Arcus Biosciences, Inc. (RCUS) Earnings Call Transcript & Summary

Hello all. I would like to welcome you to the Arcus Biosciences Corporate Update Call. My name is Brika, and I'll be today's event specialist. [Operator Instructions] I would now like to hand the call over to your host, Holli. So Holli, please go ahead.

Good morning, everyone. Thank you, Brika. Thank you all for participating in today's call to discuss our announcement this morning regarding Gilead's early option exercises. Joining me from Arcus are Terry Rosen, Chief Executive Officer; Juan Jaen, President; Jennifer Jarrett, Chief Operating Officer; Bob Goeltz, Chief Financial Officer; and Kartik Krishnan, Chief Medical Officer. I'd like to remind you that on the call, management will make forward-looking statements within the meaning of securities law's safe harbor provision. For example, statements about our future clinical development plans and data releases as well as any anticipated benefits of the transaction. All statements other than historical facts involve risks and uncertainties that may cause the company's actual results to differ. Those risks and uncertainties are described in the annual report on Form 10-K and quarterly report on Form 10-Q, which have been filed with the SEC. We strongly encourage you to review those filings. This conference call contains time-sensitive information and is accurate only as of the live broadcast today, November 18, 2021. And with that, I'll turn the call over to Terry.

Thank you, Holli, and thank you all for joining us. As Holly mentioned, we have an exciting update to share today. This morning, Gilead and Arcus announced that Gilead has exercised their option rights to 3 Arcus programs earlier than expected. The expanded partnership enables both parties to accelerate exploration of novel and innovative combination therapies with first-in-class potential. This represents an enormous opportunity for us to bring transformative treatments to patients with the most difficult to treat and troubling cancers. I'll spend a few minutes reminding you of the structure of our original agreement with Gilead and our current programs and development activities. Then I'll go through the terms of the option exercises and the new component to our collaboration or research agreement. In May of 2020, Arcus entered into an option and collaboration agreement with Gilead, under which Gilead made an upfront payment of $175 million and an equity investment of $200 million to acquire rights to zimberelimab or zim, our PD-1 antibody, and an option to obtain rights to our other programs over the 10-year term of the collaboration. Under the agreement, Arcus and Gilead will codevelop these 3 option programs globally, and if approved, jointly co-commercialize these molecules in the U.S. Gilead will hold exclusive rights outside the U.S., subject to any rights of Arcus' existing collaboration partners, and Gilead will pay Arcus a tiered royalty and ex-U.S. sales for each option product. In January of this year, Gilead made an additional equity investment in Arcus, which increased their ownership to approximately 19.7%. Since the agreement was executed, our teams have worked together closely. And through these interactions, Gilead has become very familiar with our R&D capabilities and our portfolio of molecules. That brings us to our joint announcement today that Gilead has exercised its options to our anti-TIGIT program, which includes domvanalimab or dom, an AB308; etrumadenant or etruma, our dual-adenosine receptor antagonist; and quemliclustat or quemli, our small molecule CD73 inhibitor. These option exercises were executed as part of an amendment to our original agreement with the overarching intent to accelerate and expand our clinical development efforts for dom, etruma and quemli while increasing the alignment and collaboration between our companies, including at the research level. With these opt-ins, upon closing of the transaction, Gilead and Arcus will be collaborating on the development of 5 clinical stage molecules and our teams can now focus on executing a broad joint development plan to maximize the potential of our combined clinical portfolio. I want to spend a minute on the status of these 4 molecules starting with domvanalimab, our Fc-silent anti-TIGIT antibody, which is currently being evaluated in ARC-7, a 150-patient Phase II study in first-line PD-L1 positive metastatic non-small cell lung cancer. As a reminder, in this study, patients are being randomized to 1 of 3 arms: zim alone; dom plus zim, which we refer to as the doublet; or dom plus zim and etruma, which we refer to as the triplet. In the second interim analysis which we shared in our earnings release last week, both dom-containing arms show differentiated