Arcus Biosciences, Inc. (RCUS) Q2 2021 Earnings Report, Transcript and Summary

Good afternoon, ladies and gentlemen. My name is Tamiya, and I will be your operator on this call. [Operator Instructions]. Please note that this call is being recorded today, Thursday, August 5, 2021 at 1:30 p.m. Pacific time and will be available on the Investors section of Arcus website at www.arcusbio.com. I would now like to turn the meeting over to Kaytee Bock, Vice President of Investor Relations and Corporate Strategies in Arcus.

Hi, everyone, and thank you, Tamiya. Thank you all for participating in today's call to discuss our second quarter financial results and recent corporate updates. Joining me from Arcus are Terry Rosen, Chief Executive Officer; Juan Jaen, President; Jennifer Jarrett, Chief Operating Officer; Bob Goeltz, Chief Financial Officer; and Kartik Krishnan, Senior Vice President of Clinical Development. I'd like to remind you that on the call -- on this call, management will make forward-looking statements within the meaning of securities laws' safe harbor provisions, for example, statements about our cash runway, our expected clinical development milestones and time lines, and the potential of our partnership with Gilead. All statements other than historical facts involve risks and uncertainties that may cause our actual results to differ. Those risks and uncertainties are described in our annual report on Form 10-K and quarterly reports on Form 10-Q, which have been filed with the SEC. We strongly encourage you to review those filings. This conference call contains time-sensitive information and is accurate only as of the live broadcast today, August 5, 2021. And with that, I'll turn the call over to Terry.

