Arcus Biosciences Announces First Quarter 2019 Financial Results and Recent Corporate Updates

– Selected 150 mg for the dose expansion trial for AB928, the Company’s
dual A_2a/A_2b receptor antagonist, in combination
with AB122, the Company’s anti-PD-1 antibody

– Ended the first quarter 2019 with $243.1 million in cash and
investments, which the Company continues to expect will fund operations
into 2021

HAYWARD, Calif.–(BUSINESS WIRE)–Arcus Biosciences, Inc. (NYSE:RCUS), a clinical-stage biopharmaceutical
company focused on creating innovative cancer immunotherapies, today
announced financial results for the first quarter 2019. The Company also
provided updates on its clinical programs.

“In the first quarter of 2019, we advanced our lead molecule AB928, a
potential best-in-class dual A_2a/A_2b receptor
antagonist, specifically designed for oncology indications, by selecting
150 mg for dose expansion studies in combination with AB122, the
Company’s anti-PD-1 antibody. The Company also began enrollment in the
fourth combination dose-escalation trial evaluating AB928 in non-small
cell lung carcinoma patients,” said Terry Rosen, Ph.D., Chief Executive
Officer of Arcus. “Operationally, we recently rounded out our management
team with two key additions, Rekha Hemrajani as Chief Operating and
Financial Officer and Dr. Bill Grossman as Chief Medical Officer. Both
bring extensive expertise from the biotechnology and cancer
immunotherapy spaces. Together, we are eager to work towards translating
our unique science into life-changing therapies for patients.”

Pipeline Updates

AB928 (dual A_2aR/A_2bR
antagonist)

• Selected 150 mg for the dose-expansion portion of the trial of AB928
  in combination with its anti-PD-1 antibody AB122 in advanced solid
  tumors.
• Continued to enroll patients in these combination dose-escalation
  trials of AB928 in combination with chemotherapy:
  • AB928 in combination with Doxil® in triple negative breast cancer
    (TNBC) and ovarian cancer.
  • AB928 in combination with mFOLFOX in colorectal cancer and
    gastroesophageal cancer.

• Began enrolling the fourth AB928 combination dose-escalation trial:
  • AB928 in combination with carboplatin/pemetrexed and pembrolizumab
    in non-small cell lung cancer (NSCLC) after failing tyrosine
    kinase inhibitor (TKI) therapy.

AB680 (small-molecule CD73 inhibitor)

• Continued to dose patients in the healthy volunteer trial of AB680
  (i.v. formulation) in Australia. This trial is primarily
  designed to determine the safety, tolerability, pharmacokinetic (PK)
  and pharmacodynamic (PD) profile of AB680 prior to initiating clinical
  testing of AB680 in cancer patients.
• Continued to progress IND-enabling studies for an oral formulation of
  AB680.

AB122 (anti-PD-1 antibody)

• Continued to enroll patients in the Phase 1 dose-escalation trial for
  AB122. Based on data generated to date, the Company selected 240 mg as
  the dose for the Q2W (every 2 weeks) regimen for AB122. The Company
  continues to evaluate alternative doses and dosing schedules.

AB154 (anti-TIGIT antibody)

• Continued to enroll patients in the dose-escalation portion of the
  ongoing Phase 1 trial for AB154 in Australia, which is evaluating
  AB154 as a monotherapy and in combination with AB122 in advanced solid
  tumors. The dose-escalation portion will be followed by the initiation
  of dose-expansion cohorts in solid tumors associated with high levels
  of TIGIT and/or CD155, the primary ligand for TIGIT, once the
  recommended doses for AB154 as a monotherapy and in combination with
  AB122 have been identified.

Recent Corporate Updates

• In March 2019, Arcus announced the appointment of Rekha Hemrajani to
  Chief Operating and Financial Officer following the transition of
  Jennifer Jarrett, the Company’s former Chief Operating and Financial
  Officer.
• In May 2019, Arcus announced the appointment of William Grossman,
  M.D., Ph.D., to Chief Medical Officer.
• In May 2019, Arcus entered into a clinical development collaboration
  with Strata Oncology utilizing Strata’s precision drug development
  platform and proprietary biomarkers to evaluate AB122 in a basket
  trial including tumor types that are generally not responsive to
  anti-PD-1 therapy.

