ArQule, Inc. (ARQL)

ArQule is developing a portfolio of proprietary small molecule drugs to treat cancer. The company’s technology platform includes the Activated Checkpoint Therapy (ACT) program, which seeks to harness the cell's natural defense mechanism against genetic (DNA) damage. While ArQule was previously a leading chemistry services company, since mid-2006, it has repositioned itself as an oncology company focused on developing internally discovered drug candidates.


The company's cancer product, ARQ 501, currently in a Phase II trial, which is based on its ACT platform, plans to announce Phase II results from ARQ 501 around mid-2007. The company's second clinical-stage product, ARQ 197, completing Phase I clinical trial, is designed to trigger death in cancer cells. It expects to initiate Phase II trials in second quarter of 2007. ArQule also has a number of pre-clinical programs based on product candidates directed towards molecular targets.


The company’s revenue, which is currently derived from research and development funding from its alliance with Hoffmann-La Roche, Inc. (Roche), remained flat at $6.6 million, for the year ended December 2006. Revenue from its chemistry services business ceased in the second quarter of 2006 as a result of its strategic decision to exit this business and the subsequent decision by Pfizer to terminate its agreement with effect from May 2006.


ArQule looks like an attractive investment proposition on the premise that ARQ 501 is completing a broad Phase II development program, its partnership with Roche for ARQ 501 which is worth up to $276 million in research funding and clinical development milestones and a series of pre-clinical oncology programs utilizing the ACT platform. Compared to fiscal 2006, the company’s management expects to generate revenues in excess of 8% during fiscal 2007.