So thank you, Kaytee, and thank you all for joining us today. Many of you know us, but others are newer to Arcus. So I wanted to use this call as an opportunity to remind you of our strategy, update you on our programs and recap the progress we've made since Arcus was founded just 6 years ago. Our strategy from day 1 has been to create highly potent and selective small molecules against well-characterized targets and pathways that have yet to be translated into effective therapies. A great example of that is AB680, our small molecule CD73 inhibitor to which we now refer as quemliclustat or quemli for short. While there are antibodies against this target in development, we have the first and most advanced small molecule CD73 inhibitor in clinical studies. AB680 is a unique and highly potent molecule that may have advantages over the antibodies. Another example is AB521, our HIF-2 alpha inhibitor that addresses a target that has historically represented a difficult challenge for the field, yet we've created a high quality and potentially best-in-class molecule that should advance into the clinic by year-end. To execute on this strategy, we've built a robust small molecule drug discovery capability that has efficiently advanced our molecules from program inception to first IND filing in as little as 18 months. All of our small molecule drug candidates were created start to finish by our internal discovery team and are designed to have ideal pharmacological properties. While it's difficult to differentiate antibody therapeutics, small molecules can be highly differentiated by a number of factors: their potency, selectivity, safety, PK and other characteristics. And our goal is always to create a molecule with best-in-class properties. The second pillar of our strategy has been to secure backbone antibodies to combine with our small molecules in the development of novel, highly differentiated intra-portfolio combinations. Through in-licensing as well as our in-house antibody discovery and development capability, we now have a PD-1 antibody and 2 TIGIT antibodies in clinical development as well as a fourth antibody against CD39 in preclinical development. Having our own backbone antibodies is very enabling, ensuring the accessibility for our clinical studies and actually very significant flexibility in the development and commercialization of our combination therapies. The third component of our strategy has been to create a broad portfolio of molecules, targeting diverse mechanisms. Our small molecule portfolio today encompasses both immuno-oncology targets such as those within the ATP-adenosine pathway as well as cell intrinsic targets such as HIF-2 alpha and AXL. We now have 5 clinical stage drug candidates and we expect our sixth, our HIF-2 alpha inhibitor to enter the clinic before year-end. We also continue to expand our pipeline through the initiation and advancement of new research programs against to date undisclosed targets, including our first non-oncology target that leverages our expertise in immunology. We've assembled a highly experienced development team, which is now leading 6 randomized clinical studies, including a registrational Phase III trial and other registrational studies are in planning. Our approach to clinical development is simple: be aggressive yet thoughtful, and generate randomized data early in the drug's development to ensure timely decision-making and optimal resource allocation. Importantly, our clinical programs are targeting some of the most prevalent cancers, including non-small cell lung, colorectal, prostate and pancreatic. Our molecules represent huge opportunities for us to improve upon the treatment of these difficult-to-treat cancers. Given the magnitude of our market opportunities, we've entered into partnerships to expand upon our own clinical efforts and accelerate the pathway to becoming a fully integrated biopharmaceutical company and doing that in a capital-efficient manner. This includes our 10-year all-in alliance with Gilead, which has provided us with over $650 million in capital today and resulted in Gilead owning a 19.4% equity stake in Arcus. They continue to be a valuable, strategic, operational and thought partner, and we remain very pleased with the ongoing collaboration between our two companies. We're also very excited about our clinical collaboration with AstraZeneca to conduct a Phase III study [indiscernible] TIGIT antibody in combination with their anti-PD-1 antibody, Imfinzi, currently the standard of care in Stage III non-small cell lung cancer. This leverages their leadership in this setting. Activities remain on track to support initiation of this study by year-end. In addition, we are discussing additional clinical collaborations. We also have a partnership with Taiho under which they received an option to our programs in Japan and other countries in Asia, excluding China, and they have already opted into both etruma and zim. This month, Taiho's IND for zim in Japan was cleared, enabling them to initiate their platform study, evaluating zim in combination with other molecules in their portfolio anticipated to begin in the third quarter. Discussions around opt-in to our other clinical stage molecules are also underway. Finally, in China, we have a great partnership with WuXi who manufactures all of our biologics. We also maintain a strong relationship with Gloria, who have the China rights to our PD-1 antibody, zim. They have filed for approval of zim in China for classical Hodgkin's lymphoma and are rapidly advancing a registrational study in cervical cancer in China as well. Underpinning all of this is our extraordinary team, now over 300 employees with approximately 80% in R&D. Our development organization now exceeds 120 staff, most of whom joined us with strong experience from large biopharmaceutical companies. With $805 million of cash and investments at the end of June, we have plenty of capital to prosecute our programs over the near term and expect our current cash balance will fund operations through at least 2023. Now on to our clinical programs. First, our TIGIT program in domvanalimab, or dom, our Fc silent TIGIT antibody. In June, we conducted an interim analysis for ARC-7, a randomized Phase II study in first-line metastatic non-small cell lung cancer with 50% or greater PD-L1 expression. ARC-7 was designed to provide valuable information, and it includes 3 arms: zimberelimab or zim, our PD-1 antibody; zim plus dom or the doublet; zim plus dom plus etruma, our adenosine 2a/2b receptor antagonist or the triplet. ARC-7 has a target enrollment of 50 patients per arm, about twice the size of CITYSCAPE's data set in PD-L1-high patients. As this was an early interim analysis designed for internal decision-making, the data set was inherently immature. Nevertheless, the totality of the data was encouraging for all 3 arms enabled us to make several important decisions. Number one, ARC-7 and ARC-10, our registrational study for dom plus zim in the same population will continue as planned with no changes. Two, we continue to advance our ongoing joint efforts with Gilead to prepare for several Phase III studies for dom where we believe we can be a market leader with an anti-TIGIT antibody with a goal of starting at least one of these studies by year-end. Three, with AstraZeneca, we agreed that PACIFIC-8 preparation will continue as planned with study initiation by year-end. And four, based upon the intriguing data for the triplet, we are actively exploring other opportunities for this combination. On our call to discuss the interim analysis, we mentioned a very important finding. 1/4 of patients that responded in the study did so after 3.5 months, is a frequently seen observation with IO therapies. Therefore, we believe that further data maturity -- with further data maturity, the overall response rates or ORRs for the arms will likely improve over time, particularly since at the time of the interim analysis, several patients have completed only 1 disease assessment. Recall that we are doing disease assessments every 6 weeks. In Roche's CITYSCAPE study in this setting, the ORR for their TIGIT doublet improved from 55% at the time of the abstract based on a median follow-up of 6 months to 66% at the time of the data presentation based on a median follow-up of 11 months, and we could see similar evolution in response rates for the dom combinations over time in ARC-7 with more scans and follow-up. We recognize there's been a lot of interest in understanding the performance of the doublet versus the triplet. While the data sets were small and lacking surety, we were absolutely encouraged by the performance of both of these arms. Regarding the triplet, we included this arm because CD73 expression is known to be high in non-small cell lung cancer. And in fact, our analysis of a panel of lung cancer tumor samples has revealed a strong correlation between high PD-L1 and high CD73 expression. We were therefore quite excited to see the triplet arm performing particularly well across multiple measures, including ORR and depth of response. More mature data will enable us to confirm this activity, assess durability and better understand how much of the triplet activity is driven by dom versus etruma. As I mentioned, based on these data, we are very interested in pursuing other settings with the triplet. In fact, an investigator-sponsored trial was just initiated to evaluate the triplet in non-small cell lung cancer patients previously treated with checkpoint inhibitor therapy. ARC-7 is enrolling well, and we plan to submit data later this year for presentation. Our objective is to present a data set that has high impact for Arcus and the field, and we are considering conferences that occur late this year as well as in the first half of next year. Finally, to round out our discussion of dom, we continue to enroll our Phase III study in the same patient population as ARC-7. This study is designed to enable the potential approval of both zim monotherapy and zim plus dom. We also have an Fc-enabled TIGIT antibody, AB308. We believe we are the only company with TIGIT antibodies of both configurations in clinical development, and having a second TIGIT antibody provides us with a huge amount of flexibility as we think about future clinical collaborations and commercial strategy. We started dose escalation