Arcus Biosciences at Morgan Stanley Conference: Strategic Priorities for 2026

On Wednesday, 10 September 2025, Arcus Biosciences (NYSE:RCUS) presented its strategic priorities at the Morgan Stanley 23rd Annual Global Healthcare Conference. The company highlighted its robust pipeline of Phase III studies targeting major cancer types and emphasized its strong financial position. However, the competitive landscape and the need for careful capital management were also discussed.

Key Takeaways

• Arcus is advancing three programs with five Phase III studies in major tumor types.
• Strong cash reserves of over $900 million support ongoing and future studies.
• The company is prioritizing the development of casdatifan, particularly in renal cell carcinoma (RCC).
• Arcus is leveraging partnerships with Gilead Sciences, AstraZeneca, and Taiho Pharmaceutical for study funding.
• The company aims to differentiate its therapies through efficacy and safety measures.

Financial Results

Arcus Biosciences reported a cash position exceeding $900 million, allowing the company to pursue multiple Phase III studies concurrently. The company is focused on capital preservation, pausing less strategic activities to extend its cash reserves. Funding from partners like Gilead Sciences, AstraZeneca, and Taiho Pharmaceutical enables Arcus to manage only two of the five Phase III studies operationally, providing a significant operational advantage.

Operational Updates

Casdatifan (HIF2α Inhibitor) Program:

• Upcoming data update in October with 120 patients, showing eight months of additional follow-up.
• Phase III study, PEAK1, evaluates casdatifan plus cabozantinib in IO-experienced RCC, targeting a $2 billion market.
• Phase Ib/III study with AstraZeneca for casdatifan with an anti-PD-1/CTLA-4 bispecific antibody in first-line clear cell RCC, targeting a $3 billion market.
• Casdatifan demonstrated a 33% confirmed ORR, outperforming belzutifan’s 18-22% ORR.

Domvanalimab (Anti-TIGIT Antibody) Program:

• START221 Phase III study in gastric cancer completed enrollment in 18 months; readout expected in 2026.
• STAR-121 lung cancer trial to be fully enrolled by end of 2024.
• The Fc-silent design aims to avoid T-cell depletion, improving safety and efficacy.

Quemliclustat (CD73 Inhibitor) Program:

• PRISM1 study in first-line pancreatic cancer completed enrollment in nine months with 600 patients.

Future Outlook

Casdatifan:

• Updated monotherapy data to be presented at an investor event in October.
• Data from the safety run-in part of the Phase Ib/III trial expected in the second half of next year.

Domvanalimab:

• Overall survival data to be revealed at ESMO.
• Exploring a two-ways-to-win design for TAP greater than 5 and IPT separately.

Commercialization:

• Considering a U.S. commercial footprint with 100-150 reps.
• Intends to make cabozantinib the dominant TKI in the RCC market.
• Casdatifan has intellectual property protection until 2040 or 2041.

Q&A Highlights

FDA Interactions:

• No significant impact from changes in the FDA; communication remains clear.

Casdatifan vs. Belzutifan:

• Casdatifan showed superior efficacy with a 33% confirmed ORR compared to belzutifan’s 18-22%.
• Casdatifan demonstrated a lower primary progressive disease rate, about half of belzutifan’s 35%.

PEAK1 Trial:

• Randomized, placebo-controlled trial with PFS as the key endpoint.
• Cabozantinib alone expected to have a PFS in the 9-10 month range; the goal is to exceed this with combination therapy.

TIGIT Program:

• The Fc-silent design offers unique advantages over prior antibodies.

In conclusion, Arcus Biosciences is strategically positioned to advance its oncology pipeline with strong financial backing and strategic partnerships. For a detailed understanding, refer to the full transcript below.

Full transcript - Morgan Stanley 23rd Annual Global Healthcare Conference:

Terrence Flynn, U.S. biopharma analyst, Morgan Stanley: Great. Good morning. Thanks for joining us, everybody. I’m Terrence Flynn, Morgan Stanley’s U.S. biopharma analyst. I’m very pleased to be hosting Arcus Biosciences this morning. Joining us from the company, we have Jennifer Jarrett, the company’s Chief Operating Officer, and Richard Markus, the company’s Executive Medical Officer. Thank you both so much for being here. Really looking forward to catching up. Before we get started, for important disclosures, please see the Morgan Stanley Research Disclosure website at www.morganstanley.com/researchdisclosures. If you have any questions, please reach out to your Morgan Stanley sales representative. With that, I thought maybe, Jen, you could just give us kind of an overview of strategic priorities for the company as we head into 2026 here and what you and the team have been focused on, and then we’ll dive into the pipeline.

