ArQule Announces Second Quarter Fiscal 2005 Results; Conference Call Scheduled Today at 9 A.M. Eastern Time.WOBURN, Mass. -- ArQule, Inc. (Nasdaq: ARQL) today reported its results of operations for the fiscal quarter ended June 30, 2005. The Company reported total revenues of $13,454,000 for the quarter ended June 30, 2005, compared to revenues of $14,012,000 for the second quarter of 2004. Revenues for the six months ended June 30, 2005 were $27,397,000, compared to revenues of $25,773,000 for the same period in 2004. The Company reported a net loss of $2,427,000, or $0.07 per share, for the quarter ended June 30, 2005, compared to a net loss of $134,000, or $0.00 per share, for the quarter ended June 30, 2004. For the six-month period ended June 30, 2005, the Company reported a net loss of $3,871,000, or $0.11 per share, compared to a net loss of $5,385,000, or $0.19 per share, for the six-month period ended June 30, 2004. For the quarter ended June 30, 2005, the Company reported total costs and expenses of $16,129,000, compared with $14,392,000 for the second quarter of 2004. Total costs and expenses for the six months ended June 30, 2005 were $32,019,000, compared to $31,573,000 for the same period in 2004. ArQule ended the second quarter of fiscal 2005 with approximately $130,000,000 in cash and marketable securities Marketable Securities Very liquid securities that can be converted into cash quickly at a reasonable price. Notes: Marketable securities are very liquid as they tend to have maturities less than one year, and the rate at which these securities can be bought or sold has . This amount includes $40,100,000 in proceeds received from the completion of a sale and leaseback sale and leaseback The sale of a fixed asset that is then leased by the former owner from the new owner. A sale and leaseback permits a firm to withdraw its equity in an asset without giving up use of the asset. Also called leaseback. transaction of the Company's headquarters facility in Woburn, Massachusetts Woburn (/'wu.bə(r)n/) is a city in Middlesex County, Massachusetts, USA. The population was 37,258 at the 2000 census. Woburn is the birthplace of Anglo-American scientist Benjamin Thompson, a.k.a. completed in May 2005. Following the conclusion of the first six months of 2005, the Company is adjusting its guidance for fiscal year 2005 as follows. As a result of significant cost savings due to operational efficiencies and program synergies realized during the first six months of the year, particularly in pre-clinical activities, the Company now projects total research and development expenses for the year to range between $30 million and $34 million. The Company expects net investment income to range between $2.3 million and $2.8 million. Net loss is expected to range between $17 million and $23 million, and net loss per share between $0.50 and $0.67. As a result of the receipt of proceeds from the sale and leaseback transaction, the Company expects to end fiscal year 2005 with between $116 million and $121 million in cash and cash equivalents. This guidance does not assume any additional collaborations, acquisitions or in-licensings. "At the mid-way point of the year, ArQule is proceeding on schedule in both its clinical and pre-clinical programs," said Dr. Stephen A. Hill, president and chief executive officer of ArQule. "We are on track to initiate at least one Phase 2 trial by the end of the year with our lead product, ARQ (Automatic Repeat reQuest) A method of handling communications errors in which the receiving station requests retransmission if an error occurs. ARQ - Automatic Repeat Request 501, which is partnered with Roche, and to submit an Investigational New Drug (IND) application for one pre-clinical program before the end of the year. Our cash position is strong, having benefited from the completion of a registered stock offering in January, the sale-leaseback transaction completed in May, and significant cost savings in certain pre-clinical programs. "We are seeing encouraging signs of anti-tumor activity in our two Phase 1b combination therapy trials and in our Phase 1 monotherapy monotherapy /mono·ther·a·py/ (-ther´ah-pe) treatment of a condition by means of a single drug. mon·o·ther·a·py n. Treatment of a disorder with a single drug. trial with ARQ 501, and we have recently activated activated a state of being more than usually active. In biological systems this is usually brought about by chemical or electrical means. Commonly said of pharmaceutical and chemical products. a third site in connection