Earnings Call Transcript
Arcus Biosciences, Inc. (RCUS)
Earnings Call Transcript - RCUS Q4 2025
Operator, Operator
Hello, everyone, and thank you for joining the Arcus Biosciences Full Year and Fourth Quarter 2025 Earnings and Financial Results Call. My name is Claire and I'll be coordinating your call today. I will now hand over to Holli Kolkey from Arcus Biosciences to begin. Please go ahead.
Holli Kolkey, IR Representative
Good afternoon and thank you for joining us on today's conference call to discuss Arcus' fourth quarter and full year 2025 financial results and pipeline updates. I will be filling in for Pia Eaves, our Head of IR, who is out on maternity leave. I would like to remind you that on this call, management will make forward-looking statements, including statements about our cash runway, our projected 2026 revenue and our expected clinical development milestones and timelines. All statements other than historical facts reflect the current beliefs and expectations of management and involve risks and uncertainties that may cause our actual results to differ from those expressed. Those risks and uncertainties are described in our most recent annual report on Form 10-K that has been filed with the SEC. For today's call, please refer to our latest corporate presentation posted in the Investors section of our website. This afternoon, you'll hear from several members of our management team. So now I'll turn the call over to our CEO, Terry Rosen, to begin.
Terry Rosen, CEO
Thank you, Holli, and thanks to everyone for being here this afternoon. 2026 will be a pivotal year for Arcus. We are committed to establishing casdatifan as the leading HIF-2 alpha inhibitor and setting a new standard for treating clear cell renal cell carcinoma. This year, we anticipate significant data presentations and advancements in our Phase III clinical program for CAS. I want to highlight for those who may be new to Arcus or casdatifan that the benefits of casdatifan are well recognized, stemming from its unique PK/PD profile. This is clear from the strong differentiation observed in the primary biomarker for HIF-2 alpha inhibition, EPO production, and across key efficacy measures. Casdatifan targets the issue more effectively and sooner. This week, we released updated data from our ARC-20 cohorts on casdatifan monotherapy in late-line clear cell RCC. We are excited that Dr. Toni Choueiri will present this data at ASCO GU this weekend. We will delve into this data further today, but it is crucial to note that single-agent CAS has achieved remarkable overall response rates and progression-free survival in late-line clear cell RCC, outperforming both belzutifan, the only marketed HIF-2 alpha inhibitor, and standard care TKIs. This is highlighted clearly in our corporate deck. Notably, casdatifan delivers these results without the severe side effects seen with TKIs. The ASCO GU presentation will also share biomarker data that strengthens our confidence in casdatifan's differentiation from belzutifan. Additionally, we will present detailed results from the Phase III LITESPARK-011 study, which compares belzutifan plus lenvatinib to cabozantinib in IO-experienced clear cell RCC. These findings should validate and reduce risk for our ongoing Phase III PEAK-1 study, which is investigating cas plus cabo in a similar patient population. The combination of our data and the findings from belzutifan will make this ASCO GU an essential event for the HIF-2 alpha inhibitor class, clearly positioning it as a critical standard of care in RCC treatment. We believe HIF-2 alpha inhibitors will become integral across all lines of RCC treatment, with CAS poised to be the preferred option in various settings. As we will outline later, we anticipate that CAS's profile will support a groundbreaking frontline regimen, enhancing patient experiences and potentially leading to significant commercial opportunities. Our first Phase III study for CAS, PEAK-1, is currently enrolling participants and is designed for swift approval and access for patients. The enthusiasm for PEAK-1 is already high, fueled by the robust new ARC-20 data and the validation of HIF-2 alpha inhibition in early line settings from LITESPARK data. By combining our leading HIF-2 alpha inhibitor with the widely utilized TKI, cabozantinib, we aim to secure a substantial share in the IO-experienced segment. I'd like to take a moment to discuss our strategy for frontline treatment, as it will be a significant focus for us throughout 2026. Our approach is supported by the consistently low primary progression rates observed with casdatifan in different settings. Primary progression indicates the percentage of patients whose disease worsens before their first scan. It's critical for this rate to be minimized, especially in early line treatments, because patients who face primary progression miss the chance to benefit from therapy, which is a tough reality for them and their healthcare providers. CAS has demonstrated low rates of primary progression compared to belzutifan, which has a high rate of 35% as a standalone treatment in its Phase III trial. This distinction implies that in frontline RCC, belzutifan will likely always need to be combined with a TKI to maintain low primary progression rates. In fact, Merck’s Phase III frontline study is investigating this combination. The regimen of lenvatinib, belzutifan, and pembrolizumab may not be patient-friendly in terms of quality of life. On the other hand, a TKI-free regimen is more appealing for both patients and healthcare professionals. The predominant feedback from investigators suggests that, given casdatifan's profile, the need for a TKI may be postponed for years, providing a much more