Arcus Biosciences, Inc.

Previous wording

We intend to use our website www.arcusbio.com as a means of disclosing material non-public information and for complying with our disclosure obligations under the Regulation FD. Such disclosures will be included on the company’s website under the heading "Investors & Media." Accordingly, investors should monitor such portions of the company’s website, in addition to following the company’s press releases, SEC filings and public conference calls and webcasts (if any). The information contained on, or that may be accessed through our website is not part of, and is not incorporated into, this Quarterly Report on Form 10-Q.

Current wording

We intend to use our website www.arcusbio.com as a means of disclosing material non-public information and for complying with our disclosure obligations under Regulation FD. Such disclosures will be included on the company’s website under the heading "Investors & Media." Accordingly, investors should monitor such portions of the company’s website, in addition to following the company’s press releases, SEC filings and public conference calls and webcasts (if any). The information contained on, or that may be accessed through our website is not part of, and is not incorporated into, this Quarterly Report on Form 10-Q.

Previous wording

We are a late clinical-stage biopharmaceutical company focused on developing differentiated molecules for patients with cancer and inflammatory and autoimmune diseases. Our most advanced molecules are in Phase 3 registrational studies for various cancer indications and we expect our next wave of clinical-stage molecules to come from our inflammation and autoimmune disease programs. Our vision is to leverage our internal small-molecule discovery capabilities to create, develop and commercialize highly differentiated therapies that can have a meaningful impact on patients.

Current wording

We are a late clinical-stage biopharmaceutical company focused on developing differentiated molecules for patients with cancer and immunology diseases. Our most advanced molecules are in Phase 3 registrational studies for various cancer indications and we expect our next wave of clinical-stage molecules to come from our immunology programs. Our vision is to leverage our internal small-molecule discovery capabilities to create, develop and commercialize highly differentiated therapies that can have a meaningful impact on patients.

Previous wording

•In April 2026, we announced that the period for Gilead’s option rights under the Gilead Collaboration Agreement entered into in 2020, as amended, will end on July 14, 2026, following Gilead’s decision to not make the option continuation payment. Accordingly, Gilead will not have option rights to additional programs in our early-stage pipeline, including the CCR6, CD89 and CD40L programs, but will maintain its existing time-limited options to programs including AB801 (an investigational small molecule AXL inhibitor), AB598 (an investigational anti-CD39 monoclonal antibody), AB102 (an investigational MRGPRX2 antagonist), and an investigational TNF small molecule inhibitor.

Current wording

•As announced in April 2026, Gilead’s option rights under the Gilead Collaboration Agreement entered into in 2020, as amended, ended on July 14, 2026, following Gilead’s decision not to make the option continuation payment. Accordingly, Gilead does not have option rights to additional programs in our early-stage pipeline, including the CCR6, CD89 and CD40L programs, but maintains time-limited options to programs including AB801 (an investigational small molecule AXL inhibitor), AB598 (an investigational anti-CD39 monoclonal antibody) and an investigational TNF small molecule inhibitor. Gilead’s time-limited option rights to AB102 (an investigational MRGPRX2 antagonist) have also expired.

Previous wording

•In April 2026, we announced the discontinuation of the Phase 3 STAR-121 study due to futility. STAR-121 evaluated domvanalimab plus the anti-PD-1 antibody zimberelimab and chemotherapy versus pembrolizumab plus chemotherapy as a first-line treatment for metastatic NSCLC.

Current wording

•In April 2026, we announced the discontinuation of the Phase 3 STAR-121 study due to futility, and in August 2026, we announced the discontinuation of the Phase 3 PACIFIC-8 study. STAR-121 evaluated domvanalimab plus the anti-PD-1 antibody zimberelimab and chemotherapy versus pembrolizumab plus chemotherapy as a first-line treatment for metastatic NSCLC. PACIFIC-8 evaluated domvanalimab in combination with durvalumab versus durvalumab alone in patients with PD-L1 positive, Stage III unresectable NSCLC.

Previous wording

Our license and development services revenue consists of amounts recognized from the portions of the nonrefundable upfront payments received from Gilead and Taiho and allocated to performance obligations for licenses or R&D activities performed by us as we develop our investigational products under the terms of our collaboration agreements. License and development services revenues are recognized based upon the timing of the delivery of a license or service if delivery is complete, or based on estimates of each performance obligation's percentage of completion at the period end if it is still in process. We calculate percentage of completion as a ratio of effort incurred to date on each performance obligation to the total estimated effort to be incurred to satisfy that performance obligation.

