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ArQule Reports Second Quarter 2013 Financial Results



  ArQule Reports Second Quarter 2013 Financial Results

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

Business Wire

WOBURN, Mass. -- July 30, 2013

ArQule, Inc. (NASDAQ: ARQL) today announced its financial results for the
second quarter of 2013.

For the quarter ended June 30, 2013, the Company reported a net loss of
$6,786,000 or $0.11 per share, compared with a net loss of $885,000 or $0.01
per share for the second quarter of 2012. For the six-month period ended June
30, 2013, the Company reported a net loss of $12,561,000 or $0.20 per share,
compared with a net loss of $5,145,000 or $0.09 per share, for the six-month
period ended June 30, 2012.

At June 30, 2013, the Company had a total of approximately $111,114,000 in
cash, equivalents and marketable securities.

Operational Update

  * Data from the Company’s Phase 2 trial in colorectal cancer (CRC) presented
    at the 2013 ASCO Annual Meeting included trends in improved progression
    free survival (PFS), overall response rate (ORR) and overall survival (OS)
    in patients who received tivantinib in combination with irinotecan and
    cetuximab.
  * Enrollment in the Phase 3 METIV-HCC trial in hepatocellular carcinoma
    (HCC) is proceeding as planned following the initiation of this trial in
    January, 2013 toward the goal of recruiting approximately 300 patients at
    120 clinical sites.
  * A recent exploratory analysis of the MET IHC (immunohistochemistry)
    sub-group from the MARQUEE trial in non-squamous non-small cell lung
    cancer (NSCLC) demonstrated that the MET high tivantinib group showed a
    substantial improvement in OS relative to control, a benefit not seen in
    the intent-to-treat (ITT) population; complete data from this trial are
    planned for presentation at the European Cancer Congress in the fall of
    2013.
  * A focused workforce reduction of approximately 25 positions effective
    immediately has resulted in total personnel at the Company numbering
    approximately 67; as a result, current cash, cash equivalents and
    marketable securities will be sufficient to fund the Company’s working
    capital and capital requirements into 2016, with no impact on current
    financial guidance for 2013. This action is intended to align human and
    financial resources with the Company’s primary focus on clinical-stage
    development, while retaining its core discovery capabilities.

“Data from a randomized, placebo-controlled, double-blind, Phase 2 clinical
trial with tivantinib in combination with cetuximab and irinotecan in patients
with relapsed or refractory KRAS wild-type metastatic CRC were presented at
the 2013 ASCO Annual Meeting,” said Paolo Pucci, chief executive officer of
ArQule. “These data analyses identified signals of clinical benefit in trends
toward improved PFS, ORR and OS.

“We are pleased to report that well over one half of the clinical sites
participating in our pivotal Phase 3 METIV-HCC trial have been opened,” said
Mr. Pucci. “Significant interest among clinical investigators is fueling
momentum in patient screening at centers in Europe and the U.S.

“We expect that today’s announced workforce reduction and a number of
additional cost containment initiatives will extend our financial runway into
2016,” said Mr. Pucci. “While we retain our core discovery capabilities we
have now created the financial flexibility to continue to develop our
proprietary pipeline. These combined actions serve to harmonize our financial
timeline with anticipated clinical development milestones.”

Revenues and Expenses

The Company reported total revenues of $4,436,000 for the quarter ended June
30, 2013, compared with revenues of $11,829,000 for the second quarter of
2012. Revenues for the six months ended June 30, 2013 were $10,097,000,
compared with revenues of $20,327,000 for the six months ended June 30, 2012.

The $7.4 million revenue decrease in the three months ended June 30, 2013 is
primarily due to revenue decreases of $4.9 million from our Daiichi Sankyo
research collaboration that ended in November 2012 and $2.3 million from our
Daiichi Sankyo tivantinib program. The $10.2 million revenue decrease in the
six months ended June 30, 2013 was primarily due to revenue decreases of $9.8
million from our Daiichi Sankyo research collaboration that ended in November
2012, $0.4 million from our Daiichi Sankyo ARQ 092 agreement that ended in
June 2013, and $1.8 million from our Daiichi Sankyo tivantinib program. These
decreases were partially offset by $1.8 million of other revenue related to a
one-time research project.

Total costs and expenses for the quarter ended June 30, 2013 were $11,280,000
compared with $12,785,000 for the second quarter of 2012. Total costs and
expenses for the six months ended June 30, 2013 were $22,861,000 compared with
$25,687,000 for the same period in 2012.

