Arcus Biosciences (RCUS) AI Stock Analysis

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Arcus Biosciences

(NYSE:RCUS)

46Neutral

Arcus Biosciences shows strong revenue growth but faces significant challenges with profitability and cash flow, impacting its financial performance score. Technical indicators suggest a bearish trend, which affects the stock's appeal. Valuation is hampered by negative earnings and the absence of dividends, making it less attractive to investors. These factors collectively contribute to a lower overall stock score.

Positive Factors

Clinical Efficacy

Data presented bolstered the promising topline results presented in October 2024, and validated cas as a best-in-class HIF-2α compared to competitor belzutifan.

Financial Position

RCUS finished 2024 in a strong cash position, with $992M in cash and cash equivalents expected to fund operations into mid-2027.

Market Opportunity

RCUS retains full rights to casdatifan, with a potential market opportunity of approximately $5 billion in the post-immuno-oncology and immuno-oncology-naive metastatic ccRCC combinations.

Negative Factors

Investor Concerns

Investors have expressed hesitation stemming from Gilead’s decision not to opt-in to the program and whether cas’s differentiation over Merck’s belzutifan will prove clinically meaningful.

Strategic Decisions

Contrary to expectations given the promising data, GILD chose not to opt-in for commercial rights to cas, driven by strategic concerns.

Arcus Biosciences (RCUS) vs. S&P 500 (SPY)

Market Cap

$890.49M

Dividend YieldN/A

Average Volume (3M)1.14M

Price to Earnings (P/E)―

Beta (1Y)2.00

Revenue Growth120.51%

EPS Growth25.37%

CountryUS

Employees627

SectorHealthcare

Sector Strength65

IndustryBiotechnology

Share Statistics

EPS (TTM)-3.10

Shares Outstanding105,885,140

10 Day Avg. Volume1,417,865

30 Day Avg. Volume1,143,741

Financial Highlights & Ratios

PEG RatioN/A

Price to Book (P/B)N/A

Price to Sales (P/S)3.67

Price to Cash Flow (P/CF)-2.40

P/FCF Ratio0.00

Enterprise Value/Market CapN/A

Enterprise Value/RevenueN/A

Enterprise Value/Gross ProfitN/A

Enterprise Value/EbitdaN/A

Forecast

1Y Price Target

$29.13

Price Target Upside246.37% Upside

Rating ConsensusStrong Buy

Number of Analyst Covering10

Arcus Biosciences Business Overview & Revenue Model

Company DescriptionArcus Biosciences (RCUS) is a biopharmaceutical company that focuses on developing innovative cancer immunotherapies. The company is engaged in the research and development of novel combination therapies designed to enhance the immune system's ability to fight cancer. Arcus Biosciences' pipeline includes small molecules and antibodies, targeting various pathways to improve patient outcomes in oncology.

How the Company Makes MoneyArcus Biosciences generates revenue primarily through strategic collaborations and partnerships with larger pharmaceutical companies. These alliances often involve upfront payments, milestone payments based on the achievement of specific developmental or regulatory goals, and potential royalties on sales if therapies are successfully commercialized. Additionally, the company may occasionally receive grants or funding from research institutions to support its innovative projects. As Arcus Biosciences continues to advance its pipeline, licensing agreements for its proprietary therapies also serve as significant revenue streams, contributing to its financial stability and growth.

Arcus Biosciences Financial Statement Overview

Summary

Arcus Biosciences exhibits strong revenue growth but struggles with profitability and cash flow sustainability. The balance sheet is solid, with minimal leverage and strong equity. However, the persistent net losses and negative cash flows highlight the need for improved operational efficiency to ensure long-term viability.

Income Statement

Neutral

Revenue saw a significant increase from $117M in 2023 to $258M in 2024, marking strong growth. However, the company continues to operate at a loss with negative EBIT and EBITDA margins, indicating ongoing profitability challenges. Net profit margin remains negative due to substantial net losses.

Balance Sheet

Neutral

The company maintains a robust cash position with cash and short-term investments exceeding total debt, resulting in negative net debt. However, the debt-to-equity ratio is relatively low, suggesting low leverage risk. The equity ratio is strong, indicating a solid capital structure despite the accumulated losses.

Cash Flow

Neutral

The operating cash flow improved from -$306M in 2023 to -$170M in 2024, yet remains negative, reflecting ongoing cash burn. Free cash flow has similarly improved but is still negative, implying the company needs to enhance operational efficiency to achieve sustainable cash generation.

Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Breakdown
Income Statement		Total Revenue
258.00M	117.00M	112.00M	382.88M	77.52M
	Gross Profit
258.00M	-223.00M	98.00M	375.82M	-81.48M
	EBIT
-330.00M	-340.00M	-280.00M	54.25M	-124.23M
	EBITDA
-269.00M	-283.00M	-250.00M	61.96M	-118.47M
	Net Income Common Stockholders
-283.00M	-307.00M	-267.00M	53.00M	-116.68M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
978.00M	759.00M	1.14B	681.30M	735.09M
	Total Assets
1.15B	1.09B	1.34B	1.59B	772.29M
	Total Debt
48.00M	11.00M	120.00M	116.89M	15.24M
	Net Debt
-102.00M	-116.00M	-86.00M	-31.03M	-158.17M
	Total Liabilities
665.00M	633.00M	688.00M	750.45M	269.99M
	Stockholders Equity
485.00M	462.00M	657.00M	841.45M	502.30M
Cash Flow		Free Cash Flow
-176.00M	-330.00M	426.00M	-282.25M	108.11M
	Operating Cash Flow
-170.00M	-306.00M	438.00M	-256.17M	111.17M
	Investing Cash Flow
-84.00M	194.00M	-413.00M	-3.87M	-434.37M
	Financing Cash Flow
277.00M	33.00M	33.00M	237.34M	438.68M

Arcus Biosciences Technical Analysis

Technical Analysis Sentiment

Negative

Last Price8.41

Price Trends

50DMA

9.15

Negative

100DMA

12.00

Negative

200DMA

14.04

Negative

Market Momentum

MACD

-0.30

Negative

RSI

51.13

Neutral

STOCH

81.90

Negative

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For RCUS, the sentiment is Negative. The current price of 8.41 is above the 20-day moving average (MA) of 7.79, below the 50-day MA of 9.15, and below the 200-day MA of 14.04, indicating a neutral trend. The MACD of -0.30 indicates Negative momentum. The RSI at 51.13 is Neutral, neither overbought nor oversold. The STOCH value of 81.90 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for RCUS.

