What You Need to Know About Arcus Biosciences

January 9, 2017
By Mark Terry, BioSpace.com Breaking News Staff

Arcus Biosciences isn’t exactly a spinout of Flexus Biosciences. But Arcus was founded by the two co-founders of Flexus Biosciences, Terry Rosen and Juan Jaen, after Flexus was acquired by Bristol-Myers Squibb in 2015 for $1.25 billion.

Flexus had been in existence for less than two years when it was acquired and Rosen was looking ahead to build a company for the long term.

Rosen told BioSpace, “I remember our general counsel saying, ‘Terry, it’s your fiduciary duty to close this deal.’ $1.25 billion with $800 million upfront. We set out shortly thereafter with the aim to build a long-term company. So that shaped some of our thoughts about how to build Arcus and how we wanted to go about it.”

Arcus is an immuno-oncology company, but has a very specific business and development strategy that is built around the awareness that most immuno-oncology products are likely to be used in combination with other drugs.

Company Leadership
Terry Rosen—co-founder and chief executive officer. Prior to founding Arcus, Rosen was co-founder and chief executive officer of Flexus Biosciences, which was acquired by Bristol-Myers Squibb in 2015 for $1.25 billion. Before that he was vice president, Therapeutic Discovery at Amgen .

Juan Jaen—co-founder and president. Before co-founding Arcus, Jaen was co-founder and president and head of R&D at 1013173. Before that, Jaen was chief scientific officer and senior vice president of Drug Discovery at ChemoCentryx .

Ulrike Schindler—vice president, Biology. Most recently, Schindler led the Biologics Discovery group at Amgen. Before that, in 2000, she established and led the Regensburg, Germany technology site for Tularik, which was bought by Amgen in 2004.

Jay Powers—vice president, Drug Discovery. Before joining Arcus, Powers was vice president of Drug Discovery at Flexus and then FLX Bio. Before that, he was vice president of Drug Discovery at ChemoCentryx.

Steve Young, vice president, Technology. Most recently Young was vice president of Technology at FLX Bio. Before that he was executive director at Amgen, heading the Discovery Technologies Department.

Nigel Walker, vice president, Protein Science. Prior to joining Arcus, Walker was the executive director of Amgen’s Molecular Structure & Characterization division.

Company Financing
Arcus raised about $120 million in two financing rounds. The initial Series A was just under $50 million. Rosen said, “We raised $30 million from the founders, and friends and family, then we rounded it off to $50 million by bringing in some strategic investors to have some great long-term relationships.” Those investors include The Column Group and Celgene Corporation .

Then in August 2016, they ran a Series B round that raised an additional $70 million. Rosen said, “It was very oversubscribed. We were planning on $50 million and that amount was led by GV (Google Ventures), as well as Invus, Taiho Ventures, DROIA Oncology Ventures and Stanford University. We’d done some in-licensing with Stanford, and they had a right to invest.”

Arcus wanted to expand on what they were doing and push their programs through faster. Initially they thought they would have a single program to advance into clinical trials in 2017, with the second program moving into the clinic in 2018. But additional funding would allow them to get both products into the clinic in 2017.

Pipeline
Arcus has six pipeline programs. The most advanced is an A2aR antagonist, a CD73 inhibitor and a CD39 inhibitor. The additional three are unspecified antibody targets still in discovery. There is also a seventh, TLR4 in early discovery, which is the technology licensed from Stanford.

“Immuno-oncology, in general, is going to involve combinations. But the thing we realized was that, all things being equal, it would be better if we built a portfolio that could have intra-portfolio combinations. In general, a lot of times a combination might not be available for development or commercialization, and if you don’t have it, you’re stuck,” Rosen said.

So the company’s strategy has been to intentionally develop compounds that have value individually, but that will also work in combination.

Market Competition
Immuno-oncology is a hot market now and unlikely to change for a while. So in that regard, Arcus is in competition with most of the major players in the industry, as well as several smaller companies.

“When you think about traditional drug discovery, let’s say statins, if I was working on this and the guy down the street was working on it, we’re basically in a footrace and we get into the discussion of first or best. That’s one of the traditional discussions that we have in the industry,” Rosen said.

What, as mentioned above, is different about Arcus, is the internal development with intracompany combinations in mind.

“We decided to step back and think about how we’re going to add things in our portfolio and the value of how it will fit into our strategy. I think it resonated with our investors and a number of other constituencies. That idea of not just being a one-trick pony or two ponies that are completely independent variables, but the idea of integrating the target, combination of targets, and picking the right setting. It gives us the opportunity to try and be smart in more than one way,” Rosen said.

Dollars and Deals
Most early-stage companies aren’t inclined to discuss pending partnerships. Rosen does say the investors aren’t pushing them on this. “Our notion of what we might do in the near future is one that gets us where we want to be faster and more efficiently, rather than just near-term economics. Obviously any company, even larger companies in general, have to do partnerships to balance risk and help with the economics required for ultimate development. But in the near-term we don’t have any specific reason that we’d have to partner,” Rosen said.

What to Look For
Arcus expects to have two programs into the clinic in 2017, while continuing to advance four or five other programs. The company is also growing rapidly. “Originally we were going to grow to 38 people by the end of 2016, and now it’s more likely to be closer to 60. There’s nothing virtual about us. We have good lab space. We have a very strong chemistry group and we don’t view it as a commodity or something that can be outsourced. I’ve never really believed that,” Rosen said.

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