Exhibit 99.1
Contacts:
Dr. Stephen A. Hill, CEO
Louise A. Mawhinney, CFO
(781) 994-0300
www.ArQule.com
For Immediate Release:
ARQULE ANNOUNCES THIRD QUARTER EARNINGS
Conference Call scheduled for today at 9 a.m. Eastern Time
Woburn, Mass., Oct. 28, 2004 –ArQule, Inc. (NASDAQ: ARQL) today reported its results for the quarter ended September 30, 2004.
For the quarter ended September 30, 2004, ArQule reported revenues of $14,594,000 compared with $15,961,000 for the same period of 2003. These results are in line with our strategic shift of emphasis to oncology drug discovery, while continuing to advance our Pfizer and other chemistry collaborations. The Company reported net income of $1,472,000 for the quarter ended September 30, 2004, or $0.05 per share. The net income includes a $1,496,000 reduction in the restructuring reserve associated with a lease commitment in California, such reduction resulting from execution of a sublease. This compares with a net loss of $29,909,000 or $1.22 per share, for the quarter ended September 30, 2003. The net loss in 2003 was primarily the result of a charge taken to write off in-process research and development costs of $30,359,000 associated with the acquisition of Cyclis Pharmaceuticals, Inc.
Revenues for the nine months ended September 30, 2004 were $40,367,000 compared with revenues of $47,096,000 for the same period of 2003. For the nine months ended September 30, 2004, ArQule reported a net loss of $3,912,000, or $0.14 per share. This compares with a net loss of $29,622,000, or $1.28 per share, for the nine months ended September 30, 2003.
ArQule ended the third quarter of 2004 with approximately $77 million in cash and marketable securities.
Financial Guidance
ArQule is updating financial guidance for the year ended December 31, 2004. Net decrease in cash during 2004 is anticipated to be between $9 and $11 million, an improvement from our previous guidance of between $14 and $16 million, primarily due to improved efficiency and other cost saving initiatives. ArQule’s guidance for revenue of between $50 and $52 million remains unchanged. The total cost of revenue is expected to range between $31 and $32 million, down from $34 and $35 million; total research and development expense is expected to range between $21 and $22 million, down from $24 and $25 million; marketing, general and administrative expense is expected to range between $9 and $10 million, which remains unchanged from prior guidance; restructuring accrual adjustments are expected to result in a net gain of $400,000, as opposed to a net charge of $1.1 million as disclosed in our previous guidance; and net investment income is expected to range between $900,000 and $1.1 million, up from a range of $600,000 to $800,000.
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ArQule now expects its net loss for 2004 to range from $10 to $11 million, or between $0.35 and $0.38 per share, down from previous guidance of $0.52 to $0.56 per share.
“We are pleased with the financial results, which we feel reflect our commitment to conserve cash, while maintaining a very aggressive research and development program, and meeting all of the requirements of our collaborations,” said Dr. Stephen A. Hill, ArQule’s President and Chief Executive Officer.
Research and Development Program Update
Clinical Trials
The ARQ 501 phase 1 monotherapy trial continues to enroll successfully. Recruitment is likely to continue into 2005 as the maximum tolerated dose has not yet been identified. The phase 1b/2 combination trial of ARQ 501 with gemcitabine is anticipated to open at two sites within the United States before the end of the year. The phase 1b dose escalation component will enroll any patients with advanced cancer, including those who have previously received gemcitabine. The Phase 2 component will commence upon identification of the maximum tolerated dose in phase 1b, and will be conducted at sites in both the United States and Europe. Treatment naïve patients with advanced metastatic pancreatic cancer will be eligible for the study.
ArQule anticipates that a combination trial involving ARQ 501 and Taxotere will also open by the end of the year. This open label phase 1b dose escalation study will be conducted in the United States and enroll patients with advanced cancer, some of whom may have previously received Taxotere.
Preclinical Programs
ArQule’s most advanced preclinical programs, 550RP (second generation E2F program) and 650RP (Cancer Survival Protein Program), are proceeding ahead of internal expectations, having demonstrated anti-tumor activity in animal xenograft models. The newly-announced B-RAF Kinase program, 350RP, is on track and has also demonstrated anti-tumor activity in animal models. The two earliest stage programs, 450RP (undisclosed checkpoint program) and 850RP (p53 pathway), have entered lead identification.
ArQule will hold a conference call at 9:00 a.m. Eastern Time. Dr. Stephen A. Hill, President and CEO, and Louise A. Mawhinney, Vice President and CFO, will lead the call.
| Date: | Thursday, September 28, 2004 | |||
| Time: | 9:00 a.m. Eastern Time | |||
| Conference Call Numbers: | ||||
| Toll Free: | (800) 946-0782 | |||
| Toll: | (719) 457-2657 | |||
| Webcast: | www.ArQule.com |
A replay of the conference call will be available for five days and can be accessed by dialing toll-free (888) 203-1112, and outside the U.S. (719) 457-0820. The access code is 863777.
