Conference Transcript - RCUS 2026-03-09

Dana Graybosch, Analyst — Lyric

Good morning, everyone. My name is Dana Graybosch. I'm a senior equity research analyst here at Lyric, and I'm happy to be joined by Arcus. For 30 minutes, and we were just commenting, there's no way any of us on the stage, if you know us, do anything in 30 minutes. So we're going to do the best we can. And I'm joined here by Terry Rosen, the CEO, and then Jen Jarrett, the COO of Arcus. And I think we'll spend the bulk of our time I'm talking about CasDatafan, which is your HIF2-alpha inhibitor, a really exciting program and an exciting space, HIF2-alpha inhibition, in my opinion. I'm on print on that. You can go read my notes. And then if we have time, maybe we'll get to the rest of the pipeline as you're building some autoimmune programs as well. So CasData, Cas, Cas, I think your clinical and pharmacodynamic outcomes do point to Cas being best in class, but there's still some debate there. So can you talk about what you've shown and why you think it's best in class over the only other HIF-2-alpha inhibitor with a meaningful clinical program, which is Merck's Belzutafan?

Terry Rosen, CEO

So I think that there's that debate, if there was any, is pretty much gone as of ASCO-GU. But to just reiterate, what are the key differentiators? So the first thing about castatafan versus belzutafan is that the biggest driver of the differentiation starts in a very simple way. It's PK-PD profile. So it has linear dose-proportional pharmacokinetics. Belzutafan has absorption-limited kinetics, so it allows us to really hit the target harder. So how does that manifest itself? So I'll move through the different clinical efficacy parameters and we'll show those numbers and then I'll refer to some biomarker data to reinforce all that. So the first thing that you see differentiation is if you look in the lateline setting, and what's nice about that is you're comparing single-agent casdaphan versus single-agent belzutafan. So it's a very clear comparison. And Belzutophan has a rate of primary progression that's approaching 35%, Castataphan is in the high teens. So how does that manifest itself then in the next set of data, which let's talk about response So what we're looking at with Arcus is we have 120 patients in that late-line monotherapy setting, and they're broken into four cohorts. And those four cohorts are similar in dose, so we tend to think of them similar from an efficacy standpoint. But one of those cohorts includes our Phase III go-forward dose and formulation, 100 milligrams. So what we tend to do is we speak to the data for the 120 patients, and we speak to the data for the 30 patients that are in that cohort. And so if you look at the confirmed response rate for the 120 patients, as we sit here today, it's now about 35%. In the 100 milligram go-forward dose and formulation, it's 45%. The confirmed response rate for Belzutafan in that setting is just over 20%, so a little more than twice. If you look at the median PFS, for the 120 patients, it's stabilized. It's at about 12.2 months. If you look at the 100 milligram go forward cohort, it's up above 15 months. Belzutafan is consistently shown about 5.6 months. So we're somewhere between two to three fold, the PFS, and that's the approvable endpoint. The thing that really ties it all together and just amplifies those differences, because you can tie scientifically those data, the efficacy data, is we have biomarker data. And what we've shown, the gold standard for HIF2 inhibition in a human is looking at suppression of erythropoietin production, which is under the control of this transcription factor HIF-2-alpha. And what you can see is that not only do we get a deeper suppression, but the durability, the Merck molecule, belzutafan, loses that PD effect after about nine weeks. We've shown that we robustly inhibit it out past the year. And finally, on the biomarker front, we've actually now shown, while erythropoietin is simply a biomarker, it doesn't drive the cancer, we've been shown a very clear correlation between the ability to suppress erythropoietin production and efficacy, so clinical outcome. So connecting all the way from PKPD to ORR to PFS to biomarker data, it's very consistent and very different profiles between the two molecules.

Dana Graybosch, Analyst — Lyric

One of the interesting things we see with HIF2-alpha inhibition is you get really prolonged disease control. I think you see that in all the Bell studies, you see it in the CAS studies. And I wonder why, what is it about HIF2-alpha that leads to such a prolonged response when a patient does respond? And how much longer do you expect duration of treatment because of that on CAS to be than even what we've seen with Bells?

