rcus-20250331

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

_____________________________________

FORM 10-Q

_____________________________________

(Mark One)

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2025

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _____________to _______________

Commission File Number: 001-38419

_____________________________________

Arcus Biosciences, Inc.

(Exact Name of Registrant as Specified in its Charter)

_____________________________________


Delaware			47-3898435
(State or other jurisdiction of incorporation or organization)			(I.R.S. Employer Identification No.)

3928 Point Eden Way Hayward, California 94545
(Address of principal executive offices)

Registrant’s telephone number, including area code: (510) 694-6200

_____________________________________

Securities registered pursuant to Section 12(b) of the Act:

Titles of Each Class

Trading Symbol(s)

Name of Each Exchange on which Registered

Common Stock, Par Value $0.0001 Per Share

RCUS

The New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes x No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No x

As of May 1, 2025, the registrant had 105,885,138 shares of common stock, $0.0001 par value per share, outstanding.

ARCUS BIOSCIENCES, INC.

TABLE OF CONTENTS


		Page
	RISK FACTOR SUMMARY	i
PART I.	FINANCIAL INFORMATION
Item 1.	Financial Statements	1
	Condensed Consolidated Statements of Operations	1
	Condensed Consolidated Statements of Comprehensive Loss	2
	Condensed Consolidated Balance Sheets	3
	Condensed Consolidated Statements of Stockholders’ Equity	4
	Condensed Consolidated Statements of Cash Flows	5
	Notes to Condensed Consolidated Financial Statements	6
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	21
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	30
Item 4.	Controls and Procedures	30
PART II.	OTHER INFORMATION
Item 1.	Legal Proceedings	31
Item 1A.	Risk Factors	31
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	62
Item 3.	Defaults Upon Senior Securities	62
Item 4.	Mine Safety Disclosures	62
Item 5.	Other Information	62
Item 6.	Exhibits	63
SIGNATURES		64

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RISK FACTOR SUMMARY

The following is a summary of the key risks and uncertainties that make an investment in our securities speculative and risky. The below summary does not contain all of the information that may be important to you, and you should read this summary together with the more detailed description of the risks set forth under "Part II. Item 1A. Risk Factors" of the Quarterly Report.

Risks Related to our Limited Operating History, Financial Position and Capital Requirements

•We have a history of operating losses, have never generated any revenue from product sales and anticipate that we will continue to incur significant losses for the foreseeable future.

•We may need to obtain additional funding. If we do not receive or are unable to raise additional capital when needed, we may be forced to restrict our operations or delay, reduce or eliminate our product development programs.

Risks Related to the Discovery and Development of our Investigational Products

•If we are unable to obtain regulatory approval for our investigational products, or experience significant delays in doing so, our business will be materially harmed.

•Preliminary, topline and interim data from our clinical studies that we announce or publish from time to time are subject to audit and verification procedures that could result in material changes in the final data and may change as more patient data become available.

•Enrollment and retention of subjects in clinical trials is expensive and time consuming and can be made more difficult or rendered impossible by competing treatments, clinical trials of competing investigational products, geopolitical instability and public health epidemics, each of which could result in significant delays and additional costs in our product development activities, or in the failure of such activities.

•Serious adverse events, undesirable side effects or other unexpected properties of our investigational products may be identified during development or after approval, which could lead to the discontinuation of our clinical development programs, refusal by regulatory authorities to approve our investigational products or limitations on the use of our investigational products or, if discovered following marketing approval, revocation of marketing authorizations or subsequent limitations on the use of our investigational products.

•A key element of our strategy is the development of intra-portfolio combinations. If we are not successful in discovering, developing and commercializing investigational products that take advantage of different mechanisms of action to achieve superior outcomes relative to the use of single agents or other combination therapies, our ability to achieve our strategic objectives would be impaired.

•Certain of our investigational products may require companion diagnostics in certain indications. Failure to successfully develop, validate and obtain regulatory clearance or approval for such tests could harm our product development strategy or prevent us from realizing the full commercial potential of our investigational products.

