Arcus Biosciences, Inc.

Hello everyone. Thank you for joining us and welcome to the ARCIS second quarter 2026 earnings call. After today's prepared remarks, we will host a question and answer session. If you would like to ask a question, please press star 1 to raise your hand. To withdraw your question, press star 1 again. I will now hand the conference over to Pia Eaves, Vice President of Investor Relations. Pia, please go ahead.

Good afternoon and thank you for joining us on today's conference call to discuss ARCISO's second quarter 2026 financial results and pipeline updates. I'd like to remind you that on this call, management will make forward-looking statements, including statements about our development strategies and our expectations regarding the advantages and opportunities afforded by our investigational products, our clinical development milestones and timelines, our projected cash runway, and our financial outlook. All statements other than historical facts reflect the current beliefs and expectations of management and involve risks and uncertainties that may cause our actual results to differ from those expressed. Those risks and uncertainties are described in our most recent quarterly report on Form 10-Q that has been filed with the SEC. For today's call, please refer to our latest corporate presentation posted in the Investors section of our website. This afternoon, you'll hear from our CEO, Terry Rosen, CMO Richard Marcus, President Juan Jaen, and CFO Bob Goeltz. With that, I'll turn the call over to Terry.

Thanks very much, Pia, and thanks so much everyone for joining us this afternoon. We continue to make substantial progress in advancing our portfolio of oncology and immunology programs. Execution throughout the first half of the year has been tremendous, and this tangible productivity will be a focus of today's discussion. Our highest priority, no surprise, continues to be the advancement of Castatafan, which we believe has clear potential to be a $5 to $10 billion drug. The remainder of our pipeline has also been advancing quite well, and we're beginning to share the details and breadth of our other programs. These create a steady and sustainable stream of additional opportunities, as well as strategic optionality. So starting with Castatafan, our next generation HIF-2-alpha inhibitor. The advancement of CAS has driven an inflection in value for ARCIS, and we expect further data this year to accelerate this inflection. Our first Phase III trial, Peak 1, evaluating CAS plus cabozantinib, the gold standard of Karen's second-line Clear Cell RCC, has tremendous investigator enthusiasm, and we remain on track to complete enrollment by the end of this year. Last year, we presented a wealth of data that demonstrated clearly Cas-DataFan's efficacy advantages over Belzudafan. Over the next six months, we will share new data that will provide clear line of sight to Cas-DataFan's full market potential. Based upon Cas-DataFan's superior profile, as well as our development strategy, we expect Cas to become the backbone therapy for all patients in all lines of treatment and Clear Cell RCC, and we're maximizing that opportunity by rapidly expanding our development program. With the recent failure of Merck's LightSpark 012 study, Cas now has no competition in the frontline space, and our development plan, already ongoing, creates a clear path for Cas to consolidate what's currently fragmented frontline market as the first and only HIF-2-alpha inhibitor in this setting. We're leveraging our platform study ARC20 in addition to collaboration studies to support the key combination regimens we'll pursue for first-line treatments. We had our meeting with the FDA to discuss our first front-line phase three study in the setting, we're calling that PEEP20, and we remain on track to start this registrational trial by the end of 2026. Across the development program, castatopan is being evaluated in several different combinations across all lines of therapy. We're doing this in both a capital and resource-efficient manner by securing partnerships, more specifically clinical collaborations, and these all allow us to retain the full rights to the Cas-DataFan program. We believe that we are the partner of choice for collaborations involving a HIF-2-alpha inhibitor. This is enabling investigation of the smartest mechanistic combinations and settings. Keep in mind, Belzodafan is readily available to anyone. We do not believe it's an accident that others want to combine with Cas-Statafan. We initiated multiple new clinical trial collaborations in the last two months. In June, we announced a collaboration with BMS to evaluate Cas in combination with Pumida, their bispecific anti-PD-L1 VEGF antibody in the first line setting. In July, we announced a collaboration with Summit Therapeutics to evaluate Cas in combination with Ivo, their bispecific anti-PDX1 VEGF antibody. ARCIS will be conducting this study in a first-line cohort as part of ARC20. This is the second of three collaborations we've executed to evaluate Cas with an anti-PDX VEGF bispecific in the first line. So just to emphasize, We have three collaborations with anti-PDX VEGF antibodies. In addition, in July, we