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About ArQule
ArQule, Inc. is a biotechnology company engaged in research and development of next-generation small-molecule cancer therapeutics based on its innovative Activated Checkpoint TherapySM (ACTSM) platform. ACTSM compounds are intended to improve the way cancer patients are treated because they selectively kill cancer cells and spare normal cells by restoring and activating cellular checkpoints that are defective in cancer. In addition to advancing its own programs, ArQule continues to advance the drug discovery efforts of pharmaceutical collaborators by providing high-quality library design and compound production, including collaborations with Pfizer and Novartis. For more information, please visit www.ArQule.com.
This press release contains forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995, which provides a safe harbor for forward-looking statements made by or on behalf of ArQule. Actual results may differ materially from those projected in the forward-looking statements or historical performance due to numerous risks and uncertainties that exist in ArQule’s operations, development efforts and the business environment, including without limitation: ArQule’s financial guidance may be inaccurate due to intrinsic or extrinsic factors; the ACTSM platform may not improve efficacy or reduce toxicity and compounds resulting from the platform may not operate as intended; the efforts to achieve synergy between ArQule’s chemistry platform and its biological approaches may be unsuccessful; the current and future clinical studies may encounter enrollment difficulties and unexpected toxicity; the commencement of the anticipated clinical trials may be delayed or the trials may never commence; the preclinical efforts associated with the ACTSM pipeline may fail or prove disappointing; the animal xenograft preclinical studies may be unpredictive of human response; collaborators may terminate their agreements with ArQule; and, the risks and uncertainties described in ArQule’s Form 10-Q filed with the Securities and Exchange Commission on August 4, 2004, its Form 10-Q filed with the Commission on May 7, 2004 and its Form 10-K filed with the Commission on March 12, 2004. The forward-looking statements contained herein represent the judgment of ArQule as of the date of this report. ArQule disclaims any intent or obligation to update any forward-looking statement except to the extent required by law.
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ArQule, Inc.
Condensed Statement of Operations
(In Thousands, Except Per Share Amounts)
| Three Months Ended | Nine Months Ended | |||||||||||||||
| September 30, | September 30, | |||||||||||||||
| (Unaudited) | (Unaudited) | |||||||||||||||
| 2004 | 2003 | 2004 | 2003 | |||||||||||||
| Revenue: | ||||||||||||||||
| Compound development revenue | $ | 12,692 | $ | 15,961 | $ | 36,313 | $ | 47,096 | ||||||||
| Compound development revenue — related parties | 250 | — | 750 | — | ||||||||||||
| Research and development revenue | 1,652 | — | 3,304 | — | ||||||||||||
| Total revenue | 14,594 | 15,961 | 40,367 | 47,096 | ||||||||||||
| Costs and expenses: | ||||||||||||||||
| Cost of revenue — compound development | 7,820 | 8,878 | 23,824 | 27,069 | ||||||||||||
| Research and development | 5,001 | 4,726 | 14,680 | 12,860 | ||||||||||||
| Marketing, general and administrative | 2,117 | 2,349 | 6,934 | 7,165 | ||||||||||||
| Restructuring credit | (1,496 | ) | (290 | ) | (424 | ) | (290 | ) | ||||||||
| In-process research and development | — | 30,359 | — | 30,359 | ||||||||||||
| Total costs and expenses | 13,442 | 46,022 | 45,014 | 77,163 | ||||||||||||
| Income/(loss) from operations | 1,152 | (30,061 | ) | (4,647 | ) | (30,067 | ) | |||||||||
| Net investment income | 320 | 152 | 735 | 445 | ||||||||||||
| Net income/(loss) | $ | 1,472 | $ | (29,909 | ) | $ | (3,912 | ) | $ | (29,622 | ) | |||||
| Net income/(loss) per share: | ||||||||||||||||
| Basic | $ | 0.05 | $ | (1.22 | ) | $ | (0.14 | ) | $ | (1.28 | ) | |||||
| Diluted | $ | 0.05 | $ | (1.22 | ) | $ | (0.14 | ) | $ | (1.28 | ) | |||||
| Weighted average common shares outstanding: | ||||||||||||||||
| Basic | 28,830 | 24,536 | 28,789 | 23,213 | ||||||||||||
| Diluted | 28,986 | 24,536 | 28,789 | 23,213 | ||||||||||||
| September 30, | ||||||||
| 2004 | December 31, | |||||||
| Balance sheet data (in thousands): | (Unaudited) | 2003 | ||||||
| Cash, cash equivalents and marketable securities | $ | 76,983 | $ | 76,724 | ||||
| Working capital | 56,880 | 54,698 | ||||||
| Total assets | 123,195 | 128,424 | ||||||
| Stockholders’ equity | 83,027 | 86,477 | ||||||
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