Arcus Biosciences, Inc.

phase three study for TIGIT antibody in combination with their anti-PD1 antibody in FENZI, currently the standard of care in stage three non-small cell lung cancer. This leverages their leadership in this setting. Activities remain on track to support initiation of this study by year end. In addition, we are discussing additional clinical collaborations. We also have a partnership with Taiho, under which they received an option to our programs in Japan and other countries in Asia, excluding China, and they have already opted into both eTRUMA and ZIM. This month, Taiho's IND for ZIM in Japan was cleared, enabling them to initiate their platform study, evaluating ZIM in combination with other molecules in their portfolio, anticipated to begin in the third quarter. Discussions around optin to our other clinical stage molecules are also underway. Finally, in China, we have a great partnership with Wuxi, who manufactures all of our biologics. We also maintain a strong relationship with Gloria, who has the China rights to our PD-1 antibodies in. They have filed for approval of XIM in China for classical Hodgkin's lymphoma and are rapidly advancing a registration study in cervical cancer in China as well. Underpinning all of this is our extraordinary team, now over 300 employees with approximately 80% in R&D. Our development organization now exceeds 120 staff most of whom joined us with strong experience from large biopharmaceutical companies. With $805 million of cash in investments at the end of June, we have plenty of capital to prosecute our programs over the near term and expect our current cash balance will fund operations through at least 2023. Now, on to our clinical programs. First, our TIGIT program and Dom Vanillamab, or Dom, our FC silent TIGIT antibody. In June, we conducted an interim analysis for ARK7, a randomized Phase II study in first-line metastatic non-small cell lung cancer with 50% or greater PD-L1 expression. ARK7 was designed to provide valuable information, and it includes three arms. Zimbirellumab, or Zim, are PD-1 antibody. Zim plus Dom, or the doublet, and Zim plus Dom plus Etruma are adenosine 2A2B receptor antagonists, or the triplet. ARC7 has a target enrollment of 50 patients per arm, about twice the size of Cityscape's dataset in PD-L1 high patients. If this was an early interim analysis designed for internal decision-making, The dataset was inherently immature. Nevertheless, the totality of the data was encouraging for all three arms, enabled us to make several important decisions. Number one, ARC-7 and ARC-10, a registrational study for Dom plus Zim in the same population, will continue as planned with no changes. We continue to advance our ongoing joint efforts with Gilead to prepare for several Phase III studies for DOM, where we believe we can be a market leader with an antitiget antibody, with the goal of starting at least one of these studies by year-end. Three, with AstraZeneca, we agreed that Pacific 8 preparation will continue as planned with study initiation by year-end. And four, based upon the intriguing data for the triplet, we are actively exploring other opportunities for this combination. On our call to discuss the interim analysis, we mentioned a very important finding. A quarter of patients that responded in the study did so after 3.5 months. This is a frequently seen observation with IO therapies. Therefore, we believe that with further data maturity, the overall response rates or ORRs for the arms will likely improve over time, particularly since at the time of the interim analysis, several patients had completed only one disease assessment. Recall that we are doing disease assessments every six weeks. In Roche's Cityscape study in this setting, the ORR for their TIGIT doublet improved from 55% at the time of the abstract based on a median follow-up of six months to 66% at the time of the data presentation based on a median follow-up of 11 months. And we could see similar evolution in response rates for the DOM combinations over time in ARC-7 with more scans and follow-up. We recognize there's been a lot of interest in understanding the performance of the doublet versus the triplet. While the data sets were small and lacked maturity, we were absolutely encouraged by the performance of both of these arms. Regarding the triplet, we included this arm because CD73 expression is known to be high in non-small cell lung cancer. In fact, our analysis of a panel of lung cancer tumor samples has revealed a strong correlation between high PD-L1 and high CD73 expression. Quite excited to see the triplet arm performing particularly well across multiple measures, including ORR and depth of response. More mature data will enable us to confirm this activity, assess durability, and better understand how much of the triplet activity is driven by DOM versus eTRUMA. As I mentioned, based on these data, we are very