Arcus Biosciences, Inc. Investor update

All right. Good morning. Welcome everybody to our casdatifan Investor Day. We will be sharing some exciting new data across first, second, and late-line kidney cancer. Before we begin, I'd like to remind you we'll be making forward-looking statements, and please review our SEC filings where the risk factors are laid out in detail. Today, you'll be hearing from a number of members of our management team, as well as our guest speaker, Dr. Rana McKay, who will be joining us virtually. After Dr. McKay's section, we'll stop for a short Q&A with her, and then we'll take more questions at the end after the full presentation. I'll turn it over to Terry to begin.

Fine. Oh, I'll repeat that. Thanks again for all of you who are joining us, including those of you who are online. We have a lot to share today. It's a pretty exciting day for us. We're obviously here to talk about casdatifan, but before we jump into that, we just wanted to spend 2 minutes on the background of the company. Even though it looks like a lot of familiar faces, for those who are out there and know less about the company, we just want to give you a drop of background. Arcus was founded in 2015. We've been around for about a decade. The company was founded with both a focus and expertise around small molecule drug discovery. We're a very R&D-centric organization. You can see we had that goal of advancing one to two molecules into the clinic each year.

I think we've done a quite good job of that. We built up quite a portfolio of programs. Casdatifan is sort of right down the middle of the fairway, really reflects the paradigm of Arcus. We have our molecule, quemliclustat, that's in frontline pancreatic cancer. We're actually doing an interim analysis of its registrational trial this quarter. That'll read out. On the other end of the spectrum, we have a portfolio of very early programs that are just into the clinic or earlier. Those are mostly in the immunology area. The reason we point that out is because as casdatifan approaches commercialization, we feel we have a very sustainable pipeline to continue to grow the company with other molecules, both addressing similar opportunities and of similar quality. I'm going to use this slide somewhat as an executive summary as we talk about casdatifan, high level.

You should think about what we're laying out for the day. I think the first thing that I wanted to talk about is our holistic approach here. We recognized some time ago that casdatifan represented a true, unique molecule, dramatically different from belzutifan. In thinking about the opportunities, what we did is we looked across each line of therapy in clear cell RCC at what were the vulnerabilities of the standard of care. I'm going to talk a little bit about that on the next slide. But essentially what we're going to lay out today is the plans that we had, the data that we've generated, and the plans we have going forward.

But suffice it to say, I think when you walk out of this room, that you will believe that casdatifan, hands down, is the best molecule, best drug in clear cell RCC, bar none. We think you will recognize that it does have a $5 billion-$10 billion commercial opportunity, and we have a lot of tailwinds in our development program. Essentially, we are going to talk about first line, second line, and late line. What we are going to share today, it is not just totality of the data. In each of those modules, we think you will walk away thinking we have the best molecule to address each of those. So for those who like the minimalist version where everything can be done in 5 minutes and feel like you have to be able to say everything in 5 minutes, this slide has it. So those are real curves.

We will be talking about more specific data as I go along. But what I want to do here is just lay out those vulnerabilities in each line of therapy. So when you think about the front line, the most commonly used regimen is ipi/nivo. Ipi/nivo has about 30% of the front-line market. The reason that ipi/nivo is used number one is because it provides the best overall survival. So it is used 30%. Why is not it used 100%? And its limitations are very clear and very simple. It is its rate of primary progression, which is almost one in five, and then just PFS in general. Landmark PFS for ipi/nivo is 50% at 12 months. So 50% of the patients have progressed.

The clear message, and this is a theme you are going to hear throughout the day, everything we are doing is highly aligned with how physicians want to treat clear cell RCC. So as we are going to change the paradigm, we are essentially going to give an umbrella of a casdatifan-based regimen on top of the regimens that they already like to use. So the idea on ipi/nivo is get that disease control to where it can take that 30% to maybe 50% or more conservatively. The second line is a very interesting one. So the second line has two vulnerabilities, two limitations. So the first one, we have now had LITESPARK-011 done. Merck with belzutifan is 0 for 3 on hitting overall survival. So one thing that we have been told in the second line, if we could achieve an overall survival signal, that would be game-changing.

