- Gilead will pay $725 million to retain rights to four experimental cancer immunotherapies developed by Arcus Biosciences, announcing Thursday that it would affirm an option deal the two companies signed in 2020. The most advanced projects involved are aimed at a cellular target called TIGIT that's increasingly of interest to drugmakers hoping to follow the success of Merck & Co.'s Keytruda and others like it.
- Under the licensing deal, the two companies will share global development costs and split U.S. commercialization costs and profits, with Gilead leading marketing outside the U.S. and paying royalties to Arcus on those sales. Arcus will also lead development on as many as two additional pre-clinical targets the two companies will identify together.
- The deal is the latest in a long-running effort by Gilead, which made its name in antiviral drugs, to expand into oncology. The company has won approvals for three cancer drugs in the past four years, but sales of its HIV drugs still dwarf that of its oncology business.
The initial deal between Gilead and Arcus gave the larger drugmaker rights to an experimental drug called zimberelimab, which attacks cancers using the same mechanism as Keytruda, along with an option to license the four projects covered by Thursday's announcement.
In June, Arcus announced positive early findings from a Phase 2 trial of zimberelimab and its lead anti-TIGIT agent, called domvanalimab, in previously untreated lung cancer. That trial tests zimberelimab, which targets a protein called PD-1, against a combination of zimberelimab and domvanalimab, and another regimen of both drugs along with an additional Arcus drug called etrumadenant. Etrumadenant is also part of the deal announced Thursday.
While Arcus hasn't released detailed data from that trial, the positive findings seen so far were likely the trigger for Gilead to opt in. Brian Abrahams, an analyst at RBC Capital Markets, wrote in a note to clients that Gilead executives had signaled they would license the Arcus drugs if they were able to shrink or eliminate tumors in at least half of the enrolled patients.
Alongside the deal, Gilead and Arcus said they would release data from the Phase 2 trial, including results on how long the combinations kept patients from getting sicker, at a medical meeting in 2022. In first-line lung cancer, Keytruda has set a high bar; shrinking or eliminating tumors in 48% of patients and keeping patients from progressing or dying for a median of 8.8 months, Brian Skorney, an analyst at Baird, wrote in a note to clients.
Meanwhile, Arcus has already initiated a Phase 3 trial of zimberelimab alone and in combination with domvanalimab in lung cancer, which is set to read out in 2025.
Gilead and Arcus face tough competition, however. Merck and Roche also have anti-TIGIT agents they're testing alongside PD-1 drugs, with Roche's, called tiragolumab, gaining a Breakthrough Therapy designation from the Food and Drug Administration based on Phase 2 data.
Arcus shares rose 14% on the news, trading above $42 apiece Thursday morning.