On November 18, 2021 Gilead Sciences, Inc. (Nasdaq: GILD) and Arcus Biosciences, Inc. (NYSE: RCUS) reported that Gilead has exercised its options to three programs in Arcus’s clinical-stage portfolio, including both anti-TIGIT molecules, domvanalimab and AB308, as well as etrumadenant and quemliclustat (Press release, Gilead Sciences, NOV 18, 2021, View Source [SID1234595797]). The companies also added a research collaboration as described below. Today’s transaction is subject to applicable antitrust clearance under the Hart-Scott Rodino Antitrust Improvements Act and other customary closing conditions. The parties expect the transaction to close by year-end.
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Domvanalimab is an Fc-silent anti-TIGIT antibody in Phase 2 and Phase 3 studies in non-small cell lung cancer (NSCLC) and AB308 is an Fc-enabled anti-TIGIT antibody under Phase 1 evaluation. Etrumadenant is a dual adenosine A2a/A2b receptor antagonist in Phase 1 and Phase 2 studies in NSCLC, colon cancer and prostate cancer. Quemliclustat is a small molecule CD73 inhibitor in a Phase 1 study in metastatic pancreatic ductal adenocarcinoma (PDAC).
Gilead has been encouraged by early clinical data generated for each of the three programs. By opting in early to all three programs now, Gilead and Arcus are able to accelerate the clinical development and advancement of these clinical-stage molecules and facilitate the exploration of treatment combinations across the portfolios. For example, Gilead will be able to pursue potential chemotherapy-free regimens with Trodelvy (sacituzumab govitecan-hziy) in combination with therapies optioned from the Arcus portfolio. Gilead will also have the flexibility to add Gilead portfolio candidates to existing Arcus studies.
"Gilead is pursuing some of the most promising mechanisms of action in oncology today, with the aim of achieving better treatment outcomes for more patients," said Daniel O’Day, Chairman and Chief Executive Officer, Gilead Sciences. "The addition of three mid- to late-stage clinical programs into our oncology pipeline significantly expands the number of transformational medicines we can potentially deliver to people with cancer, while also enabling our pursuit of novel combinations."
"Through the expanded partnership, we will be able to leverage the combined portfolios of the two companies to enable rational exploration of unique and innovative combination therapies within a single integrated program," said Terry Rosen, Ph.D., Chief Executive Officer of Arcus. "The early exercise of Gilead’s options will now ensure that Arcus is well positioned to accelerate and expand clinical development activities so that it may deliver benefit to patients with some of the most difficult to treat cancers, including pancreatic, lung, colon and prostate."
Terms of the Exercised Options and Amendment to the Agreement
Under the terms of the parties’ Option, License and Collaboration Agreement (the "2020 Agreement"), for the three options that Gilead is exercising today, Arcus will receive option payments totaling $725 million. The parties will co-develop and share the global costs related to these programs. If the optioned molecules achieve regulatory approval, Gilead and Arcus will co-commercialize and equally share profits in the U.S. Gilead will hold exclusive rights outside the U.S., subject to any rights of Arcus’s existing collaboration partners, and Gilead will pay to Arcus tiered royalties.
With Gilead’s early option exercises for all three programs, Gilead and Arcus amended the 2020 Agreement, including as follows:
Arcus may be required to operationalize at least 50% of the clinical studies, with costs to be shared by Gilead and Arcus.
The royalties payable by Gilead to Arcus on sales for these three programs outside of the U.S. were slightly reduced. The reduced royalties range from the mid-teens to the low twenties.
Arcus will lead the discovery and early development of drug candidates against two novel research targets jointly selected by the parties.
Upon closing of the transaction for all three programs, the $100 million option continuation payment due in 2022 will not be made by Gilead.
Summary of anti-TIGIT Program
ARC-7 is a Phase 2 study evaluating patients randomly allocated to domvanalimab plus zimberelimab vs. zimberelimab alone vs. domvanalimab plus zimberelimab plus etrumadenant as first-line treatment for PD-L1 ≥ 50%, metastatic NSCLC. The study is actively enrolling with a target total enrollment of 150 patients who are being randomly allocated 1:1:1 to each group and treated until disease progression or loss of clinical benefit. Gilead and Arcus have jointly decided that results, including data on progression-free survival, will be presented at a medical conference in 2022.
