Arcus Biosciences, Inc.

Note 1. Organization, liquidity and capital resources

Organization

Arcus Biosciences, Inc. (referred to as "Arcus," "we," "our," "us," or the "Company") is 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.

We operate and manage our business asone reportable and operating segment, which is the business of developing and commercializing highly differentiated therapies that have a meaningful impact on patients. See Note 15, Business segment, for more information.

Liquidity and Capital Resources

As of June 30, 2026, we had cash, cash equivalents and marketable securities of $775 million, which we believe will be sufficient to fund our planned operations for a period of at least twelve months following the date of filing of this report.

Note 2. Summary of significant accounting policies

Basis of Presentation

These interim financial statements should be read in conjunction with the audited Consolidated Financial Statements and the related notes thereto for the year ended December 31, 2025 included in our Annual Report on Form 10-K filed with the Securities and Exchange Commission ("SEC") on February 25, 2026. There have been no significant changes to our summary of significant accounting policies as disclosed in that filing.

These interim financial statements have been prepared in accordance with U.S. generally accepted accounting principles ("U.S. GAAP") for interim financial information and include all normal and recurring adjustments that management believes are necessary for a fair presentation of the periods presented. The Condensed Consolidated Balance Sheet as of December 31, 2025 has been derived from audited consolidated financial statements at that date but does not include all of the information required by U.S. GAAP for complete financial statements.

Operating results for the six months ended June 30, 2026 are not necessarily indicative of the results that may be expected for the year ending December 31, 2026 or for any future period.

Use of Estimates

The preparation of the Condensed Consolidated Financial Statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses and related disclosures. We base our estimates on historical experience and on various market-specific and other relevant assumptions that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Estimates are assessed and updated each period to reflect current information. Actual results may differ materially from those estimates.

Recent Accounting Pronouncements

In November 2024, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2024-03 — Income Statement — Reporting Comprehensive Income — Expense Disaggregation Disclosures (Subtopic 220-40) — Disaggregation of Income Statement Expenses. This ASU requires disclosure, in the notes to financial statements, of specified information about certain costs and expenses. We plan to adopt this guidance beginning with our 2027 Annual Report to be filed in early 2028 and all quarterly and Annual Reports thereafter. We expect the adoption of this standard to result in increased disclosures in the Notes to our Consolidated Financial Statements.

In September 2025, the FASB issued ASU 2025-07 — Derivatives and Hedging (Topic 815) and Revenue from Contracts with Customers (Topic 606): Derivatives Scope Refinements and Scope Clarification for Share-Based Noncash Consideration from a Customer in a Revenue Contract. This ASU refines the scope of the guidance on derivatives in Topic 815 and clarifies the guidance on share-based payments from a customer in ASC 606. We adopted this standard in 2026 with no significant impact on our Consolidated Financial Statements.

Note 3. Related party - Gilead Sciences, Inc.

In 2020, we and Gilead Sciences, Inc. ("Gilead") entered into an Option, License and Collaboration Agreement (the "Gilead Collaboration Agreement"), Common Stock Purchase Agreement (the "Stock Purchase Agreement"), and Investor Rights Agreement (the "Investor Rights Agreement").

The Gilead Collaboration Agreement was amended in 2021 (the "First Gilead Collaboration Agreement Amendment"), in 2023 (the "Second Gilead Collaboration Agreement Amendment"), in 2024 (the "Third Gilead Collaboration Agreement Amendment") and (the "Fourth Gilead Collaboration Agreement Amendment"), and in 2025 (the "Fifth Gilead Collaboration Agreement Amendment").

The Stock Purchase Agreement was amended in 2021 (the "First Stock Purchase Agreement Amendment"), in 2023 (the "Second Stock Purchase Agreement Amendment"), and was amended and restated in 2024 (the "Third Stock Purchase Agreement Amendment").

The Investor Rights Agreement was amended in 2022 (the "First Investor Rights Agreement Amendment") and was amended and restated in 2024 (the "Second Investor Rights Agreement Amendment").

We refer to these agreements collectively as the "Gilead Agreements".

Stock Purchase and Investor Rights Agreements

In the first quarter 2025, through our underwritten offering, Gilead purchased 1.4 million shares of our common stock for total gross proceeds of $15 million.

Under the Investor Rights Agreement entered into in 2020 and subsequent amendments, Gilead had the right to designate three members of our board of directors and registration rights for shares that it purchases. Gilead previously exercised its rights to appoint allthree board members and we have registered all shares purchased to date.

As of June 30, 2026, Gilead held approximately 24.7% of our outstanding common stock.

