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ArQule Reports Fiscal 2012 Year End and Fourth Quarter Results

  ArQule Reports Fiscal 2012 Year End and Fourth Quarter Results

          Conference call scheduled today at 9:00 a.m. eastern time

Business Wire

WOBURN, Mass. -- March 14, 2013

ArQule, Inc. (NASDAQ: ARQL) today announced its financial results for the year
and for the fourth quarter ended December 31, 2012.

The Company reported a net loss of $10,872,000 or $0.18 per share, for the
year ended December 31, 2012, compared with a net loss of $10,762,000, or
$0.20 per share, for the year ended December 31, 2011. For the quarter ended
December 31, 2012, the Company reported a net loss of $5,296,000 or $0.09 per
share, compared with net income of $3,768,000, or $0.07 per share, for the
quarter ended December 31, 2011.

At December 31, 2012, the Company had a total of approximately $130,599,000 in
cash and marketable securities.

Operational Milestones

Tivantinib (ARQ 197)

  *Presentation of data at the 2012 Annual Meeting of the American Society of
    Clinical Oncology (ASCO) from a randomized, double-blind, controlled Phase
    2 trial of tivantinib in second-line hepatocellular carcinoma (HCC) that
    met the primary endpoint of time to progression, with pronounced
    improvements observed in median overall survival and progression free
    survival in MET-high patients;
  *Dosing of the first patient in the pivotal Phase 3 METIV-HCC trial of
    tivantinib as a single agent in second-line HCC MET-high patients in
    January 2013;
  *Agreement with the U.S. Food and Drug Administration (FDA) on a Special
    Protocol Assessment (SPA) for the design of the METIV-HCC trial;
  *Discontinuation of the Phase 3 MARQUEE trial of tivantinib and erlotinib
    in non-squamous non-small cell lung cancer (NSCLC), conducted by our
    partner Daiichi Sankyo Co., Ltd., following an interim analysis, with
    patients already on treatment and re-consented continuing to receive
    treatment;
  *Permanent suspension of enrollment in the Phase 3 ATTENTION trial of
    tivantinib and erlotinib in non-squamous NSCLC in Asia conducted by our
    partner, Kyowa Hakko Kirin Co., Ltd., with patients already enrolled and
    re-consented continuing to receive treatment;
  *Announcement of top-line data from the randomized Phase 2 signal
    generation trial of tivantinib in combination with irinotecan and
    cetuximab in second-line colorectal cancer (CRC) showing a trend of
    improvements in progression-free survival and objective response rate;
  *Presentation of Phase 1b data at the ASCO Annual Meeting showing that the
    combination of tivantinib and sorafenib was well tolerated and that
    preliminary anti-tumor activity was observed in multiple patient extension
    cohorts, including HCC.

Pipeline / Discovery

  *Commencement of patient dosing in a Phase 1 clinical trial with ARQ 087,
    an orally bioavailable, multi-kinase inhibitor with pan-FGFR (fibroblast
    growth factor receptor) activity.

Plans for 2013

“Tivantinib has re-emerged as a Phase 3 clinical-stage compound with the
initiation of the METIV-HCC trial in second-line HCC early this year,” said
Paolo Pucci, chief executive officer of ArQule. “In 2013 we look forward to
multiple data presentations that will inform our future development plans. The
primary objectives with tivantinib this year include:

  *timely progress in patient enrollment in the Phase 3 METIV-HCC trial;
  *completion of patient enrollment in the Phase 2 KRAS-mutation positive
    NSCLC trial;
  *completion and presentation of data analyses from the MARQUEE trial;
  *data read-out from the ATTENTION trial by Kyowa Hakko Kirin expected in
    late 2013 or early 2014;
  *presentation of final data from the randomized Phase 2 combination trial
    with irinotecan and cetuximab in colorectal cancer;
  *support of ongoing clinical trials sponsored by the National Cancer
    Institute/Cancer Therapy Evaluation Program.

“Progress in other programs will focus on the following activities:

  *enrollment of patients in the Phase 1 trial with ARQ 087;
  *completion of patient enrollment in the Phase 1 trial with ARQ 092;
  *screening of the Company’s proprietary library of compounds as part of a
    drug discovery effort directed toward defined therapeutic targets.

“At the end of 2012, ArQule had $130.6 million in cash and marketable
securities,” said Mr. Pucci. “We expect that these available financial
resources will be sufficient to finance our working capital requirements well
into 2015.”