Terry Rosen, CEO

So what Dana's referring to is that you see patients, for example, in the late line, we'll see patients that are out past two years on the therapy, even patients that have stable disease. So once a patient, and that's why that primary progression is so devastating, because if a patient can get past that first scan, they have a very good chance of doing very well. and you see patients with tails that look very much like immunotherapy. And what we believe, there's two factors probably driving that. So first of all, in clear cell RCC, about 85 to 90-plus percent of the patients have HIF-2 as a driver. So it's an important driver across that patient population. And that's why when you look at the waterfall plots, they're pretty amazing. You'll see like 90% of the patients are getting some level of tumor reduction. But the other thing that points to where the world has been pushing where you want cancer therapy to go is that the mechanism is extraordinarily non-toxic. So the only AEs you see, and this is really with both Belzutafan and Castatafan, is on and on-target AEs, and their anemia, which is very well-managed, that comes from that suppression of erythropoietin production, and much more rare, you see hypoxia, which is also under control of HIP2. So what we believe enhances that durability is because it's such a safe mechanism that essentially what you're seeing is instead of a typical therapy, like if you use on the extreme something like chemo where basically you hit the patient with a nuclear bomb you get some tumor reduction but then they get sick and then they progress in the case of HIF2 you're giving the patient a therapy that's very non-toxic so as they do better as their tumor burden goes down they get healthier they get stronger their own immune system kicks in that's one of the best prognostics of doing well for a cancer patient is that tumor reduction and that they do better so they start to contribute so that's a key aspect of the durability and in fact we've seen patients that have been stable out past the year and then then actually went on to have a partial response even so where you can see not only flatlining but even tumor reduction and test the urine therapy.

Jennifer Jarrett, COO

And the other important point is there's no real known mechanism for resistance, and so it's very different than a kinase as an example, where you tend to develop mutations very quickly. Here, I think there's only been one mutation that's been discovered, and only two patients have been known to have that mutation. So the fact that you're not developing mutations quickly and leading to resistance is something that also helps with this mechanism.

Terry Rosen, CEO

You know, the other important, since Jen made that point, The important thing about that, when you start to think about the utility of HIF-2 inhibition, it's likely that a patient's going to be able to get HIF-2 inhibitor in every line of therapy. So similar to what you see with Bev and colorectal cancer.

Dana Graybosch, Analyst — Lyric

There's a question I get a lot, and it's a confusing question, so I'm going to see if you can answer it.

Terry Rosen, CEO

I'll give you a confusing answer.

Dana Graybosch, Analyst — Lyric

Bell's, Merck's drug, has these really durable responses, too. just a lot of patients aren't getting to that response but how do you square that with their loss of ability to keep the pharmacodynamic marker EPO that comes back up after nine weeks but the patients stay in nice response well I love the

Terry Rosen, CEO

question because it well it's to some people that might be intuitively make It's actually, I think, quite easy to explain because, in general, when you think about anti-cancer agents, they're usually, like, it's sort of a monogenetic target. And what you've got is HIF2 is a transcription factor that regulates hundreds of genes. And so that erythropoietin that you're measuring in the periphery is simply a marker. But what you have to recognize is that each gene has its own dose response and it has its own environment that it might reflect that response. And that could sound like an esoteric answer, but I think there's a very tangible example that I can share that can help you see why erythropoietin blockade, while it's a surrogate, doesn't linearly correspond with what's going on in the tumor. And the best way to exemplify that is the second on-target AE that you see, which is hypoxia. So anemia, you see about 80-plus percent of patients will get some level of anemia. And it's anemia, and it's very well-managed. Hypoxia, on the other hand, is much rarer, and it involves different genes. And you only see it in maybe 10% of patients. So you can imagine the genes involved in the tumor is another set that's different. And so they all have their own different dose response and environment that can affect the activity. So it's not surprising that they're not linearly correlated, but they're just qualitatively correlated.