clinical activity to that of zim alone. Arcus is excited about these results, which provided further conviction to accelerating the development plans for dom. We have advanced dom into its first registrational Phase III study, ARC-10, which is targeting the same setting as ARC-7, with over 30 sites active today. And we have other Phase III studies in planning with Gilead, which we'll talk about a little later on the call. We have shared the detailed results of the second interim analysis with AstraZeneca, who remains on track to initiate a second registrational study for dom, PACIFIC-8, which will evaluate dom plus durva, AstraZeneca's anti-PD-L1 antibody, in unresectable Stage III non-small cell lung cancer by year-end. AB308, our Fc-enabled anti-TIGIT antibody, is currently in a Phase I study in combination with zim in advanced malignancies. Five expansion cohorts are currently open for enrollment. These cohorts will be used to generate clinical signals that we can explore in future clinical studies for our TIGIT program. And now to etruma and quemli, both of which are key targets in the CD73 adenosine pathway. Etruma is currently in 4 randomized clinical studies. As I mentioned earlier, etruma is being evaluated as part of our treatment arm in ARC-7. And today, this arm has outperformed both the zim mono and doublet arms, respectively. In addition to ARC-7, etruma is being evaluated in ARC-4 in EGF receptor positive non-small cell lung cancer, ARC-6 in castrate-resistant prostate cancer and ARC-9 in metastatic colorectal cancer. All of these studies with the exception of ARC-9 are expected to generate important data over the next 12 months that could inform and lead to registrational trials. And next, quemli is currently being evaluated in an ARC-8 Phase I/Ib study in combination with zim and gemcitabine nab-paclitaxel, which we'll refer to as gem/Abraxane, in first-line metastatic pancreatic cancer, a really devastating cancer where there's been no treatment advancement beyond chemo in almost a decade. This month, we'll complete enrollment well ahead of schedule of the 90-patient randomized portion of the study, which is evaluating quemli plus gem/Abraxane plus zim versus quemli plus gem/Abraxane to provide an early look at contribution of components. As of the early often discussion -- as the early option discussions advance, we and Gilead began discussing the best form for presentation of our ARC data, ARC-8 data, as well as other data sets and we agreed to present the ARC-8 data at a medical conference in 2022. These data would include PFS from the randomized portion of the study. We continue to be really excited about the potential of quemli and are very pleased with Gilead's early opt-in. We have an opportunity to expand the development plan for this exciting molecule. Now let's get back to the announcement today. Consistent with the terms of our original agreement, following closing of the transaction, which we expect to occur by year-end, Gilead will pay to Arcus option payments tolling $725 million for the 3 programs. Following this payment, all in, Gilead will have invested approximately $1.4 billion into Arcus. In addition, costs and expenses related to the global co-development program and advancement of these molecules will be shared effective at closing. We'll also receive retroactive reimbursement for Gilead's share of the cost for ARC-10, the ongoing registrational Phase III study for dom. Arcus will commit to operationalizing at least 50% of joint clinical development activities for each option program. This commitment reflects both companies' confidence in Arcus' clinical team. It also allows both parties to benefit from strategic resourcing and Arcus' speed while allowing Arcus to maintain an active role in the strategy, planning and execution of its development programs. In addition, Arcus and Gilead added a research collaboration, whereby Arcus will lead the discovery and research efforts for 2 novel research targets. The new research collaboration will be overseen by an existing joint research committee with the intent to facilitate experiments to guide the selection of novel combinations for clinical studies and deepen the relationship between our research teams. Our 2 research teams have gotten to know each other well over the last year, and so we are very excited about the expansion of our current alliance and we appreciate Gilead's confidence in our discovery capability. And finally, upon closing of Gilead's early opt-in to all 3 clinical programs, Gilead will not be obligated to make the $100 million option continuation payment in 2022. The parties also agreed to a slight reduction in Arcus's ex-U.S. royalties to mid-teens to low 20s. Our ex-U.S. royalties will continue to be