favorable option for patients and enhancing their quality of life. As such, our frontline strategy revolves around developing casdatifan without a TKI and specifically using a combination of casdatifan with anti-PD-1 therapy, potentially supplemented with a third non-TKI agent. We plan to implement this strategy swiftly and effectively through our ARC-20 study. This is a good time to clarify how we've utilized and will continue to leverage ARC-20 to guide our development strategy for CAS. First, with four monotherapy cohorts and 121 efficacy data points in late-line clear cell RCC, ARC-20 allows us to show clearly that CAS has a best-in-class HIF-2 alpha inhibitor profile. Second, these cohorts were designed to meet Project Optimus objectives, establishing that a daily dose of 100 milligrams is optimal for ongoing use of casdatifan. Lastly, the design enables us to efficiently add and enroll cohorts to test CAS and its combinations in various settings. Currently, we have approximately 30 active sites across four countries involved in the study, enhancing our operational efficiency. We first applied this with the cas plus cabo cohort, quickly generating data to support our initial Phase III study, PEAK-1. We've since added three additional cohorts, with around 90 patients in total, to illustrate the feasibility of using CAS without a TKI in early treatment settings. One of these cohorts, focusing on cas plus zim, is fully enrolled and has already yielded a primary progression rate of 9% for the initial 23 of 30 patients. With the consistently low primary progression rates across all settings, we and our investigator advisors are convinced that a TKI-sparing casdatifan regimen is the ideal frontline therapy. We have just begun enrolling a new cohort to assess CAS combined with anti-PD-1 and anti-CTLA-4 to bolster the rapid initiation and execution of our first Phase III study in the frontline context. Lastly, while our primary focus is on RCC, we've also developed promising preclinical data for CAS in HCC and are exploring ways to pursue opportunities in HCC in a cost-effective manner. We've spent considerable time discussing casdatifan, but I would now like to shift to our immunology portfolio, which has garnered significant interest. We have utilized the same small molecule expertise that developed casdatifan to build an emerging lineup of inflammation and immunology programs. We expect two of these to enter clinical trials within the next year. Our aim is to target validated areas where it has been challenging to develop small molecule drugs with optimal pharmaceutical characteristics. Thus, we anticipate minimal competition for our inflammation and immunology initiatives, similar to our experience with casdatifan. Our three most advanced compounds include an MRGPRX2 antagonist, a TNF inhibitor, and a CCR6 antagonist. Later in this call, Juan will elaborate on how our compounds may differentiate themselves from others. Before that, I will turn the call over to Richard to review the new and updated casdatifan data that we will present at ASCO GU this weekend.
Richard Markus, Chief Medical Officer
Thank you, Terry. I'd like to start on Slide 9 of our corporate deck, just to remind everyone about the design of our ARC-20 study. Today's data include updated ORR and PFS based on a data cutoff date of January 30 from the four late-line monotherapy cohorts highlighted on this slide. This is now the fourth time we are presenting data for single-agent casdatifan in this setting. As you'll see on the next few slides, the efficacy data continued to improve with longer follow-up. Now moving to Slide 10, where we show the latest ORRs for the 100-milligram QD cohort, which is our going-forward dose and formulation. The confirmed ORR increased from 35% at the August data cut now to 45%. The 45% ORR in this late-line patient population is remarkable and that it's twice that observed with belzutifan in LITESPARK-005. Similarly, the confirmed ORR for the pooled analysis improved from 31% to 35%, well above the range of ORRs that have been observed for belzutifan. On Slide 12, we show the latest Kaplan-Meier curve for the 100-milligram cohort. And you can see here that this 100-milligram cohort shows an impressive median PFS of 15.1 months after 17.8 months of median follow-up. There are some patients still on treatment who are censored before the median, but even in a highly unlikely scenario where all censored patients progress at the next scan, the median PFS for this cohort would still be 14.4 months. Let's move on to the next slide, Slide 13, where we show the latest Kaplan-Meier curve for the pooled analysis. The median PFS remained at 12.2 months. As you can see here, there are quite a lot of patients still on treatment beyond 12 months and even beyond 24 months. So overall, we are seeing PFS that is 2 to 3 times longer with CAS monotherapy than the 5.6 months observed for belzutifan in the same setting. These data clearly support the proposition that casdatifan is the best-in-class HIF-2 alpha inhibitor, and our highest priority now is to maximize the potential of this molecule in clear cell renal cell carcinoma. I would now like to spend some time on our development plans, starting with our first Phase III study, PEAK-1, which is evaluating cas plus cabo versus cabo in immune therapy experienced ccRCC. The trial design is shown on Slide 19 of our corporate deck. PEAK-1 is actively enrolling, and we are confident that the study will complete enrollment quickly. Additionally, PEAK-1 has a sole primary endpoint of PFS, which should enable a relatively short time to read out. This is a fast-to-market strategy that builds on top of standard of care. Based on all the data