Arcus Biosciences (NYSE:RCUS) surged up as much as 15.5% in trading yesterday, and some profit-taking has kicked in leaving a scant loss seen in today's session. The company's current flagship asset, domvanalimab—a treatment option for lung cancer—recently posted some positive results, prompting interest in licensing the product. This treatment serves as the latest reason to pay close attention to Arcus Biosciences, as the broader financial analyst community has been urging investors to buy in for the last two years.
Arcus Stock Advances as Lung Cancer Falters
The latest testing on domvanalimab, an anti-Tigit antibody geared toward fighting off lung cancer, showed positive results overall. The reports noted that those who took the treatment showed “encouraging clinical activity,” reports noted, and given that the testing represented some of the most carefully-watched phase 2 clinical trials this year, came off positively.
The news bodes well for Arcus, as Gilead Sciences (NASDAQ:GILD) currently has an option with the company to license domvanalimab as a treatment option. Gilead signed the 10-year agreement back in the early days of this year, which called for Gilead to engage in joint development and commercialization of several of Arcus' major cancer treatment options.
One part of the agreement allowed Gilead to pay $275 million for exclusive rights to domvanalimab, though it's unclear if Gilead will ultimately exercise that option. Positive test results suggest that's more likely to be the case, but some are concerned that there weren't many details released around the study, leaving some wondering just what “encouraging clinical results” actually are. Reports suggest that there were no major safety signals witnessed, and the trials will continue as previously planned.
Interest around anti-Tigit antibodies has been brisk since January when Roche (OTCMKTS:RHHBY) revealed its own results around an anti-Tigit antibody called tiragolumab. The use of tiragolumab, along with Tecentriq, reduced tumor sizes in 31% of lung cancer patients studied. Those who only received Tecentriq, meanwhile, saw tumor sizes reduced for 16% of patients.
Reports note that antibodies that block Tigit make it harder to shut down immune system responses, though Roche's own testing back in May found that the tumor size reductions were occurring only in certain patients. Specifically, Roche's anti-Tigit antibodies work best to patients with tumors that overexpress a substance called PD-L1, and those patients respond well to current treatments as they stand. Still, improving the lung cancer survival rate is a positive move.
What Are Financial Analysts Saying About RCUS Stock?
While the testing out of Arcus Biosciences has produced sound if potentially limited results, financial analysts have little doubt about Arcus' capability to provide return for investors. The stock currently carries a consensus rating of “buy”, and has held that rating for over two years now.
A year ago, RCUS stock lost the one “hold” rating it had, leaving it with six “buy” ratings. Six months ago, the company had eight “buy” ratings to its credit, and today, that's the exact same story we have now. The company went from March to May with nine “buy” ratings, so it did lose a rating in that time, but the financial analyst community is still clearly bullish on Arcus Biosciences stock.
Arcus Biosciences price targets, meanwhile, are fairly narrow. The current average is $54.88, with a high target of $70 and a low of $43. With this morning's session showing prices around $26.56, the current price would have to nearly double just to clear the low target. That suggests quite a bit of upside potential to be unlocked here.
Recent movement for Arcus Biosciences has been limited but universally positive; yesterday, SVB Leerink raised its price target on the company, putting it up from $53 per share to $63. This makes the seventh firm this year to raise its price target on Arcus. It also represents a perfect streak for Arcus, as the seven analysts who hiked their price target represent all the movement the analyst pool has seen for Arcus in 2021. The good news extends back into 2020 as well; every analyst that issued commentary on Arcus Biosciences in 2020 either raised their price target or initiated coverage at a “buy”. Even the non-official commentary is positive; recent insider selling was spotted as the co-founder, Terry Rosen, sold $211,000 worth of stock. This represented just 0.2% of the overall holding, so it's minor at best. In fact, reports note that insider purchases have outweighed insider sales by a factor of around seven to five, as insiders bought 73,040 shares but sold 50,580 shares.
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