tiered. The royalties for zimberelimab and future option programs under the original agreement are not affected by these changes. So what does this all mean for Arcus? First, the early opt-ins represent a major acceleration expansion of our collaboration activities with Gilead. Arcus has always referred to our partnership as an all-in collaboration, and today's announcement reinforces our mutual commitment to one another and our shared vision for creating one of the largest, most diversified and premier oncology portfolios in the industry. Second, Gilead brings a significant operational expertise with global reach. The $725 million upfront payment and cost sharing for 5 clinical stage molecules, together with the $743 million of cash we had at the end of the third quarter, puts Arcus in a strong position to invest aggressively in our clinical stage molecules and research programs. The early opt-ins by Gilead also enable us to access and benefit from the clinical, commercial and global resources of a much larger partner. Third, Gilead exercising all 3 options now provides us with a tremendous amount of certainty and clarity, enabling us to go full steam ahead on our shared clinical development plans. It also simplifies the development of combination therapies with Gilead now having shared rights to all of the components of Arcus' intra-portfolio combinations. Fourth, the amendment entered into today is anticipated to accelerate the exploration of new cross-portfolio combinations with first-in-class potential. Before we move to Q&A, I want to spend a minute on the clinical development plans for the molecules for which Gilead is exercising their option rights. As I mentioned earlier, our 4 ongoing randomized clinical studies for etruma will be used to inform and design potential later-stage studies. This includes new clinical studies to evaluate our first-in-class triplet, dom plus zim plus etruma, based on the results seen thus far in ARC-7. We'll focus on settings where adenosine plays an important role in blocking checkpoint inhibitors from achieving optimal efficacy. For quemli, our ARC-8 pancreatic cancer study, is really just the tip of the iceberg. AstraZeneca recently presented very exciting randomized data for their CD73 antibody in Stage III non-small cell lung cancer, further validating the potential of this mechanism. And the early opt-in for quemli upon closing the transaction will allow us to expand our development plan for this molecule into other settings. For dom, there's much more to do with this molecule and mechanism. Gilead and Arcus are actively evaluating the initiation of several potentially registrational trials in 2022 in settings of significant unmet need in large patient populations. We believe anti-TIGIT will become an essential backbone and expect to share further combination studies, leveraging the mechanisms within both the Arcus and Gilead portfolios. And lastly, we're exploring clinical collaborations with third parties, which would enable us to maximize the value of our portfolio by combining our proprietary molecules with current or emerging standard of care therapies. The PACIFIC-8 study with AstraZeneca is an example of this. AstraZeneca will operationalize the study, which will be funded by AstraZeneca and us. Every day, it's more apparent that the path to differentiation in cancer is through novel combinations. This is becoming true for every class of drugs for cancer, whether anti-PD-1s, KRAS inhibitors, TKIs or even cell therapy. We believe that access to our molecules will allow for the creation of first and best-in-class combinations that offer meaningful clinical differentiation over other regimens. And before we wrap up, I wanted to share an update on our HIF-2 alpha inhibitor, AB521, our newest molecule to enter the clinic. Enrollment has just begun on our healthy volunteer Phase I study and information on the study is now available on clinicaltrials.gov. We started the year with a clear message that 2021 will be a transformational year for both Arcus and the field. It has been. As we approach 2022 with 6 outstanding molecules in the clinic, all with validated mechanisms, we expect that the year ahead will bring a number of important readouts and a corresponding portfolio of late-stage trials of innovative combination therapies that have the potential to change the treatment landscape for patients who need better options. In closing, we're thrilled to deepen our partnership with Gilead. With our combined laser focus on the advancement of our molecules, we could not be more confident in our ability to accelerate programs and get new possible combination therapies to patients as quickly as possible. 2022 is going to be an incredible year. We'll now open up the line to questions.

