Arcus Biosciences (RCUS) AI Stock Analysis

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Arcus Biosciences

(NYSE:RCUS)

Rating:51Neutral

Price Target:

$8.50

▼( -4.17% Downside)

Arcus Biosciences' overall stock score reflects mixed financial and operational performance. While the company maintains a strong cash position and demonstrates progress in strategic programs, the persistent negative earnings and volatility in revenue present significant challenges. Positive earnings call sentiment and technical indicators are offset by valuation concerns, resulting in an overall moderate score.

Positive Factors

Clinical Trials

The potential success of Phase 3 readouts for domvanalimab and quemliclustat could provide significant upside for Arcus Biosciences.

Earnings and Stock Valuation

The recent stock decline presents a buying opportunity ahead of the first outcomes from ARC-20 for the cas/cabo combination.

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.

Negative Factors

Market Perception

Investors have largely dismissed the programs related to domvanalimab and quemliclustat, viewing them as risky despite their potential for success.

Partnership Decisions

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

Stock Performance

Shares are down 45% year-to-date, likely due to skepticism on cas differentiation from belz.

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

Market Cap

$922.26M

Dividend YieldN/A

Average Volume (3M)1.29M

Price to Earnings (P/E)―

Beta (1Y)1.99

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. Volume1,318,467

30 Day Avg. Volume1,288,579

Financial Highlights & Ratios

PEG Ratio-2.12

Price to Book (P/B)1.57

Price to Sales (P/S)0.00

P/FCF Ratio-4.98

Enterprise Value/Market Cap0.85

Enterprise Value/Revenue0.78

Enterprise Value/Gross Profit3.15

Enterprise Value/Ebitda-0.82

Forecast

1Y Price Target

$28.89

Price Target Upside225.70% Upside

Rating ConsensusStrong Buy

Number of Analyst Covering10

Arcus Biosciences Business Overview & Revenue Model

Company DescriptionArcus Biosciences, Inc., a clinical-stage biopharmaceutical company, develops and commercializes cancer therapies in the United States. Its product pipeline includes, Etrumadenant, a dual A2a/A2b adenosine receptor antagonist, which is in a Phase 1b/2 clinical trial; and Zimberelimab, an anti-PD-1 antibody that is in Phase 1b clinical trial for monotherapy. The company also develops Domvanalimab, an anti-TIGIT monoclonal antibody, which is in Phase 2 development for the treatment of first-line metastatic non-small cell lung cancer in combination with Zimberelimab; Quemliclustat, a small-molecule CD73 inhibitor is in a Phase 1/1b study for the treatment of first-line metastatic pancreatic cancer; and AB521, an oral and small molecule HIF-2a inhibitor that is in Phase 1 study for the treatment of patients with von Hippel- Lindau disease. It has a clinical development collaboration agreement with Strata Oncology, Inc. to evaluate Zimberelimab; a collaboration with AstraZeneca, BVF Partners L.P to evaluate domvanalimab, its investigational anti-TIGIT antibody, in combination with Imfinzi (durvalumab) in a registrational Phase 3 clinical trial in patients with unresectable Stage III non-small cell lung cancer; and license agreements with Taiho Pharmaceutical Co., Ltd, Abmuno Therapeutics LLC, and WuXi Biologics to develop anti-CD39 antibody for the treatment of cancer. The company was incorporated in 2015 and is headquartered in Hayward, California.

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 Key Performance Indicators (KPIs)

Any

Revenue by Segment

Revenue by Segment
Highlights earnings from different business units or product lines, indicating which areas drive growth and profitability, and where strategic focus or improvement may be needed.

Chart InsightsArcus Biosciences has seen significant fluctuations in its 'License and Development Services' revenue, with a notable spike in early 2024, indicating potential new partnerships or product developments. Meanwhile, 'Other Collaboration' revenue remains relatively stable but shows a slight decline in late 2024, suggesting possible shifts in collaboration dynamics. The absence of earnings call data leaves the strategic reasons behind these movements unclear, but the volatility in the License segment could suggest strategic pivots or market responses to new opportunities.

Data provided by:

Main Street Data

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
248.00M	-223.00M	98.00M	375.82M	-81.48M
	EBIT
-330.00M	-340.00M	-280.00M	54.25M	-124.23M
	EBITDA
-268.00M	-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
60.00M	11.00M	120.00M	116.89M	15.24M
	Net Debt
-90.00M	-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 Price8.87

Price Trends

50DMA

8.36

Positive

100DMA

10.50

Negative

200DMA

13.42

Negative

Market Momentum

MACD

0.08

Negative

RSI

51.43

Neutral

STOCH

70.41

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 8.87 is above the 20-day moving average (MA) of 8.54, above the 50-day MA of 8.36, and below the 200-day MA of 13.42, indicating a neutral trend. The MACD of 0.08 indicates Negative momentum. The RSI at 51.43 is Neutral, neither overbought nor oversold. The STOCH value of 70.41 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 3 New Risks

Any difficulties or delays in the commencement or completion, or the termination or suspension, of our current or planned clinical trials could result in increased costs to us, delay or limit our ability to generate revenue or adversely affect our commercial prospects. Q4, 2024

Even if we receive regulatory approval for any investigational product, we will be subject to ongoing regulatory obligations and continued regulatory review, which may result in significant additional expense. Q4, 2024

Disruptions at the FDA and other government agencies caused by funding shortages or global health concerns could hinder their ability to hire, retain or deploy key leadership and other personnel, prevent new or modified products from being developed, review, approved or commercialized in a timely manner or at all, which could negatively impact our business. Q4, 2024

Arcus Biosciences Peers Comparison

Overall Rating

UnderperformOutperform

Sector (53)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
XERS	63 Neutral	$813.59M	―	222.83%	―	29.88%	35.11%
NTLA	54 Neutral	$938.47M	―	-57.92%	―	-13.37%	2.57%
Sector *	53 Neutral	$5.24B	3.07	-43.58%	2.80%	16.87%	-0.11%
RCUS	51 Neutral	$922.26M	―	-63.17%	―	-40.51%	-35.07%
DAWN	50 Neutral	$666.97M	―	-17.80%	―	―	56.10%
NRIX	47 Neutral	$773.03M	―	-64.16%	―	-30.25%	-5.92%
VIR	44 Neutral	$653.87M	―	-44.59%	―	-73.79%	-5.24%

* Healthcare Sector Average

Performance Comparison

RCUS

Arcus Biosciences

8.61

-8.14

-48.60%

NTLA

Intellia Therapeutics

9.20

-16.77

-64.57%

XERS

Xeris Pharmaceuticals

4.92

2.91

144.78%

VIR

Vir Biotechnology

4.51

-6.86

-60.33%

NRIX

Nurix Therapeutics

9.78

-6.33

-39.29%

DAWN

Day One Biopharmaceuticals

6.29

-8.33

-56.98%

Arcus Biosciences Earnings Call Summary

Earnings Call Date:May 06, 2025

(Q1-2025)

% Change Since: 9.24%|

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 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.