Gilead, Arcus Biosciences Form 10-Year, $2-Bn Immunotherapy PactBy
Gilead Sciences and Arcus Biosciences, a Hayward, California clinical-stage company focused on cancer immunotherapies, have entered into a 10-year partnership, worth up to $2 billion, to co-develop and co-commercialize current and future therapeutic product candidates in Arcus’s pipeline. The agreement will also provide ongoing funding to support Arcus’s research and development programs.
The company has a clinical-stage pipeline of four immuno-oncology programs, as well as an oncology discovery pipeline with six preclinical compounds that target key biological pathways. In addition to small-molecule products, Arcus is advancing antibody products that target immune checkpoint receptors. Overall, the company has 10 ongoing clinical studies, including a Phase II study in first-line non-small cell lung cancer evaluating combinations of three Arcus product candidates: AB154, an investigational anti-TIGIT monoclonal antibody; AB928, an investigational A2aR/A2bR antagonist; and zimberelimab (AB122), an investigational anti-PD-1 monoclonal antibody.
Under the agreement, Arcus will receive $375 million upon closing, consisting of a $175-million upfront payment and a $200-million equity investment from Gilead. Arcus is eligible to receive up to $1.225 billion in opt-in and milestone payments with respect to its current clinical product candidates. Gilead will gain access to Arcus’s current and future investigational immuno-oncology products through the agreement. This includes immediate rights to zimberelimab, as well as the right to opt-in to all other current Arcus clinical candidates, which include AB154, AB928, and AB680, a CD73 Inhibitor small molecule, upon payment of an opt-in fee that ranges from $200 million to $275 million per program, after delivery of a qualifying data package. If Gilead opts-in to the AB154 program, Arcus is eligible to receive up to $500 million in potential future US regulatory approval milestones.
Gilead will receive the right to opt-in to all other programs that emerge from Arcus’s research portfolio over the next 10 years, upon payment of an opt-in fee of $150 million per program after Arcus’s delivery of a qualifying data package.
Upon Gilead’s exercise of its option for a program, unless Arcus opts out according to terms of the agreement, the companies will co-develop and share global development costs and will co-commercialize and share profits in the US. Gilead will obtain exclusive rights to commercialize any optioned programs outside of the US, subject to any rights of Arcus’s existing partners, and for which Gilead will pay to Arcus tiered royalties ranging from high-teens to low twenties. Gilead will further provide ongoing research and development support of up to $400 million over the collaboration term.
Gilead’s $200-million equity investment will be at a price per share of $33.54. Additionally, Gilead will have the right to purchase additional shares from Arcus, up to a maximum of 35% of the outstanding voting stock of Arcus over the course of the next five years, at a 20% premium at the time Gilead exercises such option, or, if greater, at the initial purchase price per share.
In addition, Gilead will have the right to appoint two individuals to Arcus’s Board of Directors upon closing of the transaction.
This transaction, which is expected to close in the third quarter of 2020, is subject to applicable antitrust clearance under the Hart-Scott Rodino Antitrust Improvements Act and other customary closing conditions.