to date, we have high confidence that this study will establish cas plus cabo as the new standard of care in IO-experienced clear cell RCC. Meanwhile, as Terry talked about earlier, our first-line strategy has the potential to transform the treatment paradigm for RCC. We're focused on the development of a TKI-free regimen that improves on the efficacy of IO-only therapy, and there are several opportunities for CAS to do this. First, the biggest limitation of anti-PD-1 plus anti-CTLA-4 therapy is that it has a relatively high rate of primary progression that is 20% to 25%. With CAS's low rate of primary progression and its orthogonal mechanism, we believe we can meaningfully improve upon this high rate of primary PD seen with the IO-only therapy. In fact, we have shown that patients who progress quickly on IO-based therapies have tumor markers that correlate with responsivity to CAS. Additionally, median PFS for IO-only regimens in clear cell RCC is relatively short at about 12 months. So again, we believe we can meaningfully improve on this PFS. To determine the optimal go-forward TKI-free regimen, we are evaluating multiple CAS combinations in ARC-20. These include our fully enrolled cohort evaluating cas plus zim, which we believe will convincingly demonstrate the ability of CAS plus an anti-PD-1 to form the backbone of our first-line regimen based on both safety and efficacy. We plan to share data from this cohort in the second half of this year. Additionally, we just started a cohort to evaluate CAS in combination with anti-PD-1 and anti-CTLA-4. In addition to this cohort, we also plan to evaluate another TKI-free combination for CAS in the frontline setting, and we'll share more about this in the coming months. Lastly, we continue to monitor data from the EVOLVE study, evaluating CAS plus forimtamig, an anti-PD-1 CTLA-4 bispecific that's in collaboration with AstraZeneca. The safety and early efficacy data from all of these cohorts will inform the design of our first Phase III study for CAS in the frontline setting. We have already started planning activities to enable us to initiate a Phase III study as soon as we have the relevant safety and efficacy data in hand. Our goal is to initiate a Phase III study at the end of this year.
Jennifer Jarrett, CFO
Thanks, Richard. I'd like to start on Slide 22. RCC represents a massive multibillion-dollar market opportunity for casdatifan. Sales for RCC drugs in just some major markets are over $10 billion annually today and anticipated to grow to $13 billion by 2030. As you can see here, historically the market has been dominated by only two classes of therapies, IO and TKIs, and HIF-2 alpha inhibition is the only new class of drugs on the horizon today. Importantly, as of today, the HIF-2 alpha inhibitor field is only a 2-horse race with just belzutifan and us with casdatifan. While Merck is slightly ahead of us, historical data has shown that in just a 2-player market in oncology, second entrants have captured 42% when there is no differentiation. And let me repeat that, this is when there is no differentiation. With efficacy differentiation as we are seeing with casdatifan, this share can be meaningfully higher, and oncology analogs have shown that fast followers with differentiation share can be as high as 85%. Additionally, we are developing CAS with different combination partners to belzutifan, which should drive even further differentiation. Turning to Slide 23. The sole marketed HIF-2 alpha inhibitor, belzutifan, which is currently approved only in late-line clear cell RCC, is already generating annual run rate sales of nearly $1 billion. While impressive, this is only scratching the surface in terms of market opportunity for a best-in-class HIF-2 alpha inhibitor. For casdatifan, we are focused on early line settings, which have larger patient populations and longer durations of therapy, both of which will contribute to a much larger market opportunity that is multibillion dollars in size. Specifically, our PEAK-1 study is targeting the IO experienced setting, of which there are approximately 21,000 patients in the major markets alone, which is more than twice the third-line patient population where belzutifan is approved today. Additionally, with the duration of therapy at least double that of belzutifan today, we expect a peak sales opportunity of $2.5 billion in the IO experienced or PEAK-1 setting alone. In first line, the opportunity is even greater. With our TKI-free strategy, we believe we can take meaningful share for both IO/IO and IO/TKI regimens. Here, we estimate peak sales potentially for CAS of $3 billion or more. All in, casdatifan could be a $5 billion drug in first- and second-line RCC alone. And to be clear, this is a revenue opportunity to Arcus, not TAM or total addressable market. There's opportunity to expand that further with trials that support casdatifan usage in other RCC settings as well as potentially other tumor types like HCC, which Terry referenced earlier. As a reminder, we own all of the rights to casdatifan, including economics, other than in Japan and certain other Southeast Asian countries, so nearly 100% of casdatifan revenues would accrue to us. I'll end with one slide that supports our plans to focus on a TKI-free regimen in the front line, and that's Slide 24. Here, we show market research that we recently conducted to determine the preferred combination partner for CAS in the front line. You can see here very clearly that the IO/IO regimen is preferred 3 times more than the IO/TKI regimen as a combination partner for CAS for all the reasons we discussed earlier today. I'd now like to turn the call over to Juan to discuss our immunology portfolio in more detail.
