The fifth session of the first day of the Biopharma Back to School Summit that Citi is hosting here in N.Y.C. I'm Yigal Nochomovitz, I'm one of the biotech analysts. Our next session is with Arcus Biosciences. It's really a pleasure to have with me the CFO, Bob Goeltz, and also Pia Eaves, who's the head of IR and strategy. Welcome both of you. Appreciate it. Very much. A lot is happening, obviously, in the space. You're generating a lot of new data sets. I understand you have some new slides as well that would be helpful in framing the very significant data update in October that you're planning. Bob, maybe just to start, tell us what's on deck for October at a high level. Then we can walk through the 1L data, the 2L, the 2L strategy, and how you're thinking about the phase III strategies for everything. Perfect. Yeah. No, happy to do that, and thanks for having us. Maybe just before I jump into casdatifan, really briefly, just to remind folks about the company. Arcus is a company that is based on very high-quality drug discovery, particular emphasis on high-quality small molecule drug discovery. We like to focus on areas where there are targets that have good biologic validation, and we think that there's a real opportunity for a very high-quality molecule. That's clearly the case with casdatifan. I know we're going to focus on casdatifan today, and we'll jump right into it. Just a quick reminder, the rest of the portfolio for us, we also have a drug that's targeting CD73, that's in a pivotal pancreatic cancer study. In the update for this conference, we also indicated that we expect an interim analysis in the fourth quarter of this year on that pancreatic cancer study. We are looking forward to seeing data from quemliclustat, which is that compound in PDAC pretty shortly. Then we also have a really exciting early-stage immunology portfolio of largely small molecules that is moving along in the first program, an MRGPRX2 inhibitor is now in a healthy volunteer study in the clinic. Shifting to casdatifan, which is definitely the focus for investors right now. Quick reminder, one of the reasons why we are really excited about the program is that the target HIF-2α of casdatifan has been validated by a molecule from Merck, belzutifan. It has had three successful phase III studies, LITESPARK-005 in late-line monotherapy, LITESPARK-011 in second line in combination with lenvatinib, and then also in adjuvant therapy in combination with pembrolizumab. Good validation for the target, not drug in the late line monotherapies are doing sales of roughly around a run rate of $1 billion a year. However, that molecule does have a liability that is pretty well characterized, which is that it has absorption-limited pharmacokinetics. That aspect means that as you increase doses beyond the dose that is approved and that they have been using for their clinical trials, 120 milligrams, you only get incrementally higher exposures. Back to the core of Arcus of looking at developing very high-quality small molecules. Our goal was to see if more could be taken from the target HIF-2 if you actually did not have that liability. Casdatifan has dose proportional and linear pharmacokinetics, and we are essentially, in our clinical trials, utilizing a dose that has roughly fivefold the pharmacodynamic effect of belzutifan. In late line monotherapy, what we saw was that that resulted in a very substantial increase in response rate and progression-free survival. Progression-free survival, for example, 12-15 months versus 5.6 months from LITESPARK-005, which was their pivotal study. We also see a substantially lower rate of primary progression, which is progression by the first scan, which is a particular problem in clear cell RCC, where the primary progression rate can be a third or greater for an agent like belzutifan. That is sort of where we are right now, and our first pivotal study for casdatifan will be combining casdatifan plus cabozantinib, which is the standard of care in second line clear cell RCC versus cabozantinib. That pivotal study is enrolling, and we have indicated we expect to have this study enrolled around the end of this year. The enrollment is going very well. We are excited about that. Then our frontline strategy will be to combine casdatifan with ipilimumab and nivolumab, which is one of the preferred regimens in the frontline. We can talk about the nuances of what regimens are in the frontline and the pros and cons to each as we get into the details. That will be our second pivotal study. The first one is called PEAK-1, that is the second line study. The second one is PEAK-20, which is the frontline study. That brings us to a very meaty update that we will have in October. We are going to have an investor event on October 20th, and we will be updating data and providing new data across multiple