Arcus Biosciences, Inc.
For the period ended Jun 30, 2025. Filed Aug 6, 2025.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Jun 30, 2025 · Filed Aug 6, 2025
RCUS$18.28+3.3%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2025-03-31; filed 2025-05-06.
0001724521-25-000063
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2025-06-30; filed 2025-08-06.
0001724521-25-000101
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 93 previous paragraphs and 106 current paragraphs.
59 unchanged; 22 reworded; 23 added; 11 removed; 1 previous and 2 current paragraphs rearranged.
Tables are not compared: 4 previous and 4 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (23)
Current report
Gilead and Arcus co-develop globally and share co-commercialization rights in the U.S. for domvanalimab, zimberelimab and quemliclustat. Gilead holds commercialization rights outside of the U.S. subject to any third-party rights.
Current report
HIF-2α Program (casdatifan)
Current report
•In June 2025, we presented initial data from the ARC-20 study evaluating casdatifan plus cabozantinib that showed that nearly half of patients with metastatic cancer had a confirmed response:
Current report
◦Treatment with casdatifan, a HIF-2a inhibitor, plus cabozantinib, a tyrosine kinase inhibitor, showed a confirmed overall response rate of 46% in patients who reached a minimum of 12 weeks (two scans) of follow-up,
Current report
◦The combination had a manageable safety profile, and there was no meaningful overlapping toxicity for the two drugs.
Current report
•The data supported the initiation of two studies:
Current report
◦PEAK-1, a Phase 3 study evaluating casdatifan plus cabozantinib versus cabozantinib in immunotherapy-experienced clear cell renal cell carcinoma ("ccRCC"), that has been initiated; and
Current report
◦eVOLVE-RCC02, a Phase 1b/3 study sponsored and operationalized by AstraZeneca, evaluating casdatifan plus volrustomig, an investigational anti-PD-1/CTLA-4 bispecific antibody, in first-line, metastatic ccRCC, that has also been initiated.
Current report
CD73 Program (quemliclustat)
Current report
•In July 2025, we announced that quemliclustat, an investigational small molecule CD73 inhibitor, was granted Orphan Drug Designation by the FDA for the treatment of pancreatic cancer.
Current report
Adenosine Receptor Antagonist Program (etrumadenant)
Current report
•In the first quarter 2025, based on our strategic priorities, we decided to pause future development of etrumadenant and in June 2025, Gilead returned its license to the adenosine receptor antagonist program, which includes etrumadenant.
Current report
The increase in Total revenues for the three months ended June 30, 2025 was primarily driven by the cumulative catch-up from license and development services revenue of $143 million relating to pausing future development of etrumadenant and Gilead's related return of its license to the program.
Current report
*** Head and Neck Squamous Cell Carcinoma ("HNSCC")
Current report
The increase in R&D expenses for the three months ended June 30, 2025 was primarily due to increased CMC costs. We expect to incur elevated costs related to this activity through the third quarter 2025. Otherwise, clinical costs for our late-stage programs were flat, as increased enrollment and start-up activities for PRISM-1 and PEAK-1 were largely offset by lower costs for STAR-221. Other increases in expense resulted from an increase in early-stage development activities, driven by Phase 2 activities for casdatifan. Increases in compensation and personnel costs were partially offset by a $2 million decrease in non-cash stock-based compensation.
Current report
The One Big Beautiful Bill Act ("OBBBA") was enacted on July 4, 2025. The OBBBA contains several changes to corporate taxation, including permanent repeal of the requirement to capitalize domestic research and experimental expenditures for federal income tax purposes for taxable years beginning after December 31, 2024. The OBBBA is not currently expected to materially impact the Company’s effective tax rate or cash flows in the current fiscal year.
Current report
We are obligated to make principal loan payments and an end of term charge under the loan and security agreement with Hercules that we entered into on August 27, 2024 and under which we drew an additional $50 million in June 2025. See Note 11 to our Condensed Consolidated Financial Statements in Part I, Item 1 for further discussion.
Current report
Standalone selling price
Current report
As part of the accounting for contracts with customers, we develop assumptions that require judgment to determine the standalone selling price of each performance obligation identified in the contract.