interested in pursuing other settings with the triplet. In fact, an investigator-sponsored trial was just initiated to evaluate the triplet in non-small cell lung cancer patients previously treated with checkpoint inhibitor therapy. AHRQ 7 is enrolling well, and we plan to submit data later this year for presentation. Our objective is to present a data set that has high impact for AHRQ and the field, and we are considering conferences that occur late this year as well as in the first half of next year. Finally, to round our discussion of Dom, we continue to enroll our Phase III study in the same patient population as ARC7. This study is designed to enable the potential approval of both Zim monotherapy and Zim plus Dom. We also have an FC-enabled TIGIT antibody, AB308. We believe we are the only company with TIGIT antibodies of both configurations in clinical development And having a second-digit antibody provides us with a huge amount of flexibility as we think about future clinical collaborations and commercial strategy. We started dose escalation of AB308 with our PD-1 antibody earlier this year and just completed enrollment of the third dosing cohort. So this study has progressed rapidly. In fact, we have selected the recommended dose for expansion and are on track to start five planned expansion cohorts in the third quarter. The objectives for these expansion cohorts are to generate signals and tumor types to further inform our Phase III strategy for our antitiget program and to assess AB308 safety and activity in certain hematological cancers where we believe that FC function may be important. We continue to believe that the collective data to date suggests that an FC silent TIGIT antibody may be advantageous in solid tumors. And future clinical data sets should provide more insight into whether FC silent TIGIT antibodies have a more favorable long-term safety profile due to a lack of prolonged Treg depletion in the periphery. To wrap up our TIGIT discussion, I'll comment briefly on the Gilead optin. Gilead has the ability to opt-in at any time, up until we obtain a data set on a pre-specified number of patients. If they decide to trigger their opt-in review period, Gilead will have a certain period of time to make their opt-in decision. We anticipate an opt-in trigger decision by Gilead for our anti-tigit program by year-end 2021. Exercise of the opt-in would trigger a $275 million payment to ARCIS, as well as 50% development cost sharing for both the DOM and AB308 programs. Now on to our ATP adenosine programs. We have established ourselves as a leader, and perhaps the leader, in ATP adenosine biology with two first-in-class and potentially best-in-class molecules. eTRUMA and our dual A2A2B adenosine receptor antagonist, and AB680, also referred to as QEMLI, our small molecule CD73 inhibitor. These molecules target the second and third nodes in the ATP adenosine pathway, thereby blocking adenosine formation and its action at its cognate receptors, respectively, and the ensuing suppression of immune cells. We also expect to advance our antibody against CD39, the first node in the ATP adenosine pathway, into clinical development in 2022. We've now presented data from several Phase 1 and 1B studies, including at ASCO-GI, AACR, and ASCO in 2021, which provided early clinical evidence supporting the advancement of both eTRUMA and QEMLI, and our ongoing randomized studies are designed to confirm these findings. For eTRUMA, we've recently reported encouraging data in three settings, two of which, colorectal and prostate cancer, represent tumor types where PD-1s alone have not shown meaningful activity. First, at AACR, we presented data from ARP3, our Phase I-1b study that evaluated the TRUMA plus FOLFOX and third-line plus metastatic colorectal cancer. The combination was well-tolerated and resulted in a median progression-free survival of 4.2 months approximately double the two months reported for current standard of care therapies in the setting. We also observed a doubling in overall survival as compared to what would be expected with standard of care. These results have generated significant investigator interest in our follow-on study, the ARC-3, which we call ARC-9, our randomized phase two study in metastatic colorectal cancer. This study is evaluating the same combination plus zimborellamab with or without Bev versus standard of care in the second and third line setting. And it has a target enrollment of approximately 200 patients across those two settings. We just completed enrollment of the safety run-in for these cohorts and expect to initiate the randomized portions shortly. The second important data set for TRUMA came from a cohort of ARC6, our Phase 1B2 study in castrate-resistant prostate cancer, evaluating Etruma plus docetaxel plus Zimbirellamab versus docetaxel in second-line patients that had progressed following treatment with one or more new