Juan Jaen, Chief Scientific Officer
Thanks, Jen. I’m pleased to share details about our emerging immunology portfolio. This area has interested us, and we have expertise in it from the start of the company. Currently, our portfolio consists of five programs that are highlighted in our slide deck, showcasing years of research and compound optimization. Our strategy has always been about minimizing biological risk by building on mechanisms that have proven clinical efficacy. We aim to take a small molecule approach in pathways where biologics have excelled, as we see a significant opportunity to create value. We seek more than just the convenience of an oral drug; several of our programs also expect to show differentiated efficacy and safety compared to the approved biologics. As I mentioned, we have five active programs, but I will focus on our MRGPRX2 and TNF inhibitor programs, which are on track to be the first to enter clinical trials. For our X2 antagonist program, we plan to address chronic urticaria and atopic dermatitis. This target has garnered considerable attention recently and offers a novel approach to modulating mast cell activity. While successful treatments like anti-IgE and anti-IL-4 receptor antibodies exist, there remains a significant medical need since many patients do not respond well to these therapies. Targeting mast cells is a valid strategy for conditions such as chronic urticaria and allergic asthma, and our small molecule approach could provide a unique mechanism to meet the clinical need for these conditions. Our candidate molecule is specifically designed to enhance potency and pharmacokinetics compared to early small molecule drugs in development. We anticipate that the clinical exposure required for our treatment will be significantly lower than that of the leading small molecule currently in trials, potentially offering a better therapeutic index and a best-in-class profile. We expect to initiate our MRGPRX2 antagonist in trials later this year, starting with a Phase I study in healthy volunteers, followed closely by a proof-of-concept study in chronic inducible urticaria. This program has the potential to deliver proof-of-concept data within nine to twelve months of entering the clinic. Our TNF inhibitor program presents another significant opportunity. Anti-TNF antibodies are highly successful drugs, and with our small molecule approach, we aim to create a Humira in a pill form. One challenge with existing TNF antibody therapies is that they inhibit signaling at both TNF receptor 1 and 2. However, blocking receptor 2 can affect regulatory T cells and tissue repair, leading to inflammation as a side effect in some patients. Our approach selectively prevents TNF from activating receptor 1 while maintaining receptor 2 function, which we believe will be an effective yet safer alternative. Compared to early competitors in clinical stages, our molecule has been designed to offer better potency and human pharmacokinetics. We anticipate entering the clinic with this program in late 2026 or early 2027. Similar to the X2 program, our TNF program is also positioned to generate proof-of-concept data fairly quickly. We are excited about the potential of our immunology programs to provide better options for patients, and we are committed to advancing these programs into clinical trials as swiftly as possible. Now, I’ll hand it over to Bob to discuss our financials.
Robert Goeltz, CFO
Thanks, Juan. Our cash at the end of the fourth quarter was $1 billion as compared to $841 million as of the end of the third quarter. Our cash position was bolstered by proceeds from our $288 million financing in November. Turning to our financial results for the quarter, we recognized GAAP revenue for the fourth quarter of $33 million, which compares to $26 million for the third quarter. Our revenue is primarily driven by our collaboration with Gilead. Our R&D expenses for the fourth quarter were $121 million compared to $141 million in the third quarter. G&A expenses were $26 million for the fourth quarter compared to $27 million for the third quarter. Total noncash stock-based compensation was $15 million for the fourth quarter compared to $14 million for the third quarter. Shifting gears to guidance for 2026, we expect to recognize GAAP revenue of $45 million to $55 million for the full year of 2026. As we discussed on prior calls, we expect operating expenses to decrease meaningfully in 2026 compared to 2025. The magnitude of this decrease will be in part determined by the results of the futility analysis for STAR-121, which will be conducted in the next couple of months. Accordingly, we expect to provide more detailed R&D expense guidance in connection with our Q1 call. We expect our cash and investments will enable us to fund operations until at least the second half of 2028. For more details regarding our financial results, please refer to our earnings press release from earlier today and our 10-K. I'll now turn it back over to Terry.