Collaboration Agreements

In 2020, we entered into the Gilead Collaboration Agreement, which gave Gilead, for an upfront payment of $175 million, an exclusive license to develop and commercialize zimberelimab (the anti-PD-1 program) in certain markets and time-limited options to acquire exclusive licenses to develop and commercialize any of our then-current and future clinical programs arising during the 10-year collaboration term, contingent upon $100 million option continuation payments payable on each of the second, fourth, sixth and eighth anniversaries of the agreement. The collaboration term, which determined the programs to which Gilead obtained options to acquire exclusive licenses to develop and commercialize under the Gilead Collaboration Agreement, ended on July 14, 2026 following Gilead’s decision not to make the option continuation payment due on the sixth anniversary of the agreement.

For each program that Gilead opts in to, both companies will co-develop and equally share global development costs, subject to certain opt-out rights that we have, caps on our spending and related subsequent adjustments, and certain other exceptions. For each program, provided we have not exercised our opt-out rights, we have the option to co-promote in the U.S. with equal sharing of related profits and losses. Gilead has the right to exclusively commercialize outside of the U.S., subject to the rights of our existing partners in any territories and will pay us tiered royalties as a percentage of revenues ranging from the high teens to the low twenties.

Gilead's option to acquire exclusive licenses to develop and commercialize AB801 (an investigational small molecule AXL inhibitor) and AB598 (an investigational anti-CD39 monoclonal antibody) under the Gilead Collaboration Agreement, will expire after a prescribed period following the achievement of a clinical development milestone in such program and our delivery to Gilead of the requisite data package. Gilead may exercise its option to these programs at any time prior to expiration of the option and will pay us an option fee of $150 million per program.

In 2021, we entered into the First Gilead Collaboration Agreement Amendment pursuant to which Gilead exercised its option tothree programs—providing Gilead with exclusive licenses to develop and commercialize domvanalimab and AB308 (collectively, the anti-TIGIT program), etrumadenant (the adenosine receptor antagonist program) and quemliclustat (the CD73 program), in certain markets—for a total payment of $725 million that was received in 2022. The amendment also (i) provided for a slight reduction in the royalties for these three programs, such that Gilead would pay us tiered royalties as a percentage of revenues ranging from the mid-teens to the low twenties; and (ii) removed the $100 million option continuation payment that was otherwise due on the second anniversary of the Gilead Collaboration Agreement. With respect to domvanalimab, we are also eligible to receive up to $500 million in potential U.S. regulatory approval milestones.

Under the First Gilead Collaboration Agreement Amendment, Gilead retains an option right to an oncology research program for which we will lead discovery and early development activities. For this program, Gilead has the right to exercise its option, either (i) upon our completion of certain investigational new drug ("IND")-enabling activities for an option payment of $60 million or (ii) following the achievement of a clinical development milestone for an option payment of $150 million.

In 2023, we entered into the Second Gilead Collaboration Agreement Amendment pursuant to which we expanded our collaboration to provide Gilead with options to license up tofour jointly selected research-stage programs that target inflammatory diseases for which we will lead discovery and early development activities. We received a total upfront payment of $35 million for an initialtwo research programs in 2023. Gilead’s options to the othertwo research programs, as amended under the Fourth Gilead Collaboration Agreement Amendment expired in May 2025 and Gilead’s time-limited option rights to AB102 (an investigational MRGPRX2 antagonist) expired in May 2026. Gilead has the right, for our investigational TNF small molecule inhibitor either (i) to exercise its option upon our completion of certain IND-enabling activities for an option payment of $45 million or (ii) to extend its option and exercise it following the achievement of a clinical development milestone for an option payment of $150 million. If Gilead exercises its option at the earlier time point, we would be eligible to receive up to $375 million in regulatory and commercial milestone payments as well as tiered royalties. If Gilead exercises its option at the later time point, the parties would have rights to co-develop and share global development costs and to co-promote and share profits in the U.S. for that program.

In 2024, we entered into the Third Gilead Collaboration Agreement Amendment. The Third Gilead Collaboration Agreement Amendment, among other things, (i) required Gilead to pay the $100 million option continuation payment due on the fourth anniversary of the Gilead Collaboration Agreement, which was received in 2024, (ii) provides that we will operationalize and fund the Phase 3 PRISM-1 study evaluating quemliclustat in pancreatic cancer subject to Gilead's right to reinstate the study as part of the parties' joint development activities upon regulatory approval, (iii) provides that we will solely fund our share of the phase 3 PACIFIC-8 study, subject to Gilead’s right to reinstate PACIFIC-8 as part of the parties’ joint development activities for the TIGIT Program upon regulatory approval, and (iv) provides that we will fund certain other activities. All other terms of the existing collaboration agreements remain unchanged.