Revenues and Expenses

Revenues for the year ended December 31, 2012 were $36,414,000 compared with
revenues of $47,310,000 for the year ended December 31, 2011. For the quarter
ended December 31, 2012, revenues were $5,143,000, compared with revenues of
$16,504,000 for the quarter ended December 31, 2011.

The $10.9 million revenue decrease in 2012 was principally due to a
$10.0million decrease in revenue recognized from the Company’s Daiichi Sankyo
ARQ 092 upfront licensing payment received in 2011, a $4.4 million decrease in
revenue recognized from the tivantinib license agreement with Kyowa Hakko
Kirin, a $10.2 million decrease in revenue recognized on the milestone
received from the Daiichi Sankyo tivantinib program in 2011, a $2.2 million
revenue decrease from the Daiichi Sankyo AKIP™ agreement, and a $2.6 million
decrease in revenue recognized resulting from the extension of the development
period of the Daiichi Sankyo tivantinib agreement. These revenue decreases
were partially offset by a $2.8 million increase from the Company’s Daiichi
Sankyo ARQ 092 agreement and lower contra-revenue of $15.7 million associated
with the Daiichi Sankyo tivantinib program.

Fiscal 2012 research and development expenses were $33,966,000, compared with
$45,011,000 for fiscal 2011. Fourth quarter 2012 research and development
expenses were $7,246,000, compared with $9,674,000 for the fourth quarter
2011. Research and development expenses decreased in fiscal 2012 and in the
fourth quarter of 2012 primarily due to the decrease in outsourced clinical
and product development costs related to Phase 1 and 2 programs for tivantinib
and other product candidates.

General and administrative expenses for fiscal 2012 were $13,852,000, compared
to $13,373,000 for fiscal 2011. Fourth quarter 2012 general and administrative
costs were $3,352,000, compared with $3,151,000 for the fourth quarter 2011.

2013 Financial Guidance

For 2013, ArQule expects net use of cash to range between $40 and $45 million.
Revenues are expected to range between $12 and $15 million. Net loss is
expected to range between $28 and $31 million, and net loss per share to range
between $(0.45) and $(0.50) for the year. ArQule expects to end 2013 with
between $85 and $90 million in cash and marketable securities.


Conference Call and Webcast
                               
ArQule will hold a conference call today at 9:00 a.m. Eastern Time.
                                       
Date:                                  Thursday, March 14, 2013
Time:                                  9:00 a.m., Eastern Time
                                       
Conference Call Numbers
Domestic:                              (877) 868-1831
International:                         (914) 495-8595
Webcast:                               www.arqule.com
                                       

A replay of the conference call will be available beginning two hours after
the completion of the call until March 16, 2013 and can be accessed by dialing
toll-free (855) 859-2056 and outside the U.S. (404) 537-3406. The confirmation
code for replayed calls is 94647035.

About ArQule

ArQule is a biotechnology company engaged in the research and development of
next-generation, small-molecule cancer therapeutics. The Company’s targeted,
broad-spectrum products and research programs are focused on key biological
processes that are central to human cancers. ArQule’s lead product, in Phase 2
and Phase 3 clinical development, is tivantinib (ARQ 197), an oral, selective
inhibitor of the c-MET receptor tyrosine kinase. The Company’s pipeline
consists of ARQ 087, designed to inhibit fibroblast growth factor receptor
(FGFR), ARQ 621, designed to inhibit the Eg5 kinesin motor protein, and ARQ
736, designed to inhibit the RAF kinases. ArQule’s current discovery efforts,
which are based on the ArQule Kinase Inhibitor Platform (AKIP™), are focused
on the identification of novel kinase inhibitors that are potent, selective
and do not compete with ATP (adenosine triphosphate) for binding to the
kinase.

