Arcus Biosciences Inc

NYSE:RCUS

Earnings Call Analysis

Arcus Biosciences reports solid growth and promising pipeline advancements.

In the third quarter of 2024, Arcus Biosciences reported GAAP revenue of $48 million, driven by partnerships, and expects $30 million for Q4. Their cash balance rose to $1.1 billion, leading to an improved cash guidance for 2024 of $950-$985 million. The company highlighted promising results in clinical trials, especially from their ARC-20 study, projecting superiority over the benchmark belzutifan. They plan to advance multiple late-stage studies, including STAR-221 and PEAK-1, with potential market opportunities exceeding $5 billion. The overall survival data presented for dom-zim therapy showed a hazard ratio of 0.64, underscoring improved effectiveness compared to current options.

Strong Revenue Growth Despite Expenses

In the latest earnings call for Arcus Biosciences, the company reported a GAAP revenue of $48 million for the third quarter of 2024, a significant increase from $39 million in the previous quarter. This growth is attributed primarily to collaborations with Gilead and Taiho, including a $15 million contribution from Taiho’s opt-in for quemli. Looking ahead, Arcus anticipates recognizing approximately $30 million in GAAP revenue for the fourth quarter of 2024. Despite a slight uptick in research and development (R&D) expenses up to $123 million from $115 million, the company maintains a stable general and administrative (G&A) expense of $30 million, projecting that these costs will remain flat in the coming quarter.

Cash Position Enhances Operational Flexibility

Arcus ended the third quarter with cash and investments totaling $1.1 billion, an increase from $1 billion at the end of the previous quarter. This robust cash position is projected to fund operations into mid-2027, reflecting a solid financial foundation that allows the company to pursue multiple clinical development milestones. The company has also raised its cash balance guidance for the end of 2024 to between $950 million and $985 million, up from the prior estimate of $885 million to $925 million.

Pipeline Progress and Expected Data Releases

Arcus is gearing up for important data presentations, including initial findings from the Phase 3 study for STAR-221 in gastric cancer. The STAR-221 program is expected to yield its first data set in early 2025, with potential for significant impact in a $3 billion-plus market opportunity. Additionally, the preliminary outcomes from the ARC-20 study on casdatifan, a HIF-2 alpha inhibitor, and its promising performance relative to belzutifan were highlighted. This study demonstrated a primary progression rate of just 19% in its cohort, with overall response rates (ORR) at 34% for the 100 mg daily group.

Efficacy and Safety Profiles in Lung Cancer Trials

The ongoing ARC-10 study results are showing compelling data; specifically, the combination of domvanalimab (dom) and zimberelimab (zim) has demonstrated a hazard ratio for overall survival at 0.64, indicating a meaningful improvement over existing treatments. Notably, the median overall survival has not yet been reached for the combination, further underscoring its potential as a treatment option in patients with PD-L1 high non-small cell lung cancer. Furthermore, the completed studies exhibit safety profiles that could position dom and zim favorably against Fc-enabled anti-TIGIT antibodies, which have reported higher rates of immune-related adverse events.

Collaborative Potential with Gilead and AstraZeneca

Arcus is on the cusp of significant partnership decisions that could further impact its competitive positioning. Gilead is expected to make an opt-in decision regarding the collaboration in the near term, with a potential $150 million fee if they proceed. This not only represents a financial boon but also emphasizes the value of Arcus's pipeline. Additionally, ongoing collaborations with AstraZeneca to combine cas with their bispecific anti-PD-1 CTLA-4 candidate volrustomig are promising, as they aim to create a TKI-sparing regimen in the first-line treatment of clear cell RCC.

Investor Outlook and Strategic Focus

As Arcus transitions into 2025, the key areas of focus include advancing clinical trials for casdatifan and evaluating the outcomes from its plethora of studies, including collaborations with large pharmaceutical partners. Investors should remain attentive to upcoming data presentations and further refinements in their development plans, including those concerning the STAR-221 and PEAK-1 trials. The operational strategies appear robust, and financial forecasts indicate a well-supported trajectory for growth and innovation in targeted cancer therapies.

Earnings Call Transcript 2024-Q3

[Operator]

Good afternoon. Thank you for attending today's Arcus Biosciences Third Quarter 2024 Earnings Call. My name is Tamiya and I will be your moderator for today's call. [Operator Instructions]

I would now like to pass the conference over to your host, Pia Eaves, Vice President of Investor Relations. You may proceed.

[Pia Eaves, executive]

Hello everyone, and thank you for joining us on today's conference call to discuss Arcus's third quarter 2024 financial results and pipeline updates, including our upcoming presentation of ARC-10 data at SITC.

I'd like to remind you that on this call, management will make forward-looking statements, including statements about our cash runway 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 quarterly report on Form 10-Q that has been filed by the -- with the SEC.

Today you'll hear from our CEO, Terry Rosen; CMO, Dimitry Nuyten; COO, Jennifer Jarrett; and CFO, Bob Goeltz. We'll also be joined by our President, Juan Jaen, for questions after prepared remarks.

With that, I'll turn the call over to Terry.

