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

Okay. Great. Welcome, everyone. I'm Yigal Nochomovitz, one of the biotech analysts here at Citi. Welcome back to the Citi Oncology Summit in the first quarter of the year. So it's my pleasure to have with me senior management from Arcus, Terry Rosen, the CEO; and Juan Jaen, President. So gentlemen, welcome. Thank you so much for taking a few minutes to chat. Really appreciate it.

Thanks Yigal.

Sure. I think everyone is obviously super familiar with you guys given the debate in the TIGIT space. But nonetheless, it would be helpful if you could -- Terry, if you could just kind of level set kind of give us the quick overview of the pipeline and what are the key upcoming catalysts that people need to be aware of and just at a high level, how you -- how Arcus approaches drug development differently from some of your peers.

So thanks, Yigal. It's awesome. Thank you, everybody, who's joined. We're always excited to chat with the external folks. Maybe I'll start off with ARC-7. I think everybody at this point who pays any attention to us knows what ARC-7 is so I'll just jump right in. We're clearly very excited about the data that were just presented in December, the ASCO Plenary and what we showed there was more than a doubling of the median PFS for dom, zim, anti-TIGIT, anti-PD-1 versus zim, the anti-PD-1 in that front line high PD-L1 non-small cell lung cancer. To get a bit more quantitative, that was a median PFS of 12 months for dom, zim versus 5.4 months for zim and really awesome hazard ratio of 0.55. I think importantly, while everyone hates cross-trial comparisons. We hate cross-trial comparisons. But nonetheless, people love cross-trial comparisons when it comes to Q&A, I think it's important to note that the PFS for dom, zim exceeds the publicly available Phase III data for not only anti-PD-1, but anti-PD-1 plus chemo, KEYNOTE-189 in this setting. As a reminder on that anti-PD-1 or KEYTRUDA plus chemo resulted in about 9 month PFS in that high PD-L1 group in KEYNOTE-189. So below our median PFS of 12 months at the last interim analysis of ARC-7. Since these data were presented, and this was one of the principal reasons, we really push to get them out there in an investigative form, so rapidly. We've been sharing them with sites. We've been sharing them with investigators as we're enrolling these Phase III studies. And we've been really thrilled with the response that we've received from the investigators. So been very well received. We'll have additional data to present at ASCO. That will be on all 150 patients from the study. And as you know, we also have a very broad development plan for dom that includes 4 Phase III trials across lung and upper GI cancers. And in fact, we're doing more planning together with Gilead. I think not only internally, but we're really encouraged by the investments we see being made across the industry in TIGIT. So clearly, the field is expanding. AstraZeneca, in the last earnings talks mentioned that they've initiated a new trial with their anti-TIGIT PD-1 bispecific antibody. I'll remind people that actually has an Fc silent TIGIT arm, I think it's interesting, as you know, we have the collaboration with AstraZeneca on PACIFIC-8 in Stage III lung. So clearly, they've seen all our data. I think that probably had some influence on them. And beyond Roche, Merck made it very clear in their last earning calls that TIGIT is a big part of their plans going forward and obviously have a number of Phase III trials. So the large pharma beyond us is clearly speaking with their feet and their dollars. Well, while dom has been such an intense focus for a lot of folks, I think we have a lot more going on and a lot more that we're advancing. And so let me spend a little bit time on the rest of the portfolio. So let me start with a molecule AB521 our HIF-2 alpha inhibitor. We really think that's a drug waiting to happen given the validation from the Merck Peloton molecule. So we're looking at that now in ARC-20, that's a Phase I, Ib study in second-line RCC. I think Yigal, you asked about our approach and our differentiation. And