This press release contains forward-looking statements regarding the Company’s
clinical trials with tivantinib (ARQ 197) and other candidate compounds in
earlier stages of development, as well as forward-looking statements related
to the Company’s financial guidance for 2013 (including estimates of net use
of cash, revenues, net loss, net loss per share and cash and marketable
securities at the end of 2013), key corporate objectives for 2013, ability to
fund operations with current cash and marketable securities, and its
agreements with Daiichi Sankyo, Inc. These statements are based on the
Company’s current beliefs and expectations, and are subject to risks and
uncertainties that could cause actual results to differ materially. Positive
information about pre-clinical and early stage clinical trial results does not
ensure that later stage or larger scale clinical trials will be successful.
For example, tivantinib, ARQ 087, ARQ 621, ARQ 736 and ARQ 092 may not
demonstrate promising therapeutic effects; in addition, they may not
demonstrate appropriate safety profiles in current or later stage or larger
scale clinical trials as a result of known or as yet unanticipated side
effects. The results achieved in later stage trials may not be sufficient to
meet applicable regulatory standards or to justify further development.
Problems or delays may arise during clinical trials or in the course of
developing, testing or manufacturing these compounds that could lead the
Company or its partners to discontinue development. Even if later stage
clinical trials are successful, unexpected concerns may arise from analysis of
data or from additional data. Obstacles may arise or issues may be identified
in connection with review of clinical data with regulatory authorities, and
regulatory authorities may disagree with the Company’s view of the data or
require additional data or information or additional studies. In addition, the
planned timing of initiation and completion of clinical trials for tivantinib
are subject to the ability of the Company or Daiichi Sankyo, Inc., its
partner, and Kyowa Hakko Kirin, a licensee of tivantinib, to enroll patients,
enter into agreements with clinical trial sites and investigators, and
overcome other technical hurdles and issues related to the conduct of the
trials for which each of them is responsible that may not be resolved. Drug
development involves a high degree of risk. Only a small number of research
and development programs results in the commercialization of a product.
Positive pre-clinical data may not be supported in later stages of
development. Furthermore, ArQule may not have the financial or human resources
to successfully pursue drug discovery in the future. Moreover, Daiichi Sankyo
has certain rights to unilaterally terminate the tivantinib license,
co-development and co-commercialization agreement. If it were to do so, the
Company might not be able to complete development and commercialization of
tivantinib on its own. For more detailed information on the risks and
uncertainties associated with the Company’s drug development and other
activities, see the Company’s periodic reports filed with the Securities and
Exchange Commission. The Company does not undertake any obligation to publicly
update any forward-looking statements.

                                                          
ArQule, Inc.

Condensed Statement of Operations and Comprehensive Loss

(In Thousands, Except Per Share Amounts)

(Unaudited)
                                                                               
                     Quarter Ended                   Year Ended
                     December 31,                    December 31,
                     2012           2011             2012            2011
                                                                               
Research and
development          $ 5,143        $ 16,504         $ 36,414        $ 47,310
revenue (1)
                                                                               
Costs and
expenses:
Research and         7,246          9,674            33,966          45,011
development
General and          3,352          3,151            13,852          13,373
administrative
Total costs          10,598         12,825           47,818          58,384
and expenses
                                                                               
Income (loss)
from                 (5,455   )     3,679            (11,404   )     (11,074   )
operations
                                                                               
Interest             151            73               445             317
income
Interest             (7       )     (7       )       (26       )     (25)
expense
Other income,        15             23               113             20
net
Net income           (5,296   )     3,768            (10,872   )     (10,762   )
(loss)
                                                                               
Unrealized
gain (loss) on       (58      )     81               108             1
marketable
securities
                                                                        
Comprehensive        $ (5,354 )     $ 3,849          $ (10,764 )     $ (10,761 )
income (loss)
                                                                               
Basic and
diluted net
earnings
(loss) per
share:
Basic earnings
(loss) per           $ (0.09  )     $ 0.07           $ (0.18   )     $ (0.20   )
share
Diluted
earnings             $ (0.09  )     $ 0.07           $ (0.18   )     $ (0.20   )
(loss) per
share
                                                                               
Weighted
average shares
used in
calculating:
Basic earnings
(loss) per           62,304         53,620           59,821          52,778
share
Diluted
earnings             62,304         54,696           59,821          52,778
(loss) per
share

(1) Research and development revenue is shown net of collaboration
contra-revenue of $0.2 million and $3.9 million, and $4.6 million and $19.5
million for the three and twelve months ended December 31, 2012 and 2011,
respectively.

                                             December 31,         December 31,
Balance sheet data (in thousands):                         2011
                                             2012
                                                                  
Cash, equivalents and marketable             $   79,271           $   68,168
securities- short term
Marketable securities- long term             51,328               40,475
                                             $   130,599          $   108,643
                                                                  
Total assets                                 $   134,193          $   117,051
Notes payable                                $   1,700            $   1,700
Stockholders’ equity                         $   81,029           $   29,729

Contact:

ArQule, Inc.
William B. Boni, 781-994-0300
VP, Investor Relations/
Corp. Communications
www.ArQule.com