Upcoming Clinical Presentations

• Arcus to present a poster on preliminary results from the ongoing
  Phase 1 studies of AB928 in combination with chemotherapy or AB122 in
  patients with advanced tumors at the 2019 American Society of Clinical
  Oncology (ASCO) Annual Meeting on June 1, 2019 in Chicago, IL.
• Arcus to host an investor and analyst call at the end of June to
  provide an update on its clinical programs.

Upcoming Milestones

By the end of the second quarter 2019, the Company expects to:

• Present initial safety, PK/PD profile, biomarker analysis and clinical
  activity data from the dose-escalation portion of the AB928
  combination trials.
• Initiate a dose-expansion study for AB928 in combination with AB122 in
  patients with renal cell cancer (RCC).

In the second half of 2019, the Company expects to:

• Present additional data from the dose-escalation portion of the AB928
  combination trials.
• Initiate a dose-expansion study for AB928 in combination with AB122 in
  patients with metastatic castration-resistant prostate cancer (mCRPC).
• Report initial safety, tolerability and PK/PD data from the Phase 1
  trial of AB680 in healthy volunteers.
• Initiate a Phase 1 trial for AB680 in patients with advanced solid
  tumors.
• Report initial data on the safety, tolerability, PK/PD and clinical
  activity of AB154 as monotherapy and in combination with AB122.
• Initiate a basket trial to evaluate AB122 in molecularly defined
  patient populations, that are generally not responsive to anti-PD-1
  therapy, utilizing the Strata Precision Oncology Network and
  proprietary biomarkers.

Financial Results for the First Quarter 2019

• Cash, cash equivalents and both short-term and long-term investments
  were $243.1 million as of the first quarter ended March 31,
  2019, compared to $259.7 million at December 31, 2018. The decrease
  was primarily due to the utilization of cash to fund our operations.
• Revenues: Collaboration and license revenues for the first
  quarter ended March 31, 2019 were $1.8 million, compared to $1.3
  million for the same period in 2018. The increase in revenue was
  primarily attributable to the adoption of Accounting Standards
  Codification Topic 606, Revenue from Contracts with Customers
  (ASC 606). Under ASC 606, additional revenue was recognized as a
  result of a higher initial transaction price from the Option and
  License Agreement, which the Company entered into with Taiho
  Pharmaceutical Co., Ltd in September 2017.
• R&D Expenses: Research and development expenses for the
  first quarter ended March 31, 2019 were $15.6 million, compared to
  $11.7 million for the same period in 2018. The increase in research
  and development expenses was primarily due to an increase in clinical
  activities for our four ongoing clinical programs and increase in
  headcount, which was partially offset due to a decrease in
  manufacturing costs.
• G&A Expenses: General and administrative expenses for the
  first quarter ended March 31, 2019 were $5.0 million, compared to $2.9
  million for the same period in 2018. Higher general and administrative
  expenses were primarily due to an increase in headcount and related
  costs, as well as costs related to activities as a public company.
• Net Loss: Net loss for the first quarter ended March 31, 2019
  was $17.7 million, compared to $13.0 million for the same period in
  2018. The increase in net loss was primarily attributable to changes
  in operating expenses noted above offset by the increase in revenues
  and an increase in interest income.

Based on its current operating plan, the Company expects that its cash
and investments as of March 31, 2019 will enable the Company to fund its
anticipated operating expenses and capital expenditure requirements into
2021.

About Arcus Biosciences

Arcus Biosciences is a clinical-stage biopharmaceutical company focused
on creating innovative cancer immunotherapies. Arcus has several
programs targeting important immuno-oncology pathways, including a dual
adenosine receptor antagonist, AB928, which is in a Phase 1/1b program
to evaluate AB928 in combination with other agents in multiple tumor
types, and an anti-PD-1 antibody, AB122, which is being evaluated in a
Phase 1 trial and is being tested in combination with Arcus’s other
product candidates. Arcus’s other programs include AB154, an anti-TIGIT
antibody, which is being evaluated in a Phase 1 trial as monotherapy and
in combination with AB122, and AB680, a small-molecule inhibitor of
CD73, which is in a Phase 1 healthy volunteer study. Arcus has extensive
in-house expertise in medicinal chemistry, immunology, biochemistry,
pharmacology and structural biology. For more information about Arcus
Biosciences, please visit www.arcusbio.com.