Terry Rosen, CEO
Thanks very much, Bob. I'm going to end on Slide 33, spend a bit of time on our upcoming news flow for 2026. As I mentioned at the beginning of the call, this is going to be another huge year for casdatifan data. Those data are both going to reinforce the confidence in its best-in-class profile and provide greater clarity on our first-line development strategy. Later this year, we'll have at least two additional data presentations for CAS. First, we'll be presenting updated data for the cas plus cabo cohort. We'll do that either at an investor event or medical meeting, by which time we'll have a minimum of 12 months follow-up on all patients. The aim here is to be able to provide a relatively mature and meaningful data set, including Kaplan-Meier curves. Also later this year, we'll share new data from the casdatifan plus zim cohort of ARC-20. This is intended to demonstrate the safety and early efficacy of the combination and to establish CAS plus anti-PD-1 as the backbone for our first-line combination. There's also a lot happening on the development front. For PEAK-1, our first Phase III study for casdatifan, our goal is to complete enrollment by year-end. Also, we're adding first-line combination cohorts to ARC-20 to determine the optimal regimen for our first Phase III study in the frontline setting, and this will enable us to initiate our second Phase III study for casdatifan at the end of this year. We also expect to advance our two lead programs targeting inflammation and autoimmune disease into the clinic by early next year. With that, I'd like to thank everybody for joining us. We appreciate your interest, your continued support of Arcus, and we're happy to open the call for questions.
Operator, Operator
Our first question comes from Salim Syed from Mizuho.
Salim Syed, Analyst
Congratulations on the data at ASCO GU. I appreciate the insights into the first-line strategy. Regarding the numbers you shared on PD and PFS, are there specific trials you are focusing on to help us think about the appropriate IO/IO benchmarks as you transition from TKI-based regimens? Additionally, what improvements would you like to see from those benchmarks?
Terry Rosen, CEO
Sure. So that's a good question. And I think as we move into this TKI-sparing regimen, the focus should really go to ipi/nivo. So there's a lot of data out there on ipi/nivo. Those of you who were at ASCO last year know that there were even basically a decade of follow-up. The reason is ipi/nivo is the #1 therapy utilized in the front line. It's roughly in 1/3 to 35% of patients. One of the reasons it is growing, but one of the reasons that it isn't used even more is the rate of primary progression, and that's on the order of 20% to 25%. Second, it has a relatively short PFS, which is on the order of 12 months or so. So I think those numbers become very clear, simple lines to put in the sand where, obviously, we want to demonstrate meaningful improvement. I would emphasize that's all going to start with that rate of primary progression. We believe it's exciting that we've even shown with anti-PD-1 alone, we are looking at potentially a single-digit rate of primary progression, and we'll have more to say on that later this year. But I think those form a good place to start the conversation around benchmarks.
Jennifer Jarrett, CFO
Yes. I just would like a specific study. So like CheckMate-214, which was a registrational study for ipi/nivo in frontline RCC. And then the other study to look at that had an ipi/nivo arm with COSMIC-313. Interestingly, the key efficacy measures, PD, PFS, OS, etc., were all very, very similar across those two studies.
Operator, Operator
Our next question comes from Li Watsek from Cantor.
Daniel Bronder, Analyst
This is Daniel Bronder on for Li. Congrats on the data update as well from our end. We're just curious to hear where you're at with the volru plus cas run-in in the frontline study that's being operationalized by AstraZeneca. I know you had mentioned that it was paused as you're looking at the data. But any more color about when it might open again, if it's going to open again?
Terry Rosen, CEO
Thank you for the question. This refers to our collaboration with AstraZeneca, which is exploring a combination of casdatifan with their bispecific anti-PD-1 and anti-CTLA-4 antibody. While the study was paused, the patients involved continued to receive treatment at a reduced dosage of volru, along with continued administration of casdatifan. We are gaining valuable insights from this combination. Since the dose reduction, we haven't observed any new immune adverse events, and the adverse events we did see resembled those typically associated with volru and anti-CTLA-4. Importantly, we have not observed any primary progression in the study. Although the sample size is small, the results appear to align with our expectations. Currently, I can't provide additional details on future plans as we are actively discussing them with AstraZeneca. It's essential to note that the study's arm remains open, specifically in ARC-20, where we anticipate swift enrollment. We'll gather the necessary data to guide our Phase III study.
Operator, Operator
Our next question comes from Daina Graybosch from Leerink Partners.
Unknown Analyst, Analyst
Bill on for Dana. Congrats on all the data. It looks really great. So in your biomarker analyses, you mentioned that deeper EPO reductions were correlated with responses. Is this due to higher baseline EPO? I guess, in other words, did patients generally reach a similar numeric EPO level after treatment? And I have one follow-up.