hormonal agents. At ASCO, we presented encouraging efficacy and safety data from the Stage 1 single-arm portion of this cohort. Specifically, in 17 efficacy-available patients treated with this eTRUMA combination, we observed a PSA response of 35%, which compares favorably to 27% for previous studies of docetaxel alone in a comparable patient population. In a smaller subset of patients with measurable disease, 27% experienced a radiographic response, which compares to in the teens for docetaxel in previous studies. In this subset, every patient achieved at least stable disease, with almost all patients achieving some tumor shrinkage. This was in an advanced patient population, many of whom had received more than one novel hormonal therapy, and the vast majority of whom had soft tissue disease. Based upon these data, we opened the randomized portion of the study, which is enrolling well and is anticipated to complete enrollment by year-end. In these studies, the safety profile of the combination was consistent with the known profiles of each individual agent, and no significant additive toxicity was observed with the addition of Atruma. Finally, while still early, the triplet data from ARK7 may provide additional evidence supporting the potential clinical activity of a TRUMA. In addition to ARK6 in prostate, ARK7 in lung, and ARK9 in colorectal cancers, we are conducting a fourth randomized study for a TRUMA, ARK4, our Phase II study in patients with EGF receptor-positive lung cancer who have progressed on TKIs. This study is comparing a TRUMA plus Zyn plus chemo to Zyn plus chemo in just recently completed enrollment with 70 patients treated across both arms. Now on to QEMLE and ARC-AID, our Phase 1-1B study in first-line metastatic pancreatic cancer. At ASCO-GI, we reported initial data from the dose escalation portion of this study. In the 17 efficacy-evaluable patients, QEMLI plus ZIM plus gemcitabine and napaklitaxel demonstrated a 41% unconfirmed response rate with at least some tumor shrinkage in almost all patients. Since then, we have completed enrollment of the expansion cohort, and we are now enrolling the randomized portion of this study, which is evaluating QEMLI plus gem-NAPTAC with Taxel with and without ZIM, and will inform the design of the Phase III trial. This portion, which will include approximately 90 patients, is on track to complete enrollment by year-end, which is ahead of plan. The data continue to look quite promising, particularly the high percentage of patients that experience tumor shrinkage and the safety profile of the combination. Our focus is now on durability of response, and we look forward to sharing updated data from the study later this year. We've also continued our planning activities to initiate a phase three study next year in first-line patients. I can't overstate the investigator enthusiasm for this program. With investigator input, we are now initiating an additional cohort in the ARCAID study targeting second-line patients previously treated with fulfirinox to further characterize this combination in a setting where basically patients have no meaningful option. And now on to what's expected to be our next clinical program, our HIF-2-alpha inhibitor, AB521. Excitement for this mechanism continues to grow as a result of data generated by Merck's HIF2-alpha inhibitor in a clear-cell renal cell carcinoma and VHL disease. And at AACR, we presented preclinical data for our program. Based upon these preclinical data, we expect AB521 to have a superior PK profile in humans relative to the Merck molecule, which we believe may give us the ability to inhibit this pathway more effectively and at lower doses. We are on track to initiate a study in healthy volunteers in the fourth quarter. The healthy volunteer study will give us the opportunity to demonstrate potential PK and PT advantages very quickly and enable us to advance AB521 into cancer patients with a very well-characterized dosing regimen. While there's a growing amount of activity targeting HIF-2-alpha, this is a difficult target to drug, and we believe we have created an ideal therapeutic candidate. Also, the breadth of our portfolio creates exciting opportunities to develop novel HIF-2-alpha combinations. For example, we know that CD73 is upregulated by hypoxia. Therefore, we are very interested in combining 8521 with Ytruma or QEMLI in RCC and other tumor types characterized by a hypoxic gene signature. While we don't have time today to get into our early efforts, our discovery focus remains intense with a full portfolio of programs that will continue to sustain our clinical pipeline. Before we move on to the financials, I want to spend a minute or two on our anticipated news flow for the next 12 months. For Dom, we plan to submit ARC 7 data this year for presentation at a medical conference, with the actual presentation occurring either late this year or the first half of