Arcus Biosciences Risk Analysis

Arcus Biosciences disclosed 60 risk factors in its most recent earnings report. Arcus Biosciences reported the most risks in the “Tech & Innovation” category.

Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy

Latest Risks Added 0 New Risks

Arcus Biosciences Peers Comparison

Overall Rating

UnderperformOutperform

Sector (51)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
XERS	52 Neutral	$658.86M	―	222.83%	―	23.89%	16.86%
Sector *	51 Neutral	$5.31B	3.33	-39.82%	2.92%	17.95%	1.84%
VIR	51 Neutral	$868.42M	―	-38.09%	―	-13.90%	16.56%
DAWN	50 Neutral	$742.92M	―	-22.49%	―	―	56.10%
NRIX	47 Neutral	$878.23M	―	-64.16%	―	-30.25%	-5.92%
RCUS	46 Neutral	$890.49M	―	-59.77%	―	120.51%	25.37%
NTLA	40 Underperform	$846.77M	―	-54.00%	―	59.55%	3.09%

* Healthcare Sector Average

Performance Comparison

RCUS

Arcus Biosciences

8.41

-7.14

-45.92%

NTLA

Intellia Therapeutics

8.31

-12.45

-59.97%

XERS

Xeris Pharmaceuticals

4.28

2.53

144.57%

VIR

Vir Biotechnology

6.12

-2.11

-25.64%

NRIX

Nurix Therapeutics

11.52

-0.84

-6.80%

DAWN

Day One Biopharmaceuticals

7.90

-7.02

-47.05%

Arcus Biosciences Earnings Call Summary

Earnings Call Date: Feb 25, 2025 | % Change Since: -17.87% | Next Earnings Date: May 6, 2025

Earnings Call Sentiment Positive

The earnings call presented strong data for key drug candidates, significant progress in clinical trials, and a stable financial position, although strategic uncertainties with collaborations and competitive challenges in the RCC market were noted.

Highlights

Promising Data for HIF-2 Alpha Inhibitor

The ARC-20 study showed a 34% ORR and 25% confirmed ORR in the 100-mg cohort, with significant potential for further improvement. The median PFS has not been reached, suggesting strong efficacy in heavily pretreated patients.

Dom-Zim Combination Shows Strong Results

ARC-10 data showed a hazard ratio below 0.65 for both PFS and OS, with a median OS not reached with dom-zim in first-line PD-L1 high non-small cell lung cancer, outperforming contemporary benchmarks.

Financial Position and Collaborations

Arcus Biosciences has $1.1 billion in cash and investments, with a runway into mid-2027, bolstered by collaboration payments from Gilead and Taiho.

Phase 3 Trials and Development Plans

Multiple Phase 3 trials, including PEAK-1 and STAR-221, are underway, targeting significant market opportunities across various cancer indications.

Lowlights

Potential Strategic Concerns with Gilead

The decision on Gilead's opt-in for the cas program remains pending, with no certainty on timing or outcome, which could impact future strategic directions.

Competition and Challenges in RCC Market

Facing competition from Merck's combinations in RCC, with potential challenges in differentiating the cas plus cabo regimen effectively in the market.

Company Guidance

During Arcus Biosciences' Q3 2024 earnings call, the management provided comprehensive guidance, focusing on several key metrics and strategic updates. The call highlighted the launch of the late-stage development program for the HIF-2 alpha inhibitor casdatifan, with promising data from the ARC-20 study showing a primary progression rate of 19% in the 100-mg cohort and a 34% overall response rate (ORR), with a 25% confirmed ORR. Furthermore, the median progression-free survival (PFS) had not been reached, surpassing the belzutifan benchmark of 5.6 months. The company plans to present additional data from ARC-20 throughout 2025, including more mature ORR and median PFS. For domvanalimab, the ARC-10 study demonstrated a hazard ratio below 0.65 for both PFS and OS, reflecting strong efficacy. Financially, Arcus ended the quarter with $1.1 billion in cash, with GAAP revenue of $48 million, and expects its cash runway to extend into mid-2027. The anticipated opt-in decision by Gilead for the casdatifan program, potentially late this year or early next year, and the ongoing partnership with AstraZeneca and Taiho, are expected to further enhance Arcus's robust pipeline.

Arcus Biosciences Corporate Events

Executive/Board Changes

Arcus Biosciences Appoints New Board Director

Neutral

Feb 6, 2025

On February 6, 2025, Merdad Parsey, M.D., Ph.D., resigned from Arcus Biosciences’ Board of Directors following his departure from Gilead Sciences, Inc. The Board appointed Dietmar Berger, M.D., Ph.D., as a Class II director to replace Dr. Parsey. Dr. Berger, who joined Gilead as Chief Medical Officer in January 2025, will not receive compensation for his role at Arcus. This change aligns with the Amended and Restated Investor Rights Agreement between Arcus and Gilead.

Glossary

OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.

NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.

UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.