Jennifer Jarrett, Chief Operating Officer, Arcus Biosciences: Sure. Thank you, Terrence. First of all, I’ll just start with a very, very high-level overview of Arcus Biosciences, and then I’ll get into what our top priorities are right now. Arcus Biosciences is very unique for a smallish biotech company. We have three different programs and five phase III studies, all targeting very, very large tumor types, including gastric, lung, pancreatic cancer, and renal cell carcinoma. One of the reasons, probably the primary reason we’ve been able to pursue so many different phase III studies in parallel is because of the funding that we’ve received from our partners, specifically Gilead Sciences, AstraZeneca, and Taiho Pharmaceutical. In fact, we’re only having to operationalize two of those five phase III studies. That gives us a huge advantage from an operationalization perspective.

From a priority standpoint, probably priority number one, two, and three right now is execution of the global phase III program for casdatifan. Casdatifan is what we believe is a best-in-class HIF2α inhibitor. There’s only one HIF2α inhibitor that’s approved and in development today other than ours. That’s Merck’s belzutifan, which has had a very, very successful launch so far in RCC. Today, it is only approved, though, in late-line RCC. For our first two phase III studies, we’re going to be targeting earlier line settings, specifically the second-line setting where IO-experienced RCC and then first-line RCC in collaboration with AstraZeneca. We’ve now presented data from about 90 patients for casdatifan monotherapy, which showed clear differentiation relative to belzutifan on every efficacy measure that we reported on. That was primary progressive disease, ORR, and PFS.

We have data coming in October that we’ll be presenting at an investor event on 120 patients where we’ll have about eight months more follow-up versus the last data presentation at ASCO GU. We’ve now started our first two phase III studies, as I mentioned earlier. The first is a study called PEAK1 that is evaluating casdatifan plus cabozantinib in IO-experienced RCC. That’s about a $2 billion market opportunity in G7 countries alone. The second phase III program, which we’re running in collaboration with AstraZeneca, is actually set up as a phase Ib/phase III study. We’ve just started a phase Ib portion with them, and that is evaluating casdatifan with AstraZeneca’s anti-PD-1/CTLA-4 bispecific antibody in first-line clear cell RCC. That’s a $3 billion plus market. We think these two settings alone could be about $5 billion in G7 countries. That is priority number one, two, and three, as I said.

Our next fourth priority is getting to the phase III readouts from our two most advanced phase III studies. The first is a study called START221, which is evaluating domvanalimab, our Fc-silent anti-TIGIT antibody, in combination with anti-PD-1 and chemo in first-line gastric cancer. We are running that study in collaboration with Gilead. That readout is expected in 2026. That’s about a 1,000-patient study. The other study where we could get to phase III data as soon as late next year is our PRISM1 study, where we’re evaluating quemliclustat, our small molecule CD73 inhibitor, in combination with chemo in first-line pancreatic cancer. That’s about a 600-patient study. One really important thing to mention with both those studies is that those are two phase III studies, both of which have completed enrollment. The first, START221, we completed enrollment on in only 18 months.

Even more impressively, for PRISM1, we completed enrollment in just nine months. That has shown as we’re going into PEAK1, our first phase III study for casdatifan, that we’ve been able to execute on two very large global phase III studies in oncology. This is very different than a lot of biotechs, which out of the gates are having to run a big global phase III study for the first time. We have a lot of experience already. The next priority that I want to mention is we have some really active discovery efforts in inflammation. We’ve now been working on these for almost three years. We’re not just repurposing some oncology molecules and then working on for inflammation. These are all best-in-class, you know, or first-in-class opportunities. We’ll have the first disclosure on these programs at our investor event in October.

The last thing that I want to mention from a priority standpoint is we are very, very focused on capital preservation. We’re very fortunate today to have over $900 million in cash on our balance sheet as of the last quarter. We want to make sure that that capital lasts as long as possible. We’ve paused a few things that felt a little bit less strategic and important. We’re really focused on conserving capital any way we can as a company.

Terrence Flynn, U.S. biopharma analyst, Morgan Stanley: Okay. Great. I know we’re going to dig into a lot of these, but maybe first just another high-level one. Obviously, there’s been a lot of focus on kind of some of the changes at the FDA, etc. I know you guys mentioned you have a lot of upcoming pivotal programs, ongoing pivotal programs. What’s been your view on kind of interactions with the agencies at, you know, steady state? Are there any changes, any slowdowns, accelerations? How would you frame that for investors?

Richard Markus, Executive Medical Officer, Arcus Biosciences: Yeah. I think the change in the FDA really hasn’t had any effect on us. We’ve had good communication with them, clear communication with them. Being in the oncology space is really still, I’d say, steady as it was, as it goes. Our study designs also, I don’t think, are controversial in any way, being randomized, double-blind type studies, etc. I think we’re very comfortable and confident still in what we’ve put in place and the reception it should get at the health authorities.

