Arcus Biosciences (NYSE: RCUS) updates Hercules loan terms and covenants

Rhea-AI Filing Summary

Arcus Biosciences, Inc. amended its loan agreement with Hercules Capital and other lenders to modify access to the remaining $150.0 million of term loan commitments and extend the debt maturity date to September 1, 2030. The amendment makes $25.0 million available at the company’s option through March 15, 2026 and another $25.0 million available through September 15, 2026. A further up to $50.0 million becomes available after a specified Phase 3 clinical data milestone that supports a U.S. FDA Biologics License Application or New Drug Application, and an additional up to $50.0 million becomes available after FDA approval of such an application, each within defined time windows.

If the aggregate outstanding principal of the term loans exceeds $200.0 million, starting with financials for the third quarter after FDA approval, Arcus must meet new performance covenants based on market capitalization, levels of “Qualified Cash,” or certain net product revenue thresholds.

Insights

Credit and capital structure analyst

Arcus links access to $150.0 million of debt to key clinical and FDA milestones.

Arcus Biosciences amended its Hercules term loan to restate the remaining $150.0 million of commitments into staged tranches with specific availability windows through December 15, 2028. Two tranches of $25.0 million each are available at Arcus’ option through March 15, 2026 and September 15, 2026, while two tranches of up to $50.0 million each depend on achieving a Phase 3 “Clinical Milestone” and an FDA approval “Milestone I.” The overall maturity is extended to September 1, 2030, lengthening the debt profile.

The amendment also tightens risk controls for lenders if leverage rises. Once aggregate outstanding principal exceeds $200.0 million, and beginning with quarterly financials for the period ending three quarters after Milestone I, Arcus must either maintain a market capitalization of at least $1.5 billion plus “Qualified Cash” of at least 50.0% of secured obligations, hold Qualified Cash of at least 100.0% of secured obligations, or satisfy specified net product revenue thresholds. These conditions tie higher debt usage to both equity valuation and cash or revenue generation capacity.

This structure gives Arcus optional access to substantial additional borrowing that is contingent on its late-stage clinical and regulatory progress, while committing the company to stronger balance sheet or revenue metrics if it draws heavily on the facility. The practical impact will depend on whether and when the company elects to use each tranche and achieves the defined milestones.

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

________________________________________________________

FORM 8-K

________________________________________________________

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): December 18, 2025

________________________________________________________

Arcus Biosciences, Inc.

(Exact name of Registrant as Specified in Its Charter)

________________________________________________________

Delaware

001-38419

47-3898435

(State or Other Jurisdiction of Incorporation)

(Commission File Number)

(IRS Employer Identification No.)

3928 Point Eden Way

Hayward, California

94545

(Address of Principal Executive Offices)

(Zip Code)

Registrant’s Telephone Number, Including Area Code: (510) 694-6200

(Former Name or Former Address, if Changed Since Last Report)

________________________________________________________

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

o			Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o			Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o			Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o			Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common Stock, Par Value $0.0001 Per Share

RCUS

The New York Stock Exchange

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§ 230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§ 240.12b-2 of this chapter).

Emerging growth company o

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

Item 1.01 Entry into a Material Definitive Agreement.

On December 18, 2025 (the “Closing Date”), Arcus Biosciences, Inc. (the “Company”) entered into a First Amendment to the Loan and Security Agreement (the “First Amendment”) with the several banks and other financial institutions or entities party thereto (the “Lenders”), as lenders, and Hercules Capital, Inc. (“Hercules”), as administrative agent and collateral agent. The First Amendment amended the terms of that certain Loan and Security Agreement, dated as of August 27, 2024, by and among the Company, Hercules and the Lenders (the “Loan Agreement”).

