Good support from Gilead: Drug giant Gilead Sciences (GILD) paid just over $300 million to up its stake in this developmental firm to 33%, paying some $21 a share to do so.
Gilead also upped its members on the board of Arcus from two to three. However, the shares are trading approximately 25% under what Gilead just paid to increase its holdings in Arcus, which could be an opportunity.
Broad Portfolio: The company’s lead product candidate is called Domvanalimab, which is an anti-TIGIT investigational monoclonal antibody. It has a broad portfolio of several other compounds in development as well.
The recent additional funding/equity investment from Gilead is not surprising as it just part of approximately $1.7 billion Arcus has received from the drug giant in recent years. It is also just one of several developmental partnerships Arcus has with larger pharma concerns, which allowed the company to build a diverse and large pipeline with three late-stage programs.
This is led by the development of Domvanalimab which is currently being evaluated in a half dozen Phase 2 and Phase 3 studies to treat NSCLC and upper GI cancers. Most of these are within a combination therapy with its in-house anti-PD-1 antibody called Zimberelimab. If any of these are successful, this could lead to a large potential market.
Arcus Biosciences seems a solid ‘sum of the parts’ investment at current trading levels. The company certainly has multiple ‘shots on goal‘, several partnerships with larger drug development concerns, upcoming trial milestones and is quite well-funded.
Risks
As outlined in the risks for the other biotech companies, successful completion of trials and FDA approval are the two main risks. Additionally. successfully marketing and profitable sales takes a huge effort, so the go to market strategy has to be almost perfect.