of AB308 with our PD-1 antibody earlier this year and just completed enrollment of the third dosing cohort. So this study has progressed rapidly. In fact, we have selected the recommended dose for expansion and are on track to start 5 planned expansion cohorts in the third quarter. The objectives for these expansion cohorts are to generate signals and tumor types to further inform our Phase III strategy for our anti-TIGIT program and success AB308's safety and activity in certain hematological cancers where we believe that Fc function may be important. We continue to believe that the collective data to date suggests that an Fc-silent TIGIT antibody may be advantageous in solid tumors, and future clinical data set should provide more insight into whether Fc-silent TIGIT antibodies have a more favorable long-term safety profile due to a lack of prolonged long Treg depletion in the periphery. To wrap up our TIGIT discussion, I'll comment briefly on the Gilead opt-in. Gilead has the ability to opt in at any time up until we obtain a data set on a prespecified number of patients. If they decide to trigger their opt-in review period, Gilead will have a certain period of time to make their opt-in decision. We anticipate an opt-in trigger decision by Gilead for our anti-TIGIT program by year-end 2021. Exercise of the opt-in would trigger a $275 million payment to Arcus as well as 50% development cost sharing for both the dom and AB308 programs. Now on to our ATP-adenosine programs. We have established ourselves as a leader and perhaps, the leader in ATP-adenosine biology with 2 first-in-class and potentially best-in-class molecules: etruma and our dual A2a/2b adenosine receptor antagonist; and AB680, also referred to as quemli, our small molecule CD73 inhibitor. These molecules target the second and third nodes in the ATP-adenosine pathway, thereby blocking adenosine formation and its action at its cognate receptors, respectively, in the ensuing suppression of immune cells. We also expect to advance our antibody against CD39, the first node in the ATP-adenosine pathway into clinical development in 2022. We've now presented data from several Phase I/Ib studies, including at ASCO GI, AACR and ASCO in 2021 which provided early clinical evidence supporting the advancement of both etruma and quemli, and our ongoing randomized studies are designed to confirm these findings. For Etruma, we've recently reported encouraging data in 3 settings, 2 of which colorectal and prostate cancer represent tumor types where PD-1s alone have not shown meaningful activity. First, at AACR, we presented data from ARC-3, our Phase I/Ib study that evaluated etruma plus FOLFOX in third-line plus metastatic colorectal cancer. The combination was well tolerated and resulted in a median progression-free survival of 4.2 months, approximately double the 2 months reported for current standard of care therapies in the setting. We also observed the doubling in overall survival as compared to what would be expected with standard of care. These results have generated significant investigator interest in our follow-on study to ARC-3, which we call ARC-9, our randomized Phase II study in metastatic colorectal cancer. This study is evaluating the same combination plus zimberelimab with or without bev versus standard of care in the second and third-line setting. And it has a target enrollment of approximately 200 patients across those 2 settings. We just completed an enrollment of the safety run-in for these cohorts and expect to initiate the randomized portions shortly. The second important data set for etruma came from a cohort of ARC-6, our Phase Ib/II study in castrate-resistant prostate cancer, evaluating etruma plus docetaxel plus zimberelimab versus docetaxel in second-line patients that have progressed following treatment with 1 or more new hormonal agents. At ASCO, we presented encouraging efficacy and safety data from the stage 1 single-arm portion of this cohort. Specifically, in 17 efficacy evaluable patients treated with this etruma combination, we observed a PSA response of 35%, which compares favorably to 25 -- 27% from previous studies of docetaxel alone in a comparable patient population. In a smaller subset of patients with measurable disease, 27% experienced a radiographic response, which compares to -- in the teens for docetaxel on previous studies. In this subset, every patient achieved at least stable disease with almost all patients achieving some tumor shrinkage. This was in an advanced patient population, many of whom had received more than 1 novel hormonal therapy and the vast majority of whom had soft tissue disease. Based upon these data, we opened the randomized portion of the study, which is enrolling well and is anticipated to complete enrollment by year-end. In these studies, the safety profile of the combination was consistent with the known profile of each individual agent, and no significant additive toxicity was observed with the addition of etruma. Finally, while still early, the triplet data from ARC-7 may provide additional evidence supporting the potential clinical activity of etruma. In addition to ARC-6 in prostate, ARC-7 in lung and ARC-9 in colorectal cancers, we are conducting a fourth randomized study for etruma, ARC-4, our Phase II study in patients with EGF receptor-positive lung cancer who have progressed on TKIs. This study is comparing etruma plus zim plus chemo to zim plus chemo, and just recently completed an enrollment with 70 patients treated across both arms. Now on to quemli and ARC-8, our phase I/Ib study in first-line metastatic pancreatic cancer. At ASCO GI, we reported initial data from the dose escalation portion of the study. In the 17 efficacy evaluable patients, quemli plus zim plus gemcitabine and nab-paclitaxel demonstrated a 41% unconfirmed response rate with at least some tumor shrinkage in almost all patients. Since then, we have completed an enrollment of the expansion cohort, and we are now enrolling the randomized portion of the study, which is evaluating quemli plus gem/nab-paclitaxel with and without zim, and we'll inform the design of the Phase III trial. This portion, which will include approximately 90 patients is on track to complete enrollment by year-end, which is ahead of plan. The data continue to look quite promising, particularly the high percentage of patients that experienced tumor shrinkage and the safety profile of the combination. Our focus is now on durability of response, and we look forward to sharing updated data from the study later this year. We've also continued our planning activities to initiate a Phase III study next year in first-line patients. I can't overstate the investigator enthusiasm for this program. With investigator input, we are now initiating an additional cohort in the ARC-8 study, targeting second-line patients previously treated with FOLFIRINOX to further characterize this combination in a setting where basically patients have no meaningful option. And now on to what's expected to be our next clinical program, our HIF-2 alpha inhibitor, AB521. Excitement for this mechanism continues to grow as a result of data generated by Merck's HIF-2 alpha inhibitor in a clear cell, renal cell carcinoma and DHL disease. And at AACR, we presented preclinical data for our program. Based upon these preclinical data, we expect AB521 to have a superior PK profile in humans relative to the Merck molecule, which we believe may give us the ability to inhibit this pathway more effectively and at lower doses. We are on track to initiate a study in healthy volunteers in the fourth quarter. The healthy volunteer study will give us the opportunity to demonstrate potential PK and PD advantages very quickly and enable us to advance AB521 into cancer patients with a very well-characterized dosing regimen. While there is a growing amount of activity targeting HIF-2 alpha, this is a difficult target to drug, and we believe we have created an ideal therapeutic candidate. Also the breadth of our portfolio creates exciting opportunities to develop novel HIF-2 alpha combination. For example, we know that CD73 is up-regulated by hypoxia. Therefore, we are very interested in combining AB521 with etruma or quemli in RCC and other tumor types characterized by a hypoxic gene signature. While we don't have time today to get into our early efforts, our discovery focus remains intense with a full portfolio of programs that will continue to sustain our clinical pipeline. Before we move on to the financials, I want to spend a minute or 2 on our anticipated news flow for the next 12 months. For dom, we plan to submit ARC-7 data this year for presentation at a medical conference, with the actual presentation occurring either late this year or the first half of next year. And as I mentioned earlier, we anticipate an opt-in trigger decision by Gilead for our anti-TIGIT program by year-end 2021. For quemli or AB680, we expect to provide updated data from the ARC-8 study in the first-line pancreatic cancer setting this fall. Given how quickly the randomized portion has enrolled with enrollment on track to complete by year-end, we anticipate presenting ORR in 6-month survival data from the dose expansion as well as initial data from the randomized portion in mid-2022. For etruma, we plan to present data, including on ORR and PFS from our 70-patient randomized study for ARC-4 are studying EGF receptor-positive non-small cell lung cancer in the first half of 2022. We also expect to present randomized ORR and preliminary PFS data from ARC-6 in prostate cancer in 2022. And finally, for AB521, our HIF-2 alpha inhibitor. With information from our healthy volunteer study, we anticipate initiating the Phase I/Ib study in oncology indication in the first half of 2022. We now have 5 ongoing randomized Phase II studies that are designed to provide definitive data sets prior to registrational studies. To preserve the integrity of these studies and to provide meaningful readouts, increasingly, our data readouts will occur after completion of enrollment and achievement of event-driven milestones. Between these studies and our earlier stage studies, as well as the activity of our partners, we expect a very steady flow of news over the coming months and year. And with that, I'm now going to turn the call over to Bob Goeltz, our CFO, to review our financials.

