MUNICH, Germany, November 11 /PRNewswire/ --

- Product Development Agreement Focused on ARQ 197, c-Met Inhibitor, With Discovery Collaboration Directed Toward Novel Kinase Inhibitors

ArQule, Inc. (NASDAQ: ARQL) and DAIICHI SANKYO Co., Ltd. (TSE: 4568) today 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.

ArQule and DAIICHI SANKYO will co-develop ARQ 197, a proprietary, orally administered, small molecule inhibitor of the c-Met receptor tyrosine kinase, to treat cancer. In addition, ArQule and DAIICHI SANKYO will advance the application of ArQule's kinase inhibitor discovery platform (AKIP(TM)) to develop a new generation of highly selective, anti-cancer kinase inhibitors intended to ensure a long-term presence in this therapeutic category. On a combined basis, the two deals include $75 million in cash upfront to ArQule from DAIICHI SANKYO.

We are delighted to welcome DAIICHI SANKYO as a partner in our shared quest to bring innovative cancer therapeutics to patients and their physicians, said Paolo Pucci, chief executive officer of ArQule. With this announcement, we complete the ARQ 197 partnership process and set the stage to bring the ARQ 197 development program to the next level. We are also very pleased to broaden this relationship by welcoming DAIICHI SANKYO as our first partner for ArQule's AKIP(TM) platform.

For ArQule, this strategic relationship will achieve several product development, scientific and financial objectives, said Mr. Pucci. First, it will allow us to optimize a clinical program with ARQ 197 that elicits the full therapeutic potential of this highly selective c-Met inhibitor. Second, it supports and further validates the application of our proprietary technology platform to the discovery of a new generation of selective inhibitors of kinases implicated in cancer. Finally, it provides meaningful, non-dilutive infusions of cash, as well as an opportunity for cost sharing.

DAIICHI SANKYO looks forward to being able to collaborate with ArQule to realize differentiated and innovative approaches in the treatment of these devastating diseases, said Takashi Shoda, president and chief executive officer of DAIICHI SANKYO Co., Ltd. This strategic partnership is the next important milestone for DAIICHI SANKYO to solidify a strong and viable pipeline in oncology.

ARQ 197 Agreement Summary

ArQule and DAIICHI SANKYO have entered into a binding letter of intent for an exclusive license, co-development and co-commercialization agreement under which they shall collaborate to conduct research, clinical trials and the market launch of ARQ 197 in human cancer indications in the U.S., Europe, South America and the rest of the world, excluding Japan, China (including Hong Kong), South Korea and Taiwan, where Kyowa Hakko Kirin Co., Ltd. (Kyowa) has exclusive rights for development and commercialization.

The binding letter of intent provides for a $60 million cash upfront licensing payment from DAIICHI SANKYO to ArQule. In addition, the binding letter of intent includes significant development and sales milestone payments. ArQule and DAIICHI SANKYO will share equally the costs of Phase 2 and Phase 3 clinical studies, with ArQule's share of Phase 3 costs payable solely from milestone and royalty payments by DAIICHI SANKYO. Upon commercialization, ArQule will receive tiered royalties from DAIICHI SANKYO on net sales of ARQ 197. ArQule retains the option to participate in the commercialization of ARQ 197 in the U.S. The final contract based on the binding letter of intent, including the terms above, is expected to be signed in December 2008. The upfront payment provided for in the binding letter of intent will be paid upon the later of December 5, 2008 or the expiration or termination of the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976.

Kinase Inhibitor Discovery Agreement Summary

ArQule and DAIICHI SANKYO have entered into a research collaboration, exclusive license and co-commercialization agreement under which ArQule will apply its proprietary technology and know-how from its AKIP[TM] platform for the discovery of therapeutic compounds that selectively inhibit certain kinases. The agreement defines two such kinase targets, and DAIICHI SANKYO will have an option to license compounds directed to these targets following the completion of certain pre-clinical studies.

The agreement provides for a $15 million upfront payment, undisclosed payments in research support for the first and second years of the collaboration, licensing fees for compounds discovered as a result of this research, milestone payments related to clinical development, regulatory review and sales, and royalty payments. ArQule retains the option to co-commercialize licensed products in the U.S.

About ARQ 197 and c-Met

ARQ 197 is a 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. In clinical studies to date, treatment with ARQ 197 has been well tolerated and has resulted in tumor responses and prolonged stable disease across broad ranges of tumors and doses.

About ArQule's Kinase Inhibitor Discovery Platform

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[TM], and is applying the platform to discover and validate compounds that inhibit these kinase targets with mechanisms similar to that of ARQ 197.


DAIICHI SANKYO is a global pharmaceutical company that focuses on researching and marketing innovative medications. The company was created in 2005 through the merger of two traditional Japanese enterprises, Daiichi and Sankyo. With net sales of more than 5.4 billion EUR in fiscal year 2007, DAIICHI SANKYO is one of the world's 20 leading pharmaceutical companies. The company's world headquarters is in Tokyo, and its European base is located in Munich. DAIICHI SANKYO has affiliates in 11 European countries and has been one of the strongest Japanese pharmaceutical companies located in Europe since it set up European production facilities and marketing offices in 1990. The company's research activities focus on the areas of cardiovascular diseases, hematology, diabetes, anti-infectives and cancer. Its aim is to develop medications that are best in their class or to create new classes of pharmaceutical drugs.

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 cancer. ArQule's lead product, which is in clinical-stage development, is ARQ 197, an inhibitor of the c-Met receptor tyrosine kinase. An additional clinical-stage program includes compounds that activate the cell's DNA damage response mechanism mediated by the E2F-1 transcription factor. The Company's most advanced pre-clinical development programs are focused on compounds that inhibit the Eg5 kinesin spindle protein and the BRAF kinase. ArQule's current discovery efforts are focused on the identification of novel kinase inhibitors that are potent, selective and do not compete with ATP (adenosine triphosphate), an energy source for cells.

Contact: Olaf Lamberz Corporate Communications Phone +49(0)89-78-08-442 +49(0)172-88-70-153

Contact: Olaf Lamberz, Corporate Communications, Phone +49(0)89-78-08-442, +49(0)172-88-70-153,