Arcus’s Casdatifan Differentiates, But Data Overshadowed By Gilead Opting Out

Arcus Biosciences put a positive spin on Gilead Sciences’ decision not to opt in to further development of the HIF-2a inhibitor casdatifan in clear cell renal cell carcinoma (ccRCC) on 18 February, noting that the smaller firm will retain full rights to the differentiated drug with a potential $5bn market for its first two indications. Investors remained skeptical, sending the company’s stock price down 16.3% to close at $10.96 despite new positive data presented on 15 February.

Hayward, CA-based Arcus presented updated results from the Phase I/Ib ARC-20 clinical trial of casdatifan in patients with metastatic ccRCC, most of whom progressed after two or more prior rounds of therapy, at the 2025 American Society of Clinical Oncology Genitourinary (ASCO GU) Cancers Symposium. The data showed even greater differentation from Merck & Co.’s first-in-class HIF-2a inhibitor Welireg (belzutifan) than the company reported in an earlier update in October.

Arcus executives did not say during an 18 February call with analysts and investors why Gilead declined to opt in to advance casdatifan under the collaborators’ longtime agreement. However, Gilead participated along with other investors in a same-day follow-on public offering (FOPO) in which Arcus grossed $150m from the sale of 13.64 million shares at $11 each to fund casdatifan development through its first set of Phase III results.

Gilead’s approximately 33% stake in Arcus did not substantially change through the FOPO. Gilead upped its shareholding in Arcus in January 2024 from 19.8% by investing $320m in the company, paying $21 per share. The partners previously entered into a 10-year, multi-drug collaboration agreement in 2020, with Gilead paying $375m up front in cash and equity.

With help via Gilead’s increased investment early last year, Arcus shored up its balance sheet such that it had $1.1bn in cash as of 30 September, which was enough to fund its operations into mid-2027, even without the recent FOPO. The company also entered into a debt agreement with Hercules Capital in August for up to $250m, starting with an initial $50m drawdown, primarily to fund casdatifan, prompting concern at that time that Gilead might not opt in on the drug.

Arcus CEO Terry Rosen said during the company’s 18 February investor call that “I think it was a strategic and prioritization decision for [Gilead], and I think it’s all good for us” that Gilead did not opt in to further develop casdatifan. “We couldn’t be more excited to have all the rights to ourselves,” Rosen added, noting that Arcus can move more quickly on its Phase III plans for the drug without Gilead participating in the development program.

“I guess I can’t imagine there is anything in the data that led them to their decision,” he said. “Everyone saw the data over the weekend. I think everyone thought the data looks fantastic. The response from the investigator community could not have been better.”

ARC-20 Data Support Phase III Plans

The ARC-20 study data presented at ASCO GU included results for casdatifan dosed at 50mg twice daily, 50mg once daily and 100mg once daily. The latter dose was selected for the planned Phase III PEAK-1 pivotal study testing the drug in combination with Exelixis’s tyrosine kinase inhibitor (TKI) Cabometyx (cabozantinib) versus cabozantinib monotherapy in first- or second-line treatment of metastatic ccRCC patients who previously were treated with an anti-PD-1 therapy. The primary endpoint will be progression-free survival (PFS) with overall survival as a key secondary endpoint.

Arcus plans to initiate PEAK-1 in the second quarter of 2025, while in mid-2025 it will present initial safety and efficacy data from the Phase I/Ib ARC-20 cohort testing casdatifan in combination with cabozantinib, giving some insight into what data from the Phase III trial may look like.

Arcus also plans to share data from multiple ARC-20 cohorts in the fall of 2025 and share initial data from the Phase I/Ib trial in 2026 from newly initiated cohorts, including casdatifan monotherapy in favorable risk first-line ccRCC, casdatifan combined with Arcus/Gilead’s PD-1 inhibitor zimberelimab in first-line ccRCC and casdatifan monotherapy in immuno-oncology (IO) drug-experienced/TKI-naïve ccRCC.