The First Amendment amends the terms for the remaining $150.0 million term loan commitments available under the loan facility such that, subject to customary terms and conditions, (a) $25.0 million is available at the Company's sole option through March 15, 2026, (b) $25.0 million is available at the Company's sole option through September 15, 2026, (c) up to $50.0 million is available to the Company following the announcement of certain data from an ongoing Phase 3 pivotal study of its drug candidates (“Clinical Milestone”) through the earlier of 90 days upon achieving the Clinical Milestone and March 15, 2028, which when taken together with an acceptable safety profile, support the filing of a Biologics License Application or New Drug Application to the U.S. Food and Drug Administration (the “FDA”), and (d) up to $50.0 million is available to the Company following the FDA’s approval of either a Biologics License Application or New Drug Application (“Milestone I”) through the earlier of 90 days upon achieving Milestone I and December 15, 2028. The First Amendment further extends the maturity date to September 1, 2030, with no further extension right.

The First Amendment adds certain performance covenants in the event the aggregate outstanding principal amount of the term loan advances exceeds $200.0 million and beginning with the delivery of the quarterly financial statements for the period ending three quarters following the achievement of Milestone I, such that the Company must satisfy either (i) (A) a market capitalization greater or equal to $1.5 billion and “Qualified Cash” (defined as cash in accounts subject to control agreements minus any accounts payable not paid after the 120th day) in an aggregate amount equal to or greater than 50.0% of the aggregate outstanding principal amount of the secured obligations or (B) Qualified Cash in an aggregate amount equal to or greater than 100.0% of the aggregate outstanding principal amount of the secured obligations or (ii) certain net product revenue thresholds.

The foregoing is only a brief description of the material terms of the First Amendment does not purport to be a complete description of the amendment and is qualified in its entirety by reference to such amendment, which will be filed as an exhibit to the Company’s Annual Report on Form 10-K for the year ending December 31, 2025.

Item 2.03 Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.

The information set forth above in Item 1.01 of this Current Report on Form 8-K regarding the Company’s direct financial obligation under the First Amendment is incorporated into this Item 2.03 by reference.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

			ARCUS BIOSCIENCES, INC.
Date: December 18, 2025			By:			/s/ Terry Rosen, Ph. D.
						Terry Rosen, Ph.D.
						Chief Executive Officer (Principal Executive Officer)

FAQ

What agreement did Arcus Biosciences (RCUS) amend with Hercules Capital?

Arcus Biosciences, Inc. entered into a First Amendment to the Loan and Security Agreement with Hercules Capital, Inc., as administrative and collateral agent, and the existing lenders. This amendment modifies terms of the loan facility originally dated August 27, 2024.

How much term loan availability remains under Arcus Biosciences' Hercules facility?

The First Amendment covers the remaining $150.0 million of term loan commitments under the Hercules loan facility, reorganizing them into four tranches that are available only within specified time periods and, for the later tranches, upon achieving clinical and regulatory milestones.

What milestone-based borrowing tranches are included in the amended Hercules loan for Arcus (RCUS)?

Under the amendment, up to $50.0 million becomes available after announcement of certain Phase 3 data that, together with an acceptable safety profile, support filing a Biologics License Application or New Drug Application, and another up to $50.0 million becomes available after U.S. FDA approval of such an application, each within a 90-day window and no later than March 15, 2028 and December 15, 2028, respectively.

When does Arcus Biosciences' amended Hercules term loan now mature?

The First Amendment extends the loan facility’s maturity date to September 1, 2030, and states that there is no further extension right beyond that date.

What new financial covenants apply if Arcus Biosciences' term loan balance exceeds $200.0 million?

If the aggregate outstanding principal of the term loan advances exceeds $200.0 million, starting with quarterly financial statements for the period ending three quarters after FDA approval (Milestone I), Arcus must meet new performance covenants. These require either a market capitalization of at least $1.5 billion plus sufficient “Qualified Cash,” higher levels of Qualified Cash alone, or satisfaction of certain net product revenue thresholds.

What is "Qualified Cash" in Arcus Biosciences' amended loan agreement?

The amendment defines “Qualified Cash” as cash in accounts subject to control agreements, minus any accounts payable that have not been paid after the 120th day. This measure is used in the new financial covenants to assess Arcus’ liquidity relative to its secured obligations.