lines of therapy. We will be providing data on the late-line monotherapy. We will be providing data on the second line in combination with cabozantinib, and then also the front line. I will walk through each of those lines of treatment and the data that we will have and how we are thinking about each of those relatively quickly, and we can jump into as much detail on each of those fronts. For those that are following online, we do have some slides that are incorporated in our corporate deck on our website, and they are available in the appendix to slide deck, which show the details of the data that we will be presenting in October. Let me start with the latest line of therapy first, and then I will work my way earlier, because this will be the maturity of the data. In the late-line monotherapy, I already indicated that we have presented what we believe is really compelling response rate data and progression-free survival data already. That is pretty mature and I think has indicated to many that they believe casdatifan is clearly differentiated from belzutifan. The new piece of data that we will have at our October update is for the first time, we will be sharing overall survival data in a Kaplan-Meier curve there. Why is that important? Belzutifan in their three pivotal studies has not demonstrated an overall survival benefit yet. In the second line in LITESPARK-011, they came quite close. They had a hazard ratio of 0.85 with a P value of 0.06 on overall survival. Overall survival, while PFS is the registrational endpoint, would obviously be a massive differentiator from a commercialization perspective, both in the U.S. in terms of label, but also ex-U.S. to open up reimbursement. We think demonstrating that the molecule could bring an overall survival benefit in late-line monotherapy has the potential to read through to multiple lines of therapy. In the late line, we will have 28 months of median follow-up. The benchmark here from LITESPARK-005 was 21 months of OS. We will be able to look at the Kaplan-Meier curve for our data and compare it to that benchmark and see whether or not it appears that there is a difference relative to what we have seen from belzutifan. Pretty simple in the late line. But you mentioned that in that late line you had low to mid-teens PFS. Yes. Right? Correct. So that should give people some Yeah framework for thinking about where OS goes. Yeah, we are cautiously optimistic, for sure. Absolutely, we think that there is a good potential here, and we think it is really frankly the potential for the mechanism. It is just we think a lot of the belzutifan data indicates what belzutifan can achieve, not what a great HIF-2α inhibitor can achieve. So across all of the efficacy metrics in the late line, we are hoping to see what a really good HIF-2 inhibitor can achieve, and so we have already seen it for PFS. And to your point, we think that bodes well for potential OS as well. So very excited about that update. Good. Just the 21 months, do we have a reference point on PFS for that number as well or not, or is that harder to It was- triangulate? It was 5.6 months. Okay. That's what I am getting at, that 5.6 translated to essentially 21. Now you have- Right 12, 13. 12 to 15, yep. The math should suggest something north of 21 if things cooperate. Yep. I think we agree with that and Okay we are cautiously optimistic. We will see how the data look. Yeah. Okay. Yeah. That's late line. Yep. That's a lot of patients. That's a big chunk of the whole- Yeah, exactly. It's 120. For Project Optimist, we looked at three doses that range in pharmacodynamic effect from essentially 2.5 to 7.5 times the PD effect of belzutifan, and what we generally observed was consistent efficacy. We generally look at that pooled data set as sort of the best indicator of truth. Within that, to your point with PFS, the range was 12-15 months. But we think the pooled data, which is close to 13 months, is probably the best indicator. If you think about 13 months, we'll see what that brings in terms of OS. Right. Okay. Yep. Okay, marching on then. Marching on to second line. Second line, again, as I mentioned, we are in the midst of enrolling our pivotal study with casdatifan plus cabozantinib versus cabozantinib. We shared very early data roughly a year ago, response rate data from that particular arm of patients, and it was not the complete arm of patients. There are 44 patients there. Now we will have about 20 months of median follow-up. There is a number of different benchmarks to look at in the second line. Obviously, the easiest thing to look at would be the LITESPARK-011 pivotal study from Merck, which, as a reminder, compared belzutifan plus Merck's TKI, lenvatinib, versus cabozantinib. There they had 0.7 hazard ratio, so the study did pretty well. Obviously, presumably will result in an approval. It is under review, I believe, currently with FDA. That was PFS, not 0.7. Yeah. The median PFS was 14.7, I believe, versus 10.7 Okay for the control arm for cabozantinib. 