When investors catch the scent of a buyout in the air, a collaboration agreement will come as a bit of a disappointment. So it is for Arcus Biosciences, whose value had tripled so far this year, helped markedly by rumours in mid-April that Gilead Sciences was considering purchasing a stake in the company.
In the event Gilead is only spending $200m to get a stake of around 10% in the cancer-focused biotech, alongside a 10-year partnership to co-develop the candidates in Arcus’s pipeline – including anti-PD-1 and anti-Tigit antibodies. The biodollar value of this collaboration is in the billions, but the up-front portion is just £175m. Reflecting the disappointment, given what was being priced into the stock, Arcus was trading off 9% this morning.
On a conference call today the group's management emphasised the advantages of having a wide-ranging collaboration with a single partner, particularly in the strategic combination of assets. Combinations are dear to Arcus’s heart. Its checkpoint inhibitor zimberelimab is being studied in combination with its Tigit, AB154, in advanced solid tumours. And a trial of a triplet – these two plus AB928, an adenosine A2B receptor antagonist – in NSCLC is due to yield interim data towards the end of this year.
What future combinations with Gilead assets – including those obtained via the acquisition of Forty Seven in March – might end up being investigated is as yet unclear.
As with all Tigit inhibitors, AB154 has been the subject of much excitement since Roche made its faith in this mechanism clear at the beginning of the year. Gilead might have been hankering after a project in this class; its chief executive, Daniel O’Day, came from Roche and could have been keen to put Gilead on a more equal footing with his former company.
If so, this yearning might have increased with the data on Roche’s anti-Tigit tiragolumab revealed when the Asco abstracts went live a fortnight ago (Asco 2020 – first-line lung cancer focus, May 14, 2020). William Grossman, Arcus’s chief medical officer, said the company was “very excited” by the Roche data, particularly the signal seen in the PD-L1-high population. This, he said, supports Arcus’s strategy of enrolling only PD-L1-positive NSCLC patients in its triplet trial, Arc-7.
The group is also bullish on its anti-PD-1. “Zimberelimab is looking just like the commercial [PD-(L)1] agents. Whether you were to look at a Keytruda or an Opdivo, the data that’s been generated by us … look to be indistinguishable,” said Arcus’s chief executive, Terry Rosen.
This is a bold statement. If Gilead agrees it has the right to opt in to these projects, co-developing and co-promoting them with Arcus in the US but gaining exclusive rights in other territories. If Gilead turns them down Arcus is free to seek other partners for the assets.
So far zimberelimab is the only agent in Arcus’s pipeline to have attracted forecasts from the sellside. It is set to sell $747m worldwide by 2026, presumably from combo use, according to consensus compiled by EvaluatePharma.