also announced the collaboration with Aveo, in which we'll be combining Cas with TiVo in advanced Belzutifan-experienced patients. This study will also enable our planned late-line registrational study that will evaluate Cas TiVo in both HIF-2 inhibitor-experienced as well as HIF-2 inhibitor-naive patients. So now let me spend a few minutes describing our holistic development strategy for CasDataFan. Let me emphasize an important point in introducing this topic. While we believe that CasDataFan will completely transform the Clear Cell RCC treatment paradigm, our strategy is totally consistent with the current treatment paradigm. We're simply creating a framework that will provide HIF-2-alpha inhibitor enhanced options that only CasDataFan with its unique profile can offer, basically adding on top of the best current regimens that are favored by both physicians and patients. So in the first line, we plan to develop multiple options that will make Cas the foundational medicine regardless of the selected combination partner. Our strategy is designed to provide flexibility to physicians with a HIF-2-alpha inhibitor enhanced regimen corresponding to their preferred treatment approach and many more patients. With Belzodafan's recent frontline setback, Castatafan has a clear path to become the common denominator in what's currently a fragmented frontline setting as the first hip 2 alpha inhibitor available to these patients. A Castatafan based TKI sparing IO-IO regimen is the bedrock of our first line strategy. It's intended to address the key limitation of ap plus nevo which is an approximately 20% rate of primary progression. Currently, ipinevo represents the most commonly used frontline regimen with a market share of about 30% and we believe CAST has the potential to increase that to 50% or more. We also plan to develop a CAST-based TKI-inclusive first-line regimen for that segment of physicians who are always going to prefer to reach for TKI. especially for patients with fast-growing bulky tumors. Our partner TKI in the setting will be ExitNet, well-established as an effective frontline TKI, and very importantly, aligning well with subsequent regimens including CAVO and TEVO over the long-term treatment strategy. You have to remember that when making prescribing decisions, physicians are considering how they will sequence multiple TKIs to potentially give patients 10 or more years of survival. So combination choices are not selected in a vacuum. Lastly, in the first line, as I mentioned earlier, we're leveraging our partnerships, including with BMS and Summit, to evaluate Cas-Stat event in combination with three different novel anti-PDX VEGF antibodies. We believe anti-PDX VEGF bispecifics may play an increasingly important role in the treatment of kidney cancer going forward. Both the PD-1 and VEGF pathways are factors in disease progression, and there's strong biologic rationale for pairing them with a hard-hitting HIF-2-alpha inhibitor like castazepam to deliver both an early treatment effect and sustained tumor suppression. The rationale for this class of bispecifics to have utility in Clear Cell RCC is as strong as in any setting. And the combination could provide a TKI sparing regimen that still incorporates the essential biology of the TKI, but without the baggage that's associated with the poor selectivity of the TKI class. In the second line, Cas plus Cabo is intended to build on the current second line standard of care. This combination is now in registrational testing with our phase three peak one trial. Cabo is the most commonly prescribed TKI monotherapy in the setting. It's the TKI that physicians prefer and have greatest experience in managing AEs with the recognition of a better toxicity profile relative to that of the Belzutifan combination partner also sold by Merck, Lenvapnid. Lenva's toxicity profile is well documented with greater rates of cardiovascular toxicities. In LightSpark 011, all grade cardiac dysfunction was 7% for Bell's-Lenva versus just 1% for Cabo. Grade 3 or higher cardiac dysfunction was 5% for Bell's-Lenva versus .5% for Cabo. That's a big deal. That's a tenfold difference. Keep in mind, these data are a direct comparison from a randomized study. With CAST's superior efficacy profile versus Bell's and Cabo's tolerability advantages versus Lenva, we expect CAST plus Cabo to be the preferred HIF-2-alpha combination in the second line based on both efficacy and safety. Finally, with the announcement of our collaboration with Aveo, we're developing CAST Datafan plus TiVo in second line plus Clear Cell RCC. including in Belzodifan-experienced patients. As I mentioned, this will precede a registrational trial of both HIF-2-alpha inhibitor experience and naive patients. In an upcoming investor event in October, we'll be sharing key ARC-20 data readouts for Castatafan. These will be in the first, in the second, and late-line settings. These data will provide a holistic picture that will demonstrate the potential for CAST to benefit patients across the treatment paradigm. This will be a large and comprehensive data set, including data from over 200 patients. Richard will go into more detail on the specific readouts, but I'd like