Dana Graybosch, Analyst — Lyric

Speaking about toxicity, do you think as we get to larger studies, we're going to see that CAS's potency comes with some detriments in terms of on-target toxicity, either anemia or hypoxia?

Terry Rosen, CEO

Well, Jen can describe the data per se, but I'll just make one comment on the anemia, because, as you said, that's one of those things intuitively you might expect them to I'll let Jen comment on what we actually know about the data, but the reason you don't see more anemia is because only about 80% of your erythropoietin production is under the control of HIF2. So you can whack HIF2 as hard as you want, but you're still going to have that 20% that bleeds through, so you can't get that down to zero. So that's why you don't see more anemia. And Jen, why don't you just comment on what we've seen to date across our studies?

Jennifer Jarrett, COO

Yeah, so we've shown the comparison from the Phase 1 or 20 study where we now have data from 121 patients, which is almost Phase 3-like in terms of size. And in that 121 patients, we've shown that anemia and hypoxia rates, both all grades as well as grade 3-4, are almost identical to Merck's and certainly no worse. And if anything, and we've heard that anecdotally as well, you know, the hypoxia, especially the grade 3 hypoxia, seems to be a little bit better than what Merck has shown. So right now, like, we have zero expectation that this would change in the phase 3 study. The other thing that I'd say, and this is, like, for any therapeutic, is clinicians are always going to get better at managing these toxicities over time. We're hearing that, you know, people are getting better at, like, identifying the patients at highest risk of hypoxia, getting better identifying it really early on, you know, before a patient's O2 sat is super low, etc. So we think over time these rates probably come down a little bit, just as clinicians do get better and better at managing them, but punchline is like we expect no difference in the AE rates relative to what Merck has shown. And no one is thinking that is like a potential liability for a castatophant in the clinician community. So with ARC-20, that's your

Dana Graybosch, Analyst — Lyric

large umbrella study can you just remind us what kind of clinical updates we

Jennifer Jarrett, COO

should expect this year from that 20 is the way it was set up it's very easy for us to add additional cohorts and so it's a very efficient way for us to look at either dosing regimens or different combinations or different settings for cats data fans so actually as of today we now have 10 different cohorts that then added to our 20. The first four were monotherapy. We then added a CAS plus CABO cohort. We then added three early line cohorts, so looking at CAS without a TKI and early line settings at RCC. And we're just now adding an open enrollment for two cohorts looking at CAS plus anti-PD-1 and CTLA-4. So to your question, what's nice about all this is there'll be a very steady stream of data flow, you know, over the next two to three years from this study. You know, it's also so likely we add additional cohorts over time as we want to look at different combinations. So as far as the next data set that we expect to come out of this study, first will be that CAF plus CABA cohort, so the fifth cohort. So this is evaluating the same combination, same setting, as we're evaluating our first safety study, peak one. So we said that data set can come anytime from around July to October. When it comes, we'll probably depend mostly on whether we decide Just presented an investor event or wait for a medical meeting the next data set will be calf plus anti PD-1 and frontline RCC So this would actually be the first data set ever presented for a hip-to-off inhibitor in frontline without a PKI We've already disclosed the primary progressive disease rate from that setting we showed nine percent Versus what you expect for PD-1 alone is probably more like 25 to 30 percent So that obviously bodes well in terms of what we think we're gonna see from that cohort And then the other Combination that we're also likely to now see by the end of the year is the one that we just added to our 20 So that's the one looking at cast plus anti PD-1 plus cTLA-4 That we're exploring as a likely regimen for our first phase restudy And so at a minimum, you know, we should have some safety data on that by the end of the year And then as we get into next year, you know, obviously you just have Efficacy data and you know more mature data from all of those cohorts

Dana Graybosch, Analyst — Lyric

We have more of the early-line monocast cohort data this year?

Jennifer Jarrett, COO

Yeah, I do want to like confuse, but yeah, given there was three early-line cohorts, it will probably be the data from at least one of the additional cohorts as well.