Current report
In the first quarter 2025, we decided to pause future development of etrumadenant. In June 2025, Gilead terminated its rights to etrumadenant (the adenosine receptor antagonist program). We determined that this was a significant reduction in the scope of the arrangement, which met the definition of a contract modification. We accounted for this contract modification as both a modification of the existing contract and the creation of a new contract. (See Note 5, Revenues, in Part I, Item 1 for further discussion). We determined the standalone selling price of certain performance obligations and allocated the total transaction price to each performance obligation on a relative standalone selling price basis. The estimation of the standalone selling price included estimates for forecasted costs, development timelines, discount rates, and probabilities of technical and regulatory success.
Current report
Under the applicable accounting rules for such contract modifications, we did not adjust the accounting for completed performance obligations that were distinct from the modified goods or services. However, we were required to adjust revenue previously recognized to reflect the effect of the contract modification due to the updated transaction price allocated to the partially satisfied performance obligations and the updated measure of progress as of the modification date. Accordingly, we recognized a cumulative catch-up to revenue of $143 million based on the updated transaction price and measure of progress for the partially satisfied performance obligations.
Current report
A hypothetical 10% change in the updated standalone selling prices or the updated measure of progress as of the modification date related to Third Gilead Collaboration Agreement Amendment would have changed the cumulative catch-up to revenue recognized during the current quarter and year to date period by as much as $3 million.
Current report
Changes in total estimated effort
Removed paragraphs (11)
Previous report
Etrumadenant - we are not pursuing a Phase 3 study at this time
Previous report
Corporate Developments
Previous report
•In February 2025, we announced that we retain full global development and commercial rights, subject to Taiho’s option right for the Taiho Territory after Gilead's time-limited exclusive option rights to our HIF-2α program (including casdatifan) expired.
Previous report
HIF-2⍺ Program
Previous report
•In February 2025, we presented clinical data from three monotherapy expansion cohorts of ARC-20 in a rapid oral session at the 2025 American Society of Clinical Oncology ("ASCO") Genitourinary Symposium. At the time of data cut-off (January 3, 2025), observations from the expansion cohorts included:
Previous report
◦A 9.7-month median progression-free survival ("mPFS") was reached for the 50mg twice-a-day (BID) casdatifan monotherapy cohort; mPFS was not yet reached for other cohorts.
Previous report
◦Confirmed objective response rate ("ORR") ranged from 25% to 33%, with two of the cohorts exceeding 30% (including one partial response that confirmed after the data cut-off).
Previous report
◦Rates of primary progressive disease (progression at or before their first disease assessment) ranged from 14% to 19%.
Previous report
Most patients (81-87%) experienced disease control with either a partial response or stable disease and were still on treatment.
Previous report
Etrumadenant
Previous report
•In March 2025, we engaged with the U.S. Food and Drug Administration ("FDA") regarding promising results from the ARC-9 study evaluating etrumadenant in third-line metastatic colorectal cancer ("mCRC"); although the FDA’s feedback confirmed the potential for a registrational path for this program in third-line mCRC, based on our strategic priorities, we are not pursuing a Phase 3 study at this time.
Reworded paragraphs (22)
Previous wording
The discussion contained herein and other parts of this report contain forward-looking statements that involve risk and uncertainties, such as statements of our plans, objectives, expectations, and intentions. The words “believe,” “may,” “will,” “estimate,” “continue,” “anticipate,” “design,” “intend,” “expect,” “could,” “plan,” “potential,” “predict,” “seek,” “should,” “would” or the negative version of these words and similar expressions are intended to identify forward-looking statements. Such statements reflect our beliefs and opinions on the relevant subject based upon information available to us as of the date of this Quarterly Report on Form 10-Q. While we believe such information forms a reasonable basis for such statements, such information may be limited or incomplete, and our statements should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all potentially available relevant information. Our actual results could differ materially from those discussed in these forward-looking and other statements. Factors that could cause or contribute to such differences include, but are not limited to, those discussed in the section of this report titled “Risk Factors.”