0.7 hazard. Yeah, 0.7 hazard ratio. Importantly, the hazard ratio improved from 0.75- 0.7 from the first interim to the second interim, largely because what you see from HIF-2α inhibition is a tail effect to some degree. Patients that either achieve stable disease, sustain stable disease, or a response, generally tend to have very durable activity with HIF-2 inhibitor. A lot of the hazard ratio sort of happens on the tail side of the curve. While the landmark PFS numbers are important, we try to emphasize that the totality of the curve is important because the tail is where HIF-2 really seems to demonstrate a significant impact. Okay. The important point for this particular data set in the second line is that the patient demographics are important to pay attention to. LITESPARK-011, for a couple of reasons, probably deviates pretty substantially from what folks would expect from a real-world patient population. The first main reason is that they did not enroll patients that had received prior lenvatinib or cabozantinib therapy, because both of those two agents were in the two respective arms. Which is one of the drawbacks of having a different TKI in both arms. Correct. Could exclude both populations. Yes, exactly. You are excluding both of those. These would be the patients leading into the second line. In the front line, patients typically see one of three TKIs combined with anti-PD-1, lenvatinib, cabozantinib, or axitinib, or they receive ipilimumab/nivolumab. 70% of the front-line market is fragmented with the anti-PD-1 TKI, 30% is ipilimumab/nivolumab. We will get to that later. Yeah. Yeah. If you think of roughly two-thirds of the TKI, 70% are essentially being excluded from your incoming population, it is a pretty substantial portion of what you would anticipate to be the real-world frontline that you are excluding from your patient population. The other piece that is important is that they still enrolled roughly half their patients with prior TKI exposure, which would seem unusual if you were to think that that was all axitinib. Turns out that it was not. The manuscript for LITESPARK-011 was just published in the last couple of weeks, and half of the patients that had prior TKI exposure had exposure to the first-generation TKIs, these are sunitinib and pazopanib. Patients that have experienced those agents probably have a different prognostic outcome versus those that have gotten the more potent TKIs like a cabozantinib or a lenvatinib. In particular, the one piece I would point to is that obviously you would not have cabozantinib treatment after cabozantinib, but for patients that receive lenvatinib in the front line. There's a couple of small real-world studies done by high-quality academic institutions that have shown that patients that receive cabozantinib therapy after treatment with lenvatinib in the frontline do particularly poorly. So they have PFS of four-six months and an OS of under a year, which is obviously much worse than you would typically expect in this patient population. In contrast to the LITESPARK-011 patient population, I think ours is probably a little bit closer to that real-world representation. We did enroll 7 of our 44 patients that received prior lenvatinib therapy, for example. And we don't have the same representation from the first-generation TKIs as well. So the patient populations are a little bit different. When we share our update in October, we'll be sharing obviously response rate data, PFS Kaplan-Meier curves, and we'll also be sharing an OS Kaplan-Meier curve. With 20 months of maturity OS for cabozantinib is just over that, 21 months. So back to the point I made about the late line, we'll have an early sense for how we're seeing for performance in the second line. That could obviously be compared to both LITESPARK-011, as well as the cabo benchmarks. Then we'll also look at each of these metrics with the relevant patient demographic. So looking at prior TKI treatment, prior lenvatinib treatment specifically because that one has such a poor prognostic, and then prior ipilimumab/nivolumab treatment because there's good benchmarks for each of those. In our slides in our deck, we have all the relevant benchmarks called out for each of those patient populations. The prior pazopanib and sunitinib, which is a very small contribution. It's a small contribution in our cohort. It was half of the TKI or about a quarter of the patient population in LITESPARK-011. The point there is that the overrepresentation or high representation of pazopanib and sunitinib in LITESPARK-011 drove what specifically? It is most likely slightly better performance from cabozantinib than what