After the market closed on Wednesday, Arcus Biosciences (RCUS 1.15%) presented interim results from Arc-7 -- one of the most closely watched phase 2 clinical trials of the year. According to the company, patients who received the company's anti-Tigit antibody, domvanalimab, showed encouraging clinical activity.

Shares of Arcus rose on Thursday in response to the company's positive view of the study. But the lack of details provided was bad news for Arcus, its collaboration partner Gilead Sciences (GILD -0.55%), and some of the biopharmaceutical industry's biggest players. 

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Interim update

Over a year ago, Arcus Biosciences began Arc-7, a phase 2 clinical trial with 150 lung cancer patients randomized to receive zimberelimab, an experimental PD-1 blocker, as monotherapy or a combination of zimberelimab plus domvanalimab.

The Arc-7 study also randomized a third cohort to receive a triple combination that includes the company's experimental adenosine receptor blocker, etrumadenant.

While success for etrumadenant would be a positive for Arcus, the biotech industry was super eager to see response rate data for the domvanalimab plus zimberelimab cohort compared to the group that received zimberelimab monotherapy. That's because a slew of companies that market PD-1 blockers similar to zimberelimab have been trying to expand their utility by combining them with anti-Tigit antibodies.

Oncology's big white whale 

The most successful cancer therapies at the moment block the PD-1 pathway, which makes it harder for tumors to hide from the immune system. Sadly, a majority of patients don't respond to PD-1 blockade. Over half a dozen companies currently market approved PD-1 blockers, and they've wasted billions in recent years chasing drugs like domvanalimab that raise response rates.

In theory, blocking Tigit makes it harder for tumor cells to shut down the immune system when it attacks. In January, one of the industry's most successful cancer drug developers, Roche (RHHBY -0.64%), said it would invest heavily in an anti-Tigit antibody called tiragolumab after adding it to a PD-1 blocker appeared to nearly double lung cancer response rates in a phase 1 trial. 

Unfortunately, Roche followed up with results in May that showed it only appears to benefit patients with tumors that overexpress PD-L1. This is particularly disappointing because we know that this group already responds relatively well to PD-1 blockade with Tecentriq and similar drugs.

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Image source: Getty Images.

Where's the data?

Management teams at biopharmaceutical companies large and small are always quick to tout any signs of success that can be gleaned from clinical trial data. On Wednesday, though, Arcus Biosciences declined to share response rate data from the Arc-7 study.

Arcus Biosciences' stock could skyrocket if we find out adding domvanalimab to PD-1 blockers improves patients' odds of long-term survival. Given the lack of success we've seen over the years from attempts to increase the utility of Tecentriq and drugs like it, the company's recent non-disclosure most likely means domvanalimab is a dud.

The stock made a slight gain on Thursday, thanks largely to the lack of safety issues for all three new drug candidates being tested in the Arc-7 trial. Arcus Biosciences still has a relatively modest $1.9 billion market cap, despite the recent run-up, because zimberelimab is the only cancer drug candidate in the company's late-stage pipeline with a reasonable chance to eventually earn approval from the FDA.

Gilead Sciences has taken a roughly 20% equity stake in Arcus, so we can count on Gilead to give Arcus Biosciences' cancer therapy candidates plenty of opportunities to prove themselves. Despite help from Gilead Sciences co-developing its new drug candidates, though, Arcus Biosciences still burned through $73 million in the first quarter. 

Each step toward earning approval for new drugs is more expensive than the one before it. The company finished March with a nice $885 million cash cushion, but this won't last very long if Gilead Sciences doesn't begin paying all rising research and development expenses for domvanalimab and the rest of Arcus Biosciences' cancer therapy candidates. For now, it's probably best to play wait and see with this risky stock.