Roche failure likely worst case for Arcus study, says Cantor Fitzgerald

Cantor Fitzgerald keeps an Overweight rating on Arcus Biosciences (RCUS) without a price target after Roche’s (RHHBY) anti-TIGIT mAb tiragolumab failed in the Phase 2/3 study for metastatic non-squamous non-small cell lung cancer. The concept of the study is similar to Arcus and Gilead’s (GILD) Phase 3 STAR-121 in first-line non-small cell lung cancer, the analyst tells investors in a research note. What is concerning to Cantor from the Roche SKYSCRAPER-06 study is that not only did tiragolumab fail to add benefit, it underperformed the control arm. This is likely the worst-case scenario for Arcus and could add uncertainty to the STAR-121 study, the firm contends. It believes STAR-121 will increasingly be a “show me” study. There are some differences between STAR-121 and SKYSCRAPER-06, “but not enough to give us high confidence,” says Cantor. The firm continues to view upper gastrointestinal cancer as the more compelling opportunity for Arcus’s domvanalimab, which it feels can alone support the stock’s current valuation.