Arcus Biosciences, Inc. Q1 FY2024 earnings call

• 2024 is a catalyst-rich year with data expected from all 4 later-stage clinical programs by year-end: dom-zim in lung and upper GI cancers, cas in clear cell RCC, quemli in pancreatic cancer, and etruma in colorectal cancer.
• ASCO in less than a month with two oral presentations: updated data from EDGE-Gastric study on dom plus zim plus chemo in first-line gastric cancer, and data from ARC-9 study in third-line colorectal cancer. Also, data from MORPHEUS-PDAC study on etruma plus atezo in first-line metastatic pancreatic cancer highlighted.
• Jennifer Jarrett discussed cas program: ARC-20 Phase Ib study enrolled over 80 patients, dose escalation completed, dose expansion ongoing, with plans to initiate Phase III trials early next year. Cas in combination with cabo TKI and STELLAR-009 study with Exelixis to support Phase III trials.
• Terry Rosen mentioned completion of STAR-221 enrollment expected midyear, STAR-121 enrollment in first-line NSCLC to complete this year, and starting Phase III trials for cas and quemli by early next year.

Arcus Biosciences reported GAAP revenue of $145 million for the first quarter of 2024, compared to $31 million in the fourth quarter of 2023. Revenue was primarily driven by collaborations with Gilead and Taiho, including a cumulative catch-up of $107 million from a Gilead amendment in January. R&D expenses for Q1 were $109 million (net of Gilead reimbursements), an increase from $93 million in Q4 2023, driven by higher costs for late-stage programs. G&A expenses were $32 million for Q1, compared to $29 million in Q4 2023. Total operating expenses in Q1 included a $20 million noncash impairment charge from office space sublease. Cash on hand as of March 31, 2024, was $1.1 billion, with expected cash balance at end of 2024 between $870 million and $920 million, funding operations into 2027.

• Expect GAAP revenue of approximately $30 million per quarter for the remainder of 2024.
• G&A expenses expected to remain stable in 2024.
• Cash balance at end of 2024 expected between $870 million and $920 million, funding operations into 2027, including a $100 million partnership continuation payment from Gilead in Q3.
• Aggressively advancing cas towards initiation of first Phase III trial early next year, and starting at least 2 additional Phase III trials by early next year for cas and quemli.

• Uncertainties in clinical trial results and regulatory approvals for various programs.
• Competition in the development of therapies for indications such as gastric cancer, clear cell RCC, and pancreatic cancer.
• Risks associated with the timing and outcomes of clinical manufacturing activities and the purchase of standard of care therapeutics for trials.

Q: About HIF-2 alpha, why 50-milligram cohort not in end-of-year release and ORR progression.

A: Terry Rosen explained 50-milligram cohort enrolled after 100-milligram, not mature enough for medical conference, and ORR data continuing to look good with slower response kinetics like belzutifan.

Q: On adenosine pathway, cracking code on responsive tumors.

A: Terry Rosen and Juan Jaen discussed responsive tumors being where standard of care is immunogenic chemotherapy, leading to ATP spillage and adenosine production, with focus on settings where chemo induces immunogenic response mitigated by adenosine blockade.

Q: On next-gen programs prioritization and inflammation component.

A: Terry Rosen mentioned early-stage portfolio continues with emphasis on discovery, including AXL inhibitor entering patients, and immunology inflammation component to increase in portfolio over time, with details to be shared later.