[Terry Rosen, executive]

Thank you very much, Pia, and thank you all for joining us today. As we are heading into 2025 our highest priority is to launch our late stage development program for HIF-2 alpha inhibitor casdatifan. As you know, just 2 weeks ago, we presented initial data from our ARC-20 study evaluating cas in late line, clear-cell RCC in an oral plenary session at the ENA meeting. These data clearly validates our conviction that cas will be a best-in-class HIF-2 alpha inhibitor, demonstrating improvement in every key efficacy measure that we analyze versus belzutifan. As you know, belzutifan is the only HIF-2 alpha inhibitor on the market today.

So let's go to Slide 5, and I'll recap the highlights from our dataset. First off, the rate of primary progression in the 100-milligram daily expansion cohort was only 19% and was similarly low in the 50-milligram daily expansion cohort. In fact, the rate of primary progression for the combined 60 patients in the 50-milligram and 100-milligram expansion cohorts was approximately half of what was observed in LITESPARK-005. Keep in mind that the primary progression rate and disease control rate, DCR, are the only data points that are fully mature and will not change. So this is really a huge difference for the molecule.

Second, we reported a 34% ORR and 25% confirmed ORR for the 100-milligram cohort with 2 out of 3 unconfirmed responses pending confirmation and also multiple stable disease patients still on therapy. As of the data cutoff, every responder across both cohorts remained on treatment with the exception of that one patient whose response did not confirm.

The belzutifan data actually provide good precedent for the kinetics of response with HIF-2 alpha inhibition. So this is important. Approximately 60% of responses occurred within 6 months of treatment and an additional 20% occurred in each of the ensuing 6-month periods. So that goes out to 18 months. These data illustrate why our ORR could, and in reality more likely should, further improve across both cohorts. Keep in mind, those follow-up times are 8 months and 11 months respectively for 50 and 100 milligrams.

The ARC-20 data also demonstrated that the activity of cas is extremely durable. As of the data cutoff, a median PFS had not been reached even with that 11 months median follow-up. Recall that belzutifan was approved based upon its PFS of 5.6 months. And our median PFS, which we expect to report in early 2025, should easily exceed that benchmark.

Given that PFS is the registration endpoint, this will be another important source of differentiation. Our spider plot show multiple patients either past or approaching the 52-week duration of treatment, and you also see deepening of responses with time. I want to emphasize that these data were generated in a heavily pretreated patient population relative to that of LITESPARK-005.

Specifically, approximately 25% of the patients enrolled in ARC-20 wouldn't be -- ineligible for LITESPARK-005. For the 50-milligram cohort, despite only 8 months median follow-up at the data cutoff, we reported a 14% primary progression rate, a 25% ORR and just over 21% confirmed ORR with the one unconfirmed responder pending confirmation, and a very impressive almost remarkable DCR of 86%.

One of the confirmed responders was a complete response. Beyond the responders, and again, another important point, nearly 40% of patients still continued on therapy with stable disease, including a few whom are extremely close already to the 30% response threshold, and you can see that in the spider plots. While this data set is still evolving and will continue to improve, we now have 2 different cohorts that are demonstrating clear efficacy differentiation relative to that of belzutifan and there's a lot more data to come.

On Slide 6, we show the data that we expect to share from ARC-20 throughout 2025. We plan to present additional data from the 100-milligram and 50-milligram cohorts of ARC-20, including more mature ORR and median PFS that will be early next year. Later in the year, we plan to present initial data from the 150-milligram and the 100-milligram once-daily tablet expansion cohorts. So that's another 60 patients worth of data.

We also plan to present initial safety data from our cas plus cabo expansion cohort. To date, the safety data from this cohort, which we already shared with the FDA as part of our pre-Phase 3 meeting are consistent with the profiles of the individual drugs and the dose intensity of 100 milligrams of cas and 60 milligrams of cabo has been maintained.

Given the importance of the ARC-20 data, and that's important to us, it's important to you, it's important to investigators, the ongoing evolution of the data set and the multiple cohorts that we've enrolled, we're considering additional opportunities to provide updates from this study in the more near term. We remain full steam ahead towards the initiation of our first Phase 3 study, PEAK-1. The investigator enthusiasm for the study is incredibly high, which we believe will support rapid enrollment.

Now let me switch gears to domvanalimab, our Fc-silent anti-TIGIT antibody. Just yesterday, the SITC abstract was released with data from Part 1 of our ARC-10 study, which evaluated dom plus zimberelimab, that's our anti-PD-1 antibody, versus zim versus chemotherapy in first-line PD-L1 high non-small cell lung cancer. As a reminder, we terminated the study for strategic reasons to focus on STAR-121, our chemo combination stud. But the early termination gave us both an opportunity to generate and now present a data set from a study that was conducted under Phase 3 conditions.

On Slide 27, we summarize the abstract. We show that dom plus zim exceeded zim monotherapy on ORR, PFS and OS. For both PFS and OS, we achieved a hazard ratio below 0.65, which is far better than the threshold considered clinically meaningful in this setting. With median PFS of 11.5 months and median OS not reached for dom-zim, these results are meaningfully above contemporary benchmark studies for anti-PD-1 monotherapy.

Dimitry is going to discuss these data in detail, but I want to make 2 important points. First off, these data reaffirm the growing recognition that Fc-silent anti-TIGIT antibodies have a differentiated safety profile relative to that of Fc-enabled antibodies.

There are only 2 Fc-silent TIGIT antibodies in late-stage clinical development today, Dom and AstraZeneca's anti-PD-1 anti-TIGIT bispecific antibody. In the last few months, AstraZeneca presented 2 data sets for their antibody in first-line non-small cell lung cancer and first-line gastric cancer. Interestingly, both data sets look very similar to our own, specifically similar efficacy as well as AE rates that are in line with anti-PD-1 therapy alone. That's an important component of the profile.