As of June 30, 2026, Gilead has licenses to domvanalimab, AB308, quemliclustat and zimberelimab. In the second quarter 2025, Gilead returned its license to the adenosine receptor antagonist program, which includes etrumadenant. After July 14, 2026, Gilead will maintain its existing time-limited options to our AXL program (including AB801), our CD39 program (including AB598), our TNF program and the oncology research program under the First Gilead Collaboration Agreement.

Under the Gilead Agreements, we recognized revenue for the three and six months ended June 30, 2026, of $33 million and $48 million, respectively, and for the three and six months ended June 30, 2025, of $160 million and $188 million, respectively. For a more detailed discussion, see Note 5, Revenues.

We recognized net expense to Gilead for the three and six months ended June 30, 2026, of $2 million and $2 million, respectively, and for the three and six months ended June 30, 2025, of $13 million and $8 million, respectively. Expenses and reimbursements from Gilead are recognized in Operating expense, allocated between Research and Development ("R&D") and General and Administrative ("G&A") in our Condensed Consolidated Statements of Operations based upon the activity that generated the expense or reimbursement.

We had net payables to Gilead at June 30, 2026 and December 31, 2025, of $12 million and $24 million, respectively, recorded in Accounts payable on our Condensed Consolidated Balance Sheets.

Note 4. License and collaborations

We enter into licensing agreements, strategic collaborations and other similar arrangements with third parties for the development and commercialization of certain investigational products. These arrangements: may be collaborative and involve two or more parties who are active participants in the operating activities of the collaboration and are exposed to significant risks and rewards depending on the commercial success of the activities; are performed with no guarantee of either technological or commercial success; and are each unique in nature. Such arrangements may include: non-refundable upfront payments; payments for options to acquire certain rights; potential development and regulatory milestone payments and/or sales-based milestone payments; royalty payments; revenue or profit-sharing arrangements; expense reimbursements; and cost-sharing arrangements.

Operating expenses for costs incurred pursuant to these arrangements are reported in their respective expense line items in the Condensed Consolidated Statements of Operations, net of any payments due to or reimbursements due from our collaboration partners, with such reimbursements being recognized at the time the party becomes obligated to pay.

Our significant arrangements are discussed below. For a more detailed discussion on revenues recognized under these arrangements, see Note 5, Revenues.

Gilead Collaboration

See Note 3, Related party - Gilead Sciences, Inc., for more information.

Taiho Collaboration

In 2017, we entered into an agreement with Taiho Pharmaceutical Co., Ltd. ("Taiho" and the "Taiho Agreement") pursuant to which Taiho obtained an exclusive option to in-license development and commercialization rights to programs for Japan and certain other Asian countries, excluding China (the "Taiho Territory") for which IND-enabling studies had begun during afive-year term which ended in September 2022, for an upfront payment of $35 million.

For each option to a program that Taiho exercises, except forcasdatifan (the HIF-2αprogram) discussed below, they will be obligated to make a payment of $3 million to $15 million, depending on the development stage of the optioned program. Upon exercise, Taiho is solely responsible for continued development and commercialization in the Taiho Territory, unless they opt to participate in a global study, in which case they would become obligated to reimburse us for their portion of the global study costs. In addition, for each optioned program we would be eligible to receive clinical and regulatory milestones of up to $130 million and commercial milestone payments of up to $145 million with the achievement of certain sales thresholds in the Taiho Territory. We will also receive royalties ranging from high single-digits to mid-teens on net sales of licensed products in the Taiho Territory. Royalties will be payable by product and country commencing on the first commercial sale and ending upon the later of: (a)10 years; and (b) expiration of the last-to-expire valid claim of our patents covering the manufacture, use or sale.

In 2022, Taiho opted to participate in two global Phase 3 trials of domvanalimab and zimberelimab combinations, STAR-121 and STAR-221, and in 2024, Taiho opted to participate in the global Phase 3 trial of quemliclustat, PRISM-1. For each of these trials, Taiho became obligated to reimburse us for their portion of the global trial costs, and to make milestone payments contingent upon successfully satisfying the related clinical milestones. The clinical milestones were met: for domvanalimab and zimberelimab for the STAR-221 trial in 2023, and Taiho became obligated to pay us $28 million; domvanalimab and zimberelimab for the STAR-121 trial in 2024, and Taiho became obligated to pay us $26 million; and for quemliclustat for the PRISM-1 trial in the first quarter 2025, and Taiho became obligated to make milestone payments totaling $19 million. All the milestone payments due have been fully received. In the fourth quarter 2025, Taiho exercised its option for HIF-2α inhibitor program (including casdatifan) for the Taiho Territory, for an option payment of $15 million. We and Taiho concurrently entered into an amendment (the "Second Amendment") where we will lead development for two indications for casdatifan in Japan and be responsible for the global study costs and we may also be eligible to receive: (i) clinical and regulatory milestones of up to $172 million of which Taiho became obligated to pay us$30 million in the second quarter 2026 upon the achievement of a clinical milestone; (ii) commercial milestone payments of up to $145 million upon the achievement of certain sales thresholds in the Taiho Territory; and (iii) royalties ranging from high single-digits to mid-teens on net sales of the licensed product in the Taiho Territory. Due to the nature of these arrangements, a portion of these upfront and clinical milestones were determined to be advance cost sharing payments for Taiho's share of the related global study R&D costs under the collaboration and are deferred and recognized as a reduction in R&D expense as the related global studies are performed, calculated as an estimated percentage of completion based on the estimated total effort for the programs. See Note 5, Revenues, for more information.

