Gilead and Arcus Biosciences Complete Closing of Option Exercise for Three Clinical-stage Programs and New Research Collaboration

FOSTER CITY, CA & HAYWARD, CA, USA I December 21, 2021 I Gilead Sciences, Inc. (Nasdaq: GILD) and Arcus Biosciences, Inc. (NYSE: RCUS) today announced the closing of Gilead’s option exercises to three programs in Arcus’ clinical-stage portfolio and a new research collaboration between the two companies. On November 17, 2021, Gilead exercised its options to anti-TIGIT molecules domvanalimab and AB308, as well as clinical candidates etrumadenant (dual adenosine A2a/A2b receptor antagonist) and quemliclustat (small molecule CD73 inhibitor).

The closing occurred following the expiration of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act.

Under the terms of the parties’ Option, License and Collaboration Agreement, as amended in connection with Gilead’s three option exercises (the “2020 Agreement”), the closing of this transaction triggers option payments totaling $725 million from Gilead to Arcus, expected to be paid in early Q1 2022. With closing of the transaction for all three programs, the $100 million option continuation payment previously due in Q3 2022 will not be made by Gilead. In addition, the parties will co-develop and share the global costs related to these clinical programs. If the optioned molecules achieve regulatory approval, Gilead and Arcus will co-commercialize and equally share profits in the U.S. Outside of the U.S., Gilead holds exclusive commercialization rights, subject to any rights of Arcus’s existing collaboration partners, and Gilead would pay Arcus tiered royalties on net sales of each optioned product.

About the Collaboration

In May 2020, Gilead and Arcus entered into a 10-year collaboration that provided Gilead immediate rights to zimberelimab and the right to opt into all other Arcus programs arising during the collaboration term. In November 2021, Gilead and Arcus amended the collaboration in connection with Gilead’s option exercise for three of Arcus’s clinical stage programs. For all other programs that are in clinical development or new programs that enter clinical development thereafter, the opt-in payments are $150 million per program. Gilead’s option, on a program-by-program basis, expires after a specified period of time following the achievement of a development milestone for such program and Arcus’s delivery to Gilead of the requisite qualifying data package. Concurrent with the May 2020 collaboration agreement, Gilead and Arcus entered into a stock purchase agreement under which Gilead made a $200 million equity investment in Arcus. That stock purchase agreement was amended and restated in February 2021 in connection with Gilead’s increased equity stake in Arcus from 13% to 19.7%, with an additional $220 million investment.

Upon closing of Gilead’s exercise of its option to a program, the two companies will co-develop and share global development costs for the joint development program, subject to certain opt-out rights of Arcus in some cases and expense caps on its spending and related subsequent adjustments. For each optioned program, provided that Arcus has not exercised its opt-out rights, if any, Arcus has an option to co-promote in the U.S. with equal profit share. Gilead has the right to exclusively commercialize any optioned programs outside of the U.S., subject to the rights of Arcus’s existing collaboration partners to any territories, and, for clinical stage programs that Gilead has opted into, Gilead will pay Arcus tiered royalties as a percentage of net sales ranging from the mid or high teens to the low twenties.

Zimberelimab, domvanalimab, AB308, etrumadenant and quemliclustat are investigational agents and have not been proven safe and efficacious.

About Arcus Biosciences

Arcus Biosciences is a clinical-stage, global biopharmaceutical company developing differentiated molecules and combination medicines for people with cancer. In partnership with industry partners, patients and physicians around the world, Arcus is expediting the development of first- or best-in-class medicines against well characterized biology and pathways and studying novel, biology-driven combinations that have the potential to help people with cancer live longer. Founded in 2015, the company has expedited the development of six investigational medicines into clinical studies, including new combination approaches that target TIGIT, PD-1, the adenosine axis (CD73 and dual A2a/A2b receptor) and most recently, HIF-2alfa. For more information about Arcus Biosciences’s clinical and pre-clinical programs, please visit www.arcusbio.com or follow us on Twitter.

About Gilead Sciences

Gilead Sciences, Inc. is a biopharmaceutical company that has pursued and achieved breakthroughs in medicine for more than three decades, with the goal of creating a healthier world for all people. The company is committed to advancing innovative medicines to prevent and treat life-threatening diseases, including HIV, viral hepatitis and cancer. Gilead operates in more than 35 countries worldwide, with headquarters in Foster City, California.

SOURCE: Gilead Sciences

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