ArQule Initiates Phase 1 Trial with ARQ 171, Provides Enrollment Update on ARQ 501 and ARQ 197.

WOBURN, Mass. -- ArQule, Inc. (NASDAQ: ARQL) today announced the enrollment and successful dosing of the first patient in a Phase 1 clinical trial with ARQ 171, a second-generation compound generated through its Activated Checkpoint Therapy(SM) (ACT) program. Phase 1 data from this compound, together with Phase 2 data from the ongoing ARQ 501 program, will form the basis of a future licensing decision by Hoffmann-La Roche (Roche). As previously communicated, Roche has an option to ArQule's E2F-1 program in the field of cancer therapy.

ArQule also updated progress in its other clinical programs. These include three Phase 2 trials with the first-generation E2F-1 compound, ARQ 501, as monotherapy in leiomyosarcoma and head and neck cancer, and as combination therapy with gemcitabine in pancreatic cancer, as well as a Phase 1 trial with ARQ 197, a proprietary, orally administered small molecule inhibitor of the c-Met receptor tyrosine kinase.

Phase 1 Trial With ARQ 171

The population in this open label, dose escalation trial will consist of patients with advanced solid tumors. The primary objective of the trial is to determine the safety, tolerability and maximum tolerated dose of ARQ 171. Secondary objectives are to determine the pharmacokinetic profile and to assess the preliminary anti-tumor activity of the compound.

"Initiation of Phase 1 clinical testing with ARQ 171 marks the achievement of a significant corporate milestone for this year," said Dr. Stephen A. Hill, president and chief executive officer of ArQule. "ARQ 171, which entered and completed GLP toxicology testing earlier this year, is the result of our biological insights into DNA damage response pathways and our capabilities in small molecule chemistry and intelligent drug design."

The first patient in the ARQ 171 trial was dosed at Premiere Oncology (Santa Monica, CA), where the principal investigator is Dr. Lee Rosen. Additional investigators and sites include Dr. Geoffrey Shapiro at Dana Farber Cancer Institute (Boston, MA) and Dr. Casey Cunningham at Mary Crowley Medical Research Center (Dallas, TX). Each of these investigators has been involved with ArQule's development of compounds that target the E2F-1 biological pathway to treat cancer.

ARQ 501 Program Update

With respect to the Phase 2 clinical program with ARQ 501, patient enrollment has been completed in the leiomyosarcoma trial. In the head and neck cancer trial, approximately 45 patients have been enrolled toward the total target number of 53 patients, and in the pancreatic cancer trial, approximately 55 patients have been enrolled toward the total target number of 66 patients. Assuming that recruitment continues at the current levels, ArQule anticipates completion of recruitment into its Phase 2 program (i.e. all three studies) before year-end. Based on the protocol-defined end-points, initial safety and efficacy data from these studies would be available by the middle of 2007.

ARQ 197 - c-Met Inhibitor Program Update

Patient recruitment is also continuing in the Phase 1 dose escalation trial with ARQ 197. Thirty-six patients have been treated with ARQ 197, at doses ranging from 20 to 360 milligrams per day. Based on current estimates, ArQule anticipates choosing a recommended Phase 2 dose for this compound by year-end and beginning initial Phase 2 exploration in early 2007.

Preliminary data from this trial was recently presented at the EORTC-NCI-AACR meeting in Prague. These data included highly encouraging signs of activity with minimal side effects.

"I am delighted with the rapid progress to date for our c-Met inhibitor," said Dr. Hill. "The level of interest in this pathway is increasing rapidly, and ARQ 197 has the potential to be the leading clinical stage compound against this target."

About Checkpoint Activation

In a normal cell, checkpoint mechanisms serve to monitor genetic (DNA) damage. If damage is detected, the cell attempts to repair the damage. If such repair is not possible, checkpoint functions cause the damaged cell to undergo cell death, or apoptosis. Cancer cells have multiple abnormalities, including DNA damage, but they are able to survive and proliferate because key checkpoints and apoptotic pathways are disabled as the cancer develops. As a result, cancer cells undergo cell division in an uncontrolled way and pass their genetic damage on to their daughter cells.

Conventional chemotherapy seeks to kill cancer cells by creating further damage to DNA sufficient to prevent cell replication. A well-known side effect of this approach is that normal cells are indiscriminately damaged, creating toxicity to patients and limiting the cancer cell killing activity of conventional chemotherapy. In contrast, ArQule's small molecule ACT product candidates, including ARQ 501 and ARQ 171, activate under-functional checkpoints and re-enable the cell to detect and respond appropriately to DNA damage. As a result, cancer cells undergo apoptosis, while normal cells, which have little DNA damage compared to cancer cells, are spared.

ArQule's ARQ-550RP program is focused on the discovery and clinical development of small molecule drug candidates that target the E2F-1 checkpoint pathway. By activating E2F-1-mediated checkpoint pathways, these compounds are intended to kill cancer cells selectively by activating the cell's natural defense mechanism against DNA damage.

About ARQ 197 and c-Met

ARQ 197 is the lead product from the Company's Cancer Survival Program (CSP), also known as ARQ-650RP. ARQ 197 is designed to block the activity of c-Met, a receptor tyrosine kinase that plays multiple key roles in human cancer, including cancer cell growth, survival, angiogenesis, invasion and metastasis. The inappropriate expression of c-Met in most cancers and its role in controlling multiple signal transduction pathways involved in tumor growth and metastasis render it a highly compelling therapeutic target for cancer.

Pre-clinical findings have demonstrated that ARQ 197 inhibits c-Met in a wide range of human tumor cell lines and possesses anti-tumor activity against several types of xenografted human tumors in mice. ArQule submitted an Investigational New Drug (IND) application to the U.S. Food and Drug Administration (FDA) for ARQ 197 in late 2005. The Company retains all rights to compounds derived from the ARQ-650RP program, including ARQ 197.

About ArQule

ArQule, Inc. 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 designed to affect key biological processes that are central to cancer. ArQule's lead clinical-stage products have been generated from two scientific platforms. The first of these, Activated Checkpoint Therapy(SM) (ACT), is designed to kill cancer cells selectively while sparing normal cells through direct activation of DNA damage response/checkpoint pathways. The Company's lead ACT program, based on the E2F1 pathway, is partnered with Roche. ArQule's second cancer platform, Cancer Survival Protein modulation, has generated a clinical-stage product designed to inhibit a molecule known as c-Met, which plays multiple roles in cancer cell growth, survival, invasion, angiogenesis and metastasis. For more information, please visit www.arqule.com.

This press release contains forward-looking statements regarding the Company's Phase 1 trials with ARQ 171 and ARQ 197 and Phase 2 trials with ARQ 501. 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 early stage clinical trial results does not ensure that later stage or larger scale clinical trials will be successful. For example, ARQ 171, ARQ 501 and ARQ 197 may not demonstrate promising therapeutic effect; in addition, they may not demonstrate an appropriate safety profile in 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. 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 partner to discontinue development. Even if later stage clinical trials are successful, the risk exists that unexpected concerns may arise from analysis of data or from additional data or that obstacles may arise or issues be identified in connection with review of clinical data with regulatory authorities or that 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 ARQ 171, ARQ 501 and ARQ 197 are subject to the ability of the Company to enroll patients, enter into agreements with clinical trial sites and investigators, and other technical hurdles and issues that may not be 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. 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.