Arcus Biosciences, Inc. [RCUS] Filings

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10-Q 1 rcus-20220930.htm 10-Q 10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-Q

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2022

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _____________to _______________

Commission File Number: 001-38419

Arcus Biosciences, Inc.

(Exact Name of Registrant as Specified in its Charter)


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

Registrant’s telephone number, including area code: (510) 694-6200

Securities registered pursuant to Section 12(b) of the Act:


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

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of October 28, 2022, the registrant had 72,407,706 shares of common stock, $0.0001 par value per share, outstanding.

ARCUS BIOSCIENCES, INC.

TABLE OF CONTENTS


		Page
PART I.	FINANCIAL INFORMATION
Item 1.	Financial Statements	1
	Condensed Consolidated Balance Sheets	1
	Condensed Consolidated Statements of Operations and Comprehensive Loss	2
	Condensed Consolidated Statements of Stockholders’ Equity	3
	Condensed Consolidated Statements of Cash Flows	4
	Notes to Condensed Consolidated Financial Statements	5
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	19
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	27
Item 4.	Controls and Procedures	27
PART II.	OTHER INFORMATION
Item 1.	Legal Proceedings	28
Item 1A.	Risk Factors	28
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	59
Item 3.	Defaults Upon Senior Securities	59
Item 4.	Mine Safety Disclosures	59
Item 5.	Other Information	59
Item 6.	Exhibits	60
SIGNATURES		61

PART I—FINANCIAL INFORMATION

Item 1. Financial Statements

ARCUS BIOSCIENCES, INC.

Condensed Consolidated Balance Sheets

(unaudited)

(In thousands, except share and per share amounts)


	September 30,			December 31,
	2022			2021
ASSETS
Current assets:
Cash and cash equivalents	$	217,647		$	147,914
Short-term investments		831,135			351,394
Receivable from collaboration partners ($26,521 and $744,535 from a related party)		27,286			744,595
Accrued interest receivable		3,423			2,227
Prepaid expenses and other current assets		21,625			15,620
Total current assets		1,101,116			1,261,750
Long-term investments		143,138			181,990
Property and equipment, net		33,892			32,455
Right-of-use assets		102,073			104,968
Restricted cash		3,005			3,005
Other long-term assets ($1,856 and $0 from a related party)		10,598			7,730
Total assets	$	1,393,822		$	1,591,898
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable	$	10,546		$	10,261
Accrued research and development		39,827			29,587
Other accrued liabilities		20,528			24,181
Deferred revenue, current ($103,291 and $96,981 to a related party)		103,291			102,003
Other current liabilities		2,984			52
Total current liabilities		177,176			166,084
Deferred revenue, noncurrent ($382,584 and $462,217 to a related party)		382,584			462,217
Operating lease liabilities, noncurrent		119,195			116,887
Other long-term liabilities		16,166			5,260
Total liabilities		695,121			750,448
Commitments (Note 11)
Stockholders’ equity:
Preferred stock, $0.0001 par value, 10,000,000 shares authorized; no shares issued and outstanding.		-			-
Common stock, $0.0001 par value, 400,000,000 shares authorized; 72,352,380 and 70,781,736 shares issued and outstanding as of September 30, 2022 and December 31, 2021, respectively. Shares outstanding includes zero and 9,946 shares issued but subject to vesting as of September 30, 2022 and December 31, 2021, respectively.		7			7
Additional paid-in capital		1,183,393			1,118,058
Accumulated deficit		(474,898	)		(275,354	)
Accumulated other comprehensive loss		(9,801	)		(1,261	)
Total stockholders’ equity		698,701			841,450
Total liabilities and stockholders’ equity	$	1,393,822		$	1,591,898

The accompanying notes are an integral part of these condensed consolidated financial statements.

ARCUS BIOSCIENCES, INC.