In contrast, for the Fc-enabled anti-TIGIT antibodies, we continue to see reports of higher rates of immune-related adverse events and treatment-related discontinuations. Combining the Fc-enabled antibodies with chemotherapy absolutely seems to exacerbate these issues.

The second point that I want to make is that with this ARC-10 data set, which will be presented in more detail at SITC, the ARC-7 results in PD-L1 high non-small cell lung cancer that we shared last year and the EDGE gastric data that we presented earlier in this year at ASCO, we now have 3 compelling data sets supporting the potential of dom-zim in both lung and gastric cancers.

For our EDGE gastric study, we showed a median PFS of 13 months for dom-zim in first-line gastric cancer, which meaningfully surpassed the PFS of 7 to 8 months seen in benchmark studies. And in the first half of next year, we expect to present mature overall survival from the study. Meanwhile, we continue to execute on our 3 Phase 3 trials for dom-zim.

In first-line gastric cancer with our STAR-221 study, we have the potential to be first to market with an anti-TIGIT antibody in this setting. With this study fully enrolled, we're actively preparing for readout and potential submission to health authorities. We believe this setting alone is a $3 billion-plus opportunity.

In lung cancer, with our STAR-121 and PACIFIC-8 studies, the latter in partnership with AstraZeneca, we have a potentially differentiated anti-TIGIT combination in the 2 settings we're pursuing, first-line and Stage 3 non-small cell lung cancer. We continue to evaluate our statistical analysis plans for all our dom-zim studies to ensure that they're optimized for probability of success, but also while addressing the largest number of patients.

We also continue to advance the other programs in our pipeline. We've initiated PRISM-1, our Phase 3 study evaluating quemli plus chemo. That's quemli is our CD73 inhibitor in first-line metastatic pancreatic cancer. And with Taiho's opt-in to this program, they're executing the study in Japan. We believe this could be a transformative first-line therapy in a disease [ to where ] with dismal outcomes for patients.

Early next year, we expect to advance AB801, a highly selective AXL inhibitor, into expansion cohorts in non-small cell lung cancer. Our relationships with Gilead, AstraZeneca and Taiho are strong, and they've enabled us to aggressively advance all of our programs in a highly resource-efficient manner. With $1.1 billion in cash and investments and runway into mid-2027, we're comfortably funded for multiple clinical readouts.

Before we go to the ARC-10 results, I'd like to turn it over to Jen to discuss our development plans and the market opportunity for cas.

[Jennifer Jarrett, executive]

Thanks, Terry. Starting with PEAK-1, our first Phase 3 trial for cas in clear cell RCC, we expect to begin this study in the first half of next year. The design is shown on Slide 23 of our deck. The study will enroll approximately 700 patients and will compare cas plus cabozantinib to cabo monotherapy in IO experienced clear cell RCC.

Cabo is the standard of care in this setting, so clinicians are extremely comfortable administering cabo and adjusting its dosing to optimize both cabo's efficacy and safety. We believe that the vast majority of the second-line patient population, approximately 80%, will be eligible for PEAK-1, given this study only includes patients who received prior treatment with cabo in the first-line setting.

You can see on Slide 24 that this study targets an approximately 11,000 patient population in the U.S. Assuming a treatment time in excess of 15 months, this is a $2 billion-plus market opportunity in the G7 countries alone.

We are also excited to move into the IO-naive setting with our collaboration with AstraZeneca to combine cas with their anti-PD-1 CTLA-4 bispecific volrustomig. The anti-CTLA-4 PD-1 combination ipi-nivo currently has about 1/3 market share in the first-line setting, and that share is growing, given the preferable safety and tolerability profile of IO-based regimens relative to those of TKIs.

By combining cas with volru, we have the potential to develop a first and best-in-class TKI-sparing regimen. This represents a patient population of approximately 12,000 in the U.S. alone. And assuming a potential median treatment duration of 20 months, the total addressable market would exceed $3 billion across the G7 countries.

Additionally, we are working to further expand the development program of cas into other RCC subpopulations, and you'll see us add additional cohorts to ARC-20 in the coming months. We remain confident in cas's ability to play a very meaningful role in the RCC market. Today, patients cycle through different treatment options for years, receiving multiple different TKIs with 7 different TKIs on the market. But today, in the HIF-2 alpha field, it is just cas and belzutifan.

I'd now like to turn the call over to Dimitri to discuss our newly released data for dom-zim in lung cancer.

[Dimitry Nuyten, executive]

Thanks, Jen. Our abstract for ARC-10 was released yesterday morning and data will be presented in a late-breaker poster session this Friday at SITC. ARC-10 was originally a global Phase 3 study evaluating dom and zim versus zim versus chemotherapy in patients with PD-L1 high non-small cell lung cancer. This is important since the trial conduct with the same rigor as would be expected from a registrational Phase 3.

Though ARC-10 was discontinued for strategic reasons, we continue to follow patients. And now with over 2 years of median follow-up, we are presenting our first overall survival data for dom and zim in any setting. As you will see, the results are supportive of dom's ability to meaningfully extend survival in patients.