next year. And as I mentioned earlier, we anticipate an opt-in trigger decision by Gilead for our anti-tigit program by year-end 2021. For QEMLI or AB680, we expect to provide updated data from the ARC-8 study in the first-line pancreatic cancer setting this fall. Given how quickly the randomized portion has enrolled, with enrollment on track to complete by year-end, we anticipate presenting ORR in six-month survival data from the dose expansion, as well as initial data from the randomized portion in mid-2022. For atreuma, We plan to present data, including on ORR and PFS, from our 70-patient randomized study for ARK4, our study in EGF receptor-positive non-small cell lung cancer, in the first half of 2022. We also expect to present randomized ORR and preliminary PFS data from ARK6 and prostate cancer in 2022. And finally, for AB521, our HIF2-alpha inhibitor, with information from our Healthy Volunteer Study, we anticipate initiating the Phase 1B study and oncology indications in the first half of 2022. We now have five ongoing randomized Phase 2 studies that are designed to provide definitive datasets prior to registrational studies. To preserve the integrity of these studies and to provide meaningful readouts, Increasingly, our data readouts will occur after completion of enrollment and achievement of event-driven milestones. Between these studies and our earlier state studies, as well as the activity of our partners, we expect a very steady flow of news over the coming months and year. And with that, I'm now going to turn the call over to Bob Geltz, our CFO, to review our financials.

Thanks, Terry. I'll touch on a few of the highlights from our second quarter of 2021 financial results. For more details regarding our results, please refer to our earnings press release from earlier today in our 10Q. Argus continues to be in a strong financial position. Our cash position as of June 30th, 2021 was $805 million, compared to $735 million at the end of 2020. The $220 million in proceeds we raised from our February sale of stock to Gilead has strengthened our balance sheet. We expect our current cash balance will fund operations through at least 2023. Now turning to our operating results. Revenue was $9.5 million, which is unchanged as compared to the first quarter of this year and increased as compared to $1.8 million for the second quarter of last year. The increase in revenue as compared to last year was attributable to our collaboration with Gilead. We expect current revenue levels to continue for the remainder of 2021, excluding the impact of any option. Our operating expenses for the second quarter were $86 million as compared to $82 million in the first quarter of this year and $47 million in the second quarter of last year. In the current quarter, non-cash stock compensation represented $13.4 million of our operating expenses. Increases in operating expenses in the second quarter were due to continued advancement of our clinical pipeline and associated manufacturing costs. In particular, manufacturing of DOM and Atruma in preparation for potential pivotal studies was the primary driver of cost increases in the second quarter. We expect this investment in manufacturing to increase modestly over the remainder of 2021. Overall, ARCIS remains in a strong position to fund the advancement of our pipeline. As a reminder, opt-ins by Gilead for our advanced clinical programs, DOM, ITERUMA, and QEMLI, would result in opt-in payments from Gilead of $200 million to $275 million per program, and Gilead would co-fund go-forward development of these programs. The financial structure of this collaboration provides ARKIS with substantial non-dilutive resources to continue to invest in our pipeline as it advances. I'll now turn it back over to Terry for some closing remarks before Q&A.

So thank you very much, Bob. We're doing a lot, and we've covered a lot today. So let me please close with a few highlights that summarize why I've never been more optimistic about ARKIS' future than I am today. Our five clinical stage molecules are progressing extremely well with a sixth, AB521, our HIF-2-alpha inhibitor, expected to enter the clinic later this year. The ARC-7 interim analysis provided us with a valuable data set, including intriguing data for the triplet, which we will understand better as the data matured. For Atruma, we now have four ongoing randomized studies, all of which we'll read out over the next 12 months to confirm the activity observed in our earlier data sets. For QEMLI, enrollment in Arc 8 remains brisk. Investigator enthusiasm remains very substantial, and the data continue to look promising. We anticipate sharing data on durability from the escalation and expansion cohorts later this year and data from the 90-patient randomized portion by mid-next year. And we anticipate a start of a registrational trial in 2022. We'll now open up the line to questions. Thank you.