Current wording

Our license and development services revenue consists of amounts recognized from the portions of the nonrefundable upfront and milestone payments received from Gilead and Taiho and allocated to performance obligations for licenses or R&D activities performed by us as we develop our investigational products under the terms of our collaboration agreements. License and development services revenues are recognized based upon the timing of the delivery of a license or service if delivery is complete, or based on estimates of each performance obligation's percentage of completion at the period end if it is still in process. We calculate percentage of completion as a ratio of effort incurred to date on each performance obligation to the total estimated effort to be incurred to satisfy that performance obligation.

Previous wording

The level of our future R&D investment will depend on a number of factors and uncertainties including the breadth of our clinical programs, the outcome of our efforts, and our collaboration activities. We expect R&D expenses to decline in the near term relative to what we have incurred as we wind down studies for domvanalimab. Streamlining initiatives we have undertaken across our R&D operations in connection with this wind-down, together with efficiencies we are pursuing across our programs outside the Gilead collaboration, are expected to further reduce costs. These decreases will be partially offset by our increased investment in the development of casdatifan and advancement of our small-molecule inflammation and immunology programs. We solely own casdatifan and lead its global development and commercialization, working with strategic partners in certain regions. As we advance our clinical-stage programs, including casdatifan, and prepare to seek regulatory approval, we may need to expand our late-stage development and commercial capabilities, which will require increased investment.

Current wording

The level of our future R&D investment will depend on a number of factors and uncertainties including the breadth of our clinical programs, the outcome of our efforts, and our collaboration activities. We expect R&D expenses to continue to decline in the near term relative to what we have incurred as we wind down studies related to domvanalimab. Streamlining initiatives we have undertaken across our R&D operations in connection with this wind-down, together with efficiencies we are pursuing across our programs outside the Gilead collaboration, are expected to further reduce costs. These decreases will be partially offset by our increased investment in the development of casdatifan and advancement of our small-molecule immunology programs. We solely own casdatifan and lead its global development and commercialization, working with strategic partners in certain regions. As we advance our clinical-stage programs, including casdatifan, and prepare to seek regulatory approval, we may need to expand our late-stage development and commercial capabilities, which will require increased investment.

Previous wording

The decrease in Total revenues for the three months ended March 31, 2026 was primarily driven by lower development services revenue from the Gilead Collaboration.

Current wording

The decrease in Total revenues for the three months ended June 30, 2026 was primarily driven by the cumulative catch-up from license and development services revenue of $143 million in 2025 due to Gilead's return of its license to the etrumadenant program, partially offset by: (i) an increase in access rights revenues recognized in the second quarter 2026 related to the expiration of Gilead's option rights; and (ii) increased revenues related to programs optioned under the Taiho Collaboration Agreement.

Previous wording

R&D expenses were flat for the three months ended March 31, 2026, with (i) late-stage development programs increasing due to our investment in casdatifan and our Phase 3 PRISM-1 study for quemliclustat, partially offset by the wind-down of studies related to domvanalimab, (ii) early-stage development activities decreasing primarily due to the absence of prior year Phase 2 study costs for domvanalimab, and (iii) partnership reimbursements decreasing, primarily due to Gilead-led activities representing a larger share of total joint development costs and a shift towards programs fully funded by us.

Current wording

The decrease in R&D expenses for the three months ended June 30, 2026 was primarily due to: (i) late-stage development activities decreasing primarily due to the wind down of Phase 3 studies related to domvanalimab and the completion of enrollment of PRISM-1, partially offset by increasing activities in our Phase 3 studies for casdatifan; (ii) early-stage development activities decreasing primarily due to the wind down of Phase 2 studies related to domvanalimab and lower Phase 2 study costs for casdatifan; partially offset by (iii) partnership reimbursements decreasing, primarily due to Gilead-led activities representing a larger share of total joint development costs and a shift towards programs fully funded by us.

