Comparing the expansion of a young biopharma to the maintenance of a home, Terry Rosen, CEO of Arcus Biosciences Inc., pointed out that "If you think you're going to sell your house in six months, you put on a fresh coat of paint and new hardware on the doors. But if you're going to stay for 30 years, you fix everything inside the walls. Nobody can see it, but you've built a much stronger structure." At Arcus, he told BioWorld, "We're building a special, unique, long-term place."

The Hayward, Calif.-based company expanded on that theme by exclusively in-licensing development and commercialization rights in North America, Europe, Japan and elsewhere for the anti-PD-1 antibody, GLS-010, from Wuxi Biologics Co. Ltd. and partner Harbin Gloria Pharmaceuticals Co. Ltd. The deal was potentially valued at $816 million, including $18.5 million up front and milestone payments that could total $422.5 million for the development and approval of 11 products that include GLS-010 – which Arcus will call AB-122 – as a component. Wuxi and Gloria also stand to receive commercial milestones of up to $375 million.

Arcus agreed to pay tiered royalties ranging from the high single-digits to low double-digits on net sales of GLS-010. In addition, Wuxi will have an exclusive three-year deal to develop Arcus' biologics portfolio and will serve as exclusive manufacturer for GLS-010 in the licensed territories for a predetermined time period.

"We knew from the outset of forming Arcus that we wanted to bring in and have control of our own PD-1 antibody," Rosen explained. "We did pretty extensive due diligence and saw this as the best option for us."

Gloria had contracted with Wuxi to discover and develop GLS-010, a checkpoint inhibitor that uses the transgenic rat platform, Omnirat, from Ligand Pharmaceuticals Inc. Wuxi was a lynchpin in the deal. Arcus had an existing relationship with the Shanghai-based firm to manufacture its TIGIT, or T cell immunoreceptor with Ig and ITIM domains, antibody, AB-154. Arcus also had a "good informal relationship" with Gloria, of Beijing, "so we can discuss clinical development as we go forward and exchange data and information," Rosen said.

Last month, Wuxi and Gloria initiated a two-part phase I study with GLS-010 in China, expected to enroll approximately 85 patients with advanced solid tumors, according to Cortellis Clinical Trials Intelligence. Consequently, "there's already a great source of GMP material available," Rosen said, enabling Arcus also to move AB-122 into the clinic this year.

Arcus was founded in 2015 by Rosen and Juan Jaen, president, on the heels of the $1.25 billion sale of their first venture, Flexus Biosciences Inc., to New York-based Bristol-Myers Squibb Co. (BMS). That deal was centered around the indoleamine 2,3-dioxygenase 1 (IDO1)/tryptophan 2,3-dioxygenase (TDO) discovery program at Flexus, which included IDO-selective, IDO/TDO dual and TDO-selective compound libraries. (See BioWorld Today, Feb. 24, 2015.)

BMS, in collaboration with Ono Pharmaceutical Co. Ltd., "is doing a great job" with that program, Rosen said, having moved lead candidate BMS-986205 into a phase I/II study in combination with nivolumab (Opdivo) alone and in combination with both nivolumab and ipilimumab (Yervoy).

'Combinations will ultimately be most clinically important'

Rosen and Jaen had little trouble raising a $49.7 million series A – $30 million came from their own pockets – to get Arcus off the ground. Last year, they added $70 million in a series B financing led by GV (formerly Google Ventures), along with Taiho Ventures, Invus, Droia Oncology Ventures and Stanford University. Series A investors, including The Column Group, Foresite Capital, Novartis and Celgene, also participated.

At the time, Arcus was seeking to drive its first two programs – AB-928, a dual antagonist of the adenosine receptors A2aR and A2bR, and AB-154 – into the clinic. Those efforts are right on schedule, with AB-928 expected to move this year into a study in healthy volunteers that will help the company expedite the overall development timetable by accruing pharmacokinetic and safety data. In the first half of 2018, the company plans to advance that asset into a trial in cancer patients, using enrollment criteria and endpoints based on data from the initial study.

Arcus is eyeing a variety of combination efforts with AB-928, as well.

In mid-2018, Arcus expects to move AB-154 directly into a trial in cancer patients. The company also plans to explore that agent in combination trials with GLS-010.

"We've already generated some preclinical information that suggests that the combination of a TIGIT antibody together with a PD-1 antibody and a modulator of the adenosine A2 pathways might also make an interesting study," Rosen said.

To build an immuno-oncology (I-O) company for the long term, Rosen and Jaen understood the need to develop "a very extensive portfolio of agents" so that "we could have candidates in our portfolio that we could combine to eventually control our own destiny," the CEO said.

To that end, Arcus also is advancing a CD73 inhibitor program and expects to identify and move an initial candidate into a trial in mid-2018. A TIM-3, or T-cell immunoglobulin and mucin-domain containing-3, antibody isn't far behind, with expectations of entering the clinic in the fourth quarter of next year.

But the co-founders were realistic enough to know they would need some partnerships to place just the right assets into their portfolio to have the desired flexibility for combination approaches with the company's internal candidates.

"When we have a very novel, exciting molecule that we discover from scratch, like AB-928, and we combine that with a checkpoint inhibitor – whether it's the TIGIT antibody or a PD-1 antibody – that combination also becomes a first-in-class entity," Rosen pointed out.

Arcus views the I-O field as a 3-D matrix that consists of a foundational molecule and its mechanism along with a combination and setting. "All of those offer opportunities for advantages" over competitors in the space, Rosen said, "but we all, I think, realize that in the end the combinations will ultimately be most clinically important."

As the I-O field evolves, Arcus is firmly in the camp that cancer will be defined less by the target organ of origin and more by its immunological status.

"In thinking about our portfolio, we want to have the tools to modulate those different important components within the immune system," Rosen explained. "From an execution standpoint, we think there are a number of targets within the immunotherapy space that have not yet been effectively targeted with a great molecule despite strong biology to support such an effort. Our idea is to build a portfolio of those great molecules. We're not picking new targets out of the ground. We're looking at targets where the biology is strongly implicated as important."

With its penchant for controlling its destiny, Arcus is not a particular fan of out-sourcing its discovery engine. Instead, the company is building its own team – "we still hire absolutely the best medicinal chemists," Rosen said – and expects to end the year with more than 80 employees. Two of the most recent hires in key positions included Jennifer Jarrett, a Medivation Inc. alum, as chief business and financial officer, and Joyson Karakunnel, former investigator at the NCI and team leader for the hematologic group at Walter Reed National Military Medical Center, as vice president of clinical development.

Considering its ambitious line-up, Arcus "will undoubtedly do some sort of financing in the latter part of the year," Rosen predicted, indicating that interest in another round is already percolating.

The company also will consider collaborations, "but we will certainly maintain very strong development and commercialization rights in the U.S. and Europe," he emphasized. With little concern that Arcus will have sufficient capital to support its clinical program, the company is in a position to "look at collaborations that make sense to build our company faster, stronger and better," Rosen added. "It's a big, important field, and there are a lot of players."