Arcus Biosciences Plummets 10.4% as Phase 3 Trial Discontinuation Shocks Biotech Sector

Summary
• Arcus Biosciences (RCUS) plunges 10.4% to $22.525, erasing $2.6B in market cap
• Phase 3 STAR-221 trial halted after interim analysis shows no survival benefit for gastric cancer combo
• $1B cash runway extends to 2028 as focus shifts to HIF-2a inhibitor casdatifan

Arcus Biosciences faces a seismic selloff following the abrupt termination of its Phase 3 STAR-221 trial, a pivotal study for its gastric cancer regimen. The stock traded as low as $20.35 and high of $22.74, reflecting investor panic over the failed trial. With $1B in cash and a pivot to casdatifan, the biotech now navigates a high-stakes transition in its oncology pipeline.

Phase 3 Trial Futility Sparks Sharp Selloff
Arcus Biosciences’ 10.4% intraday collapse stems from the discontinuation of its Phase 3 STAR-221 trial, a $100M+ investment in partnership with Gilead. The Independent Data Monitoring Committee (IDMC) concluded the domvanalimab/zimberelimab/chemotherapy combo failed to improve overall survival versus nivolumab/chemotherapy in gastric and esophageal cancers. Despite similar safety profiles, the lack of efficacy triggered a liquidity crunch as investors reassessed the company’s late-stage value proposition. The move underscores the fragility of biotech valuations tied to single clinical assets.

Bearish Options Play and Cash-Flow Resilience Signal Strategic Entry Points
• 200-day average: 12.10 (well above current price)
• RSI: 74.53 (overbought territory)
• MACD: 1.73 (bullish divergence with price)
• Bollinger Bands: Price near lower band (28.50/23.59/18.69)

Technical indicators suggest a short-term bearish bias despite long-term bullish fundamentals. The stock’s 22.35 30-day MA and 15.42 100-day MA highlight a critical support zone. With $1B in cash and a 2028 runway, Arcus remains a speculative play on casdatifan’s potential. However, the 74.53 RSI and -0.13 MACD histogram signal near-term volatility.

Top Options Contracts:
1. RCUS20260116P25 (Put, $25 strike, Jan 16 2026):
- IV: 73.72% (high volatility)
- Delta: -0.5678 (moderate sensitivity)
- Theta: -0.010665 (moderate time decay)
- Gamma: 0.072886 (responsive to price swings)
- Turnover: 26,685 (liquid)
- LVR: 7.49% (high leverage)
- Payoff at 5% downside: $2.38/share (max(0, 21.40 - 25) = 3.60)
- Why it stands out: High IV and LVR make this put ideal for a bearish bet on near-term volatility.

2. RCUS20260116C25 (Call, $25 strike, Jan 16 2026):
- IV: 76.78% (high volatility)
- Delta: 0.4386 (moderate sensitivity)
- Theta: -0.040671 (aggressive time decay)
- Gamma: 0.070167 (responsive to price swings)
- Turnover: 15,854 (liquid)
- LVR: 14.56% (high leverage)
- Payoff at 5% downside: $0 (max(0, 21.40 - 25) = 0)
- Why it stands out: High LVR and IV offer asymmetric upside if the stock rebounds on casdatifan data.

Trading Insight: Aggressive bears should target RCUS20260116P25 for a 5% downside play, while bulls may consider RCUS20260116C25 if the stock breaks above $25.50.

Backtest Arcus Biosciences Stock Performance
The backtest of Invesco QQQ Trust (RCUS) after a -10% intraday plunge from 2022 to the present shows favorable performance metrics. The 3-Day win rate is 50.30%, the 10-Day win rate is 52.11%, and the 30-Day win rate is 57.75%, indicating a higher probability of positive returns in the short term following the intraday plunge. The maximum return during the backtest was 3.39%, which occurred on day 55, suggesting that RCUS has a tendency to recover from significant dips with moderate gains.

Casdatifan Data and Cash Runway Define Arcus’ Survival
Arcus Biosciences’ 10.4% selloff reflects the market’s skepticism about its gastric cancer pipeline, but the $1B cash runway until 2028 provides a buffer for its pivot to casdatifan. Investors must now weigh the risk of short-term volatility against the potential of 2026 data readouts. With Amgen (AMGN) up 0.05% as a sector leader, biotech investors should monitor Arcus’ MRGPRX2 and casdatifan milestones. Action: Short-term traders should watch the $20.35 support level, while long-term holders may consider buying dips into the $18.69 Bollinger Band floor.