Terry Rosen, CEO
I'll let Juan give you some comments on that.
Juan Jaen, Chief Scientific Officer
There is a soft correlation between higher baseline levels and the extent of reduction. We believe our data supports that these factors reflect the level of HIF-2 alpha activity in the tumors. Tumors with a stronger HIF-2 alpha signal usually have higher EPO levels, and these are also the patients who show the most significant and sustained reductions.
Unknown Analyst, Analyst
Got it. When you're looking at these biomarkers, did you also look at VEGF and other genes that might also be downstream of HIF-2?
Juan Jaen, Chief Scientific Officer
Yes. There are other soluble peripheral markers that we'll be disclosing later this year that are regulated by HIF-2 alpha and are well known to be each one of them independently negative prognostics in this setting.
Terry Rosen, CEO
One thing I would emphasize about the biomarker work that I think is important for people to recognize, this is most important in just sort of supporting the overall understanding and tie to mechanism of the activity. In this particular case, there's no sense that we would ever think about having or needing a selection criteria based on the biomarker. Probably 80-plus percent to 90-some-odd percent of patients with clear cell RCC have some level of HIF-2 as a driver. So when we report on these types of data, what you're actually seeing is while there's correlation, even those patients with lower levels see a benefit. We get a pretty continuous spectrum of benefit throughout those patients as opposed to some sort of binary cutoff that you might be seeking.
Operator, Operator
Our next question comes from Richard Law from Goldman Sachs.
Unknown Analyst, Analyst
This is Jane on for Rich. Congrats on the progress. We have two questions about the upcoming presentation at ASCO GU this weekend. So first, Merck will present detailed results of belz plus lenva in the Phase III LITESPARK-011, which may set the bar in second line. What are your thoughts and expectations for LITESPARK-011? And my second question is, Merck is also running a study of belz plus zanza in the Phase Ib/II KEYMAKER-U03. They have a poster about this weekend. What’s your view on this combo strategy versus cas plus cabo?
Terry Rosen, CEO
Let me start with expectations around LITESPARK-011. From everything that Merck put out, they've obviously said that the study was successful, and any body language that you might infer, we think the data are going to look quite good. We're excited about that. We think a couple of things. First off, it's really providing important validation for the field in an earlier line setting. We feel great knowing that we have a better HIF-2 inhibitor, and we're going on top of what is the standard of care, cabo, in terms of TKI versus lenva, and we have the same control arm. From our perspective, obviously we have no knowledge of anything quantitative, but we expect good data. The better the Merck data, honestly, the better we feel it will be better for patients, will be better for Arcus because we think we're going to outperform them with both of the molecules in our combination. The second part, when I say there are two important things, is that all of our investigators have emphasized this point which we recognize. We have a lot of tailwinds in terms of enrolling PEAK-1, but for a number of reasons, the positive data that they will present is going to help drive enrollment. As I mentioned, we're looking to be fully enrolled by the end of this year, and we think the LITESPARK data will help us very much.
Jennifer Jarrett, CFO
Just one note on KEYMAKER-U03 you were asking for. The presentation is just a tip from the KEYMAKER study, which is just a Phase Ib/II platform study. So there's no data that's going to be presented for belzutifan. It's a trial in progress poster.
Operator, Operator
Our next question comes from Asthika Goonewardene from Truist.
Unknown Analyst, Analyst
This is Cardi on for Asthika from Truist. Just on the first question on ARC-20 monotherapy, the last update had ORR somewhere in the 30% range, and now you're showing improvement in the mid-40s. How much of that was due to deepening responses? At what time point were you seeing responses start to deepen?
Terry Rosen, CEO
So it's definitely all due to deepening of response. I like the question because it does go back. We share a lot of data, and we share almost in real time. One of the slides we've included has shown how those data have evolved over time. But we also pointed out at the earliest time point how with this mechanism and also the safety profile, it's very clear that responses can occur even out past a year. The responses occur at all sorts of different time points. The stable disease patients also continue to do very well. The question about DOR hasn't come up, but patients once they can get past that initial scan, do very well, and that's why we're seeing the PFS we're talking about. There's no generalities in terms of where those responses may occur. What I would emphasize is that even when we've seen patients that have generated their initial response out past a year, it's meaningful. What I can say is we're not close to a DOR. So we get a pretty continuous spectrum of benefit throughout those patients as opposed to some sort of binary cutoff that you might be seeking. That's one of the reasons we feel, and I think justified by the data, that the market is going to be driven not only by the number of patients but by the durability of the treatment. We've had a lot of patients, even a single agent in the late line out past two years, and we think that the front line is going to have patients doing even better than the current situation.