Thanks, Terry. I'll touch on a few of the highlights from our second quarter 2021 financial results. For more details regarding our results, please refer to our earnings press release from earlier today and our 10-Q. Arcus continues to be in a strong financial position. Our cash position as of June 30, 2021, was $805 million compared to $735 million at the end of 2020. The $220 million in proceeds we raised from our February stock -- sale of stock to Gilead has strengthen our balance sheet. We expect our current cash balance will fund operations through at least 2023. Now turning to our operating results. Revenue was $9.5 million, which is unchanged as compared to the first quarter of this year and increased as compared with $1.8 million for the second quarter last year. The increase in revenue as compared to last year was attributable to our collaboration with Gilead. We expect current revenue levels to continue for the remainder of 2021, excluding the impact of the opt-in. Our operating expenses for the second quarter were $86 million as compared to $82 million in the first quarter of this year and $47 million in the second quarter of last year. In the current quarter, noncash stock compensation represented $13.4 million of our operating expenses. Increases in operating expenses in the second quarter were due to continued advancement of our clinical pipeline and associated manufacturing costs. In particular, manufacturing of dom and etruma and preparation for potential pivotal studies was the primary driver of cost increases in the second quarter. We expect this investment in manufacturing to increase modestly over the remainder of 2021. Overall, Arcus remains in a strong position to fund the advancement of our pipeline. As a reminder, opt-in by Gilead for advanced clinical programs, dom, etruma and quemli would result in opt-in payments from Gilead of $200 million to $275 million per program, and Gilead co-funds go-forward development of these programs. The financial structure of this collaboration provides Arcus with substantial non-dilutive resources to continue to invest in our pipeline as it advances. I'll now turn it back over to Terry for some closing remarks before Q&A.