Starting with the design on Slide 30, the trial was randomized 2:2:1. So there were 38 patients in the dom and zim arm, 40 patients in the zim monotherapy arm and 17 patients in the chemotherapy arm. Baseline characteristics were generally well balanced across the arms with some prognostic imbalances favoring the chemotherapy arm. The data cutoff for this analysis was May 17, 2024, and the median follow-up was 24.5 months.

On Slide 31, we show the Kaplan-Meier curve for overall survival. These results are quite impressive. In fact, even with 2 years of median follow-up, a median OS has not been reached for dom and zim. The hazard ratio for overall survival was 0.64, a result that is very clinically meaningful.

Additionally, the zim control arm performed right in line with the benchmark studies of pembrolizumab in this setting with a median overall survival of 24.4 months. When compared to chemotherapy, zim demonstrated a hazard ratio of 0.63 for overall survival. Again, this is right in line with KEYNOTE-042 and other benchmark studies.

The poster presentation will also highlight additional data, including progression-free survival and overall response rates, which also showed a clear benefit for dom and zim over zim and put zim performance in line with the benchmark studies for pembrolizumab.

The safety profile was also consistent with prior observations for dom and zim. Immune-mediated adverse events were similar for dom and zim relative to those for zim alone at 23.7% and 20% respectively. These results are substantially different from data reported from studies with the Fc-enabled anti-TIGIT antibodies where immune-mediated adverse events, and treatment interruptions and discontinuations have been meaningfully higher than the anti-PD-1 or PD-L1 alone arm. In fact, it has been cited as the cause of trial failures.

The compelling data from ARC-10, both for efficacy and safety, increases our confidence that combining dom and zim with chemotherapy and STAR-121 will further improve outcome and provide lung cancer patients with the best chance of success in their first-line treatment.

Now I'd like to turn the call over to Bob to cover our financials.

[Robert Goeltz, executive]

Thanks, Dimitry. Our cash as of the end of the third quarter was $1.1 billion as compared to $1 billion as of the end of the second quarter. Our cash position was bolstered by a $100 million collaboration continuation payment from Gilead.

Turning to our P&L. We recognized GAAP revenue for the third quarter of $48 million, which compares to $39 million for the second quarter of this year. Our revenue was primarily driven by collaborations with Gilead and Taiho, and in the third quarter included $15 million resulting from the Taiho opt-in for quemli in July. We continue to expect to recognize GAAP revenue of approximately $30 million for the fourth quarter of 2024.

Our R&D expenses for the third quarter are stated net of reimbursements from Gilead and were $123 million as compared to $115 million in the second quarter of this year. We continue to expect modest increases in R&D expenses for the fourth quarter of 2024.

G&A expenses were $30 million for the third quarter and were flat compared to the second quarter of this year. We expect G&A expenses to remain stable for the fourth quarter.

Finally, we expect our cash and investments balance at the end of 2024 to be between $950 million and $985 million as compared to our prior guidance of $885 million to $925 million. We expect these resources to fund operations into mid-2027. Our guidance excludes additional potential opt-in payments and milestones from our partners.

For more details regarding our financial results, please refer to our earnings press release from earlier today and our 10-Q.

I'll now turn it back to Terry for concluding remarks.

[Terry Rosen, executive]

So thank you all again for joining us this afternoon. As I mentioned earlier on the call, we have a lot coming, and that starts with our SITC presentation for dom-zim on Friday, followed by additional presentations from ARC-20 and the initiation of our first Phase 3 study for cas over the coming months. As we head into 2025, we'll be approaching our first Phase 3 data set for STAR-221 in first-line gastric cancer. We appreciate your interest and support of Arcus.

And I'll now open the call for questions.

[Operator]

[Operator Instructions] The first comes from Yigal Nochomovitz with Citi.

[Yigal Nochomovitz, analyst]

I'm getting a lot of interest in cas and people are asking about the potential for Gilead's opt-in. Can you provide any more color there as far as whether they're specified windows? Obviously, you mentioned that you need a qualifying data package. Does that mean it could the monotherapy? Or is Gilead interested in seeing some of the combo data with volru or the initial combo data with cas plus cabo coming up soon? That's the first question.

[Jennifer Jarrett, executive]

Yes. So we have aligned with Gilead on what data is needed for the qualifying data package. We're very close to meeting that data requirement. So we will be delivering a package to them relatively soon. And as we've been saying, we expect a decision to be made either late this year or early next year.

[Yigal Nochomovitz, analyst]

Okay. And then I'm just curious, was there any preclinical work done with volru and cas to sort of just do a quick validation of the combo safety in NHPs or something before going into this collaboration with AZ?

[Terry Rosen, executive]

No. There was no preclinical work done. It's very typical sort of situation where you have 2 molecules, well-defined profiles that simply taking into to do those studies initially in human.

[Yigal Nochomovitz, analyst]

Okay. And then last one is I'm curious about etrumadenant. Obviously, you had the data, I believe, at ASCO for the ARC-9. What are you thinking there in terms of the later development? There is the other cohort, which is the second-line cohort, which is Cohort A. Is that what you're waiting for before you decide with a registrational study given the obviously very, very strong OS that you saw in the third line?

[Terry Rosen, executive]

No. To be honest, it's just a matter of us moving. So we're extremely excited about the data set, and we're just working through with Gilead. You can see, obviously, we're starting a number of later-stage trials, and we still have the full portfolio going. So we're working through what our next steps will be, and we'll share them once they're defined together with Gilead.