really from day 1 of Arcus, the place from a technical standpoint where we differentiate is in the small molecule class, and that's holistically, not just the medicinal chemistry. But I think HIF-2 is probably a prototype there. So it's a very exciting class. But it's also a transcription factor. And so that's why you've seen, despite the success with the Peloton Merck molecule that there's very few molecules at least in the clinic. And that's because as transcription factor, it's a very difficult target to hit. So that's certainly a source of belittle competition. And I think it demonstrates the strength of our small molecule discovery group and particularly that's why we put so much energy into what we think is a best-of-class molecule and a best-in-class profile. And it's a very clear and tangible aspect, so this isn't just a narrative. The thing that we've already demonstrated in the early clinical trials, and we're continuing to expand on that is that we can achieve higher drug levels than with belzutifan and that will give us the opportunity to hit the target harder. Where that study stands, the second dose escalation cohort, which is 50 milligrams is now enrolling. That's a very pharmacologically meaningful dose. So you'll recall we did a healthy volunteer study that lets us start at a very meaningful dose. While ARC-20 dose escalation was designed as an all-comers study. We do think that given the mechanism we may get a few see clear cell RCC patients in and as a matter of fact, the first patient in was. And we hope to and expect to achieve our dose [ 4 ] expansion by the middle of the year, and then start the Ib portion in the second half of the year. So I think as the year goes along, you'll hear more details on a more expansive plan around that in the second half of this year. We have 2 important randomized readouts for etruma in prostate cancer or ARC-6 and colorectal cancer ARC-9, we expect to have those data in-house this year. We also have ongoing Phase II studies for both etruma and quemli in non-small cell lung cancer and GI cancers, which will generate data in the future. I think with the collective set of trials we're doing for those molecules, we feel with the multiple hypotheses, whether it's combinations or settings, we've really given -- we're giving those molecules their best opportunity to succeed, and we'll read out on both of those this year and probably early into next year. We also have -- and this is a big thanks to the Gilead collaboration, another unique aspect of Arcus, not only are we growing such a substantial development capability, but we maintain and continue to grow the discovery organization. And in fact, we have 3 potential first in humans or INDs this year. So the first I'll call out is what we think will be a best-in-class small molecule AXL inhibitor, and that we would primarily derive from its selectivity, that is expected to enter clinical development in middle of the year. We expect to target STK11 mutant tumors with this molecule. We have a CD39 antibody, which will also enter clinical trials by the middle of this year. And then finally -- and third, our first molecule for inflammatory disease. So you'll see us doing more in immunology. We'll talk a little bit about -- more about this target a little later this year, but this is a target people will be familiar with. We think again, it has best-in-class potential. And we expect to enter the clinic either by the very end of this year or otherwise early into 2024. So we're just entering preclinical development there. And then we continue to have multiple discovery programs in oncology. And as I said, we're adding immunology. And couple of these oncology programs are part of the early oncology research collaboration with Gilead. The last point I'll make, we're well capitalized. We had $1.2 billion at the end of September last year. And I think very importantly is that 50% cost share, I think that's hugely enabling on all of our clinical programs, except AB521 that net comes from our collaboration with Gilead. So I'll stop there. That was a mouthful, and Juan and I are happy to take your questions.