Terrence Flynn, U.S. biopharma analyst, Morgan Stanley: Okay. Great. Maybe moving on to CAF, just given, you know, Jen, this one, two, and three, as you said, in terms of priority. I know you mentioned you have 90 patients. We’re going to get another 30 patients, it sounds like, in this next update and longer follow-up. Maybe just remind us kind of what the data was that we saw already as we look ahead to this next set of data. The Welireg or belzutifan, the Merck program, just remind us of kind of the relevant benchmarks as we look for this next data update from the fuller data set here in October.

Jennifer Jarrett, Chief Operating Officer, Arcus Biosciences: Yeah. So this next data set, as you pointed out, it’ll be 120 patients. All four of the monotherapy cohorts that we’re evaluating, casdatifan in late-line clear cell RCC, these are all patients that received at least one anti-PD-1 therapy and one TKI. A very advanced patient population. At this look at the data, we’ll have about eight months more follow-up versus the last data presentation. It’s quite a bit more follow-up. As a result, we’ll be able to provide a lot more PFS information relative to what we provided the last time around at ASCO GU in February. What you should expect to see is updated safety and ORR data for those 120 patients, and then whatever we can share on PFS. At the last time we presented data in February, we only had one median PFS that had been achieved. That was for the 50 mg BID cohort.

That was the first cohort to complete enrollment. At this next look, we may not still be in median PFSs for some of these cohorts, which is obviously a very good thing. We’ll show the Kaplan-Meier curve to start to give people a sense for where the PFSs could come out for these other cohorts. The other thing that I think will be very interesting for people to see is that first cohort to enroll, the 50 mg BID cohort, we now have a lot of patients that have been on therapy nearly two years. You’ll really start to see the tail effect that we’d expect to see with HIF2α in addition. You can see the percentage of patients that have now been on treatment close to two years.

Obviously, that translates into very, very meaningful clinical benefit for patients as well as a very large revenue opportunity for us as you think about the time on treatment. To your question on the benchmarks, belzutifan across all of their studies, so this isn’t just their Phase III study, they’ve shown an ORR in the range of 18% to 22%, looking at a similar patient population. Actually, in a lot of cases, a little bit of a less advanced patient population than what we’re looking at. As a reminder, at the last data presentation for the 100 mg QD cohort, which is our going forward dose and formulation, we showed a 33% confirmed ORR. We showed a higher ORR for all three monotherapy cohorts relative to that belzutifan benchmark. The other two efficacy measures that we reported on were primary progressive disease and PFS.

For primary progressive disease in LIFESPARK-05, the Phase III study for belzutifan, they saw about a 35% primary progressive disease rate. These are patients that are progressing on or before their first scans. They’re patients that never even get a chance to benefit. We’ve been showing a primary progressive disease rate in the teens, so about half of what’s been shown for belzutifan. For PFS, Merck reported a 5.7-month PFS in LIFESPARK-05. They also had another smaller data set that was just presented earlier in the year, similar patient population for belzutifan, and they showed almost the exact same PFS, so about 5.6 months. In contrast, when we presented the data in February, we showed a 9.7-month PFS for that 50 mg BID cohort.

We also showed the 50 mg QD cohort, and you can see that it clearly looked like we were going to be beyond 9.7 months PFS for that cohort. We’re significantly beating all of the efficacy benchmark data for belzutifan.

Terrence Flynn, U.S. biopharma analyst, Morgan Stanley: Okay. Just remind us the phase III dose that you’re using here because, again, you said four doses we’re going to see. What’s the right one to look at for the phase IIIs?

Jennifer Jarrett, Chief Operating Officer, Arcus Biosciences: Right. So 100-mg QD tablet is the going forward dose and formulation. The four cohorts that you’ll be seeing are, first of all, that 50-mg BID cohort. That was the first cohort to enroll. We only had 10-mg capsules at that point in time, which is why we had to split it up into BID. Patients were only taking five large capsules per dose. We had two dose optimization cohorts, a 50-mg QD and a 150-mg QD. We’ve been able to check the box on the dose optimization requirement. Last was that 100-mg QD tablet dose and formulation, which is the going forward dose and formulation for our phase III studies.

Terrence Flynn, U.S. biopharma analyst, Morgan Stanley: Do you still feel good about that choice of dose given the more maturing data that you’re seeing?