[Operator]

The next question comes from Li Watsek with Cantor Fitzgerald.

[Li Wang Watsek, analyst]

I guess, one, in the IO-naive renal cell cancer setting, I understand AZ is running the study. But I guess what can you say about what the next step might be and the timing of a potential pivotal trial?

[Terry Rosen, executive]

Yes. So I'll comment there. We've agreed with AstraZeneca to not comment anything further than those initial plans, and we'll say more once the study shows up on clinicaltrials.gov.

[Li Wang Watsek, analyst]

Okay. Understood. And I know you mentioned on the call, it sounds like you're looking to optimize the stat plan for the Phase 3 non-small cell lung for dom. Can you expand a little bit on that? What does that entail?

[Terry Rosen, executive]

Yes. So my comment was more general than that. We make that point for all of our studies that we're continuously looking at the stat plans for all of our programs. Obviously, in the anti-TIGIT field, there's been changes made by others. There's been some comments or statements put forward from the ODAC with the FDA. So at this point, we're not making any changes, but we just wanted to acknowledge that we're always considering that possibility.

[Li Wang Watsek, analyst]

Okay. Got it. And maybe just last question. I wonder if you can talk a little bit about the clinical benefit that you're seeing for stable disease patients from the cas study. And it seems like you got a decent number of them still on study. So I guess how clinically relevant is disease control for these patients?

[Dimitry Nuyten, executive]

Yes. So this is Dimitry. I'll take the question. So it's very, very relevant for patients. Just imagine RECIST was determined based on large data sets, mostly for chemotherapy. There had been an effort to standardize assessments of treatment. And based on reproducibility, interobservariability, a threshold of 30% was set. I think everybody would agree whether or not you're at 25% or 35% depending on the tumor volume that is not really relevant. Having tumor that doesn't grow and that has gone down in tumor volume is very important.

And then the other point that is more, let's say, from a regulatory perspective, response rate is never ever a registrational endpoint beyond accelerated approval. In this case, in kidney cancer, progression-free survival is the relevant endpoint and everybody who does not progress contributes to that. And in a Kaplan-Meier estimate, the longer you are free of progression, meaning the longer your response is lasting or the longer your stable disease is lasting, contributes equally for each patient in the Kaplan-Meier estimate for progression-free survival. So both from a clinical perspective for patients and from a regulatory registrational perspective, they're very important. And from a registrational perspective, it is equally important as a response.

[Jennifer Jarrett, executive]

We'd like to be able to get to everybody. So if you have more than a couple of questions, can you please hop up and join the queue at a later point? That would be great.

[Operator]

Our next question comes from Jonathan Miller with Evercore ISI.

[Jonathan Miller, analyst]

Can I start with some questions about HIF-2, please. I noticed in your prepared remarks, you talked about 2 unconfirmed PRs that could still confirm. I'd really like to get some detailed color on that. We hear reports. There have been papers written that suggest that one of maybe -- I think one of those 2, based on how I'm counting, had a subsequent scan of stable disease. So can you comment of those 2 unconfirmed partial responses that you're talking about, how many of those have not had a follow-up scan yet or might be expected to confirm based on one additional follow-up scan?

And maybe building off of that, given that a lot of the differentiation you're talking about compared to belzutifan is in the PD rate, i.e., at the first scan here, how well -- early in the curves, how well do you anticipate that to translate to a better profile versus belzutifan in a combo setting, especially combos with drugs like TKIs, which give their benefits rapidly at those first couple of scans?

[Terry Rosen, executive]

Jen?

[Jennifer Jarrett, executive]

Yes. So the first question kind of take it because there's a lot of different questions in there. But maybe just to jump to the back part of your question as far as who has not had a follow-up scan yet that was a responder. There was one patient in the 100 mg cohort that has not had a follow-up scan yet and one patient in the 50 mg cohort. So their last scans show them as being responders for the first time, and they are waiting for their confirmatory scans now. And then as we said for the 100 mg, there is one patient that did not confirm so far, only one patient. And in fact, as we mentioned in the script, out of all of the responders, every responder is still on treatment with the exception of that one patient that did not have a confirmed response in the 100 mg cohort.

Did that answer your question? And we can go to the second part.

[Jonathan Miller, analyst]

Yes, I was thinking specifically of that 100 mg cohort. I'm just trying to count UPRs and trying to get a sense for where the ORR could realistically get to at the end of the day. And in that 100 mg cohort specifically.

[Jennifer Jarrett, executive]

Yes. So 33% plus was the ORR. We said that one patient will not confirm. So that means the maximum confirmed ORR that we can get to, based on the current responders, so that's excluding stable disease patients that have also seen significant tumor reduction. So there could be other stable disease patients that also contribute to the ORR. But based on the current responders, the maximum confirmed response rate we can get to is 31%. And then if just one of those pending responders confirm, then that would take the ORR to 28.3%.

Does that answer…?

[Dimitry Nuyten, executive]

Yes, I can take the second part of the question about stable disease in the combination. So a few things. So of course, in the combination, we are going against cabo and we're building up on top of cabo. So everybody in the control arm would get cabo and we are doing the combination. If you think what the combination can do, it can actually help patients in different ways.

On cas, we see both early responders. We have more than a few patients responding at the first scan at 6 weeks. We've also disclosed 2 patients now that responded respectively at 12 and 14 months. So that's something that goes on top of the TKI response rate. The primary progression response rate for cabozantinib is about 20% or a little bit less and we hope to catch more patients from that 20% with a different mechanism for the combination. So of course, we can't speculate what it would be, but we -- let's say, we would expect it to also improve on top of a TKI.

