Arcus' cancer portfolio attracts $35M option deal from Japan's Taiho

The deal comes after Arcus bulked up its cancer immunotherapy pipeline with a $816 million deal to license an anti-PD-1 antibody.

Immuno-oncology startup Arcus Bioscience has signed a deal with Japanese drugmaker Taiho that provides a healthy cash injection while keeping rights in the U.S. and other markets in hand.

Taiho is paying $35 million over three years for access to Arcus' portfolio of cancer immunotherapy candidates, which the company said is poised to deliver four clinical projects before the end of 2018. Another $275 million is on offer for each drug program that Taiho chooses to license over the five years of the option agreement, which covers Japan and some other Asian markets but excludes China.

Taiho is a major seller of cancer drugs with chemotherapy products like Abraxane, Yondelis and Zolinza, and is already an investor in Arcus via its venture capital unit, which took part in the Californian biotech's $70 million series B round last year.

At the time, the Japanese firm's chief corporate officer Nobuyuki Hashimoto said the decision was based on Arcus' promising pipeline as well as its senior management expertise in immune-oncology.

Arcus' CEO Terry Rosen and president Juan Jaen were instrumental in building cancer immunotherapy form Flexus Oncology, which was sold to Bristol-Myers Squibb for $1.25 billion in 2015, and are also working together at neoantigen cancer therapy specialist Pact Pharma—another outfit backed by Taiho Ventures.

"Our relationship with Taiho began with the inaugural investment of Taiho Ventures in Arcus in 2016, and since that time, we have come to recognize an alignment in vision," said Rosen. "Given its significant expertise in the oncology area, we are confident that Taiho will maximize the value of our programs in these regions."

There is no word on the specific programs of interest to Taiho, but Arcus has been working on a range of immuno-oncology targets, including CD73, CD39 and the A2A and A2B receptors, all of which play a role in the ATP-adenosine pathway, along with other immune checkpoints. The adenosine pathway comes into effect when cells are damaged to keep them viable, and the hope is that blocking it will interrupt a mechanism that suppresses the immune response to tumor cells.

Arcus has identified two candidates that are en route to the clinic, a small-molecule dual A2A and A2B receptor antagonist called AB928 and AB154, a monoclonal antibody that blocks an immune checkpoint called TIGIT.

The new agreement comes a month after Arcus bulked up its cancer immunotherapy pipeline with a $816 million deal—including $18.5 million upfront—to license an anti-PD-1 antibody developed at China's Gloria Pharma and WuXi Biologics.