Forward-Looking Statements

This press release contains forward-looking statements. All statements
other than statements of historical facts contained herein, including,
but not limited to, Arcus’s expectations regarding the advancement and
potential of its clinical development programs, milestones, timelines,
and anticipated operating expenses and capital expenditure requirements,
are forward-looking statements reflecting the current beliefs and
expectations of management made pursuant to the safe harbor provisions
of the Private Securities Litigation Reform Act of 1995. All
forward-looking statements involve known and unknown risks,
uncertainties and other important factors that may cause Arcus’s actual
results, performance or achievements to differ significantly from those
expressed or implied. Factors that could cause or contribute to such
differences include, but are not limited to, the inherent uncertainty
associated with pharmaceutical product development and clinical trials,
difficulties or delays in developing and validating biomarkers and
related assays, delays in our clinical trials due to difficulties or
delays in the regulatory process, enrolling subjects or manufacturing or
supplying product for such clinical trials, the emergence of adverse
events or other undesirable side effects, and changes in the competitive
landscape for our programs. Risks and uncertainties facing Arcus are
described more fully in Arcus’s quarterly report on Form 10-Q for the
quarter ended March 31, 2019 filed on May 2, 2019 with the SEC. You are
cautioned not to place undue reliance on the forward-looking statements,
which speak only as of the date of this press release. Arcus disclaims
any obligation or undertaking to update, supplement or revise any
forward-looking statements contained in this press release.

Doxil® is a registered trademark of Alza Corporation.

ARCUS BIOSCIENCES, INC.
Condensed Consolidated Balance Sheets
(In thousands, except share and per share amounts)
(unaudited)
	March 31,					December 31,
	2019					2018(1)
ASSETS
Current assets:
Cash and cash equivalents	$	68,499				$	71,064
Short-term investments		173,436					185,480
Prepaid expenses and other current assets		3,080					2,321
Amounts owed by a related party		–					83
Total current assets		245,015					258,948
Long-term investments		1,201					3,181
Property and equipment, net		11,026					11,107
Equity investment in related party		770					1,202
Restricted cash		203					203
Other long-term assets		315					284
Total assets	$	258,530				$	274,925
LIABILITIES
Current liabilities
Accounts payable	$	2,829				$	3,102
Accrued liabilities		7,629					6,023
Deferred revenue, current		7,000					6,250
Other current liabilities		1,545					1,560
Total current liabilities		19,003					16,935
Deferred revenue, noncurrent		12,272					16,984
Deferred rent		4,145					4,272
Other long-term liabilities		1,543					1,792
Total liabilities		36,963					39,983
Stockholders’ equity:
Common stock		4					4
Additional paid-in capital		359,820					357,873
Accumulated deficit		(138,286	)				(122,828	)
Accumulated other comprehensive income (loss)		29					(107	)
Total stockholders’ equity		221,567					234,942
Total liabilities, convertible preferred stock and stockholders’ equity	$	258,530				$	274,925
(1) Derived from the audited financial statements for the year ended December 31, 2018, included in the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission, dated March 5, 2019.

ARCUS BIOSCIENCES, INC.
Condensed Consolidated Statements of Operations and Comprehensive Loss
(In thousands, except share and per share amounts)
			(unaudited)
			Three Months Ended March 31,
			2019					2018
Collaboration and license revenue			$	1,750				$	1,250
Operation expenses:
Research and development				15,554					11,652
General and administrative				4,969					2,929
Total operating expenses				20,523					14,581
Loss from operations				(18,773	)				(13,331	)
Non-operating income (expense):
Interest and other income (expense), net				1,534					603
Share of loss from equity method investee				(431	)				(226	)
Total non-operating income, net				1,103					377
Net loss				(17,670	)				(12,954	)
Other comprehensive income (loss)				136					(55	)
Comprehensive loss			$	(17,534	)			$	(13,009	)
Net loss per share, basic and diluted			$	(0.41	)			$	(1.37	)
Weighted-average number of shares used to compute basic and diluted net loss per share				43,508,592					9,488,352

Contacts

Katherine Bock
(415) 533-5670
[email protected]

Nicole Arndt
(510) 284-4728
[email protected]