Arcus Biosciences Plunges 13% as Phase 3 Trial Discontinuation Shakes Biotech Sector

Summary
• Arcus Biosciences (RCUS) tumbles 13.15% to $21.84, erasing $3.3 billion in market value
• Phase 3 STAR-221 trial halted due to futility in gastric/esophageal cancer treatment
• Options chain sees 2026-01-16 $25 puts surge 98.53% in turnover

The stock’s intraday swing from $20.35 to $24.00 underscores investor panic following the discontinuation of its Gilead-partnered cancer regimen. With $1 billion in cash and a pivot to casdatifan, Arcus faces a critical juncture as the biotech sector grapples with mixed signals from late-stage trials.

Phase 3 Trial Futility Sparks Sharp Selloff
Arcus Biosciences’ 13.15% intraday collapse stems from the discontinuation of its Phase 3 STAR-221 study, which evaluated domvanalimab in upper gastrointestinal cancers. The IDMC’s futility call—showing no survival benefit over nivolumab—shattered investor optimism. With Gilead’s partnership now sidelined, the stock’s technicals reflect a breakdown below key support levels, amplified by short-term bearish momentum and elevated RSI (74.53), signaling overbought conditions.

Biotech Sector Volatility Amid Mixed Catalysts
The biotech sector remains fragmented, with Amgen (AMGN) down 0.22% as Novo Nordisk’s GLP-1 Alzheimer’s failure and J&J’s Tecvayli combo data create divergent narratives. While Arcus’ setback mirrors Rezolute’s 87% plunge, Lilly’s obesity triple-agonist success highlights sector resilience. Arcus’ cash runway until 2028 contrasts with peers like Blueprint, which faces manufacturing cuts, but its pivot to casdatifan aligns with oncology’s shift toward HIF-2a inhibition.

Options Playbook: Capitalizing on Volatility with RCUS20260116P25 and RCUS20260116C22.5
• MACD: 1.73 (bearish crossover with signal line 1.87)
• RSI: 74.53 (overbought, potential reversal)
• Bollinger Bands: Price at $21.84 (near lower band $18.69)
• 200D MA: $12.10 (far below current price)

Technical indicators suggest a short-term bearish bias but long-term bullish setup. Key levels to watch: 200D MA ($12.10) as a critical support and 52W high ($26.40) as resistance. The 2026-01-16 $25 puts (RCUS20260116P25) and $22.50 calls (RCUS20260116C22.5) offer strategic entry points.

RCUS20260116P25
• Code: RCUS20260116P25
• Type: Put
• Strike: $25
• Expiry: 2026-01-16
• IV: 79.22% (high volatility)
• Leverage: 5.43%
• Delta: -0.645 (deep in-the-money)
• Theta: -0.0073 (slow decay)
• Gamma: 0.068 (moderate sensitivity)
• Turnover: 29,855
• Payoff (5% downside): $2.88 per contract
This put offers downside protection with high liquidity and strong delta, ideal for capitalizing on a potential 20% drop to $17.50.

RCUS20260116C22.5
• Code: RCUS20260116C22.5
• Type: Call
• Strike: $22.50
• Expiry: 2026-01-16
• IV: 71.96% (moderate)
• Leverage: 12.22%
• Delta: 0.513 (at-the-money)
• Theta: -0.038 (aggressive decay)
• Gamma: 0.080 (high sensitivity)
• Turnover: 21,689
• Payoff (5% downside): $0.34 per contract
This call balances risk and reward, with high gamma to benefit from volatility spikes. Aggressive bulls may consider it for a rebound above $24.00.

Hook: If $20.00 breaks, RCUS20260116P25 offers short-side potential; bulls should target a bounce above $24.00 with RCUS20260116C22.5.

Backtest Arcus Biosciences Stock Performance
The backtest of Invesco QQQ Trust (QQUS) after a -13% intraday plunge from 2022 to now shows a positive short-to-medium-term performance, with win rates and returns increasing across 3-day, 10-day, and 30-day intervals. This indicates the ETF's ability to recover from significant dips and suggests a favorable risk-return profile in the aftermath of substantial market volatility.

Immediate Action: Position for Volatility or Rebound
Arcus’ 13% drop reflects near-term pessimism but leaves room for a rebound if casdatifan data in 2026 exceeds expectations. The stock’s 52W low ($6.50) remains distant, but liquidity risks emerge if cash burns faster than anticipated. Investors should monitor the 2026-01-16 options expiry and casdatifan’s mid-2026 data readouts. Meanwhile, sector leader Amgen’s -0.22% move underscores biotech’s mixed momentum. Act now: Buy RCUS20260116P25 for downside insurance or target a $24.00 breakout with RCUS20260116C22.5.