to take a moment to provide some scientific context and a framework for thinking about patient outcomes with CAST Datapan in the various settings. In this context, in parallel to executing on our holistic development strategy for CAST, we've been committed to the advancement of the highest quality research in the HIF-2-alpha space, particularly on translational studies that have a direct impact on the development program. I want to emphasize that this work, a hallmark of the CAST DataFan program on all fronts, is not esoteric, but in fact provides the basis for the quality and profile of the molecule as well as the foundation for our development strategy. Our initial work on castafen HIF-2 alpha biology was published recently in Nature last month. The manuscript describes exceptional scientific research carried out across our drug discovery, bioinformatics, translational, and clinical teams, and includes a number of our clinical collaborators from the academic community. This is the first study to comprehensively connect clinical outcomes from patients receiving a HIF-2-alpha inhibitor with peripheral biomarker changes and associated tumor biology. The research showed that HIF-2-alpha inhibition with Casdatafan monotherapy in clear cell RCC patients resulted in deep and sustained suppression of erythropoietin and that the depth of that suppression correlated with higher response rates and longer progression-free survival. Suppression of erythropoietin or EPO production is good. It correlates with positive outcomes. This is just one example of the strides our research team has made towards developing a thorough understanding of hip 2 alpha biology and its linkage to patient outcomes in kidney cancer. Okay, now the important piece, thinking prospectively. We've also been investigating how exposure to prior therapies may impact clinical outcomes. For example, let me tie this all together. For example, it's known that, not surprisingly, prior TKI exposure in RCC leads to poorer outcomes for patients who are treated with a TKI in subsequent lines of therapy. So therefore, patients who receive a TKI in the first line are currently underserved by the most commonly prescribed TKI monotherapies in the second line and beyond. At the same time, however, TKI exposure has been shown to result in an upregulation of HIF-2-alpha activity. We've illustrated this on slide 31 of our corporate deck. So let me repeat that. Greater TKI exposure has been shown to result in upregulation of HIF-2-alpha activity. One point I'd like to link back to now. In our Nature paper, we elucidated that high HIF-2-alpha activity is correlated with improved PFS in patients treated with castatafan. However, interestingly, subgroup patient analyses reported by Merck showed that patients treated with belazodifan in LightSpark-005 or LightSpark-013 had an inverse correlation of efficacy outcome with a number of prior TKI therapies. That is, more prior TKI therapies led to worse outcomes with Belzodifan. By contrast, what I can tell you is that in our analyses of our late-line Castatafan monotherapy cohort, that's 120 patients, we do not show this inverse correlation. We therefore believe that more robust and, in fact, more durable HIF-2-alpha inhibition with CasDafan may provide better outcomes for patients with prior TKI exposure. And this will be one of the parameters that we analyze across our data sets. And we'll be speaking more about our analysis on this topic at the investor event in the fall. A little bit of a transition now. Our commitment to research has been at the core of the company since our founding. and despite relatively minimal capital investment, our parallel work in immunology has enabled us to build a rich portfolio of programs. Perhaps one of the broadest and deepest earlier portfolios of high quality molecules in the industry. These programs were all created in-house over the last several years and are now approaching clinical development. Our portfolio addresses a number of validated and emerging targets, including MRG PRX2, the TNF receptor 1, CCR6, CD89, STAT6, and CD40 ligand. We expect to initiate human dosing of AB102, an oral small molecule MRGPRX2 antagonist, this month. It will be followed shortly thereafter by our oral and selective TNF receptor 1 inhibitor in early 2027. Overall, the portfolio has the potential to generate a steady flow of INDs between now and the end of 2027. These programs afford us great strategic optionality in disease areas with high unmet need and also with extremely large markets. Finally, in addition to CAS and our immunology programs, we also have an ongoing phase three study in pancreatic cancer. So coming out of ASCO, There's been increasing focus and excitement in this space. We're preparing for initial data from our Phase III PRISM-1 study of Quimley-Klustad and chemotherapy in the frontline setting. We expect this to read out in the first half of next year. We actually see a major opportunity for Quimley as an all-comer, first-line, and importantly, a very well-tolerated option for treatment of this devastating disease. With that, I'll turn the call over to Richard to discuss the status of our clinical programs in upcoming data readouts.