ArQule Joins Forces with Daiichi Sankyo to Fight Cancer

| About: ArQule, Inc. (ARQL)

ArQule and Daiichi Sankyo announced that they have entered into two agreements that form the basis of a strategic relationship for the development and discovery of novel oncology therapeutics. One agreement covers the license of ARQ 197 and the other is an R&D agreement.

ARQ 197 is a phase 2 stage, selective inhibitor of c-Met, a receptor tyrosine kinase. When abnormally activated, c-Met plays multiple roles in aspects of human cancer, including cancer cell growth, survival, angiogenesis, invasion and metastasis. Pre-clinical data have demonstrated that ARQ 197 inhibits c-Met activation in a range of human tumor cell lines, including clear cell sarcoma, and shows anti-tumor activity against several human tumor xenografts.

Insights into the binding of ARQ 197 to c-Met formed the basis of ArQule’s discovery platform, which the Company is leveraging to design a new type of kinase inhibitors. These compounds will be intended to selectively inhibit each targeted kinase potently, selectively and without competing with ATP (adenosine triphosphate, an energy source for cells). The Company is assessing the potential of multiple kinases as targets for this drug discovery platform, named AKIP™, and is applying the platform to discover and validate compounds that inhibit these kinase targets with mechanisms similar to that of ARQ 197.

ARQ 197 Agreement Summary
- Exclusive co-development and co-commercialization agreement
- Upfront: $60 million
- Daiichii has sole rights in Japan and other asian countries
- Cost sharing (with ArQule’s costs being covered within milestone payments)

Kinase Inhibitor Discovery Agreement Summary
- exclusive license and co-commercialization agreement for two kinase targets
- Daiichi funds portion of research
- Upfront: $15M
- ArQule retains co-commercialization option in US

This is the second largish, but not killer, deal completed by ArQule in oncology. The 2004 deal with Roche over ARQ 501 (E2F-1 program) is currently in phase 2 trials with further development subject to Roche picking up the option. The company was in pretty reasonable shape cash-wise, with $130M in the bank not counting the new $75M from Daiichi only strengthens their position.