Terry Rosen, CEO

So probably the most important is cast data fan plus anti-PD-1, because that's likely to be the backbone. So as Jen mentioned, we've got peak one, our second line study is up and going and rolling, but our first phase three is likely to be CasDatafan, anti-PD-1, anti-CTLA-4, and we think that seeing the data from the anti-PD-1 cohort, which is fully enrolled with CasDatafan, will be very reassuring insofar as how that, the benefit that you're getting from IO plus CAS. And in fact, if you look at what is known to be the rate of primary progression for ipinevo, it's about 20 to 25%, and we're seeing less than 10% with CAS plus anti-PD-1 alone. so we expect to be in you know starting that phase three study by the end of this year and we think that data set will be particularly important when people see the efficacy there and knowing that we're also looking with

Dana Graybosch, Analyst — Lyric

anti-CTLA-4 on top of that let's talk about your first registration study so peak one which you've mentioned many times we've seen the first data from ARC-20 with CASCABO so this year will be the more long-term follow-up data so So you decided to test of cabozantinib in the second line setting, and the trial excludes patients with prior cabozantinib exposure. For those who don't know, Merck's study, which we just saw the outcomes from ASCOGU, LightSpark 11, similar study, they tested with their TKI lumbatinib and compared that to cabozantinib. So why peak one? Why was this the first registration trial for CAS? you didn't go single agent Merck did and you believe that there's synergistic benefit or additive either an efficacy or safety so I think additives plus

Jennifer Jarrett, COO

they're almost the same thing but we definitely think that adding a TKI to Casmodo as great as Casmodo looks it's gonna add even greater activity and the reason we like Cabo is the TKI partner is first of all we had an ad board and like ask them like which TKI would you use they were like unanimous that you you should be using Cabo. They said for RCC clinicians, Cabo-Zainib is almost like water. We're just so used to using it. We're so comfortable with it. So that was what really led us to the choice of using Cabo. And we also felt like Cabo is a better tolerated TKI. CAF is so well-tolerated, the last thing we wanted to do is bring a bunch more toxicity onto CAF. So we were definitely solving to have a better tolerated TKI. The other thing that's nice about Cabo is just a lot easier to dose, which is particularly important once you're adding it to something else. And so Cabo, you know, typically start with 60 mgs. If you see some TACIs go down to 40 and then more TACIs go down to 20. Very simple. For Lenva, it's available to a lot more different dosages. If you look at the different dosages approved for RCC for them, they've got three different RCC approvals. It's a different dose of Lenva for each of those. So a lot of clinicians say we're not even sure what the right dose of Lenva to use is. Lenva is used all the way from 20 mgs down to 4 mg. So just a lot more complexity in dosing Lenva. So for all these reasons, we felt like Cabo was the better partner. As Terry always said, you can just look at the numbers. So if you look at Cabo use versus Lenva use for RCC in the U.S., it's about 2.5x more use of Cabo. And then in some European countries, it's 10x. Literally, there's some countries where it's like 40 times more Cabo use relative to leg use. So we feel very, very strongly that Cabo was the best TKI partner. And we do feel like it's going to bring additional efficacy to CAS.

Terry Rosen, CEO

I think the other thing, when you think about it, it's a far cleaner study where you've got Cabo in both arms. As you know, Merck, for those who aren't aware, Merck also has commercial rights to Lenva, so there certainly could have been a commercial element to that decision, and when you think about the hazard ratio, they've got Cabo in the control arm, Lenva in the study arm. And interestingly to your point, when we think about this study, CAS-Cabo versus Cabo, we think when you're sure going to show a really favorable hazard ratio, particularly because of the AE profile, you should basically expect to take 100% of what was Cabo. What's interesting in thinking about the real differences between Lenva and Cabo is that, in fact, after the data came out and you had in that light spark 011 in this latest analysis, it had a .7 hazard ratio. despite that with all the investigator discussions that followed and you know they were very public there was some you know whether debate is the right word but this there was a lot of discussion about whether they would use it whether they might still prefer Cabo certainly it's going to be adopted and used but not necessarily unanimously and I think that points to the differences in the clinical practice world of Lenva versus Kabul. So let's talk more about light peak