As of June 30, 2026, Taiho has licenses for the Taiho Territory to (i) HIF-2α inhibitor program (including casdatifan); (ii) anti-TIGIT program (including domvanalimab and AB308); (iii) anti-PD-1 program (including zimberelimab); (iv) CD73 program (including quemliclustat); and (v) adenosine receptor antagonist program (including etrumadenant).

We recognized net reimbursements, including amortization of advance cost share payments, under this arrangement for the three and six months ended June 30, 2026, of$6 million and$12 million, respectively, and for the three and six months ended June 30, 2025, of$8 million and$17 million, respectively. These net reimbursements are recognized as a reduction of R&D expense in our Condensed Consolidated Statements of Operations.

We had net receivables under this arrangement at June 30, 2026 and December 31, 2025, of $36 million and $10 million, respectively, recorded in Receivable from collaboration partners on our Condensed Consolidated Balance Sheets. For a detailed discussion, see Note 5, Revenues for more information.

We had liabilities related to certain advance cost sharing payments under this arrangement at June 30, 2026 and December 31, 2025, of $35 million and $44 million, respectively, recorded in Other liabilities, allocated between current and noncurrent based on the expected timing of future recognition.

AstraZeneca Collaboration

In 2020, we entered into a collaboration with AstraZeneca to evaluate domvanalimab, our investigational anti-TIGIT antibody, in combination with AstraZeneca’s durvalumab in a registrational Phase 3 clinical trial in patients with unresectable Stage 3 non-small cell lung cancer ("NSCLC"), known as the PACIFIC-8 trial. The terms of this agreement were amended in 2024.

Under the collaboration, as amended, each company will retain existing rights to their respective molecules and any future commercial economics. AstraZeneca will conduct the trial, and each company will supply their respective investigational product to support the trial. We may be obligated to pay milestones of up to $24 million upon the achievement of certain clinical trial progress milestones or under certain circumstances if the agreement is terminated early and we will reimburse AstraZeneca annually for a portion of the trial costs. The portion of the costs that we consider to be unavoidable is accrued as incurred and milestones that are deemed probable of occurring are accrued in advance of the achievement of the milestone.

Prior to January 2024, the PACIFIC-8 trial formed part of the Arcus and Gilead joint development program for domvanalimab and our portion of the trial costs was shared with Gilead. Under the Third Gilead Collaboration Agreement Amendment, we agreed to solely fund our share of PACIFIC-8, subject to Gilead’s right to reinstate PACIFIC-8 as part of the parties’ joint development activities for the TIGIT Program.

We recognized expenses under this arrangement for the three and six months ended June 30, 2026, of $4 million and $9 million, respectively, and for the three and six months ended June 30, 2025, of $4 million and $8 million, respectively. These expenses are recognized as R&D expense in our Condensed Consolidated Statements of Operations.

We had liabilities under this arrangement, including the first milestone at June 30, 2026 and December 31, 2025, of $22 million and $12 million, respectively, recorded in Other current liabilities and Other noncurrent liabilities on our Condensed Consolidated Balance Sheets based on the expected timing of payment.

WuXi Biologics License - anti-PD-1

In 2017, we entered into an agreement with WuXi Biologics Ireland Limited ("WuXi Biologics") which, as amended, provides us with exclusive rights to (i) develop, use and manufacture products that include an anti-PD-1 antibody, including zimberelimab, worldwide and (ii) commercialize any such products worldwide, except in Greater China. As of June 30, 2026, under this arrangement, we may incur (i) additional regulatory milestone payments of up to $50 million and commercialization milestone payments of up to $375 million, (ii) tiered royalties that range from the high single-digits to low teens on net sales of the licensed products and (iii) fees related to any sublicenses.

WuXi Biologics License - anti-CD39

In 2020, we entered into an agreement with WuXi Biologics, under which we obtained the exclusive worldwide license to develop and commercialize anti-CD39 antibodies discovered under this arrangement. As of June 30, 2026, under this arrangement we may incur additional clinical and regulatory milestone payments of up to $14 million and royalty payments in the low single digits on net sales of the licensed products.