[Jonathan Miller, analyst]

Sure. I guess, but I'm asking specifically about the comparison to the other HIF-2 here to belzutifan. If your differentiation from them is in PD rate or at least a lot of it is in PD rate, how will you be able to -- would you be able to observe that differentiation in a combo setting where you have the TKI to pick up the slack on the first scan a little bit?

[Terry Rosen, executive]

So I'll comment there. I mean, again, you're purely speculating. But as you know, greater than 90% of those patients have some sort of HIF-2-driven component. And so there's absolutely still room to reduce the rate of primary progression. It puts more people into the queue, if you will. And I think that the place where you'll see that number of patients then leads into every other efficacy measure, whether it's ORR, PFS. And I have to say there's no reason to not start to think about why you may not see advantages in OS, even though that's not the approvable endpoint at this stage. There's nothing intrinsic about clear cell RCC that should suggest that you couldn't start to prolong OS as well.

[Operator]

The next question comes from Peter Lawson with Barclays.

[Peter Lawson, analyst]

Just a couple of follow-ups on the opt-in. Kind of what drives that decision for Gilead between this year and next year? Is there something from your side, their side? Or is there a different data cut? And then if Gilead doesn't opt in, what are the next steps?

[Terry Rosen, executive]

Yes. So I'll take that. First of all, there's nothing specifically driving it other than how long they take to make a decision. It happens to be that because of when we're delivering it, it's relatively near the end of the year. They have a certain amount of time that could, in fact, creep into next year. It doesn't necessarily creep into next year. So that's the only component why we introduced that ambiguity in laying out a time frame. As you know, they could opt in yesterday if they want it. So that's -- it sort of defines the latest point of when they can opt in.

The second question -- right. If they don't opt in, there's not necessarily anything that we would do immediately, but it could be any of the 3 things that you might think of. We're very comfortable continuing with this one on our own. We love the program. I think it's a great opportunity. Secondarily, we've already had plenty of inbound interest from others who recognize that there is an opt-in decision. I think most other companies have expressed that the thought that they think Gilead would opt in, but we could consider partnership with another company as well.

Bob?

[Robert Goeltz, executive]

Just on the economics, Peter, so it's $150 million opt-in fee should they decide to opt in and then we share costs 50-50 on the program going forward. And then I don't know if you were getting at this with your question, but obviously, if Gilead were to opt in, then we'd work through the details of any additional studies we might want to add to our clinical development plan together.

[Operator]

The next question comes from Asthika Goonewardene with Truist.

[Asthika Goonewardene, analyst]

I'm going to repeat what Jon did and ask a multipart single question here. So on volrustomig plus casdatifan, when you think ahead as the right comp for maybe some sort of a pivotal study down the line, what do you think the right comp is? And I ask because nivo-ipi mix is the most logical comp but obviously a very high bar. And related, the durable CR rate with nivo-ipi is something that is quite attractive about that combination in RCC. So how important is it for you to kind of replicate that or beat that specific endpoint adjacent to the regular primary endpoints that you would consider?

[Dimitry Nuyten, executive]

Yes. So this is Dmitry. I can take the question. So the relevant benchmark would be the CheckMate-214 study, although, of course, that is now somewhat outdated. But I think with the mature follow-up, the data has held up very well. We are building up on the bispecific, meaning the data for volru has been presented last year at ESMO in kidney cancer. And I think most people objectively would agree it looks at least as good or perhaps a little bit better than ipi-nivo. Some of the toxicity is a little bit better. So we don't expect, let's say, to have to beat ipi-nivo with cas alone. We know we have a solid CTLA-4 PD-1 backbone and then build on top of that.

The CR rate, indeed, the durable -- or you say, the durable response rate is important. Obviously, we don't completely know, but I think it's reasonable to hypothesize that, let's say, one of the things for ipi-nivo is the [indiscernible] PD rate investigators typically will not use ipi-nivo in the setting where they really need a fast response for a patient. So that's something we might be able to change. We might be able to get a lower primary PD rate when we build up on it. And every other benchmark, we expect to be able to deepen or lengthen, meaning longer duration of response because we add a mechanism that really helps out in the long term, longer progression-free survival and hopefully longer overall survival as well.

[Jennifer Jarrett, executive]

Yes. And I think just to hit on the primary PD point, like that was, I think, what got AstraZeneca very interested is that you do have 25% of patients that just flow right through ipi-nivo. And so by adding a drug that seems to have a relatively low primary PD, we think we can especially improve that front end of the PFS curve.

[Dimitry Nuyten, executive]

Yes. And then lastly, to add on top of that, also the safety profile for HIF-2 targeting specifically casdatifan would be far more favorable than adding a TKI on top of that regimen. So that's what we refer to the TKI-sparing approach because first-line patients can be on treatment for a very long time, which is cumbersome and, let's say, a burden on patients if they have to stay on a TKI for a long time.

[Operator]

The next question comes from Daina Graybosch with Leerink Partners.