Dana Graybosch, Analyst — Lyric

one so maybe you could give us an update on when we could potentially see that readout if you have interim analysis or you're guiding more towards the final analysis and then also you know you have PFS as your sole primary endpoint which is different than Merck and their similar trial that had a PFS OS co-primed most the alpha on OS so maybe you could talk about that decision and whether you still have a lot of confidence in that after seeing Merck's light spark data

Jennifer Jarrett, COO

there's like 10 questions I know well I'll start with the last question because I think it's a really important one but yeah we absolutely feel very very comfortable with PFS as the sole primary endpoint OS is a key secondary endpoint so we will absolutely be testing for OS and we think it's important to for sure not show a detriment for US but the update was very clear that for second line RCC PFS is the gold standard regulatory endpoint so we feel very very good about our selection of PFS as a sole primary if you look at most RCC studies both frontline and second line studies they had used PFS as a sole primary just like us and then OS as a key secondary so we're not you know being a renegade here the second thing that I would say is we don't like to share details or staff plan but you know we have a thing there it's a very simple study there is one primary there's no interim analysis you know the advantage of that is that you're not having to split your alpha so we're really maximizing the probability success of the study which is easy to do when you know that like you're using the endpoint that the FDA is very comfortable with so we feel great about our choice of endpoint we feel great about the study design it's you know as Terry was saying earlier, it's as simple as you can get. Same TKI in both arms. So, you know, there's not going to be any confusion, you know, contribution components, etc. So, we feel great about it.

Terry Rosen, CEO

What did I... I probably left something out. Merck should have done that. They never presented

Dana Graybosch, Analyst — Lyric

the interim analyses anyways. What was the point? Yeah, they tend to get overcomplicated

Jennifer Jarrett, COO

with their study designs. But, yeah, I think we looked at their study. That was also nice when you're like the number two is you can look at their stats plan how do things work out from them take a look at our stats plan do we still feel good about everything that we've done and we've already done it we're like we feel even better honestly about our stats plan than we probably did um even though we already felt good about it so what we saw from iceberg 011 was just like

Terry Rosen, CEO

very confirmatory the other the other thing that reflects you know when we started when we talked about the differentiation and the discussant noticed this noted this i'm sure you noticed So if you looked at the curves from LightSpark 011, you really didn't see any separation between the study and the control arm for six months. And the discussant that caused her to remind people about that 35% rate of primary progression as a monotherapy, that the molecule isn't hitting the target as hard, as fast, but it's bringing some durability. So we fully expect that with CAS DataFan, all of our data, every single cohort we've shown, we see low rate of primary progression. So we expect those curves to start separating sooner. And while OS is not a required endpoint for approval, we actually, they showed a trend. But statistically, it's probably a pretty low probability that they hit on OS. And we think that if we hit there, that could be another differentiator from a long-term perspective of differentiating the molecules.

Dana Graybosch, Analyst — Lyric

You know, it brings up a point on always the second in class has a challenge. and that the first in class is approved. And so your studies have to anticipate use of Bells post-study. How do you think that could impact your OS, your ability to show OS?

Jennifer Jarrett, COO

So Bells is still very hard to access outside of the US. It's still not paid for in most of the European countries. It is, obviously, like in late lines, it's getting to be pretty widely used here. But I think our geographic footprint and is likely to look very similar to Merck's, which had about less than 20% in the US, about 60% in Europe, and then the rest was rest of the world. So I actually don't think we're going to get that much Bell's use as a subsequent therapy. To your point, what I do think helps, you and I have traded emails on this. But because they use Cabo in one arm and Lenva in the other, patients as a subsequent therapy were likely getting what they didn't get in that prior line. So if you were in that Cabo monoarm, you probably got Len next. If you were in the Bells plus Len arm, you probably got Cabo next. So your subsequent therapies were different depending on what arm you were in. For us, given that patients in both arms are getting Cabo, it's probably going to be more consistent in terms of what those different arms are getting for subsequent therapy, which I think will help us.