[Operator Instructions] We now have the first question on the line from Geoffrey Porges of SVB Leerink.

Congratulations, Terry and the whole team, on this great validation. Very nice to have this surprise coming late in the year before we expected. A couple of questions, if I may. One question that's come up is, could you talk just about zim? I know it's not the focus of the call today, but just how -- what do you need to do to get zim registered? And is that essential to the registration of some of the combinations? Could you talk a little bit about that? And then, Terry, tantalizingly, we were close to seeing more data for quemli. We were close to seeing the second interim disclosure on ARC-7, and now you're pushing that up to next year. Could you just give us a sense of what you consider to be differentiated? Are we talking 10 percentage points of difference or a couple of percentage points of difference? Because that's sort of what you've given us for the triplet over the doublet and the doublet over the monotherapy and then also for the, what I would call the quad over the doublet in pancreatic cancer. And then just related to that, of course, Roche has a CITYSCAPE update coming in the next few weeks. And I'm sure you're tracking ARC-7 to CITYSCAPE. Could you reassure us that your trajectory of responses is, as you've said before, following CITYSCAPE for both the monotherapy and the doublet arm?

Well, that's great. Thank you, Geoff. And I'm going to let Kartik by -- start by commenting on zim, and then I'll talk a little bit about ARC-7 and ARC-8.

Sure. So thanks, Geoff. So as far as zim goes, a couple of ways that we're taking that forward. First and foremost is in ARC-10, the Phase III is looking at the path to registering zimberelimab in monotherapy and that remains on track. The second is through the combinations, some of which we've worked with our partners at Gilead to get through into Phase III studies and ultimately register as part of combinations. So I think we have a couple of different ways to get zim across the registration finish line.

Thanks, Kartik. So first off, on ARC-7, as you know, we purposely not been quantitative. This study is still enrolling, but what I'll tell you about the triplet with versus the doublet and the singlet obviously is that it's really firing on all cylinders better than the doublet. So ORR, depth of response both look substantially better. It's a meaningful differentiation. The other thing I'll point out in that triplet, to just to be clear, there's only been one patient to date that's going out to progressive disease. So the triplet is looking very exciting, clear differentiation. Insofar as ARC-8, yes, you're right, we were teed up. We're actually going to do a substantial presentation on that. What I'd just point to is the data continued to look -- as we saw at the time of the ASO GI presentation -- and then we've seen things -- I'll just comment on a couple of qualitative aspects of this study that clearly are differentiating from gem/Abraxane. And one of those is simply the -- what we've seen in a number of situations are very prolonged diseases, stable diseases. So even cases where we've gone out well over a year, the other thing that we've seen are responses that come 3, 4, even 5 or 6 scans into the treatment. So you have this very much immunotherapy-looking type of response profile that qualitatively is very different from what one normally sees with gem/Abraxane where, if you are going to see a responder, it's usually on the first or second scan and then you may often see a rapid progression. So aside from the numeric aspects of this that are keeping us excited about it, some of these qualitative differences that point to an immunotherapy mechanism give us confidence in the addition of 680 and what it's bringing to that chemo regimen.

We now have the next question from Umer Raffat of Evercore ISI.

Congratulations, guys. I feel like Gilead opting in on TIGIT may not be a particular surprise given everything you guys discussed last week, but I do find it interesting that they're opting into the CD73 and the adenosine program as well. And I guess my first question is, did Gilead look into any interim randomized data of ARC-8 in pancreatic? Or was it only just single-arm data at the 100, 125 dose? And I have the same question also on the TKI refractory lung study in EGFR positive. Did they look at anything on early randomized data there as well? And then also one question for Bob or Jen, if I may. I know you guys are tracking at $280 million run rate on R&D right now. And presumably, there's a sort of whole host of trials that need to get started and run in a very efficient way. But on the flip side, Gilead will be picking up half of the cost. I guess I'm trying to understand, where is R&D headed? Is there a scenario where Arcus alone could be reporting over $500 million in R&D, let's say, in 2023 time frame? I'm just trying to understand how we should model all this out.

Thanks, Umer. I appreciate the questions on -- so insofar as the randomized data, too early to look at those data. So no, Gilead has not seen any randomized data there, but we have not either. What I would also comment, though, is clearly the opt-in to all of the assets recognizes the profiles, the quality of the molecules, the data that we've generated to date. And clearly, from a strategic standpoint, you do have this biological and clinical nexus between the mechanisms. And I think Gilead, like us, recognizes that the opportunity is to fully leverage and be as smart as possible across settings, across combinations to be able to utilize all of the components of the puzzle.