ARC-10 is an ongoing registrational Phase 3 study intended to support the potential approvals of both zimberelimab monotherapy and domvanalimab plus zimberelimab in first-line, locally advanced or metastatic PD-L1≥50% NSCLC.
PACIFIC-8 is a registrational Phase 3 study with a planned initiation by the end of 2021 in collaboration with AstraZeneca. PACIFIC-8 will evaluate domvanalimab plus durvalumab, an anti-PD-L1 antibody, with curative intent in unresectable Stage 3 NSCLC, where durvalumab is standard of care.
ARC-12 is a Phase 1 study evaluating AB308 plus zimberelimab in advanced malignancies with five expansion cohorts currently open for enrollment.
Summary of ATP-Adenosine Axis (CD73 and A2a/A2b Receptor) Programs
ARC-4 is a randomized Phase 1 study evaluating etrumadenant plus zimberelimab and chemotherapy vs. zimberelimab plus chemotherapy in EGFRmut tyrosine kinase inhibitor (TKI)-relapsed and refractory NSCLC. Initial data are expected to be presented in 1H22.
ARC-6 is a Phase 1b/2 platform study in metastatic castration-resistant prostate cancer with a randomized cohort evaluating docetaxel versus docetaxel plus etrumadenant and zimberelimab. Initial results are expected in 2022.
ARC-7 is an open-label randomized Phase 2 study as noted above.
ARC-8 is an ongoing Phase 1 study evaluating quemliclustat plus zimberelimab and gemcitabine/nab-paclitaxel in first-line pancreatic cancer, with a randomized cohort comparing against quemliclustat plus gemcitabine/nab-paclitaxel. Gilead and Arcus have jointly decided that results, including data on progression-free survival, will be presented at a medical conference in 2022.
ARC-9 is a randomized Phase 1b/2, open-label, multi-center platform study to evaluate the efficacy of etrumadenant in combination with zimberelimab and FOLFOX with or without bevacizumab in second- and third-line metastatic colorectal cancer.
Additional clinical studies are expected to be initiated in 2022.
Zimberelimab, domvanalimab, AB308, etrumadenant and quemliclustat are investigational agents and have not been proven safe and efficacious. Durvalumab, docetaxel, gemcitabine/nab-paclitaxel, FOLFOX and bevacizumab are owned by companies other than Arcus and Gilead.
About the Gilead Collaboration
In May 2020, Gilead and Arcus entered into a 10-year collaboration that provided Gilead immediate rights to zimberelimab and the right to opt into all other Arcus programs arising during the collaboration term. In November 2021, Gilead and Arcus amended the collaboration in connection with Gilead’s option exercise for three of Arcus’s then-clinical stage programs. For all other programs that are in clinical development or new programs that enter clinical development thereafter, the opt-in payments are $150 million per program. Gilead’s option, on a program-by-program basis, expires after a specified period of time following the achievement of a development milestone for such program and Arcus’s delivery to Gilead of the requisite qualifying data package. Concurrent with the May 2020 collaboration agreement, Gilead and Arcus entered into a stock purchase agreement under which Gilead made a $200 million equity investment in Arcus. That stock purchase agreement was amended and restated in February 2021 in connection with Gilead’s increased equity stake in Arcus from 13% to 19.7%, with an additional $220 million investment.
Upon closing of Gilead’s exercise of its option to a program, the two companies will co-develop and share global development costs for the joint development program, subject to certain opt-out rights of Arcus in some cases and expense caps on its spending and related subsequent adjustments. For each optioned program, provided that Arcus has not exercised its opt-out rights, if any, Arcus has an option to co-promote in the United States with equal profit share. Gilead has the right to exclusively commercialize any optioned programs outside of the U.S., subject to the rights of Arcus’s existing collaboration partners to any territories, and, for clinical stage programs that Gilead has opted into, Gilead will pay Arcus tiered royalties as a percentage of revenues ranging from the mid or high teens to the low twenties.