you would expect if you had axitinib therapy, for example. I agree. Their PFS for their cabozantinib treatment arm at 10.7 months, I think it is fair to say is on the higher end of cabozantinib benchmarks that have been put up. And I think that we would expect that our patient population is a tougher patient population prognostically, and we would expect that in our pivotal study, PEAK-1, that our control arm would not perform the same because we are including these patients that are tougher to treat. Right. Okay. For the pembrolenva, you had more patients that would be expected to do worse, and you had less patients that would be expected to do better with- Yeah Opazo. Yeah. That's working both- Yeah Working in the same direction. Correct. Now, there's one thing that actually, if we talk about that's the prognostics of the patient population, the one piece that I probably would highlight is we actually are cautiously optimistic about the potential for the benefit that casdatifan can bring to these TKI-treated patients. In particular, I'd point to one specific piece of data. Merck has shared data in their late line monotherapy that shows that the more prior TKI treatment a patient has received, the worse they do on belzutifan therapy. We've indicated, and we'll share the specific data at our October event, that we do not see the same meaningful differences with casdatifan treatment. For example, patients that have received two lines or three lines of prior TKI don't do worse than patients that have received one line of prior TKI in a meaningful way. We think that is likely because of the connectedness of HIF-2 to the mechanism for a VEGF TKI. One thing that we note is that when you treat patient with a VEGF TKI, it results in elevated HIF-2 levels. I mentioned before that belzutifan, one of the challenges with the molecule is the absorption-limited PK. We are hitting the target essentially five times harder. We think that in the event you have higher levels of HIF-2, casdatifan may be better positioned to address those higher HIF-2 levels, and to cover the target in that regard and deliver good efficacy, and that may be why we see the effect that we see. Okay. The punchline being that essentially from at least a hazard ratio perspective, these underserved patients that receive prior TKI may have the potential to do better with casdatifan than they might have done with belzutifan. Okay. That all makes sense. You are going to potentially have a sort of better. These patients should do a little. When you think about the phase III trial. Yeah The PEAK-1 trial. Correct your expectation is that you would have a weaker PFS in those patients. In the control arm. In the control arm. Yeah, then the potential to generate more hazard ratio, obviously, in the experimental arm. Right. Yeah. Okay. That makes sense. Okay. You want to move to the Yeah, frontline. Because the frontline, we have been getting questions which you have been receiving as well, just in terms of the strategy, in terms of the comp there. Yeah. The double IO versus TKI, which as you noted, is the majority of the frontline use. Yep. The double IO is certainly a significant fraction as well. Yeah. In looking at the current frontline market, it's important to note that ipilimumab/nivolumab has roughly a 30% share in the frontline despite having, in its pivotal study, the worst progression-free survival performance amongst the pivotal studies, whether it be comparing to axitinib, or lenvatinib, or cabozantinib. Those drugs have a median PFS of, call it 16-24 months, whereas the median PFS for ipilimumab/nivolumab is 12 months. So why does that combination have the best individual share in the frontline and still have a 30% share with that performance? It's because it delivers overall survival, and meaningful overall survival. In fact, they just presented last year 10-year survival data, and I believe the 10-year survival data for that ipilimumab/nivolumab regimen is on the order of 30%-40%. So really impressive long-term overall survival, notwithstanding the Achilles' heel for the therapy is progression-free survival and the fact that so many patients progress quickly. Because of the strength of our late line monotherapy data, we think that that's the perfect place for casdatifan to play, essentially to make up for the weakness of a regimen that provides great long-term overall survival, so providing those patients with nearer term disease control without the toxicity of the TKI. And so the good news in terms of providing an update for data when we share data in October is because of the tough first year for patients that are treated with that regimen, it doesn't take a long period of time to see if there's a difference from an efficacy perspective by bringing casdatifan into the regimen. So what data will we have? We've completed