Abmuno License

In 2016, we entered into an agreement (the "Abmuno Agreement") with Abmuno Therapeutics LLC ("Abmuno"), under which we obtained the exclusive worldwide license to develop, use, manufacture, and commercialize products that include an anti-TIGIT antibody, including domvanalimab. As of June 30, 2026, under this arrangement we may incur additional clinical, regulatory and commercialization milestone payments of up to $88 million.

Note 5. Revenues

The following table summarizes our revenues by collaboration, category of revenue, and the method of recognition (in millions):

Revenues from Gilead accounted for 80% and 100% of Total revenues for the three months ended June 30, 2026 and 2025, respectively and 83% and 100% of Total revenues for the six months ended June 30, 2026 and 2025, respectively.

The following table summarizes the revenue recognized as a result of changes in the deferred revenue balance (in millions):

We had $56 million and $78 million of deferred revenue remaining on our Condensed Consolidated Balance Sheets at June 30, 2026 and December 31, 2025, respectively, allocated between current and noncurrent based on the expected timing of future recognition.

Revenue from the Gilead Collaboration

2025 Termination of rights to etrumadenant

In the second quarter 2025, Gilead terminated its rights to etrumadenant (the adenosine receptor antagonist program), which we determined was a significant reduction in the scope of the arrangement, which met the accounting definition of a contract modification and we accounted for this as both a modification of the existing contract and the creation of a new contract. 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. Accordingly, we allocated the updated transaction price of $256 million, which was comprised of the deferred revenue remaining as of the modification date, to the remaining unsatisfied and partially satisfied performance obligations and updated the measure of progress as of the modification date, which resulted in a cumulative catch-up to revenue of $143 million for the quarter ended June 30, 2025.

The following table summarizes the allocation of the updated transaction price to the remaining unsatisfied and partially satisfied performance obligations (in millions):

We accounted for each performance obligation as follows:

License and Development Services - Etrumadenant, Quemliclustat and Domvanalimab

Under the Gilead Collaboration Agreement, Gilead obtained options to the exclusive rights: to our adenosine receptor antagonist program, etrumadenant; to our CD73 program, quemliclustat; and to our anti-TIGIT program, domvanalimab and AB308. Effective December 2021, under the First Gilead Collaboration Agreement Amendment, Gilead exercised these options and obtained exclusive licenses to these programs for a total non-refundable payment totaling $725 million.

We determined the standalone selling price of each license using a discounted cash flow method and the R&D services for each program, using an expected cost-plus margin approach. For domvanalimab, we determined that the license was distinct based on an evaluation of the delivery of the license, noting that the program was in the later stages of development and the ongoing R&D services do not significantly modify or customize the related intellectual property. Accordingly, we recognized the allocated transaction price as revenue in the year ended December 31, 2021. For etrumadenant and quemliclustat programs, we determined that the license and R&D services were combined at the inception of the agreement based on an evaluation of the delivery of the license, due to the early stage of the technology and the specialized nature of our know-how. We recognize the amounts allocated to R&D services for domvanalimab and the combined license and R&D for etrumadenant and quemliclustat as each performance obligation is satisfied, calculated as an estimated percentage of completion based on management's estimated total effort for each program.

For the three and six months ended June 30, 2026, we recognized revenue of $8 million and $15 million, respectively. For the three and six months ended June 30, 2025, we recognized revenue of $152 million and $172 million, respectively, (including the cumulative catch-up due to Gilead's termination of its rights to etrumadenant). This was recognized within License and development services revenue in our Condensed Consolidated Statements of Operations.

Access Rights and Option Continuation Periods

Under the Gilead Collaboration Agreement entered into in 2020 and related amendments, Gilead has exclusive access to our current programs as well as any future programs for a period often years, contingent upon option continuation payments totaling $300 million, consisting of a $100 million payment on each of the fourth (paid in third quarter 2024), sixth, and eighth anniversaries of the Gilead Collaboration Agreement. Following Gilead’s decision not to make the option continuation payment due on the sixth anniversary, on July 14, 2026, Gilead has lost rights to access and obtain licenses to the programs arising from our R&D pipeline. For a more detailed discussion on time-limited options that Gilead retains, see Note 3, Related party - Gilead Sciences, Inc., for more information.

The standalone selling price of the ongoing R&D pipeline access and the option continuation material rights were determined using an expected cost-plus margin approach, with the option continuation material rights probability-adjusted for the likelihood of exercise. We use a time-elapsed input method to measure progress toward satisfying the access rights performance obligation, which is the method we believe most faithfully depicts our performance in transferring the promised services during the time period in which Gilead has access to our R&D pipeline. Accordingly, the revenue allocated to the initial four-year access rights performance obligation was recognized using this input method over the remaining period through July 2024, and for the fourth anniversary access rights continuation, over the two-year period ending July 2026. For the option continuation material rights, following Gilead's decision in April 2026 not to make the continuation payment, we recognized within Other collaboration revenue the $18 million allocated to those material rights.