[Daina Graybosch, analyst]

I'm going to follow up right along with what Asthika just asked about the trial conduct for both PEAK-1, the combo with cabo and the combo with the CTLA-4 bispecific. And that we've seen in RCC that keeping patients on study seems to be really important that if you have any toxicities in managing those discontinuations can really drive the primary efficacy endpoints. Can you talk through your strategy in both of those trials to manage treatment exposure, particularly as you started with the 60 mg dose of cabo? And they haven't always done that in our combination studies? And then also what you're doing with Astra to manage talks with a pretty toxic anti-CTLA-4 as well?

[Dimitry Nuyten, executive]

Yes. So I'll start with the cas combination. So good points. I see it as a benefit that we will be starting with 60. The trials where the TKI, in this case, cabo wasn't started at full dose was based on toxicities identified with the combination. And therefore, you give up on some early higher exposure for an active agent like cabo. So I think it's important for people to be able to start at full dose.

That's the safety data we are generating right now. We already have generated a lot of experience with cas by itself and how investigators manage the toxicity. I think the data that we've shown is very convincing that we have virtually no one discontinuing the drug for toxicity. We have some interruptions and people are able to manage the toxicities and then stay on. So that's the experience we'll also use for the combination.

The other thing that makes it a little bit easier in giving guidance is the specific profiles for toxicity for both cas and for cabo are, let's say, cabo, of course, very well-known and cas relatively straightforward with anemia and hypoxia, no relevant overlapping toxicity. So giving guidance on potential dose reductions will be straightforward and to make it as clean as possible that the trial is what we call an active comparator placebo-controlled trial. So people on the control arm will be getting cabo plus placebo to take out all bias from investigator and patients on the assessment of the AE profile.

When it comes to AstraZeneca, we can't comment as much on that trial. Obviously, that's currently in start-up and is led by AstraZeneca. Our colleagues at AstraZeneca have generated quite a bit of safety data. Some of that is in the public domain, as I referred to, from ESMO 2023, and there's a lot more data that's not in the public domain. And with that, they've, let's say, generated a lot of experience in giving specific guidance and the toxicities they seeing are -- they are seeing, of course, are not new. Ipi-nivo has been on the market for quite a while and kidney cancer investigators are, let's say, very well aware and very experienced with the management of the toxicity profile of ipi-nivo. And again, the lack of overlapping toxicities will make it easier to give specific guidance for each agent.

[Operator]

The following comes from Salveen Richter with Goldman Sachs.

[Unknown Analyst]

This is Mark on for Salveen. We have a question on TIGIT and lung on the ARC-10 data at SITC. It looks clear that TIGIT is adding a survival benefit, but why do you think the benefit on ORR is less clear? And also, how do you expect this data to translate to the STAR-121 study where it seems like OS benefit from the dom-zim doublet is likely already above KEYTRUDA chemo combo? And when should we expect to see initial data from the STAR-121? Is it possible that we could see it in the second half of 2025?

[Terry Rosen, executive]

So let me start. I think that -- well, your first question was about ORR. We think the ORR, there was a quite reasonable improvement. Keep in mind, this is immunotherapy, and it comes up time and time again. The place where you're really getting your benefit is an enhancement of OS and its durability, it's the tail. And that's why it's a profound signal that we're seeing. ORR is better, but what you really should be focused on, the world uses ORR as a surrogate for PFS as a surrogate for OS. And the reason we're out at 2-plus years and we have the OS data is that that's what you're really looking at. But nonetheless, we don't think there's anything unusual about the advantage on ORR. The second question that you asked was?

[Unknown Analyst]

How do you expect this to translate this [indiscernible].

[Terry Rosen, executive]

So we think the translation, we've already seen in EDGE-Gastric an advantage on top of chemo. The thing that -- and this is where we think we actually have a huge advantage. When we think about the STAR-121, while we stopped ARC-10 for strategic reasons, say, just on an evolving market that physicians are moving more and more from just using KEYTRUDA to using KEYTRUDA plus chemo, even in high PD-L1. What's become very apparent is that the Fc-enabled anti-TIGITs have an issue with AEs in the context of chemo. So we feel like we're well positioned to even have a stronger advantage relative to any of the competitors at this point in that population.

Now the second piece is just from a scientific standpoint. The underlying mechanism is that anti-TIGIT is enhancing the activity of the anti-PD-1. Same phenomena that we demonstrated in the context of GI cancers on top of chemo, and we've shown the data from EDGE-Gastric, and we think that same thing will hold up there. And then the particular advantage is that when you add dom on top of the anti-PD-1 chemo, what we're seeing consistently again is that we're not seeing any enhanced AEs. So you really get the full advantage of what the mechanism offers with the Fc silent molecule.

I think it's an important step to realize there's enough data out there to just bucket into 2 categories, the Fc-enabled and the Fc silent. So AstraZeneca and us and all the other later-stage molecules are having issues consistently with those immune-associated adverse events.

And then your next question was when might we see. We haven't commented yet. The point that I would raise is that in the context of EDGE-Gastric, which was fully enrolled -- I'm sorry, so our STAR-221, which is the Phase 3 correlate to that, the OS for the standard of care is about 13 months. As you know, in non-small cell lung, there it's going to be over 20 months. And so we'll give guidance on readout sometime next year.

[Operator]

The following comes from Jason Zemansky with Bank of America.

[Jason Zemansky, analyst]

Congratulations on both the quarter and the recent presentations. I had a couple of quick follow-ups on the PEAK-1 study. In terms of primary endpoint, you have PFS. Merck is advancing a number of similar studies with belzutifan, with lenvatinib in a couple of different settings, including second line, where the primary endpoint is PFS and OS. Just curious on kind of the decision behind making the primary endpoint PFS.