That was very comprehensive. So let's see, let's start with TIGIT. So you mentioned 150 patients, more data at ASCO. So I think everyone is curious to know more specifically what can you say about what we'll learn incrementally at ASCO from ARC-7. And I know you've gotten this question literally 1 million times, but nonetheless, I think it would be helpful if you could just run through again why we shouldn't be necessarily comparing what you showed with the zim monotherapy to what's been shown with pembro and why that comparison may have -- maybe troublesome or not necessarily be valid.

Sure. So let me start with the zim piece. I think the first thing is the data that we have generated already. So any investigator that's worked with zim has continuously commented, looks just the same as any anti-PD-1, looks like pembro. The data sets that Gloria generated, including their approval in China in classic Hodgkin's lymphoma, if anything, if you were to compare cross trial it looks a little better than pembro. If you were to look at the data they presented in cervical, also similar. And then I think it's been discussed sort of ad nauseam how real-world data for all the reasons of the timing of those initial studies with pembro in the clinical trial world at the time, [ what ] the other options for patients. So both the time and the evolution, how that has changed things. And I think the best, if you want to put the cherry on top of whipped cream, that describes a lot of the analysis that's gone into that, I think, is reflected in the PERLA study that Glaxo just read out where they looked at essentially the KEYNOTE-189 type of study, the TESARO Glaxo antibody plus chemo versus KEYTRUDA chemo and the KEYTRUDA PFS was several months lower than what you see in KEYNOTE-189. So we field the best data, and I think everybody agrees on this, really comes from the cross -- internal trial comparison. The last point I'd make is just even differences in scanning intervals, which Andrew shared, analysis, I think it had been done by an academic group that showed even that can affect pretty substantially PFS. So we have all the confidence in the world in zim. To the initial part of your question about what we'll be sharing, we will share the full 150 patients. By that point, all patients will have had at least 2 scans. So you'll have both more mature data by roughly 5 months or so from the last interim analysis as well as the totality of that patient population from our study.

Okay. And then obviously, the other huge question is with respect to the Roche program and the SKY-1. So how does that impact your thinking? We're all waiting for the overall survival data, obviously. If that works, that's, I think, easy. But if it doesn't, how does that impact your TIGIT strategy and your willingness to invest in the program.

Yes. So I just -- I want to emphasize our decision-making at this point is really driven by our own data. We have a very compelling data set. It's a substantial data set. So unless we learn something unexpected, somehow tirago had showed absolutely nothing. We're focused on our data set. We're focused on the evolving data set and very committed, both us and Gilead. I'll just remind you, our study is different than their study. They are different compounds, different trial designs, study sizes and assumptions. So we don't really know much more about SKY-1 than what's been in the press releases. But what I think is also important -- this is really, I think, important for the field. SKY-1 is just one study of many. We have the ARC-7 data set. We have 4 Phase III studies ongoing. Merck clearly was emphasizing in their last earnings call, how important anti-TIGIT is to their future. They've got the number of Phase II and now more and more -- I think 5 Phase III studies. So clearly, they have data that, at some point, they'll share. Beijing has several studies. AstraZeneca has seen our data. They're moving aggressively with their bispecific. So I think what you're going to start to see, there's been sort of a hyper fixation on SKY-1 because for a while, it was the only game in town. But at this point, I think everybody is looking at their own data and making their decisions in the smartest way driven by their own data and Genentech Roche will make their decisions based on their data. But we and Gilead feel quite confident as well as Taiho as well based upon the data that we have ourselves.

Okay. So it was interesting at the ASCO Plenary session in December, I think it was Dr. Peters. She was talking about defining some of the pathway, specifically CD226 for developing biomarkers for the TIGIT antibodies. Could you comment or expand on that thought? And what are you guys doing to hone in on how to find the best biomarkers for the TIGIT antibodies since -- and would we see some of that may be at ASCO?

Juan, why don't you share what we're looking at, how we're thinking about that.

Sure. Just a couple of points. First of all, we don't think that you necessarily need to enrich for patient population beyond what we are de facto already doing in studies like ARC-10 to select for PD-L1 high patients in that particular setting. Having said that, we agree that the biomarker analysis can be really informative in terms of understanding -- shedding more light on the potential mechanism of action underlying the activity of dom, along those lines, we've collected a very large number of markers related to the TIGIT CD226 pathway, including quantifying levels of the ligand as well as both TIGIT and 226, still very early. We're literally in the process of processing a lot of that data, and it may very well be that there is some of that data that finds its way into the June ASCO update.

Okay. And then the other feature of ARC-7 that maybe doesn't get talked about as much, although I've mentioned it in my research. On the triplet, so there, you didn't see an additional benefit on adding the etruma, although my argument, as I think you know, is that it was in some potentially sort of a hidden positive in the sense that since it was open label, you didn't see an inherent bias with the 3 drugs. But nonetheless, I'm just curious, given what you saw there with ARC-7 and seeing essentially the same PFS or maybe slightly lower with the triplet, what is your a level of comfort and continuing to invest in the etruma. I know you mentioned you are doing some additional studies there.

