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ArQule: Enticing Risk/Reward Setup Into AACR

Mar. 06, 2018 11:56 PM ETArQule, Inc. (ARQL)18 Comments


  • This former ROTY holding/former Contender netted a substantial gain for readers.
  • While no longer on either list, the stock currently is offering an intriguing entry point.
  • Data for ARQ 531 at AACR provides optionality (heads I win, tails I lose little).
  • Downside is cushioned by two other assets, namely rare-disease candidate miransertib and ARQ 087 in FGFR2 fusion-positive second-line intrahepatic cholangiocarcinoma.
  • Readers who have done their due diligence should purchase a pilot position. Due to the strength of data for miransertib to date, this appears to be an ideal situation where traders can accumulate a full position to take advantage of optionality with ARQ 531.

Shares of ArQule (NASDAQ:ARQL) have risen by around 75% since my November article noted that there were several ways for investors to win here.

Figure 1: ARQL daily advanced chart (Source: Finviz Elite) (Disclosure: Contains affiliate link)

In my third-quarter update piece (accessible to ROTY or SA PRO subscribers) I noted that while the company had been a serial disappointment in the past, they possess a triumvirate of assets that could create value this year along with a strengthened cash position as a result of prior financings.

Drug candidate miransertib was granted Rare Pediatric Disease Designation for the treatment of Proteus syndrome and the tiny company could receive a priority review voucher if approved. While the company had previously stated that two overgrowth disease patients had seen substantial improvement in quality of life as a result of receiving the drug, updated guidance revealed that 5 of 6 patients had experienced a reduction of at least 50% of phospho-AKT levels. Importantly, disease modification in cerebriform connective tissue nevus lesions was observed. This data leads one to believe that miransertib has a decent shot at crossing the regulatory finish line.

BVF has continued to show conviction with their position here and reversible BTK inhibitor ARQ 531 provided us optionality. ARQ 087 is being evaluated in a pivotal study in FGFR2 fusion positive second-line intrahepatic cholangiocarcinoma as well.

For the fourth quarter the company reported cash and equivalents of around $48 million, while net loss rose to $7.76 million. Research and development expenses fell to $4.72 million. As the company has guided for finishing 2018 with a cash balance of between $23 million and $25 million, another financing in the medium term is likely.

One near-term catalyst that readers should pay close attention to is initial phase 1a data for ARQ531 to be

This article was written by

Jonathan Faison profile picture
Community of Biotech Investors Focused on Value & Clinical Momentum

Founder of 500+ member ROTY Biotech Community (try the 2-week free trial to see if it adds value for you). Quality over quantity- enjoy connecting with readers.

Analyst’s Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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