So thank you very much, Bob. We're doing a lot and we've covered a lot today. So let me please close with a few highlights that summarize why I've never been more optimistic about Arcus' future than I am today. Our 5 clinical stage molecules are progressing extremely well with a sixth, AB521, our HIF-2 alpha inhibitor, expected to enter the clinic later this year. The ARC-7 interim analysis provided us with a valuable data set, including intriguing data for the triplet which we will understand better as the data mature. For etruma, we now have 4 ongoing randomized studies, all of which will read out over the next 12 months to confirm the activity observed in our earlier data sets. For quemli, enrollment in ARC-8 remains brisk. Investigator enthusiasm remains very substantial, and the data continue to look promising. We anticipate sharing data on durability from the escalation and expansion cohorts later this year and data from the 90 patient randomized portion by mid-next year, and we anticipate a start of a registrational trial in 2022. We'll now open up the line to questions. Thank you.

[Operator Instructions]. The first question is from Alethia Young with Cantor.

Congrats on all the progress over the quarter. I'd be remiss if I didn't ask another question about ARC-7. I apologize in advance. I'm just curious if you think with the data that you're generating here that it might be possible to kind of move faster into like an adaptive Phase III. And then just kind of the follow-on to that is that, can you just talk about like the scenario if Gilead does not stand how you guys might think about developing that program?

Sure. So Kartik, why don't you handle the first part of the question, and then I'll come back and get to the -- if Gilead did not opt-in scenario, okay?

Okay. Sure. So thanks, Alethia, for the questions. So the first part is about the adaptive Phase III. I think we want to see the ARC-7 data mature, understanding, of course, we have the dom and combination being interrogated in Phase III ARC-10. So the answer to your question is maybe as we see more data, we certainly would want to be able to exercise our [indiscernible] and adapt accordingly.

Sure. So thanks, Alethia. And so let me start by first saying, we continue to believe, and you can tell by the planning activities, Gilead is very enthusiastic about this. Gilead -- we're planning together. They all -- when we talk, we talk more about how fast can we go post that opt-in. But I'd still like to engage your scenario. And in that situation, we will be moving aggressively. And in fact, we believe there's a number of other parties actually who are quite interested in the program. So more likely than that, given the breadth of the opportunity, we would be going full speed without pausing, but likely bring on another partner along the way as well.

That's interesting. And yes, no, I feel comfortable. Hopefully, the Gilead locks in, but just was curious about that scenario.

Thank you.

The next question is from Peter Lawson with Barclays.

Terry, I wonder if you could remind us about the opt-in time lines at TIGIT and data seen from Gilead. And are they kind of waiting for the ARC-7 data for adenosine? Or is that at a later time point?

So I'll pass that one along to Jen to answer, please.

Sure. So our expectation, as we said, is that Gilead will start the opt-in trigger this year. As a reminder, it's a 2-step process. So the first step of that process is they need to make a determination that they are going to start their opt-in review period. Once they make that determination, they have a certain period of time, basically a few months before they make the ultimate decision. It's hard to imagine they would need that full time period to do the review based on the familiarity with the programs, but they would have that time if they wanted or they needed it. Also like I said, our expectation is that they start that review period by the end of the year based on more mature data from ARC-7. And I'm sorry, if you can remind me the second or the -- I think it's the second part of the question.

Yes. Just on adenosine, if that has a different set of triggers and when does that run to end...

Yes. Every study -- this is a reminder how the opt-in works. Gilead can opt in at any point in time up until a certain point. So their opt-in period has expired at some point, and it's different for every program. The idea though for every program though, is that the opt-in trigger would typically be randomized data from somewhere between 20 to 25 patients or so, 20 to 30 patients or so. We have not disclosed what the opt-in triggers are for everything -- or for anything. For some programs that specified an agreement. For some, it's TBD. But that's generally what the approach to the opt-ins are. I think Gilead said on their call last week that their expectation right now is that the opt-in decision for etruma and AB680 would be made next year, which is in line with when we would expect to have our first randomized data from those programs.

Got you. And then just on the HIF-2 alpha program, can you remind us when that enters the clinic and kind of the differentiation versus, I guess, the data we saw earlier this year?

So why don't we let Juan answer that question, give him a chance to say hello.

Absolutely. Yes. So we intend to initiate the healthy volunteer Phase I study later this year. Everything is on track for that. The plan is then to utilize that data generate PK/PD some initial safety information and accelerate into a cancer patient population in the first half of next year with that information. We believe, based on preclinical characterization of the molecule that it may have a superior pharmacokinetic profile to belzutifan, the Merck drug. And as a result of that, we may be able to explore a higher level of target inhibition that, that molecule and that potentially that might translate into an improved or greater clinical benefit.

The next question is from Geoffrey Porges with SVB Leerink.

Appreciate the strategy overview, Terry. I actually thought your strategy was to invent drugs with unpronounceable chemical names that require abbreviation. So first question is, it's not every day your CMO departs to a partner. And could you just explain to us why investors shouldn't regard that as a negative indicator given what we would presume as the personal and professional opportunity of staying at Arcus? And then secondly, on ARC-7, I believe you have an inter -- second interim scheduled for later this year. Can you tell us when that is and whether you'll be giving us any further update from that second interim? And will that interim -- second interim data be included in what you submit for presentation?