Current wording
The discussion contained herein and other parts of this report contain forward-looking statements that involve risk and uncertainties, such as statements of our plans, objectives, expectations, and intentions. The words "believe," "may," "will," "estimate," "continue," "anticipate," "design," "intend," "expect," "could," "plan," "potential," "predict," "seek," "should," "would", "advance", "future", "prepare" or the negative version of these words and similar expressions are intended to identify forward-looking statements. Such statements reflect our beliefs and opinions on the relevant subject based upon information available to us as of the date of this Quarterly Report on Form 10-Q. While we believe such information forms a reasonable basis for such statements, such information may be limited or incomplete, and our statements should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all potentially available relevant information. Our actual results could differ materially from those discussed in these forward-looking and other statements. Factors that could cause or contribute to such differences include, but are not limited to, those discussed in the section of this report titled "Risk Factors."
Previous wording
We are a clinical-stage biopharmaceutical company focused on creating best-in-class therapies. Using our robust and highly efficient drug discovery capability, we have created a significant portfolio of investigational products which are in clinical development, with our most advanced molecule, an anti-TIGIT antibody, now in multiple Phase 3 registrational studies targeting lung and GI cancers. Our deep portfolio of novel small molecules and enabling antibodies allows us to create highly differentiated therapies, which we are developing to treat multiple large indications. We expect our clinical-stage portfolio to continue to expand and to include molecules targeting immuno-oncology, cancer cell-intrinsic and immunological pathways. Our vision is to create, develop and commercialize highly differentiated therapies that have a meaningful impact on patients.
Current wording
We are a clinical-stage biopharmaceutical company focused on creating best-in-class therapies. Using our robust and highly efficient drug discovery capability, we have created a significant portfolio of investigational products which are in clinical development, with our most advanced molecule, an anti-TIGIT antibody, now in multiple Phase 3 registrational studies targeting lung and GI cancers. Our deep portfolio of novel small molecules and enabling antibodies allows us to create highly differentiated therapies, which we are developing to treat multiple large indications. We expect our clinical-stage portfolio to continue to expand and to include molecules targeting immuno-oncology ("IO"), cancer cell-intrinsic and immunological pathways. Our vision is to create, develop and commercialize highly differentiated therapies that have a meaningful impact on patients.
Previous wording
We currently have seven clinical programs focused on unique targets including HIF-2α, TIGIT, PD-1, adenosine A2a and A2b receptors, CD73, CD39, and AXL. In 2020, we entered into the Gilead Collaboration Agreement with Gilead to strategically advance our portfolio through a collaborative relationship. The Gilead Collaboration Agreement provides Gilead with an exclusive license to our anti-PD-1 program (including zimberelimab) and time-limited exclusive option rights to our clinical programs, which they have exercised for our anti-TIGIT program (including domvanalimab), adenosine receptor antagonist program (including etrumadenant) and CD73 program (including quemliclustat). For all such optioned programs, we are co-developing investigational products with Gilead. Our HIF-2α program (including casdatifan) is no longer subject to Gilead’s option under the Gilead Collaboration Agreement and Gilead has no further rights to the program.
Current wording
We currently have seven clinical programs focused on unique targets including HIF-2α, TIGIT, PD-1, adenosine A2a and A2b receptors, CD73, CD39, and AXL. In 2020, we entered into the Gilead Collaboration Agreement with Gilead to strategically advance our portfolio through a collaborative relationship. The Gilead Collaboration Agreement and subsequent amendments provide Gilead with exclusive licenses to our anti-PD-1 program (including zimberelimab), anti-TIGIT program (including domvanalimab) and CD73 program (including quemliclustat). They also have time-limited exclusive option rights to our clinical programs. In the second quarter 2025, Gilead returned its license to the adenosine receptor antagonist program (including etrumadenant). Our HIF-2α program (including casdatifan) is no longer subject to Gilead’s option under the Gilead Collaboration Agreement and Gilead has no further rights to the program.
