Hercules’s loan is expected to hold Arcus up as the company continues to run at a net loss. Image: Shutterstock/ Tada Images

Arcus Biosciences has announced a loan from financer Hercules Capital valued at as much as $250m, contingent on the advancement of the company’s therapeutic candidates.

Arcus released the news after the markets closed yesterday (27 August), outlining an initial $50m granted at the deal’s close, with another $100m available at Arcus’s discretion. Provided Hercules Capital approves, a further $100m can be drawn. The five-year loan and four-year interest-only period may each be extended another year should Arcus initiate Phase III trials for its cancer therapies, a HIF-2α inhibitor casdatifan and the CD73 inhibitor quemlicustat, and meet regulatory milestones, respectively.

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The deal comes as the company continues its financial recovery. Arcus’s share price dropped from a high of $49.1 in November 2021 to $13.10 in November 2023. When the market opened today (28 August), the share price stood at $17.3; the company is valued at $1.6bn.

Arcus CEO Dr. Terry Rosen said, “This non-dilutive facility enhances our already strong cash position and enables us to expand and accelerate our development program for casdatifan across multiple settings in ccRCC (clear cell renal cell carcinoma).”

If approved, the HIF-2α inhibitor is projected to enter the market in 2028 potentially earning annual global revenues of $64m, increasing to $69m by 2030. Arcus plans to present data from their Phase I/Ib casdatifan trial ARC-20 (NCT05536141) later this year.

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The loan will contribute to the $1bn in cash reserves held by Arcus as of 30 June this year. Much of this funding comes from the company’s 10-year deal signed with Gilead Sciences in 2020. As per Arcus’s Q2 2024 report, Gilead may purchase up to 35% of Arcus stock, of which it owned 32.9% at the end of Q2 2024, and appoint three Arcus board members. Gilead has done so, and appointed Gilead CEO Johanna Mercier among others.

Arcus also secured funding from other partnerships, including through an exclusive licence to quemliclustat in Asian markets, excluding China, to Taiho Pharmaceuticals.

Despite this, Arcus reported net losses of $93m in Q2 2024 compared to $75m in Q2 2023.

Another group of investigational drugs for the company is the checkpoint inhibitors domvanalimab and zimberelimab. Both target programmed cell death protein 1 and are being developed in non-small cell lung cancer under a collaboration between Arcus and Gilead in an active Phase III trial (NCT05502237). GlobalData estimates domvanalimab plus zimberelimab to yield $1.37bn in sales in 2030, including profit shares and royalties.