enrollment of a cohort of about 30 patients with casdatifan plus just anti-PD-1 without the anti-CTLA-4 roughly at the beginning of this year. So we'll have about 11 months of median follow-up with 30 patients for casdatifan plus zimberelimab, our anti-PD-1 agent. And we'll be able to look at primary progression. We've already reported that that's 7% versus ipilimumab-nivolumab, which is 18%. We'll look at ORR, and then we'll be able to share a Kaplan-Meier curve for progression-free survival. And we'll be able to compare that to ipilimumab-nivolumab, notwithstanding the fact that we don't have anti-CTLA-4 on board. So that's CheckMate 214 is the pivotal study there. We'll also be able to compare to KEYNOTE-427, which is monotherapy anti-PD-1, so pembrolizumab in that case, where the median PFS was seven to eight months. The response rate was obviously lower, higher primary progressive disease than what you saw with anti-CTLA-4, anti-PD-1. We think that those two benchmarks provide a great backdrop for sharing that first anti-PD-1 plus casdatifan set of data. To the extent we start to see some differentiation, certainly from CheckMate 214 in the early go there, we think that bodes really well for the combination that then brings also anti-CTLA-4 to the game. To that end, we just completed enrollment of our ipilimumab plus zimberelimab-casdatifan cohort of 30 patients. That is the data set that will be used to provide safety to FDA to launch the pivotal study at the end of this year, ARC-20, that I alluded to before. At the time of the investor update that we have on October 20, we will have more than 20 patients that will have made it through the first four cycles of therapy, which is the period of time during which ipilimumab is dosed. That would be the period of time where there would be the most concern for toxicity from all three agents. We like the fact that we are going to be able to provide the efficacy with the anti-PD-1, and then also be able to comment on the safety profile and early primary progression, for example, of what we are seeing with ipilimumab on board as well. Okay. That is all making sense. Your point is that with the casdatifan plus zimberelimab, potentially, we will see, you are saying you could be competitive on PFS versus CheckMate 214. Which is zimberelimab plus ipilimumab. Yeah. You are just saying casdatifan plus zimberelimab, and then of course, the standard therapy is the double. Yep. You are going to go into the phase III with the triple, which I gather would be even better than- Hopefully, yeah. CheckMate 214. Exactly. Better than the double. Yeah. There is the potential for casdatifan plus zimberelimab to be very competitive just with the CheckMate 214 regimen. Is that? We believe so, absolutely. Okay. Yeah. Because we think that when you look at the dynamics of the mechanism, casdatifan brings a component that that regimen's clearly missing in near-term disease control, together with what we hope to show in terms of the late line, in terms of overall survival. We sort of think it's the potential for best of all worlds. Right. Near-term disease control, long-term survival, and better tolerability than regimens that include TKI. Then, tell me on this point, obviously, I guess a lot of the docs just are very familiar with the ipilimumab-nivolumab combo. So that's their default. Yep. But the idea of just doing a casdatifan plus PD-1, like a casdatifan plus nivolumab frontline study is an idea, right? Yes, it is an idea, and it is one that actually we explored because we think it makes a lot of sense. What we heard from investigators is that one of the ideas that we explored was potentially even a three-arm study that included, it would have been ipilimumab-nivolumab-casdatifan, nivolumab-casdatifan, and then ipilimumab-nivolumab would be the comparator arm. What we heard from physicians is that study would be harder to enroll because there is a significant portion of the physician population that really believes the ipilimumab adds to overall survival, and they want to see the ipilimumab on board. Right. Okay. For everyone who is still going to do the cross-trial comparisons and look at the frontline. Yep IO plus the TKI, your point is that you can avoid the TKI, get better tolerability, and then make up the difference in terms of the survival endpoints with the HIF-2α inhibitor. Yeah, I think it is interesting if you look at the monotherapy data, casdatifan performs. The disease control from a TKI is different mechanistically than it is for casdatifan. When you look at spider plots for casdatifan, you tend to see slower tumor volume reduction, but very sustained action or activity. With a TKI, you tend to see marked tumor volume reduction, but then you can see a V shape curve in terms of the resistance developing and patients progressing. We think that