Yes. So Umer, this is Bob. On the financial part of the question, you're right on in terms of kind of our current run rate. I think the way to think about it is, if you were to look at the programs that are the subject of the options today together with zim, that represents slightly less than half of the spend rate of Arcus. And we've made and we'll continue to make a substantial investment in early-stage research. That core run rate will continue and will grow modestly over time. As we mentioned on the portion that does relate to these molecules, obviously, going forward, Gilead will be sharing those costs with us. We've got ambitious plans and we're going to be working with our colleagues at Gilead to fine-tune those plans for each of the molecules for the next several years, but it also takes a little bit of time to get those programs up to full steam in terms of spend rate. So the type of magnitude of spend that you were alluding to is not something that we would anticipate seeing any time in the near future. And maybe just to comment and kind of frame it more broadly, we have been guiding that we'll have cash runway at least through 2023. We would expect that today's news will significantly extend that cash runway. And as we have a chance to work with our colleagues at Gilead, we hope to provide a little bit more granular detail in terms of longer-term guidance and guidance especially for 2022 in the early part of next year because we know that will be a bit challenging to model.

We now have the next question on the phone lines from Robyn Karnauskas from Truist Securities.

This is Kripa on for Robyn. Congratulations. Very exciting to see this before the end of the year. So the triplet data, obviously Gilead has had a chance to look at it. Can you talk a little bit about what they've seen with 354 and what the strategy is? Is -- do you expect it to still be heme-focused? And one of the things you mentioned in the PR is potential Trodelvy combo as a chemo-free option. Do you guys have any internal data to support this? And finally, maybe you've mentioned this multiple times, but just can you remind us of the exclusivity of this opt-in with all the 3 molecules in the U.S. in terms of potential collaborations with other partners? Like how does it work with the AstraZeneca collaboration that you have?

So thank you, Kripa. So first off, on 308, which is what I thought you probably meant when you said what we're planning -- how we're planning to use that, in -- our guidance on that continues to be the same that it's an expansion study. We may learn something from those expansion studies that just informs our entire strategy, including with 154. But that molecule, at this point, we would maintain that optionality if we did go into hematological malignancies. Insofar as the strategy for the triplet, I would just say that's something that you should expect to see us really leverage. So this really the differentiating aspect of our program. If you think about the 2 companies that we look at is most competitive in this space, Merck and Genentech, they don't have either a CD73 inhibitor or an A2 receptor antagonist. So we feel that differentiation across settings and with various therapies, particularly therapies that are immunogenic in nature, really confirm advantage. And so I think as we go into 2022, you'll see a very robust development plan that takes advantage of an ability to not just run in the race, that doublet versus doublet, but where we have something that has that intrinsic competitive advantage.

And then, Kripa, on your last question regarding commercial exclusivity, I think Gilead will share commercial rights in the U.S. So to that point, they do have exclusive commercial rights with us in the U.S. That said, we have plenty of flexibility to do clinical collaborations much like we did with AZ. They were very much a part of the discussions, so they're very familiar with PAC-8 and are very up to speed on the PAC-8. The advantage that something like PAC-8 gives us is that we have a partner that can operationalize the study. So it just allows us to expand our footprint beyond what we'd be able to do on our own. And we also [ coop on the study is down ], but it also helps from a funding perspective. So these types of collaborations provide us with a lot of [ the images as I think Gilead. ] And I think you'll see more of those types of deals out of us.

I think you asked one other question that's related to combinations involving Trodelvy. That's something we'll talk about more. We don't have any specific guidance to give at this point. But even from the first day that Gilead had rights to Trodelvy, we recognize -- you can think about some of the settings where Trodelvy is already in play. And we believe that is -- it kills cancer cells through an immunogenic mechanism. So we can definitely contemplate multiple combinations with our portfolio. And I think we'll be forming up a firmer plan with Gilead on that -- in that area.

The next question we have comes from Alethia Young from Cantor Fitzgerald.