Risks Related to Reliance on Third Parties, Manufacturing and Commercialization

•We expect to depend on our collaboration with Gilead Sciences, Inc. ("Gilead") for the research, development, manufacture and commercialization of our investigational products. If this collaboration is not successful, our business could be adversely affected.

•We rely on third parties to conduct our clinical trials and perform some of our research and preclinical studies. If these third parties do not satisfactorily carry out their contractual duties or fail to meet expected deadlines, our development programs may be delayed or subject to increased costs, each of which may have an adverse effect on our business and prospects.

•Even if we receive marketing approval, we may not be successful in commercializing our investigational products.

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•Even if we receive marketing approval for one or more of our investigational products, our commercial success is dependent on obtaining coverage and reimbursement approval for a product from a government or other third-party payor, which coverage may be delayed or may not be sufficient to cover our costs.

•Obtaining and maintaining regulatory approval of investigational products in one jurisdiction does not guarantee that we will be able to obtain or maintain regulatory approval in any other jurisdiction. Even if our investigational products are approved by the FDA, they may never be approved or commercialized outside the United States ("U.S."), which would limit our ability to realize their full market potential.

•Any investigational products for which we intend to seek approval as biologic products may face competition sooner than anticipated.

Risks Related to our In-Licenses and Other Strategic Agreements

•We are currently party to several in-license agreements under which we acquired rights to use, develop, manufacture and/or commercialize certain of our investigational products. If we breach our obligations under these agreements, we may be required to pay damages, lose our rights to these investigational products or both, which would adversely affect our business and prospects.

Risks Related to Intellectual Property

•If we are unable to obtain and maintain sufficient intellectual property protection for our investigational products, or if the scope of the intellectual property protection is not sufficiently broad, our competitors could develop and commercialize products similar or identical to ours, and our ability to successfully commercialize our products may be adversely affected.

•We may become involved in lawsuits alleging that we have infringed the intellectual property rights of third parties or to protect or enforce our patents or other intellectual property, which litigation could be expensive, time consuming and adversely affect our ability to develop or commercialize our investigational products.

•Changes in patent law in the U.S. and other jurisdictions could diminish the value of patents in general, thereby impairing our ability to protect our investigational products.

•We may rely on trade secret and proprietary know-how which can be difficult to trace and enforce, and if we are unable to protect the confidentiality of our trade secrets, our business and competitive position would be harmed.

Risks Related to our Business Operations and Industry

•We expect to expand our business operations, and as a result, we may encounter difficulties in managing our growth, which could disrupt our operations.

•We face substantial competition, which may result in others discovering, developing or commercializing products more quickly or marketing them more successfully than us. If their investigational products are shown to be safer or more effective than ours, then our commercial opportunity will be reduced or eliminated.

•Our internal information technology systems, and those of our third-party CROs and other third parties upon which we rely, are subject to failure, security breaches and other disruptions, which could result in a material disruption of our investigational products’ development programs, jeopardize sensitive information, prevent us from accessing critical information or result in a loss of our assets, and potentially expose us to notification obligations, loss, liability or reputational damage and otherwise adversely affect our business.

•Failure to comply with privacy and data protection laws, regulations or other obligations could lead to government enforcement actions (which could include civil or criminal penalties), private litigation, and/or adverse publicity and could negatively affect our operating results and business.

•Changes in healthcare law and implementing regulations, as well as changes in healthcare policy, may impact our business in ways that we cannot currently predict, and may have a significant adverse effect on our business and results of operations.

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PART I—FINANCIAL INFORMATION

Item 1. Financial Statements

ARCUS BIOSCIENCES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In millions, except per share amounts)

(unaudited)


	Three Months Ended March 31,
		2025		2024
Revenues:
License and development services revenue (Includes $20 and $131 from a related party)		$	20	$	135
Other collaboration revenue (Includes $8 and $10 from a related party)		8		10
Total revenues		28		145

Operating expenses:
Research and development (Includes $5 and $16 of net recoveries from a related party)		122		109
General and administrative		28		32
Impairment of long-lived assets (see Note 12, Leases)		—		20
Total operating expenses		150		161

Loss from operations		(122)		(16)

Non-operating income (expense):
Interest and other income, net		11		13
Interest expense		(1)		(1)
Total non-operating income, net		10		12

Loss before income taxes		(112)		(4)

Income tax expense		—		—

Net loss		$	(112)	$	(4)

Net loss per share:
Basic and diluted		$	(1.14)	$	(0.05)

Shares used to compute net loss per share:
Basic and diluted		98.4		86.2

See accompanying notes.