casdatifan over time can give that same level of efficacy as a TKI. In fact, our monotherapy data, even on response rate and PFS, is comparable or better to a TKI with much less toxicity and a better longer-term profile. We do not think there is any reason to think that it cannot bring over time the same thing that TKI brings. Importantly, too, the other thing is that I would point to the TKI regimens have a PFS landmark of about 70% at the end of the first year. So that will be an important landmark to look at as well when you look at casdatifan plus anti-PD-1 versus a TKI plus anti-PD-1. Right. Okay. Can you just frame the timeline? PEAK-1 is doing very well with enrollment. Yep. It will be fully enrolled around the end of this year. The ARC-20- We expect to initiate the study right around the end of this year with enrollment beginning in the first quarter. Okay, and can you provide any rough idea of data timelines for those two? Yeah. The benchmark for PFS for PEAK-1 is 9-11 months for cabozantinib. I think most folks have sort of guesstimated, and we haven't given formal guidance yet because we don't have any event rate data yet. But most folks have guesstimated sort of a first half of 2028 from PEAK-1, which is probably reasonable on its face. The PFS benchmark for ARC-20 will be very similar, so the timeline to data should be very similar. We're optimistic that we can enroll ARC-20 rapidly, so we'll see how that goes. You mean the. Oh, it's a similar. The frontline even though it's frontline, it's still a similar It'll be very similar study size and the PFS is only a couple of months better. Okay. It's a very similar timeline to data. Okay. Yeah. That's not a 2028 event. No. We're phase shifted in terms of start of enrollment by about a year versus PEAK-1, a year to 15 months. I think the easiest way to think about it is that it's similarly phase shifted in terms of potential results. Okay. Just to summarize, the late line, the second line, the frontline, very significant data updates. Anything else to watch for at the event? That's plenty, but just trying to make sure we cover everything. Yeah. I think that's it. I think for us, if you think about it from a very high level perspective, the late line monotherapy data last year I think engendered a lot of confidence that we have a better HIF-2α inhibitor than our primary competitor, who's already generated positive data in three pivotal studies. I think most people believe the probability of success in the PEAK-1 study is extremely high, and that that study's already been de-risked, not only because of their data, but also because we're combining with the well-accepted standard of care in that setting and going straight against the standard of care. Really we think that from an investor perspective, when people look at the value of the company, most of the value can easily be arrived at by looking at that second line setting. We think this frontline look is going to be the first look at the frontline. When you look order of magnitude at the commercial opportunities of the two, we think the frontline's roughly a 2 to 3x, probably closer to 3x the opportunity of the second line. So a $1.5 billion to $2 billion opportunity in the second line, more like a $4 billion plus opportunity in the frontline. We're excited that the data in the frontline could engender confidence in that opportunity, and hopefully that's a nice opportunity. Okay. Just one final question, which is a bit of different topic, but we're asking everyone this since AI is featuring more heavily in our lives. To what extent are you using any of the AI tools, models, inference structures to improve processes or do things faster at Arcus? Yeah. I'd say that we have a team that has been very aggressive in adopting technologies where we see the benefit. Our small molecule drug discovery team has been similarly utilizing tools where they see the benefit. I think to some degree, input is important, right? If you can't input into models high quality data, you're not going to generate great output. For us, the place to utilize AI is in the place where the inputs are great and can actually plow through things a lot faster than we could otherwise do them. That's been where we've really seen the uptake from our side. I think sometimes folks jump to the idea that you can solve problems where you don't even have the inputs to solve the problems yet. For us, I think that we feel like that's a bit of a jump too far. I'd say we're sort of in the camp of aggressively adopting where we see lots of value add. But that's specifically for drug discovery, drug design or Yeah, absolutely. Okay. In all aspects of plowing through data relative to drug discovery and design Okay For sure. Yeah. Great. Okay. We'll see you in New York on the 20th then. All right. Thank you. Okay, thanks. Yep. Bye.