Previous wording
cabo: cabozantinib; cas: casdatifan; chemo: chemotherapy; dom: domvanalimab; etruma: etrumadenant; gem/nab-pac: gemcitabine/nab-paclitaxel; IO: immuno-oncology; nivo: nivolumab; pembro: pembrolizumab; quemli: quemliclustat; RCC: renal cell carcinoma; rego: regorafenib; zanza: zanzalintinib; zim: zimberelimab.
Current wording
cabo: cabozantinib; cas: casdatifan; chemo: chemotherapy; dom: domvanalimab; etruma: etrumadenant; gem/nab-pac: gemcitabine/nab-paclitaxel; IO: immuno-oncology; ipi: ipilimumab nivo: nivolumab; pembro: pembrolizumab; quemli: quemliclustat; rego: regorafenib; volru: volrustomig; zanza: zanzalintinib; zim: zimberelimab.
Previous wording
The decrease in Total revenues for the three months ended March 31, 2025 was primarily driven by the cumulative catch-up from license and development services revenue of $107 million in the prior year as a result of the Third Gilead Collaboration Agreement Amendment based on the updated transaction price and measure of progress for the partially satisfied performance obligations.
Current wording
The increase in Total revenues for the six months ended June 30, 2025 was primarily driven by the cumulative catch-up from license and development services revenue of $143 million relating to pausing future development of etrumadenant and Gilead's related return of its license to the program, partially offset by the cumulative catch-up of $107 million in the prior year as a result of the Third Gilead Collaboration Agreement Amendment in the first quarter 2024.
Previous wording
The increase in R&D expenses for the three months ended March 31, 2025 was primarily driven by higher costs in our early-stage development and preclinical program activities, driven by higher enrollment in our Phase 2 studies, primarily casdatifan. Our growing headcount drove an increase in compensation and personnel costs, offset by a $2 million decrease in non-cash stock-based compensation. The overall increase was partially offset by reduced spend in our late-stage development activities due to lower manufacturing costs due to the timing of manufacturing activities.
Current wording
The increase in R&D expenses for the six months ended June 30, 2025 was primarily driven by higher costs in our early-stage development activities, driven by Phase 2 activities for casdatifan. Increases in compensation and personnel costs were partially offset by a $4 million decrease in non-cash stock-based compensation.
Previous wording
R&D expense by quarter may fluctuate due to the timing of clinical manufacturing and standard-of-care therapeutic purchases with a corresponding impact on reimbursements.
Current wording
R&D expense by quarter may fluctuate due to the timing of clinical manufacturing and standard-of-care therapeutic purchases with a corresponding impact on reimbursements. We expect R&D expenses to decline commencing in the fourth quarter 2025 as costs related to the domvanalimab Phase 3 development program decrease significantly.
Previous wording
The decrease in G&A expenses for the three months ended March 31, 2025 was primarily driven by costs recognized in the prior year in connection with the Third Gilead Agreement Amendment, as well as a decrease in compensation and personnel costs driven by a $2 million decrease in non-cash stock-based compensation.
Current wording
The decrease in G&A expenses for the six months ended June 30, 2025 was primarily driven by costs recognized in the prior year in connection with the Third Gilead Agreement Amendment, as well as a decrease in compensation and personnel costs driven by a $5 million decrease in non-cash stock-based compensation.
Previous wording
The impairment expense for the three months ended March 31, 2024 was due to our 2024 evaluation and sublease of a portion of our office space, resulting in an impairment charge of $20 million.
Current wording
The impairment expense for the six months ended June 30, 2024 was due to our 2024 evaluation and sublease of a portion of our office space, resulting in an impairment charge of $20 million.
Previous wording
The decrease in Non-operating income, net for the three months ended March 31, 2025 as compared to the three months ended March 31, 2024, was primarily due to interest expense on our long-term debt agreement which we entered into in the third quarter of 2024.
Current wording
The decrease in Non-operating income, net for the six months ended June 30, 2025 as compared to the six months ended June 30, 2024, was primarily due to lower investment yields and the interest expense on our long-term debt agreement which we entered into in the third quarter 2024.
Previous wording
There was no Income tax expense for the three months ended March 31, 2025 or 2024 due to no taxable income in either period.
