Company: RCUS
Filing Date: 2025-08-06
Form Type: 10-Q
Source: 0001724521-25-000101
Chunk: 247

Company: Arcus Biosciences, Inc.
Filing Date: 2025-08-06
Form: 10-Q
Item: Part I, Item 8
Chunk 247
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-TIGIT program, domvanalimab and AB308. Effective December 2021, under the First Gilead Collaboration Agreement Amendment, Gilead exercised these options and obtained exclusive licenses to these programs for a total non-refundable payment totaling $725 million. We determined the standalone selling price of each license using a discounted cash flow method and the R&D services for each program, using an expected cost-plus margin approach. For domvanalimab, we determined that the license was distinct based on an evaluation of the delivery of the license, noting that the program was in the later stages of development and the ongoing R&D services do not significantly modify or customize the related intellectual property. For etrumadenant and quemliclustat programs, we determined that the license and R&D services were combined at the inception of the agreement based on an evaluation of the delivery of the license, due to the early stage of the technology and the specialized nature of our know-how. We recognize the amounts allocated to R&D services for domvanalimab and the combined license and R&D for etrumadenant and quemliclustat as each performance obligation is satisfied, calculated as an estimated percentage of completion based on management's estimated total effort for each program.Effective June 2025, these performance obligations were partially satisfied and we allocated the updated transaction price to these performance obligations based on their standalone selling prices and adjusted revenue based on an updated measure of progress, which resulted in a cumulative catch-up of revenue of $143 million during the three and six months ended June 30, 2025.

12

For the three and six months ended June 30, 2025, we recognized revenue of $152 million and $172 million respectively, (including the cumulative catch-up due to Gilead's termination of its rights to etrumadenant). For the three and six months ended June 30, 2024, we recognized revenue of $25 million and $156 million (including the cumulative catch-up due to the Third Gilead Collaboration Agreement Amendment executed in the first quarter 2024), respectively. This was recognized within License and development services revenue in our Condensed Consolidated Statements of Operations. Access Rights and Option Continuation PeriodsUnder the Gilead Collaboration Agreement entered into in 2020 and related amendments, Gilead has exclusive access to our current programs as well as future programs for a period of ten years, contingent upon option continuation payments totaling $300 million, consisting of a $100 million payment