Terry Rosen, CEO

The other thing I would just say, like fast forward to a world where everybody's had their approvals. The way I would see it is, first off, it's likely that a HIF-2 inhibitor is going to be used in every line of therapy. So the way we actually, given our holistic development strategy, you could imagine that we start with a TKI sparing regimen, and then in second line they get cascabo. And if you picture a world where ultimately Merck's frontline is approved, Let's say that's Lenva, Bell's, Pembrol. If a patient progresses on that by definition, they're going to get Cascavo. So we don't really see that affecting things. As you also know implicitly in that question, you'll see Bell's Zutofan use in adjuvant setting. We don't think that will affect things at all. And interestingly enough, we take away from the positive data there, just a reinforcement of the importance of HIF2, even in early lines, even though we had no doubt, and we actually have a small study that's ongoing in the period, a neoadjuvant setting with caseinophant. So we don't really see the belzutafan usage affecting where we go, largely because of that point that Jen was talking about that you're not going to have resistance development to HIF2 inhibition. It's a really interesting point because if you

Dana Graybosch, Analyst — Lyric

can be used in every line this gets to be an even larger market and and given it's so important do you actually have a study testing that or when we're going

Terry Rosen, CEO

to have real data testing sequencing? So we will we don't have any patients at this point that are post bells but there's a number of things we are thinking about and by thinking we would probably do I think the most interesting one to do that would just be most illustrative because there's there's a lot of good science behind it as well and it'll you know confirm something important is that since the rate of primary progression is so different in the late line you would basically if you took the primary progressors from belzutafan or in fact took all progressors from that third line plus patient population that progressed on belzutafan then put them on castatafan I think you'll see some differentiation there because particularly the primary progressors as you know where there's no sign that you're really having resistance development a patient that's progressing before the first scan was probably one of those that if if you have one that's a high teen and one that's 35 the Delta you would have thought would have been susceptible to cast dataphan and they certainly didn't become resistant during that period so we would expect to see some meaningful tangible response in patients that

Dana Graybosch, Analyst — Lyric

failed on Belzutifan but that that proves cast is potent but doesn't necessarily prove you can keep it online and switch the combo partners you almost

Jennifer Jarrett, COO

I mean, a HIF-2 alpha inhibitor could still be bringing some benefit, but maybe it's like that TKI that they've developed resistance to. So if you keep the HIF-2 alpha on board, so keep CAS on board, but switch out, you know, Cabo for whatever, or, you know, they're getting Bell's LEN, and it was the LEN that they got resistance to, and then you put them on CAS Cabo, they could, you know, both between having a more potent HIF-2 alpha inhibitor and a TKI, then, you know, the patient could

Terry Rosen, CEO

But inevitably, you are going to see patients that progressed on Bell's, Lenva, Pembro, go on to a Cascavo at some point.

Jennifer Jarrett, COO

And I do think, I mean, what is very different about RCC and your point about the market opportunity here, it's just very different than other tumor types. Like, you look at lung and pain, and it's just, you know, there's front-line treatments if you fail. There's second-line treatments if you fail that. There's probably nothing, honestly. Like, RCC, these patients can stay on treatment for five to 10 years. And clinicians just sequence different therapies and take them off things, put them on something else. So again, I think it speaks to the point that you could definitely see a scenario where HIP2-alpha inhibition is used over and over again.

Terry Rosen, CEO

And because as you know, even if you look at the current world, building on Jen's point, you sort of sequence through. At some point, they're going to get every TKI. That's one of the nice things about pushing the TKI to later where you're going to get, you know, several years without a TKI that only we can do because of the properties of molecule and Merck can't do that because of the high rate of primary progression But it the the reason that works is because none of those TKIs are really the same they all so it That's what's going to be your drive your progression into the next line not the HIF-2 inhibitor

Dana Graybosch, Analyst — Lyric

Awesome. Thank you. Thank you for your attention.