That's an argument, but it's not a legal argument. There's nothing in the law that says Biden must stay in the race if he stays as President.
Then once a nominee is selected by the Democrats, the 25th Amendment will be initiated in order to place Kamala Harris in office, as the “First Black Female President” in history.
This being said, I would not put it beyond them to nominate Kamala Harris as the Democrat candidate for President. They then can run her as a sitting President for office.