Jennifer Jarrett, Chief Operating Officer, Arcus Biosciences: 100%. Yeah. I think when people see the data, I think they will feel very, very good about the 100-mg QD. I think what’s also important because the 50-mg QD also looks very, very good, there are going to be patients that get dose reductions because of anemia and hypoxia, which are the two on-target toxicities that you see with HIF2α inhibition. If you look at the belzutifan studies, they’ve had about 30% dose reductions due to these on-target AEs. If you do have to dose reduce from 100-mg to 50-mg, patients are clearly getting a very, very efficacious dose of casdatifan, which is different than belzutifan. If patients have to go from 120 to 80, which, as I said, about a third of the patients seem to do, they’re definitely losing efficacy. We think this is another big advantage for us.

Terrence Flynn, U.S. biopharma analyst, Morgan Stanley: Okay. That’s built into the protocol already in phase III, the dose reduction?

Jennifer Jarrett, Chief Operating Officer, Arcus Biosciences: Yes.

Terrence Flynn, U.S. biopharma analyst, Morgan Stanley: Okay. Got it.

Jennifer Jarrett, Chief Operating Officer, Arcus Biosciences: In the phase III guidelines.

Terrence Flynn, U.S. biopharma analyst, Morgan Stanley: Great. All right. I guess the other opportunities that you’re doing the, you know, combination with cabozantinib, you had some data at ASCO. Maybe just talk about it. I know you did a lot of work on dose selection there. Maybe just give us an update on kind of what the key findings were for that study because I know that informed your PEAK1 phase III program.

Jennifer Jarrett, Chief Operating Officer, Arcus Biosciences: Yeah. That was evaluating 100 mg of casdatifan, the same dose of casdatifan with 60 mg of cabozantinib, which is the approved dose of cabozantinib. Very importantly, from the data set that we presented at ASCO, we showed that you can safely combine those two drugs. The safety profile looked very good. Only two patients had to discontinue one therapy. No patients discontinued both therapies, which is very important because at all points in time, patients were getting at least one treatment. We reported a 46% confirmed ORR, even though it was an early look. That compares to a 31% confirmed ORR that was reported in a similarly designed study for belzutifan plus cabozantinib.

Terrence Flynn, U.S. biopharma analyst, Morgan Stanley: Okay. On PEAK1, I know you mentioned here the design is IO-experienced population. You’re going combo versus cabozantinib mono. Any more details in terms of the powering assumptions that you can share on the trial?

Richard Markus, Executive Medical Officer, Arcus Biosciences: Yeah. The CAF-CABO study versus cabozantinib alone is the key registration study. It’s randomized, placebo controlled, and the key endpoint is PFS. That’s an accepted endpoint in this population globally, so we are on good grounds there. It also, of course, moves the timeline in a significant amount by looking at PFS versus overall survival. That said, we do have overall survival data being collected. It’s a pre-specified secondary endpoint, so it will satisfy all the health authorities’ requirements when we look at the overall survival data that’s available. The PFS is the registration endpoint, and I think that’s also in our favor.

Terrence Flynn, U.S. biopharma analyst, Morgan Stanley: What kind of effect size are you guys looking for in this study?

Richard Markus, Executive Medical Officer, Arcus Biosciences: CABO alone generally will have a PFS in the kind of 9 or 10-month range would be the assumption. We expect to be significantly clinically greater than that.

Terrence Flynn, U.S. biopharma analyst, Morgan Stanley: Yeah, I mean, it’s 20% the minimum bar usually in oncology.

Richard Markus, Executive Medical Officer, Arcus Biosciences: Yeah, we haven’t really come out with where the study design is on, but I’d say it’s a well-powered study for clinically meaningful benefits.

Terrence Flynn, U.S. biopharma analyst, Morgan Stanley: Yeah. Okay. Maybe just talk through, like, you know, how site activation is going, enrollment. I mean, Jen, you kind of alluded to some of this in your prepared remarks, but maybe just any update there. I think the competitive study that some people are focused on is the Welireg/Zanza study in terms of timeline. How are you stacking up in terms of timelines relative to that study?

Richard Markus, Executive Medical Officer, Arcus Biosciences: Yeah. Maybe I’ll talk about the startup and PEAK1, and you can talk about the other if you’d like. We’re in at the startup globally. It’s going well. I think the study design is quite readily understood and available from a health authority perspective. No real pushbacks from the health authorities around the world for that study. I also think from a patient and investigator perspective, this is a really desired study design and combination. By the way, it’s two-to-one randomization as well for the CAF-CABO group. That also is in favor, I think, to facilitate enrollment. I do think the startup should go well. As Jen said earlier, we’ve done this before and beat most normal timelines, I’d say, in this. We’re hoping to replicate that a third time. I think the startup should go well and the patient recruitment also should go well given the study design.

Terrence Flynn, U.S. biopharma analyst, Morgan Stanley: Okay.