Yes. So we're actually still very excited about etruma. Let me pass that out on a couple of fronts. So obviously, on the ARC-7 front, we did not see anything and we noted this even at the third interim analysis, we were not any substantial differentiation even at the third interim analysis, but we are playing that out, and we want to see on OS, whether there might be some differentiation, obviously, we'll learn that in the latter part of this year. The piece that we remind people and ourselves, while it was very exploratory, we did see a couple of intriguing responses in those patients that had progressed on the monotherapy and then went into another arm that would look at those in the triplet. And I'll remind people that those have to be confirmed progressors. So we're continuing to monitor that. We'll have additional patients. Clearly, that part lags the rest of the study because those patients have to have progressed on anti-PD-1. So we thought that was an intriguing part of the study. I think a number of investigators will also find that as well. I think the other part, though, gets it -- the fundamental hypothesis that we're looking to test. And ARC-6 and ARC-9 are a little bit closer to home on that. And that gets to the chemo-containing combinations. So if you go back when we first started to work on the ADP adenosine pathway. One of the biggest drivers for us, and that's why we were into the chemo combinations perhaps earlier than some of the others, which have more gravitated that way, including AstraZeneca. So as a reminder, those particular types of chemos that kill cells through an immunogenic cell death type of mechanism, cause the generation of a very substantial levels of adenosine as part of that killing process. So we think that those types of settings are obviously at the top of the list for exploration. And that's amongst the reasons why we see ARC-6 and ARC-9 as such important readouts. I'll also remind everybody, and we continue to have an interest in this as well. The data that AstraZeneca generated with their CD73 antibody in COAST, in Stage III lung, which also includes chemo and radiation, both known to -- you have a situation where you're inducing CD73 is as well as inducing PD-L1, we think that's another quiver, if you will, or air on the quiver of suggesting the mechanism does have a role that could be important in cancer.

Yes, we did. As you may remember about -- I think it was a year ago, we did a very big deep dive on the CD73 space. But while we're on the topic, I think so people don't have to read that report. If you could just tell us, so oleclumab is the 1 you're referencing, I believe, the AZ compound. What is -- tell us about the pitch for quemli versus that one? I mean yours is a small molecule, obviously. But apart from that, what is potentially more interesting or differentiated with quemli?

Juan, why don't you talk a little bit about what we know about quemli and how it differentiates from the antibody, biologically and physicochemically.

Yes. So oleclumab is what I would describe as a first-generation CD73 antibody, and it's well-established public information that it doesn't work particularly well against soluble CD73. So it's a molecule that exists, both as a cell bound as well as a soluble portion. We designed quemli to inhibit equally potently both the cell bound as well as soluble form of the enzyme. So that's one main difference, we believe, potentially consequential. The second one, of course, as you pointed out, this is a small molecule we anticipate that it's going to have easier reach for the deeper corners of the tumors than your average antibody will.

Okay makes sense. And then, Terry, just going back to ARC-6 and ARC-9. I think people are less familiar with those trials. So if you could just kind of quickly go through the design. I mean, I think it's pretty straightforward, but just if you could just go through and when are we getting those results?

Sure. So we'll have those results. We've given -- we'll have them in-house, and then we haven't decided yet which conference that we'll share them. They're both randomized studies, and I'll let Juan talk a little bit about what we're looking at in both of those.