So thanks for both questions, Geoff. And also your comment, I'm the worst on names. So I hate that. I have a hard time with anything that's more than 1, maybe 2 syllables. On Bill, I think your leading probably says a lot about it. It's a very unusual circumstance. And it's no question. I think it's great for Bill. It's great for Arcus and it's great for Gilead. So on the Gilead, and I would let them speak to the reasons, and I think you know as they build out there group-wide, it's good for them. For us, it puts a person in Gilead who's extraordinarily familiar with what we're doing, have passion for what we're doing, understand how that ties together with Gilead's brother strategy. And the other piece is that Bill's an outstanding builder of teams. And the group we have in place, as I mentioned earlier in the call, there's already over 120 people. It's a phenomenal leadership group. You heard Kartik on the phone. Kartik, as you know, has been intimately involved in [indiscernible] purposes, running the clinical program for at least the last 4 to 6 months. So we're super well positioned on all fronts. So I think Bill is happy as well in terms of he -- I think, he has a proclivity for a larger company, and he maintains the relationship with the people here, many of whom he has long-term relationships, not the least of which Kartik -- and he has the opportunity to continue to work with Arcus on the development into those programs. So I actually think investors should look at that as a real positive across the board, both for Arcus and Gilead. And the relationship remains strong both professionally and personally as well. So if anything, it ties us a little closer. And so far as the second part of your question about taking another peek at the data. We have not said anything explicit about that. What I'll say is, as you know, insofar as the opt-in, Gilead has mentioned that prime interest to them, and we're interested as well in seeing a look in a cut of a more mature data set, couple that together with the notion of a likely opt-in decision prior to the year-end. So it gives you a sense of approximately when that might occur. So while we haven't described that, we actually haven't decided upon the next time that we will look under the hood. But we do not plan to disclose anything about that at the time. So what the next thing that you should expect to hear from us would just be something relating to Gilead's decision-making. So we don't intend to put out a pre-announcement and create some sort of crazy flurry of activity around a particular day doing that again, and we don't plan to specifically share the data until that Ultimate medical conference presentation.

The next question is from Robyn Karnauskas with Truist Securities.

This is Kripa on for Robyn. Regarding opting into the adenosine programs. On their earnings call, Gilead noted the decision could come next year, like Jen just mentioned, but they also multiple times emphasize that if the data looks really strong, they want to move in as quickly as possible, that they would like to opt in early. Could you provide any color on what the likelihood of that is? Could the triplet data that you see towards the end of the year accelerate that process? And also a lot of questions on ARC-7, but on their call, again, they provided a lot of color, but no specific details on what would get them to opt in. Can you help us understand a little bit better what they might be looking in terms of separation, specific delta between the doublet and the triplet or like, Jen, had a threshold of patients? Is it durability? Any color would be really helpful.

Jen, do you want to comment on the totality of that? And if there's anything you leave out, I'll jump in on some you can cover.

Yes. So I will start off. So they certainly could opt in early, and I'm sure whether it's a dom or AB680, in particular, I would suspect they thought of it, but they certainly don't have to. And I think it's still to be seen whether or not they take the full amount of time they have for each of these opt-in decisions. Or if they do opt in early, what I would say is we obviously have a lot of money, thanks to them. They've given us a lot of money. And so whether they opt in early or wait, it doesn't really impact our ability to move quickly. So that's the good news, and there's also lots and lots of engagement between our 2 companies prior to this opt-in. So even on dom, I said the way the collaboration is working for that product today is much more like a partnership than they're sitting there waiting for us to send data over the transom. So there's already a lot of collaboration on CNC, on regulatory on the next wave of studies that we're both planning together. So there's a lot going on between the companies. And I think because of that, there's always a possibility that they can opt in early. I'd say on your second question on ARC-7, probably a question for them and that is exactly what they're looking for. I think they were very encouraged like we were by the data set. I think like us, they were particularly entrained by the performance of the triplet arm. And I think both us and them are watching closely as the data matures to see how much of that triplet activity was being driven by dom and -- which have a really good doublet or there's something differentiated there with etruma and with the triplet. So that's something that we're both paying close attention to as the data matures. They do have an end date, as I mentioned earlier, which is a patient-based end date. So as you talk about an opt-in decision trigger being made by the end of the year, that's why we're comfortable saying that, as well as just the ongoing dialogue we have with them and how we know that they're thinking. But I do think, in general, what they're looking for is just more follow-up. As we talked about, we have patients on the study had a median number of 2.5 scans. So we obviously have patients on the study that had only had 1 scan. We know that responses of IO can take time, and we're seeing responses after 3 scans. So we want to see how the data matures and see, just a bit more patience and understand the footprint on better.

So thanks, Jen. What I'll add is one additional piece, Kripa. And obviously, all this is -- you could find out from Gilead sort of what all the aspects -- what motivates them and when, et cetera. But one important thing to recognize, so the context of that early etruma in thinking about an etruma opt-in in the context, let's say, of the triplet. So there is no doubt that data continue to hold up with the triplet. We're going to be developing that very, very aggressively and very broadly given the ubiquitous role of adenosine across cancers. And so one aspect, if we were moving ahead very aggressively with the triplet, Gilead's involvement despite the fact that it's pretty seamless in terms of how we do things. But their influence over that development program expands once they've opted in just by the way we sort of have governance in the program. So that's another factor that could enter into the play of a desire to be much more participating at certain levels insofar as how that ultimate broad development program might be executed upon.