Jennifer Jarrett, Chief Operating Officer, Arcus Biosciences: Yeah. Just the fact that we’ve now had three medical conference presentations for casdatifan has really driven awareness of the program in the clinical community, even in the patient community. If you go into these patient chat rooms, there’s a lot of discussion around casdatifan. One of the reasons why we did want to get this data out in October versus sit on it for four months is that we have PEAK1 up and running and Evolve now up and running, just to create even more awareness around the opportunity with casdatifan. To your second question, the study that most people are focused on that’s somewhat competitive of what we’re doing with casdatifan is a study called Lifespan 011 that Merck is running where they’re combining belzutifan with their TKI, which is lenvatinib. We think that we have a better combination and development strategy for a whole bunch of reasons.

Just to go through a few of those, with their study, they’re, as I said, combining belzutifan with lenvatinib, but they’re using cabozantinib in the control arm. They’re using a different TKI in the experimental arm and the control arm, which definitely makes things more complicated. We actually think cabozantinib is a better TKI, but from a tolerability and an efficacy standpoint, if that’s true, that’s really going to work against the belzutifan plus lenvatinib arm. Belzutifan is actually used, which a lot of people don’t realize, it’s not really used today as a monotherapy. It’s used in combination with everolimus. It’s a little bit unclear exactly how lenvatinib mono performs relative to cabozantinib mono. Some of the other key differences between what they’re doing and what we’re doing is we have just one primary endpoint of PFS.

Our understanding is that they have PFS and overall survival as dual primaries. They did some interim analysis, probably looking or will do looking at PFS, but they’ve had to split up their alpha because of that versus because we have one full primary endpoint of PFS. We’ve been able to put all of our alpha on that endpoint. Because we think they’re potentially now waiting at overall survival, that allows us to close the gap in timeline because we had that PFS endpoint. We definitely think we have a better strategy, a better combination partner, and we’re really able to close the timeline.

Terrence Flynn, U.S. biopharma analyst, Morgan Stanley: I know historically, like again, everyone’s focused on PFS going all the way back. Why do you think they took that strategic decision to use OS as a co-primary?

Jennifer Jarrett, Chief Operating Officer, Arcus Biosciences: OS can be helpful with reimbursement in Europe, which may have been one reason, which is why we have it as a key secondary endpoint for our study, which we think is more than sufficient. They may have also just because, you know, HIF2α inhibition is very much like IO, where you have sort of this long tail effect, and you do tend to see a benefit in survival. They may have thought maybe at the time, like that may have been a safer endpoint for them. I think they probably would think differently now. In fact, in second-line RCC, you know, it’s been very difficult to hit an OS endpoint. There’s only one second-line RCC study that’s hit an OS endpoint, which is METEOR.

Because these patients tend to go on so many subsequent therapies, it tends to be a bit harder to use OS as an endpoint in second-line disease.

Terrence Flynn, U.S. biopharma analyst, Morgan Stanley: Okay. You would anticipate you’d have data before them, I guess, given that you have a PFS endpoint?

Jennifer Jarrett, Chief Operating Officer, Arcus Biosciences: Probably still after, but we think not long after. Okay. Yeah. We feel very good about, you know, our combination, our strategy. The other thing is we think just going on top of cabozantinib versus Lemba gives us a big advantage. As I said, a lot of people think cabozantinib is a better tolerated and a better overall TKI relative to Lemba. If you look at cabozantinib use versus Lemba use in the U.S., it’s about 2.5 to 1. Outside the U.S. and some of the major European countries, it’s as much as 10 to 1. Clinicians have a lot more experience with cabozantinib. The other thing that we like about cabozantinib relative to Lemba, especially since we’re combining it with another anti-cancer agent, is cabozantinib is much more easy to dose. It’s only available in three dosages. It’s 20, 40, 60. You typically start with 60.

You dose reduce the toxicities. In the case of Lemba, the dosages are from 4 all the way to 22 or 24 mg. A lot of clinicians claim that they’re not even sure exactly how to dose Lemba. In every phase III study, they’ve used a slightly different dose. We think there’s a lot of advantages to us going with cabozantinib versus a different TKI.

Terrence Flynn, U.S. biopharma analyst, Morgan Stanley: Okay. Great. The other combination you mentioned was with the AstraZeneca anti-PD-1/CTLA-4 bispecific antibody here. Maybe just talk to us, like why was that an interesting combination to pursue? What have the data shown? I know this is your first-line kind of approach.