Previous wording

We expect R&D expenses to decline in the near term relative to what we have incurred as we wind down studies for domvanalimab. Streamlining initiatives we have undertaken across our R&D operations in connection with this wind-down, together with efficiencies we are pursuing across our programs outside the Gilead collaboration, are expected to further reduce costs. These decreases will be partially offset by our increased investment in the development of casdatifan and advancement of our small-molecule inflammation and immunology programs.

Current wording

We expect R&D expenses to continue to decline in the near term relative to what we have incurred as we wind down studies related to domvanalimab. Streamlining initiatives we have undertaken across our R&D operations in connection with this wind-down, together with efficiencies we are pursuing across our programs outside the Gilead collaboration, are expected to further reduce costs. These decreases will be partially offset by our increased investment in the development of casdatifan and advancement of our small-molecule immunology programs.

Previous wording

There was no Income tax expense for the three months ended March 31, 2026 or 2025 due to forecasted full year NOLs.

Current wording

There was no Income tax expense for the three and six months ended June 30, 2026 or 2025 due to forecasted full year NOLs. We are currently under U.S. IRS examination for the 2023 tax year. We do not expect the examination to have a material impact on our liquidity, capital resources, or results of operations; however, the examination remains ongoing and the ultimate outcome cannot be predicted with certainty.

Previous wording

To date, we have financed our operations primarily from the sale of our equity securities, upfront or milestone payments from our research, collaboration and license agreements with our strategic partners including Gilead and debt financing. We will need substantial additional funding to support our continuing operations and pursue our development strategy. Until such time that we can generate significant revenue from sales of our investigational products, if ever, we expect to finance our operations through the sale of equity, debt financings or other capital sources, including existing or potential collaborations with other companies or other strategic transactions. See "Item 1A. Risk Factors" for a discussion of the factors that could impact our liquidity.

Current wording

To date, we have financed our operations primarily from the sale of our equity securities, upfront or milestone payments from our research, collaboration and license agreements with our strategic partners, including Gilead and Taiho, and debt financing. We will need substantial additional funding to support our continuing operations and pursue our development strategy. Until such time that we can generate significant revenue from sales of our investigational products, if ever, we expect to finance our operations through the sale of equity, debt financings or other capital sources, including existing or potential collaborations with other companies or other strategic transactions. See "Item 1A. Risk Factors" for a discussion of the factors that could impact our liquidity.

Previous wording

We have a $250 million term loan facility with Hercules. Under this facility, $100 million has been drawn. Additional tranches totaling $150 million will be available to support strategic initiatives, subject to the achievement of certain clinical and regulatory milestones and lender approval. See Note 11, Long-term debt, in Part I, Item 1, to our Condensed Consolidated Financial Statements for further discussion.

Current wording

We have a $250 million term loan facility with Hercules. Under this facility, $100 million has been drawn. Additional tranches totaling $150 million will be available to support strategic initiatives, subject to the achievement of certain clinical and regulatory milestones or lender approval. See Note 11, Long-term debt, in Part I, Item 1, to our Condensed Consolidated Financial Statements for further discussion.

Previous wording

In 2025, we issued, through two underwritten offerings, 29.4 million shares of our common stock for total gross proceeds of approximately $438 million, before deducting underwriting discounts, commissions and offering expense.

Current wording

In 2025, we issued, through two underwritten offerings, 29.4 million shares of our common stock for total gross proceeds of approximately $438 million, before deducting underwriting discounts, commissions and offering expenses.

Previous wording

Net cash used in operating activities was $138 million for the three months ended March 31, 2026 compared to $132 million for the same period in the prior year. The change in operating cash flows is primarily due to the timing of receipts from Taiho for development milestones.

Current wording

Net cash used in operating activities was $257 million for the six months ended June 30, 2026 compared to $265 million for the same period in the prior year. The change in operating cash flows is primarily due to the timing of receipts from Taiho for development milestones.

Previous wording

Cash provided by investing activities for the three months ended March 31, 2026 was primarily due to net proceeds from marketable securities of $114 million.

Current wording

Cash provided by investing activities for the six months ended June 30, 2026 was primarily due to net proceeds from marketable securities of $166 million.

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 provided by financing activities for the three months ended March 31, 2026 was due to proceeds of $3 million for stock issued under our equity award plans.

Current wording

Cash provided by financing activities for the six months ended June 30, 2026 was due to proceeds of $19 million for stock issued under our equity award plans.

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, 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.