Current wording
There was no Income tax expense for the three and six months ended June 30, 2025 or 2024 due to forecasted full year net operating losses.
Previous wording
Under the Stock Purchase Agreement, Gilead has the right, at its option, to purchase additional shares from us, up to a maximum ownership of 35% of our then-outstanding voting common stock, from time to time until July 2025. In the first quarter 2024, we further amended and restated the Stock Purchase Agreement and sold 15.2 million shares of our common stock to Gilead at a purchase price of $21.00 per share for total gross proceeds of $320 million. Of the $320 million equity investment, $87 million was determined to be a premium on the purchase of common stock and allocated to the performance obligations created by the Third Gilead Collaboration Agreement Amendment. Gilead acquired an additional 1.4 million shares of our common stock in the February 2025 underwritten offering and subsequently held approximately 29.7% of our outstanding common stock as of March 31, 2025.
Current wording
In the first quarter 2024, we amended and restated the Stock Purchase Agreement and sold 15.2 million shares of our common stock to Gilead at a purchase price of $21.00 per share for total gross proceeds of $320 million. Of the $320 million equity investment, $87 million was determined to be a premium on the purchase of common stock and allocated to the performance obligations created by the Third Gilead Collaboration Agreement Amendment. Gilead acquired an additional 1.4 million shares of our common stock in the February 2025 underwritten offering and subsequently held approximately 29.5% of our outstanding common stock as of June 30, 2025.
Previous wording
In 2023, we entered into an equity distribution agreement pursuant to which we may, from time to time, sell shares of our common stock having an aggregate offering price of up to $200 million. During the three months ended March 31, 2025 and 2024, there were no sales of our common stock under this agreement.
Current wording
In 2023, we entered into an equity distribution agreement pursuant to which we may, from time to time, sell shares of our common stock having an aggregate offering price of up to $200 million. During the six months ended June 30, 2025 and 2024, there were no sales of our common stock under this agreement.
Previous wording
In the third quarter 2024, we obtained a $250 million term loan facility from Hercules. Under the terms of the term loan facility, $50 million was drawn at closing and an additional $100 million is committed and fully available at our sole option in minimum increments of $25 million. A second tranche of $100 million will be available to support strategic initiatives, subject to future approval by Hercules. See Note 11, Long-term debt, in Part I, Item 1, to our Condensed Consolidated Financial Statements for further discussion.
Current wording
In the third quarter 2024, we obtained a $250 million term loan facility from Hercules. Under the terms of the term loan facility, $50 million was drawn at closing, $50 million was drawn in the second quarter 2025 and an additional $50 million is committed and fully available at our sole option in minimum increments of $25 million. A second tranche of $100 million will be available to support strategic initiatives, subject to future approval by Hercules. See Note 11, Long-term debt, in Part I, Item 1, to our Condensed Consolidated Financial Statements for further discussion.
Previous wording
Net cash used in operating activities was $132 million for the three months ended March 31, 2025 compared to $2 million for the same period in the prior year. The change in operating cash flows is primarily due to the prior year receipt of the $87 million allocated to the performance obligations created by the Third Gilead Collaboration Agreement Amendment and the prior year receipt of $45 million from Taiho for development milestones and its opt-in on quemliclustat, partially offset by the current year receipts of $22 million for STAR-121 and PRISM-1.
Current wording
Net cash used in operating activities was $265 million for the six months ended June 30, 2025 compared to $96 million for the same period in the prior year. The change in operating cash flows is primarily due to the prior year receipt of the $87 million allocated to the performance obligations created by the Third Gilead Collaboration Agreement Amendment and the timing of receipts from Taiho for development milestones for STAR-121, STAR-221, and PRISM-1.
Previous wording
Cash provided by investing activities for the three months ended March 31, 2025 was primarily due to net proceeds from marketable securities of $33 million.
Current wording
Cash provided by investing activities for the six months ended June 30, 2025 was primarily due to net proceeds from marketable securities of $170 million.
Previous wording
Cash used in investing activities for the three months ended March 31, 2024 was primarily due to net purchases of marketable securities of $165 million.
Current wording
Cash used in investing activities for the six months ended June 30, 2024 was primarily due to net purchases of marketable securities of $102 million.