Sure. So in ARC-6, we're looking at metastatic CRPC. We started the study with 3 different cohort settings. We discontinue one of them fairly quickly based on a futility analysis. So the data that or the cohorts that will yield some data today. One is a very late line chemo-free combination looking at etruma plus quemli plus zim our PD-1 antibody. Then we have a second line cohort in which we're combining -- these are patients that have progressed on NHT therapy. So we're comparing docetaxel plus or minus etruma plus zim versus docetaxel alone. So that's what we are looking forward to within ARC-6. In ARC-9, we're looking at 2 separate cohorts. One is in the third line plus. Chemo in which we are combining etruma plus FOLFOX comparing that to a standard of care regorafenib and a second line cohort in which we are [ comparing ] FOLFOX plus or minus, etruma and zim as the additive on top of the standard of care chemotherapy. So both of those cohorts, again, randomized cohorts in ARC-9 will also be yielding data in 2023. You recall a couple of years ago, we presented data from ARC-3 which was a single arm -- a couple of single-arm cohorts in which we showed what appeared to be, it still appears to us, is a very interesting activity data set for etruma plus FOLFOX in across different lines of therapy. The data that we showed a couple of years ago was that -- was particularly interesting was etruma plus FOLFOX in a late line cohort in which both PFS and OS were significantly higher than what's now accepted as a standard of care regorafenib or other late line standards in CRC.

And I mean, do you have a thesis as to which of these the prostate or the CRC is sort of more likely to show something based on the biology or not?

I think they're complementary hypotheses. I think colorectal is a particularly interesting one, GI, adenocarcinomas of which CRC is one of the tumors that fall into that category are particularly high in CD73 as you know, MSS CRC is not particularly sensitive to IO approaches. A hypothesis is, that we're exploring in this trial, is that adenosine may be one of the factors that prevents T cell response to that tumor, particularly following immunogenic chemotherapy like FOLFOX. In prostate is a little different. I think what we're exploring there is a little bit more of the -- this alternative source of adenosine generated by PAP, which is a prostate cancer-specific source of adenosine. So I think they're both equally interesting, but somewhat different hypotheses that we're testing.

You got 1 other sort of -- I mean, if you just always look at like experiments that would be confidence enhancing, the fact that we already have the data from ARC-3 clearly made us feel good about sort of colorectal, that was the genesis of ARC-9. And while it was early, and we'll see what happens in ARC-9, Juan's team had generated some interesting biomarker data albeit small number single-arm study that showed an interesting correlation and going in the direction of the high CD73 population, having better outcome, which is interesting that since it's -- even though it's single arm, that is a negative prognostic. So that certainly gave us impetus to invest in the randomized study.

Okay. Sorry to jump around a little bit, but I do want to -- I do want to go back TIGIT, we're kind of going in not in a linear way, but it's okay. So -- because you mentioned some of the other Phase III. So let's -- can we just go through those? There's quite a few you have you have the ARC-10, STAR-121, the STAR-221, I might be missing one. So let's just go through each of those. You made some recent changes to ARC-10. Why did you do that? And what are the goals for that study, time lines for the data for that one?

Yes, that's great. So let me start with that ARC-10 question. And we're actually thrilled that we could make the protocol amendment to ARC-10 that the FDA agreed we could do that as an amendment. So the real genesis of that change was simply how the field has evolved since we initially designed that, which to give you a sense how long ago that was, it was before we had even signed the Gilead collaboration. And as the world changed, the thing we accomplished there was very clear. So we went from a 3-arm study involving chemo to a much simpler in what we feel is better designed where we're running where the control arm is now KEYTRUDA. So that results in a number of things. It simplifies it, it's 2 arms, probably most importantly, though, if you look at all 4 of the registrational trials we're running, we are running versus the global standard of care. So not only from a registrational standpoint, is that important, but we feel from an ultimate adoption in labeling, et cetera, the fact that we're running now against pembro is a big advantage. And of course, what that does is, it makes it better for physicians and patients as well, and that enables expansion of a global footprint into both the U.S. now as well as Western Europe. So simpler, better design that makes it attractive to patients. On none of these studies -- just because they're all basically getting up and going. They're relatively early. We really haven't commented yet on the time lines. The other trial that I'll mention that you didn't mention just to call it out, and then we can get into STAR-121 and STAR-221 is PACIFIC-8, PACIFIC-8 is the trial that we're running in collaboration with AstraZeneca. So that's -- that involves durva plus dom versus durva. And as you know, durva is the standard of care there. They have like something like 90-plus percent of the market. So everyone will recall, we worked out that agreement under the umbrella of the Gilead collaboration and very shortly after we commenced the Gilead collaboration because we felt the AstraZeneca was the right company. They have the platform, they know the investigators, they know the field, so to help them execute that we feel it's an awesome opportunity in the way that's structured, we get all of the anti-TIGIT [ integromics ] get the durva [ integromics ]. So that was the 1 trial I just covered that you didn't mention.