For the three and six months ended June 30, 2026, we recognized revenue of $21 million and $24 million, respectively. For the three and six months ended June 30, 2025, we recognized revenue of $5 million and $11 million, respectively. This was recognized within Other collaboration revenue in our Condensed Consolidated Statements of Operations.

Rights to Certain Studies

Effective January 2024, under the Third Gilead Collaboration Agreement Amendment, we will solely fund certain studies, but Gilead retains exclusive rights to reinstate into the collaboration each study beginning at specified time-points for a payment amount based on the cost incurred.

We have determined that these are material rights and we estimated the standalone selling price of these performance obligations using a discounted cash flow method probability-adjusted for the likelihood of exercise. We recognize the amount allocated to each right if and when the related study is reinstated into the parties' co-development plans or if the option effectively lapses.

For the six months ended June 30, 2026, we recognized revenue of $3 million within License and development services revenue in our Condensed Consolidated Statements of Operations. As of June 30, 2026, we had $14 million of deferred revenue on our Condensed Consolidated Balance Sheet related to these performance obligations.

R&D Services - Inflammation Programs

In 2023, we entered into the Second Gilead Collaboration Agreement Amendment pursuant to which we expanded our collaboration to provide Gilead with options to license two jointly selected research-stage programs that target inflammatory diseases for which we will lead discovery and early development activities, see Note 3, Related party - Gilead Sciences, Inc., for more information. We received a total upfront payment of $35 million. We determined that the Second Gilead Collaboration Agreement Amendment represented a separate contract.

We determined that we had two separate distinct performance obligations to perform R&D services for Gilead related to discovery and early development activities for each research program for which they have made an upfront payment and, at the amendment closing date, we allocated the transaction price of $35 million equally to the two performance obligations created by this amendment based upon the respective standalone selling prices. The standalone selling prices of these obligations were determined using an expected cost-plus margin approach. We recognize the amounts allocated to these services as the performance obligation is satisfied, calculated as an estimated percentage of completion based on management's estimated total effort for the program. The options to acquire additional licenses or services did not result in additional performance obligations because they did not provide a material right at contract inception, primarily due to the very early stages of the programs. Gilead’s time-limited option rights to AB102 (an investigational MRGPRX2 antagonist) expired in the second quarter 2026 and the performance obligation was satisfied.

For the three and six months ended June 30, 2026, we recognized revenue of $4 million and $6 million, respectively. For the three and six months ended June 30, 2025, we recognized revenue of $3 million and $5 million, respectively. This was recognized within Other collaboration revenue in our Condensed Consolidated Statements of Operations.

Revenue from the Taiho Collaboration

Casdatifan

In the fourth quarter 2025, Taiho exercised its option under the collaboration arrangement and obtained an exclusive license to casdatifan (the HIF-2α inhibitor) for the Taiho Territory and concurrently entered into the Second Amendment whereby we will lead development for two indications in Japan including the global Phase 3 trial of casdatifan, PEAK-1. In exchange, Taiho made an option exercise payment of $15 million, which was received in fourth quarter 2025, and in the second quarter 2026, Taiho became obligated to pay us $30 million upon the achievement of a clinical milestone. We determined that the option exercise and amendment represented a single contract under which we have two separate distinct performance obligations, a license with a customer and R&D services for a collaborative partner related to the global study activities.

The following table summarizes the allocation of the initial transaction price of $15 million to the performance obligations (in millions):

We determined that the license for casdatifan was distinct based on an evaluation of the delivery of the license, noting that the program was in the later stages of development and the ongoing R&D services do not significantly modify or customize the related intellectual property. We determined the standalone selling price of this license using a discounted cash flow method. We recognized as revenue the allocated transaction price of $7 million in the fourth quarter 2025, within License and development services revenue in our Condensed Consolidated Statements of Operations.

The standalone selling price of the R&D services obligation was determined using an expected cost-plus margin approach. We recognize the amounts allocated to these services as the performance obligation is satisfied, calculated as an estimated percentage of completion based on management's estimated total effort for the program. We determined that these services are with a collaborative partner and not a customer and in accordance with our policy recognize these amounts as R&D expense reimbursements. See Note 4, License and collaborations, for more information.