Previous wording
Cash provided by financing activities for the three months ended March 31, 2024 was due to net proceeds of $228 million from issuance of our common stock and proceeds of $1 million for stock issued under our equity award plans.
Current wording
Cash provided by financing activities for the six months ended June 30, 2025 was due to net proceeds of $142 million from issuance of our common stock under the February 2025 underwritten offering and $49 million from our borrowings under the Hercules Agreement.
Previous wording
Cash provided by financing activities for the three months ended March 31, 2025 was due to net proceeds of $142 million from issuance of our common stock under the February 2025 underwritten offering.
Current wording
Cash provided by financing activities for the six months ended June 30, 2024 was due to net proceeds of $228 million from issuance of our common stock.
Previous wording
There have been no material changes to our contractual obligations outside the ordinary course of business during the three months ended March 31, 2025, as compared to those disclosed in our Annual Report on Form 10-K for the year ended December 31, 2024.
Current wording
There have been no material changes to our contractual obligations outside the ordinary course of business during the three months ended June 30, 2025, as compared to those disclosed in our Annual Report on Form 10-K for the year ended December 31, 2024, other than the following:
Previous wording
For example, if we are unable to advance an investigational product to regulatory approval or if we and Gilead agree to terminate joint development of an investigational product, this could result in a decrease in the estimated effort and cost of satisfying the related performance obligation as well as an increase in the estimated percentage of completion and a corresponding cumulative catch-up adjustment to revenue. In contrast, development delays or increases in the total effort required to advance an investigation product could result in a decrease in the estimated percentage of completion and a corresponding reversal of revenue. At March 31, 2025, we have $210 million in deferred revenue related to upfront cash payments for certain performance obligations with Gilead related to R&D programs that are satisfied over time, primarily etrumadenant, of which a substantial amount would be recognized if we were unable to advance the underlying investigational product to regulatory approval or if we and Gilead were to agree to terminate development of the underlying investigational product.
Current wording
For example, if we are unable to advance an investigational product to regulatory approval or if we and Gilead agree to terminate joint development of an investigational product, this could result in a decrease in the estimated effort and cost of satisfying the related performance obligation as well as an increase in the estimated percentage of completion and a corresponding cumulative catch-up adjustment to revenue. In contrast, development delays or increases in the total effort required to advance an investigation product could result in a decrease in the estimated percentage of completion and a corresponding reversal of revenue. At June 30, 2025, we had $131 million in deferred revenue related to upfront cash payments for certain performance obligations related to R&D programs that are satisfied over time, of which a substantial amount would be recognized if we were unable to advance the underlying investigational product to regulatory approval or if we and Gilead were to agree to terminate development of the underlying investigational product.
Previous wording
A hypothetical 10% change in the total estimated effort required to satisfy, R&D activities or combined license and R&D activities, performance obligations under our agreements with Gilead would have changed the related revenue recognized during the current period by as much as $56 million.
Current wording
A hypothetical 10% change in the total estimated effort required to satisfy, R&D activities or combined license and R&D activities, performance obligations under our agreements would have changed the related revenue recognized by as much as $58 million, for both the current quarter and year to date.
Rearranged current paragraphs (2)
Current report — wording carried from elsewhere
The decrease in G&A expenses for the three months ended June 30, 2025 was primarily driven by a decrease in compensation and personnel costs driven by a $3 million decrease in non-cash stock-based compensation, partially offset by increased costs recognized in the quarter in connection with the Gilead Agreement.
Current report — wording carried from elsewhere
The decrease in Non-operating income, net for the three months ended June 30, 2025 as compared to the three months ended June 30, 2024, was primarily due to lower investment yields and lower average portfolio balances, and the interest expense on our long-term debt agreement which we entered into in the third quarter 2024.
Rearranged previous paragraphs (1)
Previous report — wording carried elsewhere
•In February 2025, we issued through an underwritten offering, 13.6 million shares of our common stock at a price of $11.00 per share, for total gross proceeds of approximately $150 million, before deducting underwriting discounts, commissions and offering expenses.