That was a pretty good guess on my name. And congrats, good stuff guys. So I wanted just like maybe a strategic question. You, now with all these options, have a lot of programs and a lot of expansion. You have -- but just can you talk a little bit about maybe some of the discovery work you might be looking to do and like in what ways might you expand? Obviously, you spend a lot of time in the adenosine access. Would you be willing to go somewhere else? So that's the first question. The second question is with CD73. Can you talk about maybe just maybe -- I mean, I know you're not placed on clinical programs, but maybe like the science behind maybe other kind of combinations since you have many different things now kind of in the hopper as well?

Sure. So thanks for the question. So I think the essence of your question is where do you go with adenosine modulation and how do we think of that.

Or where do you go in your pipeline next.

Okay. Got it. So first, let me talk about the adenosine piece of things. So this is a very ubiquitous pathway in cancer. So virtually all cancers, you'll find those cancer cells are covered with CD73. And that's because it does confer a survival event. So tumors are loaded with adenosine and it's a very well-understood molecular mechanism that adenosine causes T cells to become essentially quiescent. So that's something that, wherever you have an immunogenic therapy, so for example, in that Stage 3 lung trial, you have a pretreatment with radiation. Radiation is known, for example, to really upregulate CD73 expression. A number of chemotherapies kill cells in an immunogenic mechanism that generates what we'll call an adenosine fog. So you can expect to see us go fairly broadly. We've already had and generated positive single-arm data in colorectal cancer. We've reported out early data in prostate cancer. We've shown the pancreatic cancer data at ASCO GI. So you can think of things very broadly in terms of setting because this mechanism is highly prevalent. And then when you think about therapies that are particularly immunogenic in nature, almost inherently, they're going to all be having somewhat of an inhibition by the presence of that adenosine. I would say more broadly, when you ask where is our portfolio going, we've talked about HIF-2, very different mechanism. We're very excited about our molecules that enter Phase I. We feel we have a number of opportunities to differentiate there, both by combinations, but we think that we even have a molecule that might have better pharmacokinetic properties than the Merck Peloton molecule that might offer an advantage there. We, as you might have seen recently, disclosed a first target in inflammation. It's something that we'll be talking about later next year. We could have a molecule that we'd be taking into the clinic as early as next year. So if you think about our biology, it's very immunology focused. So even though the settings that we've gone into are oncology, we feel very comfortable within the immuno-oncology space. We feel very comfortable in cell intrinsic mechanism for cancer. And in fact, you can expect to see us even expand into more immunological targets per se.

We now have a question from Peter Lawson of Barclays.

Great. Congratulations on the news. Just I guess, firstly, on the royalties. Again, slightly reduced. So what helped drove that? Was it better bargaining position? And was there an offset that we should be thinking about?

Yes. So first of all, a very minimal reduction of royalties. And they were high to begin with. And they'll stay high, we think, for a collaboration like this. So they're tiered, as a reminder, and they'll range from mid-teens to the low 20s. So that's a very, very good excess royalty rate. As I said, the reduction is minimal. And really, the offset was because they are opting in early, particularly in quemli and etruma. There's a huge savings on our part as far as the R&D associated with those 2 molecules. So as soon as it closes, they will be responsible for 50% of the development costs as well as all the other costs involved in developing those 2 molecules. And so that's really what we were offsetting with the slight reduction in royalties.

So keep in mind, it's still -- in U.S., everything stays the same, 50-50.

Got you. Okay. And then on etruma, so the -- what drove the -- what trial data drove that kind of opt-in, early opt-in there? Was it ARC-7?

Yes, I would say that you should think about the drivers here is really much more holistic than any one data set. It goes back to what I was talking about. There's a clear -- if you look at all of our data, we believe and I think the field believes CD73 inhibition and A2 receptor antagonist is going to lead the drugs. These have very broad potential roles. And so to be opted into one or not the other, it really ties a bit of your hands behind your back to really pursue the opportunities that are inherent in the portfolio. And I think both Gilead and us want to go all in on bringing what we think will be very transformational therapies to patients. So you need access to all of the molecules.

Great. And then just, I guess, a final question just on the ability to combine with other things in Gilead's pipeline. What do you find most interesting? And is it kind of the CD47 side of things or the TROP2 ADC, just shift thoughts there?