The $30 million clinical milestone which Taiho became obligated to pay us in the second quarter 2026 upon the achievement of a clinical milestone for PEAK-1 was allocated to the two separate distinct performance obligations based on the original relative standalone selling prices and we recognize the amounts allocated as the as the amounts become unconstrained and as the performance obligation is satisfied, calculated as an estimated percentage of completion based on management's estimated total effort for each performance obligation. Amounts allocated to each performance obligation are recognized within: (i) License and development services revenue for the license performance obligation; and (ii) R&D expense reimbursements for the R&D services obligation, in our Condensed Consolidated Statements of Operations.

For the three and six months ended June 30, 2026, we recognized revenue of $2 million, within License and development services revenue in our Condensed Consolidated Statements of Operations related to casdatifan.

Other

For the three and six months ended June 30, 2026, we recognized revenue of $6 million and $8 million, respectively, within License and development services revenue in our Condensed Consolidated Statements of Operations related to programs optioned by Taiho.

Note 6. Income taxes

The income tax provision or benefit for interim periods is determined using an estimate of our annual effective tax rate, adjusted for discrete items, if any, that are taken into consideration in the relevant period. Each quarter, we update the estimate of the annual effective tax rate, and if the estimated tax rate changes, we record a cumulative adjustment to the provision or benefit.

We did not record a provision for income taxes for the three and six months ended June 30, 2026 and 2025 because of forecasted full year net operating losses ("NOLs"), which consider the timing of recognition of deferred revenue for tax purposes and the effects of the option to capitalize and amortize U.S. R&D expenses as allowed by the One Big Beautiful Bill Act of 2025 ("OBBBA"), which was enacted on July 4, 2025. The effective tax rate differs from the U.S. statutory tax rate primarily due to the valuation allowances on our deferred tax assets and state income taxes.

As of June 30, 2026 and December 31, 2025, we have provided a valuation allowance against U.S. federal and state deferred tax assets. We continue to evaluate the realizability of deferred tax assets and the related valuation allowance. If our assessment of the deferred tax assets or the corresponding valuation allowance were to change, we would record the related adjustment to income during the period in which we make the determination.

We recognize interest and penalties associated with uncertain tax benefits as part of the income tax provision. To date, we have not recognized any interest and penalties, nor have we accrued for or made payments for interest and penalties.

We are currently under U.S. Internal Revenue Service ("IRS") examination for the tax year ended December 31, 2023. We believe that an adequate provision has been made for any adjustments that may result from the tax examination. We are subject to taxation in the U.S. and in Australia. Due to NOLs and research credit carryforwards, all of our tax years, from 2015 to 2025, remain open to U.S. federal and California state tax examinations. In addition, our fiscal years from 2021 to 2025 are open to examination in Australia.

Note 7. Net loss per share

The computation of basic earnings per share ("EPS") is based on the weighted-average number of our common shares outstanding. The computation of diluted EPS is based on the weighted-average number of our common shares outstanding and dilutive potential common shares, which primarily include shares that may be issued under our stock option, restricted stock and performance unit award programs (collectively, dilutive securities), as determined by using the treasury stock method.

The computations for basic and diluted EPS were as follows (in millions, except per-share data):

The following table summarizes potentially dilutive securities excluded from the computation of diluted net loss per share calculations because they would have been antidilutive (in millions):

We have also excluded from the calculation at June 30, 2025 the effect of Gilead’s right to purchase additional shares of our common stock, which expired in July 2025, as these rights had no intrinsic value.

Note 8. Stock-based compensation

Stock-based Compensation Expense

The following table reflects the components of stock-based compensation expense recognized in our Condensed Consolidated Statements of Operations (in millions):

Note 9. Cash, cash equivalents and marketable securities

The following table summarizes the amortized cost, gross unrealized gains and losses and the fair value of our cash, cash equivalents and marketable securities, all of which are considered available for sale, by type of securities (in millions):

The following table summarizes the fair values of our cash, cash equivalents and marketable securities by location in the Condensed Consolidated Balance Sheets and contractual maturity (in millions):

Realized gains or losses recognized on the sale of available-for-sale marketable securities were not material for the three and six months ended June 30, 2026 and 2025 and are included in Interest and other income, net, in the Condensed Consolidated Statements of Operations. The cost of a security sold is determined using the specific-identification method.

We limit the credit risk associated with our investments by placing them with banks and institutions we believe are highly creditworthy and investing in highly rated investments. We held a total of 120 and 31 positions in securities which were in unrealized loss positions as of June 30, 2026 and December 31, 2025, respectively. We do not intend to sell our securities with unrealized loss positions and have concluded we will not be required to sell the securities before recovery of the amortized cost for the investment at maturity. No credit related losses have been recognized for any of the periods presented.

The following table provides a reconciliation of cash, cash equivalents, and restricted cash within the Condensed Consolidated Balance Sheets to the total shown in the Condensed Consolidated Statements of Cash Flows (in millions):

Restricted cash at June 30, 2026 and 2025 represents cash balances held as security in connection with our facility lease agreements.