The next question is from Umer Raffat with Evercore.

This is Mike DiFiore in for Umer. Just curious, you mentioned the PACIFIC-8 trial that's set to start in 4Q this year, evaluating dom plus Durva. Just wondering if you could tell us a little bit more about this trial and what would be considered a good bogey in terms of ORR? Recognizing that the ARC-7 data is mature, could there be possibly any read-through based on how the doublet arm in ARC-7 is tracking?

Yes. So I think I'll take that. It's Kartik. Insofar as specific date, we have not disclosed any details about how we're thinking about that. And I think that will come out closer to when the trial gets up and going. So together with AstraZeneca, we've been doing a lot of planning together. There are also a great group with which to work. We've been enjoying working with them, moving on that also as quickly as possible, but we haven't shared any details at all and how we're thinking about that. I missed the second part of your question about a read-through.

Yes. Just recognizing the ARC-7 data is mature. I mean with respect to the doublet arm in that trial, based on how that could be tracking, could there be any read-through to PACIFIC-8 assuming that, that trial will be testing dom plus durva in combo as well.

Got you. No, we've shared the data that we had from the interim analysis and in great detail with all my colleagues at AstraZeneca, and we're going as fast as possible to get that study initiated.

Next question is from Yigal Nochomovitz from Citi.

So on ARC-7, given your comments around the triplet, I think it's fair to say that you are seeing some synergistic activity with etruma combined with dom and zim. So curious if at this point, if you formulated a working hypothesis as to what the biological mechanism might be that's driving the synergy you're seeing.

Sure. So I'll let Juan speak to that. But keep in mind, we went into the study with some underlying biology in mind, and I'll let Juan comment on exactly how we look at that.

Absolutely. It's actually very simple. If you assume that the combination of PD-1 in TIGIT inhibition is leading to activation of some T cell population, we know that, that must be happening in spite of the fact that there's a high amount of a tendency floating around in that tumor type. As Terry pointed out, we find that high PD-L1 lung tumors tend to also have a high level of CD73. So we take it as a given that, that clinical benefit, the results from PD-1 and TIGIT inhibition could be enhanced by removing that adenosine fog from the environment or preventing it from blocking the full T cell activation.

Okay. And just one quick follow-up on ARC-8. I'm just wondering why you decided not to include a monotherapy arm in that trial, for example, doing a monotherapy gem/nab-paclitaxel because then you could tease out the contribution of quemli to the doublet and the contribution of quemli and zim to the triplet.

Sure. So thanks for that one, Yigal. So in our initial discussions with the FDA at least in this early trial, the belief was that the gem-Abraxane signal is so well understood that they do not feel we should include that in the initial study at least. And instead, we talk with them since anti-PD-1 therapy is -- to date has shown no help in this particular setting. We looked in our randomized portion to segregate out the effect of the anti-PD-1. So you got the chemo plus AB680 plus zim versus the doublet lacking the zim. So the way we look at it, and we will obviously have to sort this out based upon the data and our discussions with the health authorities, but we think that might ultimately lead us to a registrational trial. That's a 2-arm study, where we would then be looking against that well-defined -- our combination versus the chemo alone.

The next question is from Mara Goldstein of Mizuho.

Just to go back to ARC-7 for a moment. And I asked if it's possible, Terry, for you guys to give us some additional details or maybe even directionality around the understanding of the percentage of patients in, let's say, the doublet arm versus the triplet arm that may have had at least 2 scans at the next and how that would compare them to the sort of first data cut. And then I just had a question, and I suppose this is a somewhat philosophical question about AB308 and understanding that this represents an opportunity for you to look at, right, the effect of having Fc-enabled candidate versus Fc silent on some of these questions around long-term issues around suppression of Tregs. But how do you think about sort of near-term efficacy data as it may relate to the development of dom and the comparison between the two?

So we don't really look at it as a bake-off. We believe in -- we started to believe and we continue to believe that the anti-TIGIT antibodies are going to behave as anti-TIGIT antibodies. And so we'll be pushing AB154 as hard as possible. And then strategically, we'll continuing, as you know, with 308. And our focus with 308, we'll look towards those hematological malignancies, where as we've discussed before, certain of those for example, multiple myeloma where TIGIT is actually found on the tumor cells, and you might want to have that potential effector function. But we believe in the solid tumor setting in which there is no situation like that, we're going to get all the efficacy in the world out of that blocking mechanism. And we'll see over time if that translates into anything relating to side effect profile. The only comment I would make on the scans part of it is that the median number of scans at this point was 2, but there were a substantial number of patients that had only a single scan. So even in a couple of months, we'll have given that these are every 6 weekly scans, we expect that maturity of that data set, we feel quite confident it's going to give us the clarity that we want to see at this stage.

The next question is from Salveen Richter with Goldman Sachs.

With respect to the updated ARC-8 data that's coming in the fall, can you help us understand what metrics you'll be focused on and remind us what is clinically meaningful in first-line PDAC?

Sure. So do you want to take it, Kartik? I'll let Kartik handle that one.