Both of those are appealing. And you may hear more from Gilead, but we see a possibility for synergy with both of those mechanisms.

With cell therapy as well. So we've generated some interesting data on combining adenosine inhibition with cell therapy. So that's something else that we're also really interested in exploring with them.

We now have our next question today from Salveen Richter from Goldman Sachs.

Congratulations here. Maybe just a question here on the adenosine programs. You've shown us some early data over the years, but what do you think would be required to really give us proof of concept in terms of the upcoming trials?

So Salveen, we actually think that proof of concept is out there from both our data to date. We believe we -- when we share the data, particularly from ARC-7, that's extremely compelling, and it's a randomized data set. And we think the cost data are fairly unequivocal of the role of CD73 in that particular setting. But we look at those cost data also, like our own, given that adenosine is pretty much everywhere that's why we're talking about the tip of the iceberg, that it's really a mechanism that goes across settings and across therapies.

And then we'll obviously have more proof of concept over the next kind of 6 to 9 months with ARC-4, ARC-6 and then when people see the data at medical conference from ARC-7.

But I think the proof-of-concept part of this is that gene is out of the bottle.

We now have Yigal Nochomovitz from Citigroup.

Let me add my congrats on the Gilead deal. I just had 2. First, regarding future clinical strategies. Does Arcus reserve the right to combine dom, 308, etruma or quemli, with any of the Arcus' earlier-stage molecules like the HIF-2 alfa or even one still in the clinical stage? Or does Gilead take full control of dom, 308, etruma and quemli now in terms of future combo strategies? And then secondly, obviously, the CD73 is a fairly crowded space. So can you talk a bit more about what Gilead sees in quemli that offers differentiation versus the competitive landscape, especially versus the AstraZeneca molecule?

Thank you, Yigal. So insofar as combining, absolutely, we can combine with anything in our portfolio. And in fact, you would expect to see us combine with our HIF-2 inhibitor. In terms of differentiation, and I think you picked the right molecule to compare to AstraZeneca with their CD73 antibody. I think it's a great antibody, but we do think that we have substantial differentiation, both when you think about the molecule and when you think about the actual mechanism that finally works by versus the antibody. So I'll start with just the general difference whereby small molecule certainly is going to penetrate the tumor tissue better than the antibody. Perhaps more interestingly, so recall that quemli is extraordinarily potent and it's extraordinarily potent in inhibiting the enzyme. So it has an IC50 of less than 10 picomolar on the order of 5 picomolar. And that's a big difference in so far as the antibody actually does not fully inhibit either the enzymatic activity of the bound or is this enzyme is easily clipped from the surface of cells. And so there's tons of soluble CD73. And so it does not inhibit fully the enzymatic activity by either the soluble or the bound. So the way those antibodies in the AstraZeneca antibody specifically was engineered is it causes internalization of that enzyme and cells. So clearly, it cannot do that to be free and soluble CD73. So we think there's a potential advantage of being able to inhibit 100% both the soluble and the membrane-bound enzyme in that the AstraZeneca molecule, to the extent that the soluble CD73 is playing an important role really can't fully mine the mechanism. We think it's a great antibody. We think they've generated great data, but we do feel the small molecule has advantages.

We now have Mara Goldstein of Mizuho.

Congratulations. So a couple of questions. And maybe the first is in the time that has elapsed since you guys disclosed that Gilead had requested an opt-in package for dom and AB308, what transpired between then and now such that the opt-in now is inclusive of the other candidates? And I guess the question is what did they see over these last 2 weeks that they hadn't seen previously, given that you didn't announce that they have requested an opt-in package on those. And then I wanted to ask on ARC-10. Has indeed Gilead seen any data generated thus far from ARC-10? And are you able to modify ARC-10 protocol to now include other arms? Or would any further study on the triplet be totally separate?

