Business & Finance
Gilead Exercises Options to Three Arcus Biosciences Clinical-stage Programs and Adds Research Collaboration
22 November 2021 - - US-based biopharmaceutical company Gilead Sciences, Inc. (NASDAQ: GILD) has exercised its options to three programs in US-based biopharmaceutical company Arcus Biosciences, Inc's (NYSE: RCUS) clinical-stage portfolio, including both anti-TIGIT molecules, domvanalimab and AB308, as well as etrumadenant and quemliclustat, the company said.

The companies also added a research collaboration as described below. Today's transaction is subject to applicable antitrust clearance under the Hart-Scott Rodino Antitrust Improvements Act and other customary closing conditions.

The parties expect the transaction to close by year-end.

Domvanalimab is an Fc-silent anti-TIGIT antibody in Phase 2 and Phase 3 studies in non-small cell lung cancer (NSCLC) and AB308 is an Fc-enabled anti-TIGIT antibody under Phase 1 evaluation. Etrumadenant is a dual adenosine A2a/A2b receptor antagonist in Phase 1 and Phase 2 studies in NSCLC, colon cancer and prostate cancer. Quemliclustat is a small molecule CD73 inhibitor in a Phase 1 study in metastatic pancreatic ductal adenocarcinoma.

Gilead has been encouraged by early clinical data generated for each of the three programs.

By opting in early to all three programs now, Gilead and Arcus are able to accelerate the clinical development and advancement of these clinical-stage molecules and facilitate the exploration of treatment combinations across the portfolios.

For example, Gilead will be able to pursue potential chemotherapy-free regimens with Trodelvy (sacituzumab govitecan-hziy) in combination with therapies optioned from the Arcus portfolio. Gilead will also have the flexibility to add Gilead portfolio candidates to existing Arcus studies.

Under the terms of the parties' Option, License and Collaboration Agreement, for the three options that Gilead is exercising TODAY, Arcus will receive option payments totaling USD 725m.

The parties will co-develop and share the global costs related to these programs. If the optioned molecules achieve regulatory approval, Gilead and Arcus will co-commercialize and equally share profits in the US.

Gilead will hold exclusive rights outside the US, subject to any rights of Arcus's existing collaboration partners, and Gilead will pay to Arcus tiered royalties.

In May 2020, Gilead and Arcus entered into a 10-year collaboration that provided Gilead immediate rights to zimberelimab and the right to opt into all other Arcus programs arising during the collaboration term.

In November 2021, Gilead and Arcus amended the collaboration in connection with Gilead's option exercise for three of Arcus's then-clinical stage programs.

For all other programs that are in clinical development or new programs that enter clinical development thereafter, the opt-in payments are USD 150m per program.

Gilead's option, on a program-by-program basis, expires after a specified period of time following the achievement of a development milestone for such program and Arcus's delivery to Gilead of the requisite qualifying data package.

Concurrent with the May 2020 collaboration agreement, Gilead and Arcus entered into a stock purchase agreement under which Gilead made a USD 200m equity investment in Arcus.

That stock purchase agreement was amended and resaid in February 2021 in connection with Gilead's increased equity stake in Arcus from 13% to 19.7%, with an additional USD 220m investment.

Upon closing of Gilead's exercise of its option to a program, the two companies will co-develop and share global development costs for the joint development program, subject to certain opt-out rights of Arcus in some cases and expense caps on its spending and related subsequent adjustments.

For each optioned program, provided that Arcus has not exercised its opt-out rights, if any, Arcus has an option to co-promote in the United States with equal profit share.

Gilead has the right to exclusively commercialize any optioned programs outside of the US, subject to the rights of Arcus's existing collaboration partners to any territories, and, for clinical stage programs that Gilead has opted into, Gilead will pay Arcus tiered royalties as a percentage of revenues ranging from the mid or high teens to the low twenties.
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