Arcus Biosciences (RCUS) AI Stock Analysis

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Arcus Biosciences

(NYSE:RCUS)

Rating:51Neutral

Price Target:

$9.00

▼(-0.88%Downside)

Arcus Biosciences receives a score of 51, primarily due to its financial challenges and valuation concerns. While strong cash reserves and promising clinical developments offer potential upside, the company's ongoing profitability issues and pipeline risks limit its attractiveness. Technical indicators provide mixed signals, requiring cautious optimism from investors.

Positive Factors

Clinical Trials

Arcus's combination data at ASCO exceeded expectations, suggesting a stronger future performance for the stock.

Financial Position

Arcus ended the quarter with $1 billion in cash, cash equivalents, and marketable securities, which they expect will fund operations through three pivotal readouts.

Therapeutic Effectiveness

The combination of casdatifan and cabozantinib demonstrated synergy in response rates over either agent alone without additive toxicity.

Negative Factors

Commercial Uncertainty

Skepticism has weighed on sentiment due to Gilead's commercial opt-out and overall uncertainty.

Market Competition

Difficulties competing with established players like Merck and Bristol and the considerable cost of running necessary studies pose challenges.

Prescriber Inertia

Arcus faces challenges in achieving its vision due to prescriber inertia and strong skepticism towards its PD-1 zimberelimab.

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

Market Cap

$1.06B

Dividend YieldN/A

Average Volume (3M)1.13M

Price to Earnings (P/E)―

Beta (1Y)1.96

Revenue Growth-40.51%

EPS Growth-35.07%

CountryUS

Employees627

SectorHealthcare

Sector Strength44

IndustryBiotechnology

Share Statistics

EPS (TTM)-1.14

Shares Outstanding105,885,140

10 Day Avg. Volume1,081,115

30 Day Avg. Volume1,133,694

Financial Highlights & Ratios

PEG Ratio<0.01

Price to Book (P/B)2.27

Price to Sales (P/S)0.00

P/FCF Ratio3.50

Enterprise Value/Market Cap1.32

Enterprise Value/Revenue1.54

Enterprise Value/Gross Profit10.32

Enterprise Value/Ebitda-1.23

Forecast

1Y Price Target

$27.88

Price Target Upside207.05% Upside

Rating ConsensusStrong Buy

Number of Analyst Covering10

Arcus Biosciences Business Overview & Revenue Model

Company DescriptionArcus Biosciences (RCUS) is a biopharmaceutical company focused on creating innovative cancer immunotherapies. Headquartered in Hayward, California, the company specializes in the development and commercialization of novel combination therapies aimed at treating cancer more effectively. Arcus leverages its robust drug discovery and development capabilities to advance a pipeline of proprietary and partnered therapeutic candidates targeting a range of cancer types.

How the Company Makes MoneyArcus Biosciences generates revenue primarily through strategic collaborations, licensing agreements, and partnerships with larger pharmaceutical companies. These collaborations often involve upfront payments, milestone payments based on the achievement of specific development or regulatory goals, and royalties on sales of commercialized products. The company invests heavily in research and development to advance its pipeline of drug candidates, with the aim of securing approvals that can lead to significant revenue streams from product sales and expanded licensing opportunities. Additionally, Arcus's ability to enter into lucrative partnerships with major industry players is a critical factor contributing to its financial performance.

Arcus Biosciences Key Performance Indicators (KPIs)

Any

Revenue by Segment

Revenue by Segment
Breaks down revenue by different business units or product lines, highlighting which areas are driving growth and which may need strategic adjustments.

Chart InsightsArcus Biosciences' revenue from License and Development Services shows volatility, with a notable spike in Q1 2024. However, the latest earnings call highlights a decline in quarterly revenue, attributed to collaboration dynamics with Gilead. Despite this, Arcus maintains a strong cash position and is strategically focused on advancing its casdatifan program, targeting a significant market opportunity in RCC. The company's collaborations, particularly with AstraZeneca, and rapid trial enrollments underscore its potential for future growth, though pipeline reprioritization poses some risk.