Condensed Consolidated Statements of Operations and Comprehensive Loss

(In thousands, except share and per share amounts)

(unaudited)


	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2022			2021			2022			2021
Revenues:
License and development service revenue ($23,742, $0, $48,374 and $0 from a related party)	$	23,742		$	-		$	48,374		$	-
Other collaboration revenue ($8,317, $7,711, $24,949 and $23,133 from a related party)		9,839			9,461			29,971			28,383
Total revenues		33,581			9,461			78,345			28,383
Operating expenses:
Research and development (($26,560), ($756), ($92,667) and ($6,856) from a related party)		76,684			71,254			207,800			206,412
General and administrative (($493), $0, ($690) and $0 from a related party)		26,294			16,343			76,104			48,990
Total operating expenses		102,978			87,597			283,904			255,402
Loss from operations		(69,397	)		(78,136	)		(205,559	)		(227,019	)
Non-operating income (expense):
Interest and other income, net		5,013			161			8,456			481
Effective interest on liability for sale of future royalties		(535	)		-			(1,437	)		-
Total non-operating income, net		4,478			161			7,019			481
Net loss before income taxes		(64,919	)		(77,975	)		(198,540	)		(226,538	)
Income tax expense		-			-			(1,004	)		-
Net loss		(64,919	)		(77,975	)		(199,544	)		(226,538	)
Other comprehensive loss		(2,557	)		(46	)		(8,540	)		(136	)
Comprehensive loss	$	(67,476	)	$	(78,021	)	$	(208,084	)	$	(226,674	)
Net loss per share, basic and diluted	$	(0.90	)	$	(1.11	)	$	(2.78	)	$	(3.28	)
Weighted-average number of shares used to compute basic and diluted net loss per share		72,236,283			70,110,138			71,752,246			68,990,290

The accompanying notes are an integral part of these condensed consolidated financial statements.

ARCUS BIOSCIENCES, INC.

Condensed Consolidated Statements of Stockholders’ Equity

(In thousands, except share amounts)

(unaudited)


	Common stock				Additional Paid-In		Accumulated			Accumulated Other Comprehensive			Total Stockholders’
	Shares		Amount		Capital		Deficit			Income (Loss)			Equity
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
Issuance of common stock upon exercise of stock options and vesting of restricted stock		269,369		-		843		-			-			843
Vesting of early exercised stock options		36,245		-		175		-			-			175
Issuance of common stock under Employee Stock Purchase Plan		140,408		-		1,394		-			-			1,394
Stock-based compensation		-		-		13,367		-			-			13,367
Other comprehensive loss		-		-		-		-			(44	)		(44	)
Net loss		-		-		-		(75,970	)		-			(75,970	)
Balance at June 30, 2021		70,042,790	$	7	$	1,081,341	$	(476,747	)	$	(46	)	$	604,555
Issuance of common stock upon exercise of stock options and vesting of restricted stock		125,182		-		1,318		-			-			1,318
Vesting of early exercised stock options		34,476		-		170		-			-			170
Stock-based compensation		-		-		14,585		-			-			14,585
Other comprehensive loss		-		-		-		-			(46	)		(46	)
Net income		-		-		-		(77,975	)		-			(77,975	)
Balance at September 30, 2021		70,202,448	$	7	$	1,097,414	$	(554,722	)	$	(92	)	$	542,607

Balance at December 31, 2021		70,771,790		7		1,118,058		(275,354	)		(1,261	)		841,450
Issuance of common stock upon exercise of stock options and vesting of restricted stock		840,577		-		9,928		-			-			9,928
Vesting of early exercised stock options		9,946		-		52		-			-			52
Stock-based compensation		-		-		16,541		-			-			16,541
Other comprehensive loss		-		-		-		-			(3,399	)		(3,399	)
Net loss		-		-		-		(67,993	)		-			(67,993	)
Balance at March 31, 2022		71,622,313	$	7	$	1,144,579	$	(343,347	)	$	(4,660	)	$	796,579
Issuance of common stock upon exercise of stock options and vesting of restricted stock		320,603		-		2,050		-			-			2,050
Issuance of common stock under Employee Stock Purchase Plan		142,557		-		2,296		-			-			2,296
Stock-based compensation		-		-		15,677		-			-			15,677
Other comprehensive loss		-		-		-		-			(2,584	)		(2,584	)
Net loss		-		-

Arcus Biosciences, Inc. [RCUS] Filings
10-Q	[2022-11-02]
10-Q	[2022-08-03]
10-Q	[2022-05-09]
10-K	[2022-02-23]
10-Q	[2021-11-08]
10-Q	[2021-08-05]
10-Q	[2021-05-05]
10-K	[2021-02-25]
10-Q	[2020-11-05]
10-Q	[2020-08-06]
10-Q	[2020-05-05]
10-K	[2020-03-05]
10-Q	[2019-11-05]
10-Q	[2019-08-06]
10-Q	[2019-05-02]
10-K	[2019-03-05]
10-Q	[2018-11-08]
10-Q	[2018-08-06]
10-Q	[2018-05-09]
S-1	[2018-02-16]