with our expanding combination trial with gemcitabine," said Dr. Hill. "The side effect profile that continues to emerge from these trials is also encouraging, and although we have yet to define a recommended Phase 2 dose for ARQ 501, we believe we are close to this goal. "In addition, during the past quarter we initiated GLP See gateway location protocol. toxicology toxicology, study of poisons, or toxins, from the standpoint of detection, isolation, identification, and determination of their effects on the human body. Toxicology may be considered the branch of pharmacology devoted to the study of the poisonous effects of drugs. studies with ARQ 197, the lead compound of a series of proprietary compounds generated through our ARQ 650 RP cancer survival pathway pathway /path·way/ (path´wa) 1. a course usually followed. 2. the nerve structures through which an impulse passes between groups of nerve cells or between the central nervous system and an organ or muscle. program, for which we retain ownership of all compounds," said Dr. Hill. "We are pleased that the body of scientific literature related to checkpoint (programming) checkpoint - Saving the current state of a program and its data, including intermediate results, to disk or other non-volatile storage, so that if interrupted the program could be restarted at the point at which the last checkpoint occurred. activation activation /ac·ti·va·tion/ (ak?ti-va´shun) 1. the act or process of rendering active. 2. the transformation of a proenzyme into an active enzyme by the action of a kinase or another enzyme. 3. is expanding significantly," said Dr. Hill. "Independent research, particularly two studies published in Nature in April, as well as ArQule's research published earlier this month in Cancer Research, has provided additional scientific validation See validate. validation - The stage in the software life-cycle at the end of the development process where software is evaluated to ensure that it complies with the requirements. of our activated checkpoint therapy platform, the central focus of the Company's proprietary approach to oncology oncology /on·col·o·gy/ (ong-kol´ah-je) the sum of knowledge regarding tumors; the study of tumors. on·col·o·gy n. drug discovery and the basis for the ongoing clinical testing of ARQ 501." ArQule will host an investor conference call today at 9:00 a.m. Dr. Hill and Louise A. Mawhinney, vice president and chief financial officer, will lead the call. Date: Thursday, July 28, 2005 Time: 9:00 a.m. eastern time Conference Call Numbers Domestic: (800) 659-2032 International: (617) 614-2712 Participant Passcode: ArQule Webcast: http://www.ArQule.com A replay of the conference call will be available for five days and can be accessed by dialing (888) 286-8010 from the U.S. and Canada, and (617) 801-6888 from outside the U.S. For archived calls, the passcode is 42394473. About ArQule ArQule, Inc. is a biotechnology company engaged in research and development of next-generation small-molecule cancer therapeutics therapeutics Treatment and care to combat disease or alleviate pain or injury. Its tools include drugs, surgery, radiation therapy, mechanical devices, diet, and psychiatry. based on its innovative Activated Checkpoint Therapy(SM) (ACT) platform. ACT compounds are intended to improve the way cancer patients are treated because they selectively kill cancer cells cells once believed to be peculiar to cancers, but now know to be epithelial cells differing in no respect from those found elsewhere in the body, and distinguished only by peculiarity of location and grouping. See also: Cancer and spare normal cells by restoring and activating cellular checkpoints that are defective in cancer. ArQule's lead program based on E2F E2F E-Mail to Fax elevation elevation, vertical distance from a datum plane, usually mean sea level to a point above the earth. Often used synonymously with altitude, elevation is the height on the earth's surface and altitude, the height in space above the surface. is partnered with Roche. In addition to advancing its own programs, ArQule continues to advance the drug discovery efforts of pharmaceutical collaborators by providing high-quality library design and compound production, including collaborations with Pfizer. For more information, please visit www.ArQule.com. This press release contains forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. as defined in the Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and of 1995, which provides a safe harbor Safe Harbor 1. A legal provision to reduce or eliminate liability as long as good faith is demonstrated. 