Okay. And then I know you sort of answered this already with respect to the [indiscernible] and thinking about zim versus pembro. But nonetheless, I think some people would still appreciate just a little bit more perspective maybe on as you mentioned, you're going up against pembro in ARC-10, but the active is dom plus zim. So just help us understand why that is not necessarily going to be a limiting factor?

Sure. So we discussed contribution of components very extensively with the FDA. We have ARC-7 data set. The other thing is that in STAR-121, which you may get to, but I'll point out one element of it, we actually have. So STAR-121 for those of you who aren't familiar, is our study that involves chemo in PD-L1 allcomers. So it's dom, zim plus chemo versus KEYTRUDA plus chemo, but we're also running in arm. So KEYTRUDA chemo's the control, but we're also running an additional arm that is zim chemo to get yet another direct comparison. So that's all been discussed with the FDA. And in any of these situations, we've had a lot of discussions not only from a regulatory standpoint, but with KOLs and physicians and investigators and the key thing will be is do we beat the standard of care in each of these. And so that will be what's adopted and what's looked at. So we feel very good, as we talked about before, that zim looks just like KEYTRUDA. And one thing that I'd just like to describe that since this question comes up, for those companies really looking to be players in the field. It's not so much looking to come in without like a biosim or go out as a monotherapy, but the ability to execute, price, deal with the secondary payers. It's very, very important that you have an anti-PD-1 that you can control. And I can't even describe a lot of times, people don't even recognize just even the execution of the trial, not only the cost of having to use -- in this case, we're using the KEYTRUDA as a standard of care. But the logistics, if you don't have your own anti-PD-1, you're at a very substantial disadvantage just from an execution standpoint. So our general feeling and again, we've done a lot of market research on this. Gilead is in complete agreement, is what you're going to see play out over the next several years is the anti-PD-1 is really going to become the commodity. And in this case, the dom is going to become the more innovative component. And in fact, not only us but Gilead also, when we talk about, we start to think of dom, zim as even becoming the backbone. So this field is going to go on and on and on beyond where we are today. And the way I think that things are starting to shape out and they play out is basically what you can think of as anti TIGIT turning anti-PD-1 or anti-PDX into super anti-PDX. So at some point, that's going to just look like a single entity and then others who put things on top of that -- super checkpoint combination in the future.

Okay. So on the -- thanks for that. On the point around contribution of components, so just so everyone is clear, I mean, for ARC-10, so you're going up against KEYTRUDA, but you do have -- as you mentioned, you do have the zim monotherapy as well, if I'm not mistaken. So how is this going to work in terms of the way it's analyzed. It's going to be dom plus zim versus pembro as the primary comparison and then dom, zim versus zim as a secondary or just -- how does it work?

Yes. So the comparison will simply be dom, zim versus KEYTRUDA. So that's -- in ARC-10, there's only the 2 arms. But we have supportive data from ARC-7 that we'll be able to share with the FDA. So the key thing is going to be that you beat the standard of care, which is KEYTRUDA, which would be -- that's very -- you're going to look to see that that's clinically and statistically meaningful way, and that will drive its adoption but as part of the whole process. And this is something we do with the FDA since we have such a broad and holistic program. A lot of our discussions, we'll talk about, well, if we have this from this study, this arm from that study as part of your ultimate regulatory package, will that satisfy the requirements? And those are the type of regulatory discussions we've had relating to those contributions of components. Go ahead, Juan.

I may add something because I think earlier, you mentioned the 3-arm design. Terry was referring to STAR-121. So that's the PD-L1 allcomers study in non-small cell lung cancer, in which we have 3 arms.

[indiscernible] No, I'm sorry, go ahead.