And then just kind of fundamentally, what do you think you need to do to distinguish yourself from Merck's combinations given their potential to kind of that first-mover advantage, particularly when if you look at, say, the first-line setting, there are a range of different studies that you might not have the same sort of efficacy, but kind of that inertia there keeps them well used. Example, KEYNOTE-426 looks like 17% still use it even though it's maybe not as good. It's a CheckMate-214 or CheckMate-9ER.

[Dimitry Nuyten, executive]

Yes. So when it comes to treatment preferences, that's the last part of your question. That has a lot of things that go into it. I actually referred to that earlier on. Ipi-nivo, for example, is very well recognized for very durable responses and long-term survival benefit. The downside of this regimen is recognized as primary progression. So patients with bulky disease, patients who need a response immediately, they're typically not put on ipi-nivo. And based on early readouts, patients with favorable risk were also not given the opportunity. But with longer-term follow-up, it's now very consistent that the IDMC risk categories are no longer considered to be predictive of ipi-nivo benefit. So that's one of the reasons.

When it comes to differentiation, it's the question I answered previously. I think in this particular setting, Merck is not doing this trial. They don't have a TKI-free first-line trial, which from a physician-patient perspective, not having the TKI toxicity for the long duration of treatment in the first line by itself is already a very important differentiator. When it comes to the second-line differentiation, PEAK-1 versus LITESPARK-11, having a far more preferred TKI as combination partner, cabo versus lenva, the logical choice because Merck owns lenva or part of it, for us is a major benefit. We consistently hear from physicians that cabo is much easier to handle than lenvatinib. The dosing complexity of multiple dose levels for lenvatinib, the overall less, let's say, less well-perceived toxicity profile is an important differentiator.

The other differentiator we have is even though Merck was earlier with the trial that comes with the downside that their experience in post-adjuvant patients by definition will be very limited to almost not existing. We will be able to capture those patients. So potentially, we will get a broader label as well.

And then the last part of your question about the dual primary endpoint, I cannot comment on why Merck is doing it. I can only speculate. The registrational endpoint is PFS. Whether or not OS is a well-powered secondary endpoint or a primary endpoint comes a little bit down to trial size efficiency. However, the only reason to do OS as co-primary or better saying dual primary endpoint is if you are not sure if you can hit PFS.

So if you hit PFS as primary endpoint, only the alpha goes to the secondary endpoint and you have an adequately powered overall survival analysis. So in my -- let's say, from my perspective, doing it as a dual primary endpoint unnecessarily makes the trial larger, but they might have done it because they didn't know what the trial readout would be. Obviously, we will have that advantage that the trial that they are doing will have read out before we get to our analysis. And in a rare case that we would have to make updates, we can do so.

[Jason Zemansky, analyst]

Got it. So if I'm hearing you correctly, you think between PEAK-1 and LITESPARK-011, you'll have a tolerability edge. Do you think you can also have an efficacy edge as well?

[Dimitry Nuyten, executive]

Absolutely. If you -- let's say, if I just start with the low bar, if you can stay on a TKI longer because it's better tolerated, you have more benefit. Then, of course, we are generating the cas data that starts to look differentiated from belzutifan on efficacy. Notably the primary PD rate, but also other benchmarks that start -- or other metrics that start to look better. So we are confident that both the combination partner, but also our HIF-2 alpha inhibitor, both will be part of the story of a better efficacy and a better safety profile combined.

[Operator]

The next question comes from Eva Fortea with Wells Fargo Securities.

[Eva Fortea-Verdejo, analyst]

And congrats on the progress. A quick one from us. So for the dom-zim combo in the Phase II EDGE-Gastric, you guided to OS data in 2025. So if I recall correctly, you've only shown data for one arm, but the study included more arms. So I was wondering if you're going to share data from the other arms together in the same update or if this might come at a later time next year?

[Dimitry Nuyten, executive]

So the guidance indeed is correct. We have committed to the OS data for EDGE-Gastric that's maturing right now for 2025. I think we've said it before, the enrollment in arm A1, that's the arm we presented, and then A2 is the contribution of component arm for regulatory purposes was not at the same time. They were done sequentially. The data are maturing. And I would say it's unlikely we will present it all at the same time because these things don't mature at the same time. But at some point, we will present the data if it's mature.

[Operator]

Our final question comes from Yigal Nochomovitz with Citi.

[Yigal Nochomovitz, analyst]

Just very quickly. I think, Terry, you mentioned in the prepared remarks that you may be in a position to provide updates in the more near term. Does that mean that you might get some of this data that's referenced in the release in this year? Or can you just clarify what you meant there?

[Terry Rosen, executive]

Yes, we didn't want to get too specific, but let's recognize, look at all those studies we have ongoing. So we -- or cohorts within the study. So we have a 150-milligram cohort. We have 100-milligram cabo. We have the 50 and 100 that we've already talked about that are continuing to mature. And what we felt is for sake of transparency and the importance of these data that when we see something meaningful, we're going to look to find a way to get it out there. But right now, we don't have any specific plans, but we recognize there's such a large volume of data we see that are interesting. We want to make sure we take the opportunity to update whenever it might be meaningful.

[Operator]

There are currently no other questions in queue. This concludes today's conference call. Thank you for your participation. You may now disconnect your lines.