On Monday, Citi reaffirmed its Buy rating and $38.00 price target for Arcus Biosciences (NYSE:RCUS), following the ARC-9 study results. The study showcased significant survival benefits for patients with third-line and beyond colorectal cancer (CRC) using a combination of treatments including etrumadenant (etruma), zimberelimab (zim), FOLFOX, and bevacizumab (bev) compared to regorafenib.
The ARC-9 clinical trial demonstrated a median overall survival (mOS) of 19.7 months for the combination therapy versus 9.5 months for the control arm, which is a notable improvement. The hazard ratio (HR) reported was 0.37, indicating a 63% reduction in the risk of death compared to the control. This outcome is particularly compelling given the randomized nature of the study, which included a robust sample size of 112 participants.
Citi's analysis highlighted the strength of the data, pointing out that the results are impressive even when compared to the standard of care (SoC) for third-line and beyond CRC, which typically sees overall survival benchmarks ranging from 10 to 12 months. The firm also addressed the discussion around the study's crossover design and the selection of regorafenib as a control, noting that the significant difference in survival outcomes negates the usual criticisms of crossover designs.
The choice of regorafenib for the control group was also defended, with Citi and other key opinion leaders (KOLs) finding the suggestion of FOLFOX retreatment as a control to be illogical, as patients at this stage have already been exposed to FOLFOX, making retreatment potentially unethical. The analyst's commentary underscores the potential of the combination therapy in improving survival outcomes for CRC patients who have exhausted other lines of treatment.
InvestingPro Insights
Following the positive evaluation from Citi, a deeper dive into the financial health and market performance of Arcus Biosciences (NYSE:RCUS) using InvestingPro data reveals additional layers to the company's outlook. The market capitalization stands at approximately $1.47 billion, underscoring a significant presence in the biotech industry. Despite a challenging profitability outlook, with analysts not expecting the company to be profitable this year, the impressive revenue growth of 99.16% over the last twelve months as of Q1 2024 indicates robust business expansion. Moreover, the gross profit margin during the same period is notably high at 84.81%, reflecting the company's efficiency in managing its cost of goods sold.
InvestingPro Tips suggest that Arcus Biosciences holds more cash than debt on its balance sheet, providing a cushion that may support its aggressive research and development activities. Additionally, while analysts anticipate sales growth in the current year, it is important to note that the company is quickly burning through cash, which could be a point of concern for investors looking at long-term sustainability. For those considering a deeper analysis, InvestingPro offers several additional tips for Arcus Biosciences, which can be accessed through the platform with a special offer. Use the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription, and uncover the full range of insights that could inform your investment decisions.
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