You would essentially take the whole market. Now, the other thing about the second line is that includes a patient population that probably has the worst prognosis of any population in clear cell RCC. And that is the group of patients that come out of the front line having experienced a second-generation TKI. So I will talk a little bit more about this in detail a little later on, but that is 60% of the patients coming into the second line that you would say miscellaneous. So two clear, simple opportunities, overall survival, and then also it would be great to address that patient population that is very underserved by the second-generation agent. And what we are doing there is we are going on top of cabo. So just like ipi/nivo is the most commonly used regimen in the front line, cabo is the most commonly used regimen in the second line.

It's 40%, and in terms of monotherapies, it's actually 80%. It's very favored by the clinical community. Finally, the late line. You generally look at this late line as almost like a salvage therapy population, a new lease on life, extraordinary overall survival. A picture's worth 10,000 of my words, and I won't give you 10,000 words. Everything that sort of describes casdatifan's advantages over belzutifan can be described as coming from this property of the molecule. We have a better quality molecule, and the first thing that we recognized where you could really see a dramatic difference is when you look at the effect of casdatifan on the biomarker for HIF-2α inhibition in a human, and that's the ability to suppress erythropoietin. Not only does casdatifan more deeply suppress that production, but you can see it's incredibly durable.

As far as we know, it goes on in perpetuity. Whereas the V-shaped curve, which was published by Merck, what you see is somewhere between one week and 13 weeks, you lose essentially all effect on that biomarker. The thing I'd like you to keep in mind is that whether you're taking those three 40-milligram tablets, your effect on erythropoietin production beyond that 13 weeks looks very minimal. I think that's particularly important when you start to think about biologies that are interacting when you're thinking about combination therapies. The left-hand side will show more specific data, but the left-hand side represents what we'd shown with our late-line patient population about a year ago. Basically, much better data compared to belzutifan, about half the rate of primary progression, 50% higher ORR, a two-plus fold improvement in PFS.

What we're going to show today is a very strong OS signal in that same population. The key point here, as I mentioned before, these two molecules are completely different. This is not an incremental difference. What we'll show you today as you see our data is that belzutifan doesn't define what HIF-2α inhibition does. It defines what belzutifan does, and essentially, casdatifan squeezed all the water out of the stone of what you can get out of the true promise of HIF-2α inhibition. I think when this target first came into recognition, there was a lot of hope. There was a lot of sort of promise as to what robust inhibition could deliver for patients. I think what you're going to see today is how that manifests itself when the curve looks like the bottom curve.

We've looked to be in the lead in the science of HIF-2 biology and studying casdatifan. This highlights a recent Nature paper, and I just want to point out two key aspects of what we showed in this Nature publication. The first one is we were able to correlate efficacy with pharmacodynamic biomarkers. Basically, what we showed was that you could correlate ORR or PFS with that ability to suppress erythropoietin production. When you think about the previous slide, given that correlation, you can see how important the difference between those two curves is. The second thing that we showed is that patients that had higher HIF-2α activity actually did better. Why is that important? HIF-2α activity is one of the most negative prognostics you can have in RCC or cancer for that matter.

What that tells you is it's not only correlative, but it's causative, given that we're having the best effect in the patients that have the worst prognostic. This is another very important aspect of durable, robust HIF-2α inhibition. This is the spider plot for the 120-patient monotherapy cohort that we've been talking about. I'd like this to get imprinted in your head because I'm going to show three spider plots today, and they're just at various stages. I don't really love the metaphor if you've seen this movie, but this movie tells you how the other spider plots are going to play out with time. What you can see, and this is remarkable when you look at this mechanism. Keep in mind, this is a late-line patient population.

Third plus line of therapy and 25% or more that are fourth plus line of therapy. If you look at that x-axis, you're out past 30 months. What you can see is not only do you get early disease control, rate of primary progression, ORR, but these patients just go on and on. Whether you're a yellow stable disease or whether you're a green or blue responder, all of these patients are getting tremendous benefit. If you look up there, 25% of the patients are still on therapy after 2 years. Basically what you're talking about, this drives obviously patient life benefit, but also it drives hazard ratio for both PFS and OS. Very critical to see that basically once a patient is on control, they essentially go on and on.