Thanks, Mara. So I would say the what happened part is really, this has been an ongoing discussion. So we had guided that when they did sort of request the -- or trigger that opt-in review period for anti-TIGIT, we would disclose it. And so we did since we have committed to that. We've never even disclosed any criteria relating to other programs. And so I think that they've been watching and we've certainly communicated an enthusiasm and excitement from Gilead. I think earlier this year, we may have even mentioned that the CD73 inhibitor program was among the most exciting to them. And so I think it was less data events in the last couple of weeks, but just the coming together of the full strategic consideration about how we want to develop our portfolios together that they recognized and tied this all one nice bow around the box of programs and just decided, let's go all in now and go full steam ahead. We need all these molecules to fully leverage the opportunity. So I don't think it was any independent or single data event, it's just a recognition that this portfolio molecules. I mentioned this a few times. There's no company large or small that have CD73 to be anti-PD-1, anti-TIGIT. And those are clearly pathways that are co-mingling in cancer. So it's really an awesome opportunity to have the entire package. In so far as ARC-10, no one has seen any data from that yet. It's early in a large randomized trial. And we really would not consider modifying that particular protocol. So anything that we might do with another combination or triplet, you could expect to see a new development pathway. And I think what you'll see is our trial designs going forward where we think about triplets, for example, are going to be really well thought out and nothing that looks like a bolt-on. I mean, these need to be trials that are very well designed, attractive for enrollment, and we want them to be the trials that patients will want to go on to. So anything beyond what you're seeing in ARC-10 will be a new trial.

Okay. And if I could just ask 2 other small questions. The reimbursement that's due on ARC-10, are you able to give us a ballpark figure of what that might be? And then lastly on the notion of around accelerating other pipeline programs, given the opt-in on essentially adenosine pathway inhibitor CD73, does that change the time line for your CD39, which is a preclinical asset?

So I'll answer the second question, and then I'll let Jen and Bob comment on the first. CD39 continues just as before, no changes.

Yes. In terms of the first part, Mara, it's not a real significant amount of money yet. We haven't disclosed any of the specifics there. But as part of the guidance early next year, we'll obviously incorporate all of that into the thinking for next year's financials.

We now have a question from Kaveri Pohlman of BTIG.

Yes, congratulations. For quemli, what are you thinking about development there? The best data is in pancreatic cancer, but is it ever a better option than etruma? And is this real place in addition to etruma if etruma isn't complete? And my second question is in terms of earlier than expected opt-in, was it the etruma data or the overall excitement in the space that drove the deal?

Thanks, Kaveri. So on CD73, you can expect us to see us go with that pretty broadly. It's not obvious at this point that either blocking CD73 or blocking the action of adenosine as adenosine receptors that one or the other is better. And in certain settings, the example we always give is prostate where there's a CD73-independent mechanism for generating adenosine. So there, you certainly want to have a receptor blocker. But given the flux of adenosine generation, you may want to also inhibit the adenosine formation, so that's an example. If you look at ARC-6, we do have an arm that actually, at least in the very early days, has generated some interesting signal where we're combining both molecules. But there's no reason, for example, in lung cancer where we've seen this interesting data already with etruma to think that CD73 might do better. With that said, the AstraZeneca COAST data, clearly, if you were thinking about things that are right down the middle of the fairway, you could think about a COAST-like study where you had an anti-TIGIT and the CD73 inhibitor and how you would juxtapose the pretreatment with the radiation is something to think about. So I just take that out there about is a couple of concepts that we might be thinking about. What was the second?

Yes. And about the portfolio versus individual molecules, and I heard this now. And I think it was really everything. I mean, just in a number of [indiscernible] between our own data set and data set from AZ. So I think along the way, Gilead definitely developed more and more conviction in our portfolio of molecules. They like the idea of going all in on everything. Instead of kind of plucking out dom and investing just in dom, I think they realize and we realize more and more that it makes sense to think about our portfolio holistically and making sure that we're allocating our capital and resources to the best programs, the best combinations, et cetera. So it was really all of that.

As we have no further questions left, I would like to hand it back to Terry Rosen for some closing remarks.

Thank you. So thank you to everybody once again for joining the call today. We really appreciate the continued interest and engagement and also all the great questions. So thank you very much.

This does conclude today's call. Thank you all again for joining. You may now disconnect your lines.