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Gilead, Arcus Biosciences Ink 10-year Deal To Co-develop Cancer Immunotherapies

Gilead Sciences, Inc. (GILD) and oncology-focused bio-pharmaceutical company Arcus Biosciences, Inc. (RCUS) said Wednesday that they have entered into a 10-year partnership to co-develop and co-commercialize current as well as future therapeutic product candidates in Arcus's pipeline. The agreement will also provide ongoing funding to support Arcus's research and development programs.

Under the terms of the deal, Arcus will receive $375 million upon closing, consisting of a $175 million upfront payment and a $200 million equity investment from Gilead. Arcus is eligible to receive up to $1.225 billion in opt-in and milestone payments with respect to its current clinical product candidates. The transaction is expected to close in the third quarter of 2020.

Gilead will have the right to appoint two individuals to Arcus's board of directors upon closing of the transaction.

Arcus said it currently has a clinical-stage pipeline of four immuno-oncology programs, as well as an active oncology discovery pipeline with six pre-clinical compounds that target critical biological pathways.

Arcus has 10 ongoing clinical studies of molecules in its portfolio. This includes a randomized Phase 2 study in first-line non-small cell lung cancer evaluating combinations of three Arcus product candidates - AB154, an investigational anti-TIGIT monoclonal antibody; AB928, an investigational A2aR/A2bR antagonist; and zimberelimab (AB122), an investigational anti-PD-1 monoclonal antibody.

Gilead will gain immediate rights to zimberelimab, as well as the right to opt-in to all other current Arcus clinical candidates, which include AB154, AB928 and AB680, upon payment of an opt-in fee that ranges from $200 million to $275 million per program, after delivery of a qualifying data package.

However, Zimberelimab, AB928, AB680 and AB154 are investigational and not approved anywhere globally. Their efficacy and safety have not been established.

Gilead said that if it opts-in to the AB154 program, Arcus can receive up to $500 million in potential future U.S. regulatory approval milestones.

Gilead will receive the right to opt-in to all other programs that emerge from Arcus's research portfolio over the next ten years, upon payment of an opt-in fee of $150 million per program after Arcus's delivery of a qualifying data package.

Gilead said its $200 million equity investment will be at a price of $33.54 per share.

In addition, Gilead will have the right to buy additional shares from Arcus, up to a maximum of 35 percent of the outstanding voting stock of Arcus over the course of the next five years. This will be at a 20 percent premium at the time Gilead exercises such option, or, if greater, at the initial purchase price per share.

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