Unknown Analyst, Analyst
Got it. If I may, I'm just going to squeeze in one more question.
Terry Rosen, CEO
Sure.
Unknown Analyst, Analyst
You have said that STAR-121 will have a futility analysis in the coming months. If you choose to discontinue STAR-121 based on the results, what is the clinical impact? What is the impact on your R&D spend?
Terry Rosen, CEO
The clinical impact is we're already anticipating from an operational standpoint that that likely will occur, but we may see something that tells us to keep going. Operationally, the impact is fairly minimal because the study is basically fully enrolled. That impact will be that you won't be doing all that work leading up to the registration. I'll let Bob comment on the expense part of that.
Robert Goeltz, CFO
The vast majority of the expense that we see for especially any of our late-stage clinical trials is incurred primarily through the enrollment cycle and as the primary portion of patient treatment is occurring. So when you get to the latter parts of the trial, and you've presumably seen a decrease in expense as an example for 221 and 121 and other studies, when we get to the latter part of the life cycle of trials, the expense starts to drop off pretty markedly.
Operator, Operator
Our next question comes from Yigal Nochomovitz from Citigroup.
Yigal Nochomovitz, Analyst
I just want to probe a little bit more in terms of the frontline strategy. You've indicated that cas plus zim will be the backbone of this strategy. The question, of course, is whether the CTLA-4 comes into the mix. With that in mind, I'm just curious when you asked the oncologist, as you showed us this new market data, in that question, you didn't include the question on cas plus zim. You put in the triple. I'm just wondering if the interpretation there is that your base case is really to do PD-1, CTLA-4 CAS and that's where it's going to shake out? Or is there some reasonable potential that it could end up just being what you've identified as the backbone, cas plus zim?
Terry Rosen, CEO
I'll let Jen start on that. We'll see if I add anything on top of what she said.
Jennifer Jarrett, CFO
I think you described it well that right now, our base case assumption is that it would be cas plus ipi/nivo. So right now, we're thinking of cas plus zim or cas plus anti-PD-1 really as a backbone and that we would likely build on that. We'll keep looking at the cas plus zim data over time. Our base case right now is cas plus ipi/nivo. As we talked about today, that cohort is actually now enrolling, and the idea is to generate safety data very quickly. Again, an early look at efficacy by looking at the rate of primary progression. The nice thing about this combination is, as Terry was talking about earlier, because ipi/nivo has a relatively high rate of primary progression, if we see early on at the first scan that rate of primary progression is coming down, that gives us a very early read on efficacy.
Terry Rosen, CEO
What I'll add is that questions arise from investors and it’s also a topic of interest for investigators. The data we have reviewed so far includes early findings, which we have shared regarding the primary progression, and it's a positive initial indication. The question arises in relation to casdatifan, specifically regarding the value that the anti-CTLA-4 provides. We will have an early data set, but our perspective is that, even though this wasn't formally part of that analysis, when discussing with investigators—particularly those familiar with the anti-PD-1 early data—it seems promising. If we could use anti-PD-1 alongside CAS in the front line for patients, it would be a significant advantage. Avoiding anti-CTLA-4 and TKI treatments would be beneficial. We will focus closely on this. However, I want to emphasize that we should not overcomplicate things. If the results from anti-PD-1, anti-PD-1, and anti-CTLA-4 in conjunction with CAS show similar outcomes, we are more likely to pursue a three-arm study that involves anti-PD-1, anti-CTLA-4 with CAS, anti-PD-1 with CAS, and ipi/nivo. We won't try to outsmart ourselves based on early data. But if the early results are promising, we will give anti-PD-1 with CAS a chance to shine.
Operator, Operator
Our next question comes from Jonathan Miller from Evercore.
Jonathan Miller, Analyst
I'll follow up on Yigal's question on the first-line setting. You say at least one Phase III starting this year. You're adding an additional undisclosed combo to ARC-20 in the first-line setting this year. The ipi/nivo combo is open. You just said it was sort of your base case, but you haven't committed to showing data for us ahead of making that Phase III decision. I just want to get a sense for broadly speaking, how many first-line Phase IIIs are you thinking about in aggregate eventually? What are your plans for the adjuvant setting, which I noticed you didn't mention except saying that CAS belongs in all lines of therapy? What are your current thoughts on partnering in RCC and beyond for CAS and whether that unlocks additional bandwidth to do some of these late-stage designs?