I was just going to say, the main comparison there will be dom, zim plus chemo versus pembro plus chemo. There's a third arm that we'll enroll fewer patients that will look at zim plus chemo, and that will give us within that study also the opportunity to address contribution of components on a chemo backbone. But the main comparison would be dom, zim chemo versus pembro chemo.

Okay. And just to clarify, then for ARC-10, it's -- what is the main comparison.

ARC-10 is...

KEYTRUDA.

KEYTRUDA versus dom, zim.

I guess, on clinic trials, it still shows there was a zim monotherapy.

Yes, that's just -- that goes back to the -- that hasn't shown up on clinical trials. Now I understand your question because we've gotten that a couple of times. That was the old design. And we thought that was a real advantage on multiple fronts to make the switch to KEYTRUDA as the control arm. And in fact, that's what we went and proposed to the FDA when we did that. They liked that as well.

Okay. And then the other one, the STAR-221, the GI trial, well -- just go through that one quickly.

Sure. Juan, why don't you talk about the rationale and everything about that study.

Sure. Yes, so STAR-221 is being operationalized by Arcus. The one that we were just talking about STAR-121 is being operationalized by Gilead. Scientifically, the rationale in both cases is similar. And it stems from the fact that as Terry pointed out, we believe that a PD-1 TIGIT [ double ] is going to work well in settings where PD-1 works, whether it's as a single agent or in combination with immunogenic chemotherapy. So using that rationale and the fact that we saw some interesting responders in our Phase I study looking at dom plus zim, we shared some of that data previously, gives us a lot of excitement about looking at a combination of TIGIT plus PD-1 plus chemo in a setting that is quite unique. So our competition is looking -- to the extent that they're looking at esophageal cancer, they've chosen to focus on squamous histology. Our study is particularly focused on adenocarcinoma of the upper GI. So we'll be looking at gastric, gastroesophageal junction and esophageal adenocarcinoma. So it's a real opportunity for to be first, take advantage of the fact that, that particular space is not as crowded as some of the other settings are.

And then you're not looking at -- you don't care about HER2 status, right for this, you're just looking broadly.

So at this point, HER2 positive or we're focusing on HER2 negative. And the study design there is 2 arms -- sorry, yes, 2 arms. Looking at dom, zim, chemo versus nivolumab plus chemo. That being the standard of care in that setting.

Okay. And let's talk a little bit about some of the earlier programs. I think you mentioned you're starting the AXL inhibitor trial soon. So what's the pitch on that asset? And there have been a number of other AXL inhibitors, if I recall, but I don't know how far they've gotten in the clinic.

Yes. I mean essentially, every TKI that you can name probably touched the [indiscernible] to some extent. So depending on the year, people have over time chosen to highlight the AXL component of what's otherwise a fairly nonspecific TKI profile, we decided to go and make the world's best, most potent and selective AXL inhibitor which I think we accomplished, the molecule is AB801. We think we can take advantage of some of the data that's been generated by earlier compounds. Lately, our -- 2 of our competitors have shared early, but intriguing data in advanced non-small cell lung cancer and second-line plus ovarian. We've chosen to steer our AXL inhibitor program towards a second-line non-small cell lung cancer population. As Terry pointed out, the STK11 mutant subset of that is particularly interesting from a biological perspective, but I think at this point, we're aiming towards an unselected population and will take a look in a randomized fashion comparing standard of care chemo against chemo plus our AXL inhibitor in the second line non-small cell lung cancer population. And again, the plan is to initiate that study towards the middle of this year.

Would you ever think about combining with of the KRAS drugs because I think that's an area of interest for the STK11 mutants, right?

It definitely is of interest. It's also -- some of the stuff that we haven't talked about publicly is also targeting STK11 mutant tumors. So down the road, I can see both the opportunity to combine with KRAS inhibitors but also with some of the other things in our portfolio, way down the road.

Okay. And then the CD39 antibody is new, you're starting a study there. Remind everyone what CD39 does and why that -- what the relevance of that mechanism is locking that target?

