ArQule Reports First Quarter 2014 Financial Results

  ArQule Reports First Quarter 2014 Financial Results

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

Business Wire

WOBURN, Mass. -- May 7, 2014

ArQule, Inc. (NASDAQ: ARQL) today announced its financial results for the
first quarter of 2014.

For the quarter ended March 31, 2014, the Company reported a net loss of
$7,141,000 or $0.11 per share, compared to a net loss of $5,775,000, or $0.09
per share, for the first quarter of 2013.

At March 31, 2014, the Company had a total of $85,758,000 in cash, equivalents
and marketable securities.

Operational Update

  *Enrollment is proceeding in the Phase 3 METIV-HCC trial of tivantinib (ARQ
    197) in hepatocellular carcinoma (HCC) conducted by ArQule and its
    partner, Daiichi Sankyo Co., in the U.S. and Europe;
  *Kyowa Hakko Kirin, the Company’s partner in Asian territories, initiated
    the Phase 3 JET-HCC trial of tivantinib in HCC in Japan in February, 2014;
  *Patient enrollment is continuing in a number of NIH-sponsored trials with
    tivantinib, including Phase 2 randomized trials in prostate cancer, head
    and neck cancer, and kidney cancer;
  *The dose escalation portions of Phase 1 trials with the Company’s
    proprietary compounds, ARQ 092 and ARQ 087, are nearing completion.

“The two Phase 3 trials with tivantinib in HCC are proceeding,” said Paolo
Pucci, chief executive officer of ArQule. “These trials, which include
METIV-HCC in the West and JET-HCC in Japan, are unique in that they are the
only biomarker-directed trials ongoing in second-line HCC. We expect to
provide updates on the projected time frame to completion of patient
enrollment as more patients complete screening to ensure that they have
MET-diagnostic high disease upon entry into the trial.

“The most advanced clinical trials with tivantinib that are being conducted
under the NIH-CRADA program are randomized Phase 2 trials taking place in
prostate cancer, head and neck cancer and kidney cancer,” said Mr. Pucci. “We
plan to announce data from these independent trials as they are made available
by sponsoring investigators.

“Our earlier clinical-stage programs are focused on ARQ 092, an Akt inhibitor,
and ARQ 087, an FGFR inhibitor,” said Mr. Pucci. “Phase 1 trials with both of
these products are nearing the achievement of maximum tolerated dose, and we
plan to announce data from these trials later this year.”

Revenues and Expenses

The Company reported research and development revenue of $2,676,000 for the
quarter ended March 31, 2014, compared with $5,661,000 for the quarter ended
March 31, 2013. Revenue in the three months ended March 31, 2014 is comprised
of revenue from the Daiichi Sankyo tivantinib development agreement and the
Kyowa Hakko Kirin exclusive license agreement for tivantinib.

The $3.0 million revenue decrease in the quarter ended March 31, 2014 is
primarily due to revenue decreases of $0.6 million from our Daiichi Sankyo
tivantinib program, $0.6 million from our Daiichi Sankyo ARQ 092 agreement
that ended in June2013, and $1.8 million of other revenue related to a
one-time research project in the quarter ended March 31, 2013.

Total costs and expenses for the quarter ended March 31, 2014 were $9,981,000
compared to $11,581,000 for the first quarter of 2013. Research and
development costs for the quarter ended March 31, 2014 were $6,731,000
compared to $8,181,000 for the first quarter of 2013. These decreases were
primarily due to lower labor related costs of $1.2 million and reduced lab
expenses of $0.4 million. These cost decreases were partially offset by $0.3
million higher outsourced clinical and product development costs related to
our pipeline programs, including ARQ 092 and ARQ 087. General and
administrative costs for the quarter ended March 31, 2014 were $3,250,000,
compared to $3,400,000 for the first quarter of 2013. This decrease was
principally due to lower non-cash stock compensation expenses.

Conference Call and Webcast

Conference call details

Date:                       Wednesday, May 7, 2014
Time:                           9:00 a.m. Eastern Time
Conference Call Numbers
        Domestic:               877-868-1831
        International:          914-495-8595
        Web cast:               http://www.arqule.com
                                

A replay of the conference call will be available beginning two hours after
the completion of the call until the end of May 9, 2014 and can be accessed by
dialing toll-free 855-859-2056 or 800-585-8367, and outside the U.S.
404-537-3406. The confirmation code for replayed calls is 30148648.

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, and
ARQ 087, designed to inhibit fibroblast growth factor receptor (FGFR).
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 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 092 and ARQ 087 may not demonstrate promising
therapeutic effect; 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. In
addition, we and our partners are utilizing a companion diagnostic to identify
MET-high patients in the METIV-HCC and JET-HCC trials, and we may encounter
difficulties in developing and obtaining approval for companion diagnostics,
including issues relating to selectivity/specificity, analytical validation,
reproducibility, or clinical validation. Any delay or failure by our
collaborators to develop or obtain regulatory approval of the companion
diagnostics could delay or prevent approval of our product candidates. 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 Statement of Operations and Comprehensive Loss

(In Thousands, Except Per Share Amounts)

(Unaudited)
                                                
                                                  Quarter Ended
                                                  March 31,
                                                  2014       2013
                                                                      
Research and development revenue (1)              $ 2,676    $ 5,661
                                                                      
Costs and expenses:
Research and development                          6,731      8,181
General and administrative                        3,250      3,400
Total costs and expenses                          9,981      11,581
                                                                      
Loss from operations                              (7,305   ) (5,920   )
                                                                      
Interest income                                   95         151
Interest expense                                  (7       ) (4       )
Other income (expense)                            76         (2       )
Net loss                                          (7,141   ) (5,775   )
                                                                      
Unrealized gain (loss) on marketable securities   (17      ) 9
                                                           
Comprehensive loss                                $ (7,158 ) $ (5,766 )
                                                                      
                                                                      
Basic and diluted net loss per share              $ (0.11  ) $ (0.09  )
                                                                      
Weighted average shares used in calculating:
Basic and diluted loss per share                  62,583     62,384

(1) Research and development revenue is shown net of collaboration
contra-revenue of $82 thousand and $216 thousand for the quarters ended March
31, 2014 and 2013, respectively.

                                                      March 31,   December 31,
Balance sheet data (in thousands):                              2013
                                                      2014
                                                                  
Cash, equivalents and marketable securities- short    $  71,728   $   74,695
term
Marketable securities- long term                      14,030      20,391
                                                      $  85,758   $   95,086
                                                                  
Total assets                                          $  88,574   $   98,179
Notes payable                                         $  1,700    $   1,700
Stockholders’ equity                                  $  54,554   $   60,626

Contact:

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