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ARCUS BIOSCIENCES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

(In millions)

(unaudited)


	Three Months Ended March 31,
		2025		2024
Net loss		$	(112)	$	(4)
Other comprehensive loss		—		(1)
Comprehensive loss		$	(112)	$	(5)

See accompanying notes.

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ARCUS BIOSCIENCES, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In millions, except per share amounts)

(unaudited)


	March 31, 2025		December 31, 2024
ASSETS
Current assets:
Cash and cash equivalents	$	192	$	150
Marketable securities	805		828
Receivable from collaboration partners ($4 and $6 from a related party)	15		20
Prepaid expenses and other current assets	19		18
Total current assets	1,031		1,016

Long-term marketable securities	8		14
Property and equipment, net	46		47
Other noncurrent assets	71		73
Total assets	$	1,156	$	1,150

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable	$	22	$	18
Deferred revenue ($72 and $85 to a related party)	72		85
Other current liabilities	98		123
Total current liabilities	192		226

Deferred revenue, noncurrent ($219 and $234 to a related party)	219		234
Long-term debt	48		48
Other noncurrent liabilities	166		157

Commitments

Stockholders’ equity:
Common stock and additional paid-in capital: $0.0001 par value per share; 400.0 shares authorized; 105.9 shares in 2025 and 92.2 shares in 2024 issued and outstanding	1,775		1,617
Accumulated deficit	(1,244)		(1,132)

Total stockholders’ equity	531		485
Total liabilities and stockholders’ equity	$	1,156	$	1,150

See accompanying notes.

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ARCUS BIOSCIENCES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

(In millions)

(unaudited)


	Number of shares of common stock	Common stock and additional paid-in capital		Accumulated deficit		Accumulated other comprehensive loss		Total stockholders’ equity
Balance at December 31, 2023	75.5	$	1,311	$	(849)	$	—	$	462
Issuance of common stock (see Note 3, Related party - Gilead Sciences, Inc. and Note 13, Stockholders' Equity)	15.2	228		—		—		228
Issuance of common stock in connection with our equity award programs	0.2	2		—		—		2
Stock-based compensation	—	20		—		—		20
Other comprehensive loss	—	—		—		(1)		(1)
Net loss	—	—		(4)		—		(4)
Balance at March 31, 2024	90.9	$	1,561	$	(853)	$	(1)	$	707












Balance at December 31, 2024	92.2	$	1,617	$	(1,132)	$	—	$	485
Issuance of common stock (see Note 3, Related party - Gilead Sciences, Inc. and Note 13, Stockholders' Equity)	13.6	142		—		—		142
Issuance of common stock in connection with our equity award programs	0.1	—		—		—		—
Stock-based compensation	—	16		—		—		16

Net loss	—	—		(112)		—		(112)
Balance at March 31, 2025	105.9	$	1,775	$	(1,244)	$	—	$	531

See accompanying notes.

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ARCUS BIOSCIENCES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In millions)

(unaudited)


	Three Months Ended March 31,
	2025		2024
Cash flow from operating activities
Net loss	$	(112)	$	(4)
Adjustments to reconcile net loss to net cash used in operating activities:
Stock-based compensation expense	16		20
Depreciation and amortization	3		3
Noncash lease expense	2		2
Impairment of long-lived assets	—		20
Amortization of discounts on marketable securities	(4)		(6)

Changes in operating assets and liabilities:
Receivable from collaboration partners ($2 and ($1) from a related party)	5		13
Other assets ($— and $6 from a related party)	—		5
Accounts payable	3		(1)
Deferred revenue (($28) and ($54) to a related party)	(28<

SEC Form 10-Q filed by Arcus Biosciences Inc.