Arcus Biosciences, Inc 10-Q for FY2021 Q1

About this 10-Q

Headline figures

Arcus Biosciences, Inc. (RCUS)

10-Q 2021-05-05 For: 2021-03-31

Added on April 11, 2026

Arcus Biosciences, Inc filed this 10-Q on May 5, 2021, covering the quarter ended March 31, 2021 (FY2021 Q1).

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

Emerging growth company

Quarter ended March 31, 2021, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $9.46M; up 440.6% from $1.75M a year earlier
Net loss: $72.59M; compared with a net loss of $27.75M a year earlier

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Delaware	47-3898435
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
3928 Point Eden Way Hayward, CA 94545
(Address of principal executive offices)

Titles of Each Class		Trading Symbol(s)		Name of Each Exchange on which Registered
Common Stock, Par Value $0.0001 Per Share		RCUS		The New York Stock Exchange

		Page
PART I.	FINANCIAL INFORMATION
Item 1.	Financial Statements	1
	Condensed Consolidated Balance Sheets (unaudited)	1
	Condensed Consolidated Statements of Operations and Comprehensive Loss (unaudited)	2
	Condensed Consolidated Statements of Stockholders’ Equity (unaudited)	3
	Condensed Consolidated Statements of Cash Flows (unaudited)	4
	Notes to Condensed Consolidated Financial Statements (unaudited)	5
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	17
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	23
Item 4.	Controls and Procedures	23
PART II.	OTHER INFORMATION
Item 1.	Legal Proceedings	24
Item 1A.	Risk Factors	24
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	54
Item 3.	Defaults Upon Senior Securities	54
Item 4.	Mine Safety Disclosures	54
Item 5.	Other Information	54
Item 6.	Exhibits	55
SIGNATURES		56

	March 31,			December 31,
	2021			2020*
ASSETS
Current assets:
Cash and cash equivalents	$	390,260		$	173,415
Short-term investments		436,666			555,231
Receivable from collaboration partners ($4,924 and $943 from a related party)		5,235			1,049
Accrued interest receivable		1,029			649
Prepaid expenses and other current assets		8,680			5,471
Total current assets		841,870			735,815
Long-term investments		57,986			6,440
Property and equipment, net		14,849			10,807
Right-of-use assets		12,243			12,781
Restricted cash		1,988			203
Other long-term assets		6,183			6,246
Total assets	$	935,119		$	772,292
LIABILITIES
Current liabilities:
Accounts payable	$	24,544		$	15,682
Accrued research and development expenses		23,023			18,307
Other accrued liabilities		7,536			9,543
Deferred revenue, current ($67,571 and $67,571 to a related party)		74,571			74,571
Other current liabilities		2,381			3,566
Total current liabilities		132,055			121,669
Deferred revenue, noncurrent ($110,097 and $117,808 to a related party)		113,369			122,830
Operating lease liabilities, noncurrent		14,706			15,243
Other long-term liabilities ($9,703 and $9,703 to a related party)		10,199			10,246
Total liabilities		270,329			269,988
Commitments (Note 10)
Stockholders’ equity:
Preferred stock, $0.0001 par value, 10,000,000 shares authorized as of March 31, 2021 and December 31, 2020; no shares issued and outstanding as of March 31, 2021 and December 31, 2020		-			-
Common stock, $0.0001 par value, 400,000,000 shares authorized as of March 31, 2021 and December 31, 2020; 70,965,513 and 65,114,685 shares issued and outstanding as of March 31, 2021 and December 31, 2020, respectively		7			6
Additional paid-in capital		1,065,562			830,438
Accumulated deficit		(400,777	)		(328,184	)
Accumulated other comprehensive (loss) income		(2	)		44
Total stockholders’ equity		664,790			502,304
Total liabilities and stockholders’ equity	$	935,119		$	772,292

	Three Months Ended
	March 31,
	2021			2020
Revenues:
Collaboration revenue ($7,711 and $0 from a related party)	$	9,461		$	1,750
Total collaboration and license revenues		9,461			1,750
Operating expenses:
Research and development (($4,924) and $0 from a related party)		66,387			23,142
General and administrative		15,821			7,008
Total operating expenses		82,208			30,150
Loss from operations		(72,747	)		(28,400	)
Non-operating income (expense):
Interest and other income, net		154			647
Gain on deemed sale from equity method investee		-			482
Share of loss from equity method investee		-			(482	)
Total non-operating income, net		154			647
Net loss		(72,593	)		(27,753	)
Other comprehensive income (loss)		(46	)		224
Comprehensive loss	$	(72,639	)	$	(27,529	)
Net loss per share, basic and diluted	$	(1.08	)	$	(0.63	)
Weighted-average number of shares used to compute basic and diluted net loss per share		67,082,161			44,282,607


	Common stock				Additional Paid-In		Accumulated			Accumulated Other Comprehensive			Total Stockholders’
	Shares		Amount		Capital		Deficit			Income (Loss)			Equity
Balance at December 31, 2019 *		44,212,195	$	4	$	369,100	$	(205,326	)	$	64		$	163,842
Issuance of common stock upon exercise of stock options		59,939		-		643		-			-			643
Vesting of early exercised stock options		77,388		-		220		-			-			220
Stock-based compensation		-		-		3,462		-			-			3,462
Other comprehensive income		-		-		-		-			224			224
Net loss		-		-		-		(27,753	)		-			(27,753	)
Balance at March 31, 2020		44,349,522	$	4	$	373,425	$	(233,079	)	$	288		$	140,638

