Long-Term Debt

12 Months Ended

Dec. 31, 2025

Long-term debt

The following table summarizes our borrowings (in millions):


	As of December 31,
	2025		2024
Long-term debt, non-current (Contractual maturity 2030)	$	100	$	50
Unamortized discounts, issuance costs, charges, and payment-in-kind interest, net	(1)		(2)
Total long-term debt	$	99	$	48

In 2024, we and Hercules entered into the Hercules Agreement, under which Hercules agreed to lend us up to $250 million in term loans in various tranches subject to minimum draw requirements for each tranche. Under this agreement, $50 million was drawn at closing and $50 million was drawn in the second quarter 2025.

On December 18, 2025, (the "Hercules Amendment Date"), we and Hercules entered into the Hercules Amendment which: (i) extended the maturity date by 12 months, to September 1, 2030, (ii) increased the end of term charge to 9.00%, (iii) modified the period during which each of the remaining tranches were available to borrow, and (iv) modified the covenant requirements associated with the debt. The Hercules Amendment was evaluated in accordance with the applicable accounting standards and determined to be a debt modification, resulting in an adjustment to the effective interest rate on a prospective basis.

Under the Hercules Agreement, as amended, an additional $50 million is committed and fully available at our sole option of which $25 million is available through March 15, 2026 and $25 million is available through September 15, 2026. The remaining $100 million is available as follows: $50 million following certain BLA-enabling clinical milestones related to our ongoing Phase 3 studies and drawable through the earlier of March 15, 2028 or 90 days following the achievement of the milestone, and $50 million following the FDA's approval of a BLA or NDA application for an Arcus investigational product and drawable through the earlier of December 15, 2028 or 90 days following the achievement of the milestone. Undrawn portions of any expired tranches will remain available through the loan's maturity date, subject to lender approval and the achievement of any milestones associated with the original tranches.

The Hercules Agreement, as amended, has an interest-only period through September 1, 2028, after which the principal amount will be repaid in 25 monthly installments through the maturity date of September 1, 2030. The term loans bear cash interest at a rate equal to the greater of (i) 10.45% or (ii) the prime rate plus 1.95%. The agreement allows us to defer up to 2.0% of the cash interest as payment-in-kind interest which is added to the principal at a 1.10 multiple and effective July 1, 2025, we have elected the maximum payment-in-kind deferral.

We may prepay all or any portion of the outstanding term loans at any time, subject to a prepayment fee of: (i) 3.00% of the principal amount prepaid if the prepayment occurs prior to the first anniversary of the Hercules Amendment Date; (ii) 2.00% of the principal amount prepaid if the prepayment occurs on or after the first anniversary and prior to the second anniversary of the Hercules Amendment Date; or (iii) 1.00% of the principal amount prepaid thereafter. The agreement also has an end of term charge of 9.00% of the total amount borrowed.

The Hercules Agreement, as amended, contains customary affirmative and negative covenants, including covenants that limit or restrict our ability to incur liens, incur indebtedness, make investments, pay dividends, merge or consolidate, dispose of assets, and enter into transactions with affiliates, subject to customary exceptions. We are also required to maintain a minimum cash balance of 50% of the funded amount if our market capitalization were to fall below a certain threshold and, in the event that the outstanding principal balance exceeds $200 million, we will be required to meet certain net product revenue thresholds. We do not have covenant requirements associated with this agreement until July 1, 2027.

The Hercules Agreement, as amended, is secured by a first priority security interest in substantially all of our assets, excluding certain intellectual property. The Hercules Agreement also contains customary events of default terms, including payment defaults, breaches of covenants, bankruptcy and insolvency events, cross-defaults to other indebtedness, material AEs, and the occurrence of a change of control. Upon the occurrence of an event of default, Hercules may declare all outstanding obligations under the Hercules Agreement to be immediately due and payable and exercise any or all of its rights and remedies, including foreclosure on the collateral securing the term loans.

The aggregate future minimum payments due under the Hercules Agreement, including principal payments, payment-in-kind interest incurred to date, and the end of term charge, are as follows (in millions):


Maturity Date	Amount
2028	$	15
2029	46
2030	49
Total payments	$	110

During the years ended December 31, 2025, and 2024, we recognized $9 million and $2 million of interest expense. The effective interest rate of the debt, including amortization of the debt discount and issuance costs and payment-in-kind interest, was 12.85% commencing with the modification which occurred in the fourth quarter 2025, compared to 13.08% commencing with the second quarter 2025 and 13.39% for all periods prior to the second quarter 2025.