Richard Markus, Executive Medical Officer, Arcus Biosciences: Yeah. I think we’re quite excited about this study, especially it’s a front-line study now. The real concept here is to be TKI-free in the front line and push the TKI and associated toxicities towards later lines. So volrustomig, like you said, is their bispecific CTLA-4/PD-1. The study design, again, is a phase IB/III design. It’s seamless to go from the phase IB to III on a global scale. The phase IB part is looking at our casdatifan 100 mg, so our standard go-forward dose daily with two different doses of volrustomig, just as mostly a safety run-in, think of it that way, and pick the volrustomig dose that best combines with casdatifan.

Then we go straight into the phase III, which is volrustomig plus casdatifan compared to ipilimumab/nivolumab as the primary comparison for registration, which, again, ipilimumab/nivolumab now is probably the dominant first-line and preferred first-line therapy, again, because it’s TKI-free. That’s covering about 30% of the front line and growing as opposed to going the other direction. Like using cabozantinib in the second line, which is the dominant second-line current therapy, this is the dominant first-line therapy, and we’re adding casdatifan. That’s really the phase III registration design. There is a third arm of volrustomig alone, but that’s just for composition of components. The main statistical comparison is casdatifan plus volrustomig compared to ipilimumab/nivolumab.

Terrence Flynn, U.S. biopharma analyst, Morgan Stanley: Yeah. Remind us how large and how long is that run-in or lead-in phase going to be? What triggers the phase III, you know, move to phase III, I guess?

Richard Markus, Executive Medical Officer, Arcus Biosciences: Yeah. We said we have data probably second half of next year from the run-in part or safety parts. Meanwhile, the phase III is being prepped globally. We’ll be able to just go straight into that once we pick the dose.

Terrence Flynn, U.S. biopharma analyst, Morgan Stanley: Okay. Is it more, I mean, I’m assuming you’re going to collect upskill data, but is it more of a safety check the box? You’ll see pretty limited, you’ll see some ORR data or something like that?

Richard Markus, Executive Medical Officer, Arcus Biosciences: Yeah. It’s mostly a safety check on the two different doses of volrustomig. We expect the CAF to be able to combine well with volrustomig. We don’t expect any overlapping toxicities, but it is still a safety check.

Terrence Flynn, U.S. biopharma analyst, Morgan Stanley: Okay. Does that have a dose reduction as well for casdatifan? Can you go from 100 to 50 if needed?

Richard Markus, Executive Medical Officer, Arcus Biosciences: We have the same kind of concepts available for patient management, especially because we expect patients to be on therapy for a long time, like years. We do have safety management.

Terrence Flynn, U.S. biopharma analyst, Morgan Stanley: Okay. Great. I guess just as you think about the asset, Jen, you kind of framed out the commercial opportunity here in various lines based on the two studies that you’re pursuing right now. What’s the latest thought on kind of partnership? I know you guys have, you know, are taking this forward solo right now, but how are you thinking about that, especially as you think about like that first-line investment?

Jennifer Jarrett, Chief Operating Officer, Arcus Biosciences: Yeah. One of the things that’s really nice about how we’re running Evolve is that AstraZeneca is actually the one running Evolve. It is part of the clinical collaboration with AstraZeneca, which is really, really attractive for us. They are actually operationalizing the study. That obviously saves us a lot of resources. We’re paying for about 50% of the study. It’s a really, really capital and resource-efficient way for us to pursue the front line. They’ve been a great partner. We know them well. It’s been a great collaboration so far. In some ways, it’s like a partnership. What’s nice is we retain all of the economic and commercial rights. That makes a huge difference if you think about it from an NPV perspective. If you’re paying half of the study cost but retain all of the upside. For now, we’re probably more interested in doing those types of things.

There’s interest for sure in the asset. We’ll see how things play out over time. For now, PEAK1 is kind of well underway. We’ve got a good strategy for front line. We feel very good about where we sit today, but you’ll see what happens longer term. What is nice, RCC, as we see with Exelixis, they’ve been a great case study for us. They have made cabozantinib, as we talked about, the dominant TKI in the RCC market. I think it proves that a biotech can very effectively go after that market and do it on their own if they want to.

Terrence Flynn, U.S. biopharma analyst, Morgan Stanley: Just remind us, like from a commercial footprint perspective in the U.S., that’d be like 100, 150 reps roughly?

Jennifer Jarrett, Chief Operating Officer, Arcus Biosciences: Yeah, probably not even 100. Probably even a little bit less than that. It’s a pretty concentrated market at GU Oncologist. As we think about a partner, what could be interesting is just as we think about further expanding the development program for CAF, even though we’re going after like sort of the lion’s share of the market, there’s some other things that we could do, especially other tumor types we may want to pursue. A partner could potentially be helpful there.

Terrence Flynn, U.S. biopharma analyst, Morgan Stanley: Okay. Last, just remind us about IP. How far out you guys go on casdatifan?