Balance at December 31, 2020 *		63,691,901	$	6	$	830,438	$	(328,184	)	$	44		$	502,304
Issuance of common stock and rights to purchase additional shares in accordance with Amended and Restated Gilead Purchase Agreement, net of $55 offering costs		5,650,000		1		220,295		-			-			220,296
Issuance of common stock upon exercise of stock options and vesting of restricted stock		200,828		-		1,885		-			-			1,885
Vesting of early exercised stock options		54,039		-		183		-			-			183
Stock-based compensation		-		-		12,761		-			-			12,761
Other comprehensive loss		-		-		-		-			(46	)		(46	)
Net loss		-		-		-		(72,593	)		-			(72,593	)
Balance at March 31, 2021		69,596,768	$	7	$	1,065,562	$	(400,777	)	$	(2	)	$	664,790

	March 31, 2021
	Total		Level 1 (Quoted Prices in Active Markets For Identical Assets)		Level 2 (Significant Other Observable Remaining Inputs)		Level 3 (Significant Other Unobservable Remaining Inputs)
Money market funds	$	362,762	$	362,762	$	-	$	-
U.S. treasury securities		206,460		-		206,460		-
U.S. government agency securities		5,002		-		5,002		-
Corporate securities and commercial paper		310,688		-		310,688		-
Total assets measured at fair value	$	884,912	$	362,762	$	522,150	$	-

	December 31, 2020
	Total		Level 1 (Quoted Prices in Active Markets For Identical Assets)		Level 2 (Significant Other Observable Remaining Inputs)		Level 3 (Significant Other Unobservable Remaining Inputs)
Money market funds	$	146,468	$	146,468	$	-	$	-
U.S. treasury securities		301,112		-		301,112		-
U.S. government agency obligations		25,001		-		25,001		-
Corporate securities and commercial paper		262,505		-		262,505		-
Total assets measured at fair value	$	735,086	$	146,468	$	588,618	$	-

	Amortized Cost		Unrealized Gain		Unrealized Loss			Fair Value
As of March 31, 2021:
Money market funds	$	362,762	$	-	$	-		$	362,762
U.S. treasury securities		206,422		40		(2	)		206,460
U.S. government agency securities		5,000		2		-			5,002
Corporate securities and commercial paper		310,730		14		(56	)		310,688
Total	$	884,914	$	56	$	(58	)	$	884,912

	As of March 31, 2021		As of December 31, 2020
Accrued personnel expenses	$	7,128	$	8,632
Professional fees		67		295
Other		341		616
Total	$	7,536	$	9,543

	Three Months Ended March 31,
	2021		2020
Collaboration revenue	$	9,461	$	1,750
Total collaboration and license revenue	$	9,461	$	1,750

			Three Months Ended March 31,
Revenues recognized:	Over time	Point in time	2021		2020
Gilead access rights related to the Company's research and development pipeline	*		$	7,711	$	-
Taiho collaboration agreement	*			1,750		1,750
Total collaboration and license revenue			$	9,461	$	1,750

	Three Months Ended March 31,
Revenue recognized in the period from:	2021		2020
Amounts included in deferred revenue at the beginning of the period	$	9,461	$	1,750
Performance obligations satisfied in previous period		-		-

	Three Months Ended March 31,						Change
	2021			2020			$			%
Revenues:
Collaboration revenue		9,461			1,750			7,711		*
Total collaboration and license revenue		9,461			1,750			7,711		*
Operating expenses:
Research and development		66,387			23,142			43,245			187	%
General and administrative		15,821			7,008			8,813			126	%
Total operating expenses		82,208			30,150			52,058			173	%
Loss from operations		(72,747	)		(28,400	)		(44,347	)		156	%
Non-operating income, net		154			647			(493	)		-76	%
Net loss	$	(72,593	)	$	(27,753	)	$	(44,840	)		162	%

	Three Months Ended March 31,
Net cash (used in) provided by:	2021			2020
Operating activities	$	(66,316	)	$	(31,277	)
Investing activities		62,826			40,056
Financing activities		222,120			610
Net increase in cash, cash equivalents and restricted cash	$	218,630		$	9,389

Exhibit Number	Exhibit Description	Incorporated by Reference
Exhibit Number	Exhibit Description	Form	File No.	Exhibit	Filing Date

3.1	Amended and Restated Certificate of Incorporation	10-Q	001-38419	3.1	May 9, 2018

3.2	Amended and Restated Bylaws	8-K	001-38419	3.1	May 26, 2020
10.1^**	Amended and Restated Common Stock Purchase Agreement dated January 31, 2021 between Arcus Biosciences, Inc. and Gilead Sciences, Inc.	SC 13D/A	005-90423	99.1	February 2, 2021
10.2^*	Fifth Amendment Dated April 1, 2021 to the Lease agreement dated September 30, 2015 between Arcus Biosciences, Inc. and Hayward Point Eden I Limited Partnership.
31.1^*	Certification of Principal Executive Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2^*	Certification of Principal Financial Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1†	Certification of Principal Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2†	Certification of Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

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101.PRE	Inline XBRL Taxonomy Extension Presentation Linkbase Document

104	Cover Page Interactive Data File (formatted as inline XBRL and contained in exhibit 101)

		ARCUS BIOSCIENCES, INC.

Date:	May 5, 2021	By:	/s/ Terry Rosen
			Terry Rosen, Ph.D.
			Chief Executive Officer (Principal Executive Officer)

Date:	May 5, 2021	By:	/s/ Robert C. Goeltz II
			Robert C. Goeltz II
			Chief Financial Officer (Principal Financial and Accounting Officer)