Yes. So obviously, this is a Phase I dose escalation and expansion with now proceeding into a randomized phase. So we're following all of the metrics that we can. We're looking at responses. We're looking at -- as an immunotherapy, prolonged stable disease and disease control, most specifically, clinically meaningful at the time of registration is definitely going to be survival. So we're looking at, in this maturing data set, landmark survival points. As it relates to progression and overall survival, we haven't had the trial running to the point that we can -- we'll be able to speak on either of those necessarily with much maturity. But we should be able to look at the early endpoints in terms of disease control and response.

The next question is from Tom Shrader with BTIG.

This is Kaveri on for Tom. All my questions have been answered, but maybe one on the CRC program. You presented encouraging data from the ARC-3 study. Can you talk about what drove your interest in adding PD-1 to the CRC trial as it is in the case of ARC-9? Then I would just make a follow-up. The second one, it's on the ARC-10 trial, similar to previously asked question, if not the same. Can you add 928 arm to the study, to the ARC-10 study if the data from ARC-7 trial are positive?

So I'll answer that one, the second part quickly, and then I'll let Juan talk about the role of anti-PD-1 in a study like the ARC-9 trial. So we would not look to add AB928 into ARC-10. In general, when you got a registrational trial like that up and going, you can't just add something else in like as a platform. And in fact, anything we would want to do with that triplet would involve starting a new, well-designed separate trial that would make sense as opposed to just trying to modify the ongoing trial. Now I'll let Juan comment a bit on the role of an anti-PD-1 on top of the earlier doublet.

Sure. So we interpret the promising clinical trends in ARC-3, and that is combining the adenosine blocker with FOLFOX. It's holistically across the late-line patients, but also the correlation with certain biomarkers such as TMB and CD73 expression, we interpreted the totality of that as being consistent with the hypothesis, and hypothesis being the FOLFOX would -- in addition to direct cancer cell killing would also trigger an immune secondary wave to that cell killing. And we took the evidence of 928 enhancing that benefit as a suggestive of a strong immune component to that benefit. When we consider the optimal combination to follow up on that in a randomized controlled fashion in ARC-9, it seemed pretty logical to -- if we're postulating a T cell activation-driven benefit to layer the PD-1 blocker on top of the adenosine blocker. So the fact that PD-1 inhibition by itself doesn't provide much benefit was not enough of a reason for us not to consider the potential benefit when you are, in fact, initiating a T cell response by some other mechanism.

The next question is from Zhiqiang Shu with Berenberg.

The first one I want to ask about the 2 TIGIT antibodies. You mentioned you have selected the dose for your 308. I was wondering if the dose is the same as you used for dom. And that's the first question. And the second, I want to ask about the CD73 inhibitor. Since you're going to look at Phase III registration trial design, I was wondering, for Gilead to opt in to this program, what's the timing look like? And what we should be looking at the data, data readouts for them to participate? And then also on that, just a follow-up. I think I recall you also are evaluating an oral formulation for this inhibitor. Maybe talk about the program there.

Sure. Thank you very much. So let me just repeat those for the others in the room here. So the first question is the go-forward dose for AB308, our second TIGIT antibody. The second question -- well, the third question was the CD73 inhibitor. The oral part, what's happening there. And I guess the middle question was what can we say about the opt-in for the CD73 inhibitor. So I'm going to let Juan or Kartik, one of you answer the -- what we're thinking about AB308.

Yes. So in terms of the dose, they're not the same. In fact, the recommended dose for expansion memo went out yesterday, so hot off the presses that the dose has been selected in the expansion cohorts. We anticipate will open soon. It's actually a lower dose than what we're using with domvanalimab.

And on the -- I'll comment on the Gilead question. We really don't know. It's something better discussed with them. But the idea in all likelihood is that we feel that when we would actually get close to that planning and later-stage planning of a registrational trial when we have the data set that fully supports that at least, that would be a possibility where they might consider, particularly they've indicated an extreme enthusiasm for the program, for the pancreatic cancer setting, a desire to be very involved in even that initial registrational trial. So it's purely speculative. But going back to what I said earlier about the enhanced role they play in being involved in the trial execution and what they've articulated about a desire to be involved with AB680 and their excitement, as we've shared data with them on this program, they have shown a strong passion for that. And someone remind me what the other question was. There was one other question. Yes, so I mean, we're all -- thanks a lot. Yes. So we basically demonstrated that we could achieve the desired levels of drug with the oral formulation. At this point, we're simply holding that in reserves. So think of it as putting that on the shelf. And the way we think about it is that in strategically as we expand our efforts around AB680, I'll try to say quemli, the idea might be that in certain settings, you might want to, for example, go to an all-oral regimen depending on what the combination partner was. And in a case like that, we would bring the oral formulation into use. I would also just say the way we look at the profile, we would probably go with a loading those of the IV formulation and then use the oral as a maintenance therapy.

There are no additional questions waiting at this time. I will now turn the conference over to management for any closing remarks.

Yes. So let me actually finish up. Let's see. I guess I would just thank everybody for joining. We appreciate the engagement. We appreciate the large interest and the questions. Thank you very much.

That concludes the conference call. Enjoy the rest of your day.