ArQule reduces third quarter net loss to $6,394,000

Nov 9 2010

ArQule, Inc. (NASDAQ: ARQL) today reported its results of operations for the fiscal quarter and nine months ended September 30, 2010.

“Our oncology drug discovery collaboration with Daiichi Sankyo has been expanded, establishing a third therapeutic target, with an option for a fourth, and including a two-year extension”

The Company reported a net loss of $6,394,000 or $0.14 per share for the quarter ended September 30, 2010, compared to a net loss of $8,088,000 or $0.18 per share for the quarter ended September 30, 2009. For the nine-month period ended September 30, 2010, the Company reported a net loss of $24,373,000 or $0.55 per share, compared to a net loss of $26,268,000 or $0.60 per share for the same period in 2009.

At September 30, 2010, the Company had a total of $88,481,000 in cash, equivalents and marketable securities.

Recent Operational Highlights

ARQ 197

• Agreement with the U.S. Food and Drug Administration (FDA) on a Special Protocol Assessment for the design of a Phase 3 trial in patients with advanced non-squamous non-small cell lung cancer (NSCLC), announced on October 11, 2010;
• Presentation of final results from the Phase 2 clinical trial in patients with advanced NSCLC at the European Society for Medical Oncology (ESMO), announced on October 11, 2010.

Pipeline

• Expansion of oncology drug discovery collaboration with Daiichi Sankyo Co., Ltd. based on the ArQule Kinase Inhibitor Platform (AKIP™) technology, announced on October 12, 2010.

"We have reached an SPA agreement for our Phase 3 trial with ARQ 197 in NSCLC, which is planned for initiation late this year," said Paolo Pucci, chief executive officer of ArQule. "The trial will be a randomized, double-blinded study of erlotinib plus ARQ 197 in patients with locally advanced or metatstatic NSCLC of non-squamous histology. The primary endpoint is overall survival in the intent-to-treat population. Key secondary objectives include overall survival in the epidermal growth factor receptor wild-type sub-population and progression-free survival in the intent-to-treat population.

"At the ESMO annual meeting, we presented final results from the Phase 2 trial in NSCLC, including new exploratory data analyses demonstrating a prolongation of time to develop new metastases in patients who received ARQ 197 plus erlotinib," said Mr. Pucci. "These metastases-delaying data potentially add to our mechanistic understanding of the anti-cancer effect of ARQ 197.

"Our oncology drug discovery collaboration with Daiichi Sankyo has been expanded, establishing a third therapeutic target, with an option for a fourth, and including a two-year extension," said Mr. Pucci. "We are delighted with the progress made since this collaboration was established, and we believe its expansion will lead to the discovery of novel kinase inhibitors for additional targets in oncology."

Revenues and Expenses

The Company reported total revenues of $8,270,000 for the quarter ended September 30, 2010, compared to revenues of $6,436,000 for the quarter ended September 30, 2009. Revenues for the nine months ended September 30, 2010 were $21,701,000, compared to revenues of $17,912,000 for the nine months ended September 30, 2009.

Increased revenues for the 2010 periods were primarily due to revenue recognized from a $5,000,000 milestone payment received in September, 2010 from Kyowa Hakko Kirin Co., Ltd. for the initiation of a Phase 2 trial in gastric cancer in Asia. The 2010 and 2009 periods also include revenue from the Company's ARQ 197 license agreement and AKIP collaboration with Daiichi Sankyo Co., Ltd.

For the quarter ended September 30, 2010, the Company reported total costs and expenses of $14,648,000, compared to total costs and expenses of $14,481,000 for the quarter ended September 30, 2009. Total costs and expenses for the nine months ended September 30, 2010 were $46,265,000, compared to $45,356,000 for the same period in 2009.

Research and development costs for the three and nine-month periods ended September 30, 2010 were $11,475,000 and $36,237,000 respectively, compared with $11,347,000 and $35,359,000 for the 2009 three and nine-month periods.

General and administrative costs for the three and nine-month periods ended September 30, 2010 were $3,173,000 and $10,028,000, respectively, compared with $3,134,000 and $9,997,000 for the 2009 three and nine-month periods.

Financial Guidance

ArQule today is confirming its financial guidance for 2010. ArQule expects net use of cash to range between $22 and $42 million. Revenues are expected to range between $26 and $30 million. Net loss is expected to range between $30 and $34 million, and net loss per share to range between $(0.67) and $(0.76). ArQule expects to end 2010 with between $75 and $95 million in cash and marketable securities.

Among the factors that could influence this guidance are: timing of the initiation of the planned Phase 3 trial with ARQ 197 in NSCLC; timing and receipt of a related milestone payment; and the timing of reimbursement of certain ArQule expenses related to the AKIP™ discovery collaboration.

SOURCE ArQule