2. A form of shark repellent implemented by a target company acquiring a business that is so poorly regulated that the target itself is less attractive. for forward-looking statements made by or on behalf of ArQule. ArQule and its representatives may from time to time make written or oral forward-looking statements, including statements contained in this press release. Generally, the words "believe," "expect," "intend," "estimate," "anticipate," "will" and similar expressions identify forward-looking statements. All statements which address operating performance, events or developments that ArQule expects or anticipates will occur in the future, such as projections about its future results of operations or its financial condition, research, development and commercialization of its products and anticipated trends in its business are forward-looking statements within the meaning of the Reform Act. Actual results may differ materially from those projected in the forward-looking statements or historical performance due to numerous risks and uncertainties that exist in ArQule's operations, development efforts and the business environment, including without limitation: the ACT platform may not improve efficacy or reduce toxicity toxicity /tox·ic·i·ty/ (tok-sis´i-te) the quality of being poisonous, especially the degree of virulence of a toxic microbe or of a poison. and compounds resulting from the platform may not operate as intended; the current and future clinical studies may encounter enrollment difficulties and unexpected toxicity; the commencement of the anticipated clinical trials may be delayed or the trials may never commence; the preclinical preclinical /pre·clin·i·cal/ (-klin´i-k'l) before a disease becomes clinically recognizable. pre·clin·i·cal adj. 1. efforts associated with the ACT pipeline may fail or prove disappointing; the animal xenograft xenograft /xeno·graft/ (zen´o-graft) a graft of tissue transplanted between animals of different species; it may be concordant, preclinical studies preclinical studies, n.pl a term used to describe research done before a clinical study. May be laboratory or epidemiologic research. may be unpredictive of human response; collaborators may terminate their agreements with ArQule because ArQule may fail to satisfy the collaborators' needs or for other reasons; and, the risks and uncertainties described in ArQule's Form 10-Q Form 10-Q See 10-Q. filed with the Securities and Exchange Commission on April 29, 2005, its 10-K filed with the Commission on March 16, 2005, its Form 10-Q filed with the Commission on November 9, 2004,and its Form 10-Q filed with the Commission on August 4, 2004. The forward-looking statements contained herein represent the judgment of ArQule as of the date of this report. ArQule disclaims any intent or obligation to update any forward-looking statement except to the extent required by law.
ArQule, Inc.
Condensed Statement of Operations
(In Thousands, Except Per Share Amounts)
(Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
2005 2004 2005 2004
--------- ------- ------- -------
Revenue:
Compound development revenue $ 11,802 $12,360 $24,093 $24,121
Research and development
revenue 1,652 1,652 3,304 1,652
--------- ------- ------- -------
Total revenue 13,454 14,012 27,397 25,773
--------- ------- ------- -------
Costs and expenses:
Cost of revenue - compound
development 7,674 7,465 15,027 16,004
Research and development 6,217 4,712 12,070 9,679
Marketing, general and
administrative 2,238 2,215 4,922 4,818
Restructuring charge - - - 1,072
--------- ------- ------- -------
Total costs and expenses 16,129 14,392 32,019 31,573
--------- ------- ------- -------
Loss from operations (2,675) (380) (4,622) (5,800)
Net investment income 498 246 1,001 415
Loss on investment (250) - (250) -
--------- ------- ------- -------
Net loss $ (2,427) $ (134) $(3,871) $(5,385)
========= ======= ======= =======
Basic and diluted net loss per
share $ (0.07) $ (0.00) $ (0.11) $ (0.19)
========= ======= ======= =======
Weighted average common shares
outstanding - basic and diluted 34,953 28,808 34,003 28,769
========= ======= ======= =======
June 30, December 31,
Balance sheet data (in thousands): 2005 2004
------------------------------------------- ------------- ------------
Cash, cash equivalents and marketable
securities $130,184 $71,365
Working capital 118,706 54,782
Total assets 148,303 120,218
Stockholders' equity 108,633 82,452
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