Arcus Biosciences stock rating upgraded to Buy at H.C. Wainwright

On Wednesday, H.C. Wainwright analyst Emily Bodnar raised the stock rating for Arcus Biosciences (NYSE:RCUS) from Neutral to Buy, setting a price target of $24.00. The upgrade comes as the stock trades near its 52-week low of $10.24, down approximately 48% over the past year. According to InvestingPro analysis, the stock appears undervalued, with multiple analysts maintaining price targets ranging from $17 to $46. Bodnar’s optimism is based on the potential of Arcus’s drug candidate, casdatifan (cas), particularly when used in combination with cabozantinib (cabo) for treating clear cell renal cell carcinoma (ccRCC). The ARC-20 study has enrolled approximately 40 patients in the cas + cabo cohort, with initial objective response rate (ORR) data and safety results expected in mid-2025. The company maintains a strong financial position with a current ratio of 5.24 and more cash than debt on its balance sheet, as reported by InvestingPro, which provides comprehensive analysis through its Pro Research Reports covering 1,400+ US stocks.

The cas + cabo combination is being evaluated for the same patient population as the planned Phase 3 PEAK-1 study, which is set to begin in the second quarter of 2025. The current cohort aims to confirm the safety of the combination therapy before initiating the PEAK-1 trial. According to the company, the safety profile observed thus far aligns with the known side effects of each agent individually.

Comparatively, several studies have assessed the efficacy of cabo in the post-immune-oncology (post-IO) setting, with median progression-free survival (PFS) ranging from 9.3 to 11.5 months and ORR between 32% and 52%. In contrast, a study combining belzutifan with cabo yielded an ORR of 31% and a median PFS of 13.8 months. Cas monotherapy has demonstrated an ORR of approximately 30% and a median PFS of 9.7 months, which compares favorably to belzutifan’s median PFS of 5.6 months in a separate study.

Bodnar suggests that an ORR of at least 40% for the cas + cabo combination would indicate a significant benefit over either treatment alone and could offer an advantage over the belzutifan + cabo regimen. The primary endpoint for the upcoming PEAK-1 study is median PFS, and a result greater than 14 months would likely be necessary to demonstrate statistical significance over cabo alone and to show superiority to belzutifan.

Initial data from the study in mid-2025 will likely include preliminary ORR results and safety information, with more comprehensive data on durability and median PFS expected in the first half of 2026. The current stock levels of Arcus Biosciences are seen as an attractive entry point by Bodnar, leading to the upgrade in the company’s stock rating. With a market capitalization of $939 million and projected revenue growth of 124% for the current year, InvestingPro data reveals 12 additional key insights about RCUS’s financial health and market position, available exclusively to subscribers.

In other recent news, Arcus Biosciences reported several key developments that are of interest to investors. The company disclosed a strong cash position with approximately $992 million in cash, cash equivalents, and marketable securities as of December 31, 2024. Arcus Biosciences also announced a $150 million stock offering priced at $11 per share to fund the ongoing development of its cancer treatment, casdatifan. Following the expiration of Gilead Sciences (NASDAQ:GILD)’ option to license casdatifan, Arcus retains full global rights to the drug, except in certain Asian territories.

Recent data from the ARC-20 study showed promising results for casdatifan in treating metastatic clear cell renal cell carcinoma, with a median progression-free survival of 9.7 months in the 50 mg twice daily cohort. The study also reported overall response rates of 25% for the 50 mg twice daily cohort and 33% for the 100 mg once daily cohort. H.C. Wainwright adjusted its price target for Arcus Biosciences shares to $18 from $20, maintaining a Neutral rating, following the presentation of these results. Additionally, the company is set to initiate the PEAK-1 Phase 3 trial in 2025, evaluating casdatifan in combination with another cancer drug.

Arcus Biosciences also made changes to its Board of Directors, appointing Dietmar Berger, M.D., Ph.D., following the resignation of Merdad Parsey, M.D., Ph.D. These developments underscore Arcus Biosciences’ ongoing efforts in advancing its cancer treatment pipeline and maintaining robust corporate governance.

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