Jennifer Jarrett, Chief Operating Officer, Arcus Biosciences: I want to say it’s 2041, 2040. This is, you know, homegrown molecule. Yeah, so lots of IP life left.

Terrence Flynn, U.S. biopharma analyst, Morgan Stanley: Okay. Great. Maybe just pivoting over to Dom here. I know there’s been a lot of ups and downs in the TIGIT space over the last, I mean, 18 months, two years or so. You spoke to some of this in terms of the differential on Fc regions. Just remind us why you’re still confident here in the program because I think from an investor side, I’d say that people are probably a little bit more skeptical would be my guess right now.

Richard Markus, Executive Medical Officer, Arcus Biosciences: Yeah. The key difference from our antibody compared to the prior 18 months, as you said, is ours is Fc-silent as opposed to Fc-active. What that functionally does, in addition to hitting the TIGIT receptor and blocking that, is ours will not deplete the T cell, you know, T effector and T regs, while an Fc-active will. If you do deplete those, especially like T regs, you could get more immune-mediated adverse events, which then leads to patient discontinuation from therapy, which obviously then doesn’t allow the therapy to work, as well as depleting T effector cells. By being Fc-silent, we don’t have those two detriments to the therapy. Our data has been quite consistent so far, and we have it in gastric and in lung, both with consistent results.

Interestingly, AstraZeneca still has a very robust program also with an Fc-silent antibody, and their results are also very consistent with ours. I’m happy to say ours will read out before theirs, but that also adds to the confidence thing that it’s not just a one-time, one-study aspect that we’ve seen our results.

Terrence Flynn, U.S. biopharma analyst, Morgan Stanley: Yeah. You mentioned again gastric, lung, kind of two focal indications here. I know you’ll have some updated gastric data from Phase II at ESMO next month. Maybe just help frame for us kind of the prior data we’ve seen. You know, similar question as before with CAF, like what’s going to be incremental in terms of either patients, follow-up, etc.

Richard Markus, Executive Medical Officer, Arcus Biosciences: Yeah. The big data. We’ve had edge gastric data before. By the way, the edge gastric population here is really the same population as our START221 that’s going to be reading out for the phase III registration. Before, we’ve had PFS data. The PFS data is, in essence, overlapped with what was otherwise OS data for the comparator. We’ll be coming out with our OS data now. That’s the biggest new reveal, let’s say, at ESMO will be the OS data, which hopefully will show what we can do in the START221 study.

Terrence Flynn, U.S. biopharma analyst, Morgan Stanley: Yeah. I think, you know, just looking at my notes, PFS, I think you’re at 12.9 months in the intent-to-treat population, 13.8 in the PD-L1 high population. Maybe just remind us like what the, you know, PD-1 chemo typically does. I think it’s somewhere in that same range.

Richard Markus, Executive Medical Officer, Arcus Biosciences: It’s in the same kind of 13, maybe 14-month range. That’s right.

Jennifer Jarrett, Chief Operating Officer, Arcus Biosciences: For overall survival. Yeah.

Richard Markus, Executive Medical Officer, Arcus Biosciences: For overall survival. Sorry. Yeah, not PFS.

Terrence Flynn, U.S. biopharma analyst, Morgan Stanley: You would expect your OS data to.

Richard Markus, Executive Medical Officer, Arcus Biosciences: Exactly. It’d be greater than our PFS data. That’s exactly right.

Terrence Flynn, U.S. biopharma analyst, Morgan Stanley: Okay. Understood. Anything else that you think is going to be notable, or is OS going to be the key thing in this presentation, or anything else that’s going to be, you know, that we should think about?

Richard Markus, Executive Medical Officer, Arcus Biosciences: I think the biggest part will be the overall survival that I think everyone wants to see is what is the efficacy of this therapy, and how will it compare or how does it compare to otherwise with the control arm equivalent in the standard of care.

Terrence Flynn, U.S. biopharma analyst, Morgan Stanley: Okay. Maybe just on START221 as the pivotal trial, you mentioned very similar population to EDGE-Gastric. Just remind us of the design here, and then timing and data.

Richard Markus, Executive Medical Officer, Arcus Biosciences: Yeah. So it’s our domvanalimab and zimberelimab, our PD-1 plus chemo, basically compared to PD-1 and chemo, with the standard of care as the control arm randomized study. It’s fully enrolled. It was enrolled by June of 2024. We’re now watching the study and counting the events because it’s event-driven. You can do the math. We’re more than a year out from when the last patient was enrolled already. It’s event-driven, so all we can really guide to is next year, as far as when to expect data.

Terrence Flynn, U.S. biopharma analyst, Morgan Stanley: Yeah.