In addition, Arcus expects its clinical trial collaborator AstraZeneca to begin a Phase Ib trial in 2025 testing casdatifan in combination with the big pharma’s anti-PD-1/CTLA-4 bispecific antibody volrustomig in IO-naïve ccRCC patients.

Arcus’s clinical trial expansion plans are informed by the ARC-20 trial results to date, which in the recent update showed 9.7 months of PFS for patients treated with 50mg twice daily with a median of 15 months of follow up. With median follow up of 12 months in the 50mg once daily group and five months in the 100mg once daily group, PFS has not yet been reached.

The confirmed overall response rate (ORR) to date is 25% for 50mg twice daily, 32% for 50mg once daily and 33% for 100mg once daily. Median time to response was 2.8 months, 4.1 months and 1.6 months, respectively. The disease control rate (DCR) was 81% for 50mg twice daily, 86% for 50mg once daily and 85% for 100mg once daily.

In terms of safety, rates of serious treatment-emergent adverse events (TEAEs) related to casdatifan were 3% for 50mg twice daily, 10% for 50mg once daily and 7% for 100mg once daily. Grade 3 or higher TEAEs related to casdatifan, which also have been associated with Welireg, were anemia – 42% for 50mg twice daily, 32% for 50mg once daily and 17% for 100mg once daily – and hypoxia at rates of 9%, 7% and 10%, respectively.

By comparison, Arcus noted that in the Phase III LITESPARK-005 trial of Welireg, the confirmed ORR rate was 22% with a DCR of 61% and median PFS of 5.6 months. Rates of grade 3 and higher anemia and hypoxia were 33% and 11%, respectively.

“Initial looks at this data seem very strong, and increasingly differentiated versus Merck,” Evercore ISI analyst Umer Raffat said in a 17 February note.

Arcus foresees the HIF-2a inhibition market for ccRCC as a two-drug race between casdatifan and Welireg, with the post-IO indication covered by the Phase III PEAK-1 trial estimated at 19,000 patients in major markets for a total of $2bn in revenue. The company estimated that the IO-naïve market eligible for treatment with casdatifan plus AstraZeneca’s volrustomig is 21,000 patients with $3bn in revenue potential.

Gilead Remains Invested Despite Opting Out

While investors were unhappy about Gilead’s decision not to exercise its option for casdatifan, analysts were comforted by the fact that the company maintained its investment stake in Arcus overall through its participation in the FOPO following the new casdatifan data disclosures.

“While Arcus didn’t share much reasoning behind the decision, they highlighted Gilead had all the available data for both cas monotherapy and early cabozantinib combo data from ARC-20,” Wells Fargo analyst Eva Fortea Verdejo said in an 18 February note. “That said, Gilead did participate in today’s equity offering. Notably, Gilead’s [investor relations] team indicated this was a strategic, prioritization decision, and they remain engaged with Arcus through other programs and their ownership stake.”

Mizuho Securities analyst Salim Syed also said in an 18 February note that Gilead “notably” participated in the Arcus FOPO.

Going forward, Fortea Verdejo said the Phase I/Ib ARC-20 update in mid-2025 with data from the casdatifan and cabozantinib combination cohort should somewhat de-risk the planned Phase III PEAK-1 trial. “Recall, the cabo+belzutifan combo in [second-line] demonstrated an ORR of 31% and PFS of ~14 months,” she said. “Based on the mono data for cas, we would expect improved efficacy with in-line safety. Safety will be a key parameter, with low discontinuation and dose reduction rates driving efficacy for the combo.”

However, while Cantor Fitzgerald analyst Li Watsek said in a 17 February note that Arcus’s new casdatifan data “convincingly showed that it’s a superior molecule” relative to Welireg, “we believe Arcus could benefit from a big pharma partner to maximize the [first-line] opportunity.”