Data provided by:

Main Street Data

Arcus Biosciences Earnings Call Summary

Earnings Call Date:May 06, 2025

(Q1-2025)

% Change Since: 11.82%|

Next Earnings Date:Jul 31, 2025

Earnings Call Sentiment Neutral

Arcus Biosciences demonstrated strong financial management and strategic advancements in their casdatifan program, with promising data and collaborations. However, there are concerns about pipeline reprioritization, particularly in the TIGIT program, and a decline in quarterly revenue.

Q1-2025 Updates

Positive Updates

Cash Position and Capital Allocation

Arcus Biosciences has a strong balance sheet with $1 billion in cash and investments, bolstered by a $150 million equity financing. This financial position is expected to fund operations through initial pivotal readouts for key programs, including PEAK-1.

Casdatifan Development Progress

Significant progress in the casdatifan program, with promising initial data from the cas plus cabo cohort of ARC-20 accepted for an oral presentation at ASCO. The program includes eight cohorts evaluating different dosing regimens, combinations, and settings for clear cell RCC.

Strategic Collaborations

Arcus is collaborating with AstraZeneca to develop casdatifan in combination with their anti-PD-1 anti-CTLA-4 bispecific antibody, volrustomig, offering the first TKI-free HIF-2 alpha combination option for first-line RCC.

Enrollment and Study Progress

The PRISM-1 trial in pancreatic cancer is enrolling rapidly and expected to be fully enrolled by the end of 2025, ahead of initial expectations. There is also strong enrollment interest in the PEAK-1 trial.

Negative Updates

Pipeline Reprioritization and Program Halt

The adenosine modulator program, specifically the A2 receptor antagonist etruma, is not moving forward at this time despite a good meeting with the FDA.

TIGIT Program Concerns

Questions raised about under-investment in the TIGIT program compared to AstraZeneca, with only two major Phase 3 studies ongoing for TIGIT-based therapies.

Revenue Decline

Reported GAAP revenue for Q1 2025 was $28 million, down from $36 million in Q4 2024, primarily driven by the collaboration with Gilead.

Company Guidance

During the Arcus Biosciences First Quarter 2025 Earnings and Financial Results Call, the company provided several key metrics and guidance on its financial and clinical trajectory. Arcus reported $1 billion in cash and investments, with expectations to maintain this strong financial position through its initial pivotal readouts for three major programs, including the PEAK-1 trial for casdatifan. The company anticipates recognizing GAAP revenue between $75 million to $90 million for the full year 2025, primarily driven by its collaboration with Gilead. In terms of clinical development, Arcus highlighted the rapid enrollment of the PRISM-1 trial, expected to be fully enrolled by the end of 2025, and the STAR-221 trial's timeline to read out in 2026. The company emphasized its focus on casdatifan, targeting a $5 billion market opportunity in RCC, with the completion of its Phase 3 PEAK-1 study and ongoing collaborations with AstraZeneca to advance TKI-free regimens.

Arcus Biosciences Financial Statement Overview

Summary

Arcus Biosciences shows strong gross profit margins but struggles with profitability due to consistent negative net income and EBIT. The balance sheet is moderately leveraged with sufficient cash reserves, but the cash flow statement highlights ongoing challenges in cash generation.

Income Statement

Neutral

Arcus Biosciences has experienced fluctuating revenue with a decline from 2021 to TTM (Trailing-Twelve-Months). Gross profit margins are strong, but the company has consistently reported negative net income, EBIT, and EBITDA, indicating ongoing operational challenges. The net profit margin is negative due to substantial losses, which is a concern for profitability.

Balance Sheet

Neutral

The balance sheet shows a moderate debt-to-equity ratio, supported by a healthy level of cash and short-term investments relative to debt. However, the decline in stockholders' equity over recent periods indicates potential erosion in shareholder value. The equity ratio is reasonable, but the company relies on external financing, suggesting moderate financial stability.

Cash Flow

Negative

The cash flow statement reveals negative free cash flow in TTM, indicating challenges in generating cash from operations. The operating cash flow to net income ratio is unfavorable due to negative net income. Despite some stability in operating cash flows, the company needs to improve its cash generation to sustain operations without relying heavily on external financing.

TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Breakdown
Income Statement		Total Revenue
141.00M	258.00M	117.00M	112.00M	382.88M	77.52M
	Gross Profit
136.00M	248.00M	-223.00M	98.00M	375.82M	-81.48M
	EBIT
-436.00M	-330.00M	-340.00M	-280.00M	54.25M	-124.23M
	EBITDA
-390.00M	-268.00M	-283.00M	-250.00M	61.96M	-118.47M
	Net Income Common Stockholders
-391.00M	-283.00M	-307.00M	-267.00M	53.00M	-116.68M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
997.00M	978.00M	759.00M	1.14B	681.30M	735.09M
	Total Assets
1.16B	1.15B	1.09B	1.34B	1.59B	772.29M
	Total Debt
60.00M	60.00M	11.00M	120.00M	116.89M	15.24M
	Net Debt
-132.00M	-90.00M	-116.00M	-86.00M	-31.03M	-158.17M
	Total Liabilities
625.00M	665.00M	633.00M	688.00M	750.45M	269.99M
	Stockholders Equity
531.00M	485.00M	462.00M	657.00M	841.45M	502.30M
Cash Flow		Free Cash Flow
-303.00M	-176.00M	-330.00M	426.00M	-282.25M	108.11M
	Operating Cash Flow
-300.00M	-170.00M	-306.00M	438.00M	-256.17M	111.17M
	Investing Cash Flow
117.00M	-84.00M	194.00M	-413.00M	-3.87M	-434.37M
	Financing Cash Flow
190.00M	277.00M	33.00M	33.00M	237.34M	438.68M

Arcus Biosciences Technical Analysis

Technical Analysis Sentiment

Negative

Last Price9.08

Price Trends

50DMA

8.51

Positive

100DMA

9.76

Negative

200DMA

12.99

Negative

Market Momentum

MACD

0.30

Negative

RSI

49.21

Neutral

STOCH

51.64

Neutral

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 9.08 is below the 20-day moving average (MA) of 9.18, above the 50-day MA of 8.51, and below the 200-day MA of 12.99, indicating a neutral trend. The MACD of 0.30 indicates Negative momentum. The RSI at 49.21 is Neutral, neither overbought nor oversold. The STOCH value of 51.64 is Neutral, 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 (54)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
XERS	60 Neutral	$728.71M	―	222.83%	―	29.88%	35.11%
Sector *	54 Neutral	$5.38B	3.40	-45.06%	3.28%	16.75%	-0.02%
NTLA	52 Neutral	$877.35M	―	-57.92%	―	-13.37%	2.57%
NRIX	52 Neutral	$975.05M	―	-64.16%	―	-30.25%	-5.92%
RCUS	51 Neutral	$1.06B	―	-63.17%	―	-40.51%	-35.07%
DAWN	50 Neutral	$707.51M	―	-17.80%	―	―	56.10%
VIR	50 Neutral	$749.25M	―	-44.59%	―	-73.79%	-5.24%

* Healthcare Sector Average

Performance Comparison

RCUS

Arcus Biosciences

9.08

-7.92

-46.59%

NTLA

Intellia Therapeutics

8.37

-17.59

-67.76%

XERS

Xeris Pharmaceuticals

4.38

2.16

97.30%

VIR

Vir Biotechnology

5.25

-5.11

-49.32%

NRIX

Nurix Therapeutics

12.63

-4.10

-24.51%

DAWN

Day One Biopharmaceuticals

6.75

-6.17

-47.76%

Arcus Biosciences Corporate Events

Product-Related Announcements

Arcus Biosciences Presents Promising Phase 1/1b Trial Data

Positive

Jun 2, 2025

On June 1, 2025, Arcus Biosciences presented updated data from its Phase 1/1b clinical trial ARC-20, involving the combination of casdatifan and cabozantinib for patients with clear cell renal cell carcinoma. The interim analysis, with a data cutoff date of March 14, 2025, showed a confirmed objective response rate of 46% and an acceptable safety profile, indicating potential efficacy and safety for this treatment combination.

The most recent analyst rating on (RCUS) stock is a Buy with a $25.00 price target. To see the full list of analyst forecasts on Arcus Biosciences stock, see the RCUS Stock Forecast page.

Glossary

BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

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.