So CD39 is an enzyme that's involved in the degradation of extracellular ATP. So when cells die in a particular fashion, we refer to it as immunogenic cell death, one of the things they do is they spill over massive amounts of their guts into the surrounding environment. ATP is recognized by the immune system as a sign of danger. CD39 removes that sign of danger. And so what we're trying to do by blocking CD39 is enhance the ability of the interdict cells to recognize a dying cancer cell and mount, orchestrate an effective T cell response against that tumor. It's not the first CD39 antibody to make it to the clinic we just don't think that some of the earlier entries have properly tested the therapeutic hypothesis that I just formulated. So we're going to go for a very -- in a very, very focused fashion into a combination in tumor type that we think best aligns with the hypothesis that I just outlined.

So it's similar conceptually to the adenosine blockade but with an antibody, right? Is that fair?

I actually -- I don't like the classification of CD39 as an adenosine type of approach. Even though one of the consequences of having -- preventing the hydrolysis of ATP may in fact be affecting the level -- the amount of adenosine. It's fairly upstream. So we're primarily focused on the effects, the benefit of having more ATP in the tumor and the resulting enhanced activation of the interdict cells.

Yigal, I think one thing -- it's really -- it's almost like the push pull. So in one case, blocking adenosine is removing something that's putting a break on the immune system, if you will. Blocking CD39 keeps the thing that actually has the activating effect, present. So they're really -- they're literally 2 different hypotheses that happen to involve the same biological pathway. But in one case, you're doing something that activates in the other case, you're removing a repressor.

Got it. Okay. That's helpful. And then earlier, Terry, let's just talk about HIF-2 alpha again so I think you mentioned that you're getting better drug levels than Merck. So is that the differentiator for AB521? Or is it also more potent? Or is it -- this is a PK-type argument?

I'll let Juan describe that -- this is really an amazing molecule that they -- an optimization effort. So Juan, why don't you describe what we're doing and the advantages, et cetera.

Yes. I mean I think the company is nominally more potent than belzutifan, but I wouldn't -- that's not the first thing I would highlight to anybody. It's primarily the ability to reach significantly higher circulating levels of the drug than what's inherently possible with belzutifan. So belzutifan's half-life and whatnot is fine as it is a small molecule drug. They just -- they reach a point of saturation where going higher in doses does not translate into more amount of drug being absorbed. And the question on the table that we intend to evaluate clinically is whether pushing the amount of drug higher than what belzutifan can reach translates into a better clinical activity profile. And the data we've generated so far in the first cohort in the dose escalation study in cancer patients, but in an earlier study in healthy volunteers is very supportive of at least the fundamental premise of a compound that has phenomenal human PK that hits the pathway extremely well. In fact, I've been surprised on the positive side. If anything, our prediction was a little bit conservative. It's doing more biologically. And this is just measuring peripheral PD it probably works a little bit better than even I expected. And so the next step is to confirm that, that higher exposure we think we may very well be able to go to 3, 4 times the amount of drug that belzutifan achieves, the next step will be to confirm whether that, in fact, translates into greater clinical benefit.

Okay. And then Terry, tell me if I got this wrong, but I thought you said that one of the carve-outs in the cost share with Gilead is AB521 is not part of the cost share. Is that right? And if so, why is that?

Yes. So that currently -- so Gilead he hasn't opted into that program yet. They're clearly very interested in it. We'll see how that plays out. But they -- keep in mind that the 50% cost share starts occurring when they opt in, and that trigger hasn't been reached yet for the HIF-2 program. So it's still part of -- they have the option to opt into it.

Got it. Okay. Okay. Well, this was great. I think we did most of the highlights, maybe not every single trial, but hopefully, most of them. So thank you very much. That was great. And I'm sure we will be chatting any day now around...

Yes. And thanks for including us. This was a pleasure. And thank you, everybody else who joined in. We appreciate it.

Yes. Thanks, Yigal.

Take care Yigal.

Thank you, bye.

Bye.