Terry Rosen, CEO
Yes. I'm going to comment briefly and then turn it over to Jen for a more fulsome answer on all of that. But I'll address the partnering part. From a partnering perspective, what you should expect to potentially see, and you probably will see, are clinical collaborations. At this point, we love that we basically own 100% of the casdatifan rights other than in Japan and a few other Southeast Asian countries. As you know, that gives us enormous strategic optionality. With that said, there are mechanisms and settings that make sense. Since casdatifan is a relatively rare beast, we feel like we're in a good position to do some smart clinical collaborations under good terms. I’ll let Jen comment more broadly, though, on the number of Phase IIIs we might do, how they're sequencing, when we'll disclose some data, etc.
Jennifer Jarrett, CFO
Yes. So just on the Phase III front, obviously we have TKI-1 that's enrolling. Our plan is to start one other Phase III study around year-end. That would be in the frontline setting and informed by this new cohort that we're adding, a cohort looking at CAS plus anti-PD-1 plus CTLA-4. You could probably make an assumption that that first Phase III would be looking at that triplet versus ipi/nivo. So that would probably be our base case assumption today. We're also interested in generating some other data with that other combination as well. The adjuvant setting will see what the LITESPARK-022 data looks like. A lot of times, they don’t want to be on therapy, especially patients doing well. We’ll continue to evaluate, and it’s something that we might consider for the future.
Terry Rosen, CEO
I believe that as the year progresses, we will continue to share our perspective, and likely into next year as well, that HIF-2 inhibition will be applicable in every line and setting of clear cell RCC. Our overall development strategy, including supportive studies, aims to ensure we address all aspects over time. From a prioritization viewpoint, the focus is on the PEAK-1 frontline study, with the possibility of another study next year. We will complement these with additional studies that make sense, ensuring we explore all avenues for usage and reimbursement in every line of therapy.
Jennifer Jarrett, CFO
And we’re continuing to look at clinical collaborations for that other new frontline option that we’re thinking about. Not everything is on our dime; it's not all our resources, etc. That’s important to us as well.
Jonathan Miller, Analyst
Great. If I could just squeeze in one more before we run out of time. On PRX2, you've mentioned a couple of times the potential for a safety delta on the basis of better potency and lower dosing. Are there specific safety signals that we should look at when we think about initial data here? How much data from the initial cohorts, especially in healthy volunteers, will you need to be able to put some bookends around what that potential safety delta might look like?
Juan Jaen, Chief Scientific Officer
I often mention that outside of oncology, one incorrect dose can lead to significant problems. A well-executed study with healthy volunteers can provide some reassurance, but we are continuously gathering more data. It's crucial to monitor liver function, especially when dealing with high levels of any foreign substance. If the dosage becomes too high, signs of liver distress may appear. We believe we will be able to maintain a safer margin between the dosage of our drug needed for effective pharmacology and the levels that could adversely affect the liver.
Operator, Operator
Our last question comes from Emily Bodnar from H.C. Wainwright.
Emily Bodnar, Analyst
I was going to ask if you could give us some updated expectations for the cas plus cabo data later this year, given you now have pretty mature monotherapy data with PFS over 12 months. How are you kind of thinking about what the combo could look like in earlier line patients in that full 45 patient data set?
Operator, Operator
There seems to be a connection issue. We'll be right back in just a moment. Emily, could you please repeat your question?
Emily Bodnar, Analyst
Yes. Do you hear me?
Terry Rosen, CEO
Yes. Thank you, Emily.
Emily Bodnar, Analyst
Okay. I was going to ask if you could give us some more updated expectation for your cas plus cabo data later this year, given you now have pretty mature monotherapy PFS is over 12 months. So how are you kind of thinking about what the combo could look like in earlier line patients in that full 45 patient data set?
Terry Rosen, CEO
Jen?
Jennifer Jarrett, CFO
Yes. As Terry said, when we present the data, the goal is to have 12 months minimum follow-up on everybody so that we may not have a PFS, but we'll be able to look at a Kaplan-Meier curve and at least make some educated guesses as far as where PFS could shape out or shape up. As you know, for cas mono PFS, we're seeing a range of 12 to 15 months. So we’ll see what cas cabo shows. Right now, we believe very strongly that we can keep cabo alone because cas mono alone looks better than cabo. We’ll build on what cas mono looks like and what cabo mono looks like. We’re excited to get those data out. We think like the LITESPARK-011 data, it will also be very derisking for the PEAK-1 study.
Terry Rosen, CEO
The other nice thing about LITESPARK-011, just may be obvious, but it will give a good, call it, contemporary look at what cabo alone looks like because that's the control arm. To the extent that thinking about benchmarks.
Jennifer Jarrett, CFO
Yes. What gives us obviously a lot of confidence in the cas plus cabo data in the PFS is, like I said, just what we're seeing with cas mono and the fact that cas mono looks better than cabo mono and we think may even look better than belz plus lenva. You'll see what the LITESPARK-011 data shows.