Jennifer Jarrett, Chief Operating Officer, Arcus Biosciences: Yeah. What I was saying just to remind people, you know, so it’s an OS primary endpoint, but we’re looking both at the TAP greater than 5, which is essentially PD-L1 high, and IPT separately. If you hit on one of those endpoints, you get to recycle the alpha into the other endpoints. We kind of like to call it a two-ways-to-win type design. The other thing that we actually added later is if one of those hits, if TAP greater than 5 hits, there’s a hierarchical analysis looking at TAP greater than 1. We’re really trying to solve for the broadest patient population possible with that design. One last thing to point out, for those of you familiar with the lung cancer market, in gastric, it’s much more skewed towards high PD-L1.

In our START221 study, actually, a little over 45% of the patients were TAP greater than 5 or PD-L1. We think probably over 80% or so were PD-L1 positive or TAP greater than 1. A TAP greater than 5 and TAP greater than 1 both capture a very significant percentage of the gastric cancer patient population.

Terrence Flynn, U.S. biopharma analyst, Morgan Stanley: Okay. Got it. You cover the landscape. Just remind us, you provided some numbers for CAF, but just as you look at that gastric opportunity, what’s the size of the market, roughly?

Jennifer Jarrett, Chief Operating Officer, Arcus Biosciences: TAP greater than five alone would be about $3 billion in G7 countries. You know, another very big sizable opportunity. Another market, like RCC, where there’s just very little competition, which is one of the reasons why we’ve been able to enroll START221 so quickly. There was really no competitive studies out there, and we think that’s a real opportunity for the anti-TIGIT class if it works.

Terrence Flynn, U.S. biopharma analyst, Morgan Stanley: Okay. Great. Then, DOM, you know, STAR-121, which is the lung cancer trial, just any update on enrollment progress in that study and how to think about data timing?

Richard Markus, Executive Medical Officer, Arcus Biosciences: Yeah. Someone again, enrolling well, and we expect it to be fully enrolled by the end of this year. Then again, it’ll be a matter of time. It’ll be certainly beyond that of STAR 221, just looking at gastric cancer versus lung cancer in addition to when the enrollment completes. We can’t really give guidance yet onto when the 121 readout would be, but it will be fully enrolled or expected to be fully enrolled this year.

Terrence Flynn, U.S. biopharma analyst, Morgan Stanley: Yeah. Okay. That’s probably beyond 2026, right, if you look at timing of, like, you know, what the control arm is, etc. That’d be a fair guess.

Richard Markus, Executive Medical Officer, Arcus Biosciences: Fair guess, but it’s hard to say. Like I said, it’s been running for a long time, for a while now. Yeah, it’s lung cancer, so we’ll see where we go.

Terrence Flynn, U.S. biopharma analyst, Morgan Stanley: Okay. Got it. As you think about, I mean, lung cancer, to me, it seems like you have a lot of companies still pursuing kind of first-line options. Do you see this as potentially becoming the new standard of care, or is this a market that’s going to get increasingly fragmented? How do you guys see that market playing out on the forward? I think there’s still some uncertainty in terms of what it ultimately shapes up.

Jennifer Jarrett, Chief Operating Officer, Arcus Biosciences: Yeah. We changed our primary endpoint from, it was an IPT-focused endpoint, to greater than one. We’re definitely positioning domvanalimab/zimberelimab for the PD-L1 greater than 1 or PD-L1 positive patient population. We actually think there’s a little bit less competition. I think that, you know, the anti-PD-1/CTLA-4 bispecific antibodies and CTLA-4s tend to be more targeted at the PD-L1 low or negative patient population. For KRAS, a lot of that patient population, again, tends to overlap more with PD-L1 low. I think there’s still some questions about whether or not KRAS can move into first-line and how combinable it is both with anti-PD-L1 and chemo.

Even though there’s a lot out there, which is one of the reasons why studies take a little bit longer to enroll, if the study’s positive, we actually feel very, very good about the potential for that molecule to take significant share of that PD-L1 greater than 1% patient population. There’s obviously the anti-PD-L1 digest out there. We’ll see on that. So far, we have not seen anything that would tell us that that’s going to be a better combination versus anti-PD-L1. Genetic data looks, you know, probably not quite as strong as ours based on the phase III data that we’ve presented. We haven’t seen any, you know, they’ve been a slightly different patient population. We’ll see. Lung is so big. That is a $10 billion plus market that there’s also room for a few different players.

Terrence Flynn, U.S. biopharma analyst, Morgan Stanley: Okay. Great. Thanks so much, Jen, Richard. Really appreciate the time and best of luck.

Jennifer Jarrett, Chief Operating Officer, Arcus Biosciences: Cool. Thanks, guys.

Richard Markus, Executive Medical Officer, Arcus Biosciences: Thank you.

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