By Colin Kellaher 



  Gilead Sciences Inc. Wednesday said it will invest an initial $200 million in Arcus Biosciences Inc. as part of a 10-year partnership to co-develop and co-commercialize current and future therapeutic product candidates in Arcus' pipeline. 


  Upon closing of the agreement, Arcus will receive $375 million from Gilead, including a $175 million upfront payment and a $200 million equity investment priced at $33.54 a share, in line with Tuesday's closing price for the Hayward, Calif., biopharmaceutical company. 


  Gilead said Arcus will also be eligible for more than $1.6 billion in potential research-and-development funding, opt-in and milestone payments with respect to its current clinical product candidates. 


  Gilead, a Foster City, Calif., biopharmaceutical company, said the deal gives it access to Arcus' clinical and preclinical pipeline of immuno-oncology product candidates that target critical biological pathways. 


  Gilead said it will have the right to appoint two individuals to Arcus' board upon closing of the transaction, expected in the third quarter, adding that will also have the right to buy more shares from Arcus, up to a maximum of 35% of its voting stock, over the next five years. 


  Shares of Arcus, which currently has about 46 million shares outstanding and a market capitalization of roughly $1.54 billion, fell 9.7% to $30.30 in premarket trading Wednesday. 


  Write to Colin Kellaher at colin.kellaher@wsj.com