Research and development costs for the three and six-month periods ended June
30, 2013 were $8,082,000 and $16,263,000 respectively, compared with
$9,271,000 and $18,574,000 for the 2012 three and six-month periods. The lower
research and development costs and expenses in the 2013 periods were due to
lower outsourced clinical and product development costs related to Phase 1 and
Phase 2 programs for tivantinib and pipeline programs, as well as lower labor
related costs.

General and administrative costs for the three and six-month periods ended
June 30, 2013 were $3,198,000 and $6,598,000 respectively, compared with
$3,514,000 and $7,113,000 for the 2012 three and six-month periods.

Confirmed 2013 Financial Guidance

As previously stated, 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 is expected to range between $(0.45) and $(0.50). ArQule
expects to end 2013 with between $85 and $90 million in cash and marketable
securities.

Conference Call and Webcast

Date:                           Tuesday, July 30, 2013
Time:                           9:00 a.m. Eastern Time
Conference Call Numbers
         Domestic:              877-868-1831
         International:         914-495-8595
         Web cast:              http://investors.arqule.com/events.cfm

A replay of the conference call will be available beginning two hours after
the completion of the call through August 1, 2013 and can be accessed by
dialing toll-free 855-859-2056 and outside the U.S. 404-537-3406. The replay
access code is 19175389.

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
includes: ARQ 092, designed to inhibit the AKT serine/threonine kinase; 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 and its ability to fund operations with current
cash and marketable securities. 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 092, ARQ 621 and ARQ 736 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 subsequent 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. 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 is
subject to the ability of the Company as well as Daiichi Sankyo, Inc. and
Kyowa Hakko Kirin, a licensee of tivantinib, to enroll patients, enter into
agreements with clinical trial sites and investigators, and overcome technical
hurdles and other issues related to the conduct of the trials for which each
of them is responsible. There is a risk that these issues may not be
successfully resolved. Drug development involves a high degree of risk. Only a
small number of research and development programs result 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, with respect to partnered programs, even if certain
compounds show initial promise, Daiichi Sankyo or Kyowa Hakko Kirin may decide
not to license or continue to develop them, as the case may be. In addition,
Daiichi Sankyo and Kyowa Hakko Kirin have certain rights to unilaterally
terminate their agreements with ArQule. If either company were to do so, the
Company might not be able to complete development and commercialization of the
applicable licensed products 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 Consolidated Statements of Operations and Comprehensive Loss
(Unaudited)
                                 
                                                                              
                                  Three Months Ended    Six Months Ended
                                  June 30,              June 30,
                                  2013       2012       2013        2012
                                  (In Thousands, Except Per Share Data)
                                                                              
Research and development          $ 4,436    $ 11,829   $ 10,097    $ 20,327
revenue (1)
                                                                              
Costs and expenses:
Research and development            8,082      9,271      16,263      18,574
General and                         3,198      3,514      6,598       7,113
administrative
Total costs and expenses            11,280     12,785     22,861      25,687
                                                                              
Loss from operations                (6,844 )   (956   )   (12,764 )   (5,360 )
                                                                              
Interest income                     132        79         283         144
Interest expense                    (6     )   (6     )   (10     )   (12    )
Other income (expense)              (68    )   (2     )   (70     )   83
                                                                              
Net loss                            (6,786 )   (885   )   (12,561 )   (5,145 )
                                                                              
Unrealized gain (loss) on           (67    )   (126   )   (58     )   (107   )
marketable securities
Comprehensive loss                $ (6,853 ) $ (1,011 ) $ (12,619 ) $ (5,252 )
                                                                              
Basic and diluted net
loss per share:
Net loss per share                $ (0.11  ) $ (0.01  ) $ (0.20   ) $ (0.09  )
                                                                              
Weighted average basic
and diluted common shares           62,473     60,891     62,429      57,351
outstanding

(1) Research and development revenue is shown net of collaboration
contra-revenue of zero and $0.2 million, and zero and $3.4 million for the
three and six months ended June 30, 2013 and 2012, respectively.

Balance sheet data (in thousands):                    June 30,    December 31,
                                                      2013        2012
                                                                   
Cash, equivalents and marketable securities-          $ 80,096    $   79,271
short term
Marketable securities- long term                      31,018      51,328
                                                      $ 111,114   $   130,599
                                                                   
Total assets                                          $ 114,745   $   134,193
                                                                       
Notes payable                                         $ 1,700     $   1,700
                                                                       
Stockholders’ equity                                  $ 70,935    $   81,029

Contact:

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