Note 10. Condensed consolidated balance sheet components

Prepaid Expenses and Other Current Assets

Prepaid expenses and other current assets consisted of the following (in millions):

Other Current Liabilities

Other current liabilities consisted of the following (in millions):

Note 11. Long-term debt

The following table summarizes our borrowings (in millions):

In 2024, we entered into a loan and security agreement with Hercules which we subsequently amended in the fourth quarter 2025 (the "Hercules Agreement"). Under the Hercules Agreement, Hercules agreed to lend us up to $250 million in term loans in various tranches subject to minimum draw requirements. At closing, we drew $50 million and we drew an additional $50 million in the second quarter 2025. The remaining $150 million is available as follows: (i) $50 million will be available upon the achievement of certain Biologics License Application ("BLA") enabling clinical milestones related to our ongoing Phase 3 studies, drawable through the earlier of March 15, 2028 or 90 days following the achievement of the applicable milestone; (ii) $50 million will be available upon the FDA's approval of a BLA or New Drug Application ("NDA") for an Arcus investigational product, drawable through the earlier of December 15, 2028 or 90 days following such approval; and (iii) $50 million remains available through the loan's maturity date, subject to lender approval. Any amounts from future expired tranches that were not drawn will remain available through the loan's maturity date, subject to lender approval and the achievement of any milestones associated with the original tranches.

During the three and six months ended June 30, 2026, we recognized $3 million and $7 million of interest expense, respectively. During the three and six months ended June 30, 2025, we recognized $1 million and $3 million of interest expense, respectively. The effective interest rate of the debt, including amortization of the debt discount and issuance costs and payment-in-kind interest, was 12.85% commencing with the modification which occurred in the fourth quarter 2025, compared to 13.08% commencing the second quarter 2025 and 13.39% for all periods prior to the second quarter 2025.

Note 12. Leases

The following table summarizes our cash and non-cash information related to our operating leases (in millions):

As of June 30, 2026 and December 31, 2025, we have provided deposits for letters of credit totaling $3 million to secure our obligations under our leases, which are included in Other noncurrent assets on the Condensed Consolidated Balance Sheets.

Note 13. Stockholders' equity

Common Stock

Underwritten Offering

In the first quarter 2025, we sold 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. As part of this underwritten offering, Gilead purchased 1.4 million shares of our common stock for total gross proceeds of $15 million.

Note 14. Fair value measurements

We determine the fair value of financial and non-financial assets and liabilities using the fair value hierarchy, which establishes three levels of inputs that may be used to measure fair value, as follows:

•Level 1 inputs include unadjusted quoted prices in active markets for identical assets or liabilities;

•Level 2 inputs include observable inputs other than Level 1 inputs, such as quoted prices for similar assets or liabilities; quoted prices for identical or similar assets or liabilities in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the asset or liability; and

•Level 3 inputs include unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the underlying asset or liability. Our Level 3 assets and liabilities include those whose fair value measurements are determined using pricing models, discounted cash flow methodologies or similar valuation techniques and significant management judgment or estimation.

Assets and liabilities measured at fair value are classified in their entirety based on the lowest level of input that is significant to the fair value measurement.

The following tables summarize the types of assets and liabilities measured at fair value on a recurring basis by level within the fair value hierarchy (in millions):

Long-term debt

We determine the fair value of our long-term debt, for disclosure purposes only, based on other inputs that are observable, and thus categorized as Level 2 in the fair value hierarchy. As of June 30, 2026 and December 31, 2025, the estimated fair value of our long-term debt approximated the carrying amount.

Note 15. Business segment

We operate and manage our business asone reportable and operating segment, which is the business of developing and commercializing highly differentiated therapies that have a meaningful impact on patients. Our chief operating decision maker ("CODM") is the Chief Executive Officer, who decides how to allocate resources and assesses segment performance based on the net loss reported in the Condensed Consolidated Statements of Operations.

The table below is a summary of the segment net loss, including significant segment expenses (in millions):

(1) R&D expenses incurred related to a Phase 3 clinical program intended to result in registration of a new product. This includes all unallocated program-level expense not directly attributable to a specific clinical trial once the related program enters into one or more Phase 3 clinical trials.

(2) R&D expenses incurred for activities ranging from early-stage development and preclinical to Phase 2 clinical trials. This includes all unallocated program-level expense not directly attributable to a specific clinical trial unless the related program has entered into one or more Phase 3 clinical trials.

(3) Other segment items includes non-allocated program costs and other G&A costs.

Total segment assets at June 30, 2026 and 2025 were $0.9 billion and $1.1 billion, respectively.