Data Presented at ASCO Identify Maximum Tolerated Dose and Confirm c-Met Inhibition in Tumors with ARQ 197, Under Development by ArQule

Investigators today presented data from a Phase 1, dose-escalation trial with ARQ 197, a selective inhibitor of the c-Met receptor tyrosine kinase under development by ArQule, Inc. (NASDAQ: ARQL). These data demonstrate that the compound is safe and well tolerated at oral doses up to 300 milligrams (mg) twice daily (b.i.d.), with dose-limiting toxicity (DLT) observed at 400 mg b.i.d. Analysis of tumor biopsy samples from patients in this trial who received from 100 mg to 300 mg of ARQ 197 b.i.d. confirms the inhibition of c-Met by ARQ 197.

The investigators also observed stable disease in seven patients and prolonged stable disease (greater than 12 weeks) by Response Evaluation Criteria In Solid Tumors (RECIST) for up to 32 weeks in five patients with multiple tumor types, including melanoma (two patients), Merkel cell carcinoma, chondrosarcoma, and gastric cancer. Tumor regression was observed in a patient with metastatic gastric cancer who remains on study. Analysis of blood samples shows a reduction in circulating endothelial cells, suggesting the anti-angiogenic potential of this compound.

These data were discussed in a poster presentation (Phase 1 trial to determine the dose range for the c-Met inhibitor ARQ 197 that inhibits c-Met and FAK phosphorylation, when administered by an oral twice-a-day schedule) at the 2008 Annual Meeting of the American Society of Clinical Oncology (ASCO) on June 1, 2008. Contributing authors of the study were researchers from the Royal Marsden Hospital and the Institute of Cancer Research in the United Kingdom, as well as members of ArQules scientific staff. The trials principal investigator was Dr. Johann S. de Bono, MD FRCP MSc PhD, senior lecturer and consultant, Institute of Cancer Research, Royal Marsden Hospital.

These exciting findings show a dose-dependent increase in systemic drug exposure, identify a maximum tolerated dose (MTD), and expand our ARQ 197 safety database, said Peter S. Lawrence, president and chief operating officer of ArQule. As a result, we are reviewing an increase in the dose levels in our current and planned trials with ARQ 197. The 120 mg b.i.d. dose currently employed in our Phase 2 trials is based on earlier Phase 1 data related to observed anti-cancer activity and a plasma exposure plateau before an MTD was reached.

The 300 mg b.i.d. dose was well tolerated in the trial discussed at ASCO, and it may increase patient benefit and the potential for clinical success going forward, said Mr. Lawrence. We are therefore exploring changes to protocols in our ongoing Phase 2 trials in MiT-driven tumors and pancreatic cancer. In our Phase 1 combination therapy trial with erlotinib, our dose escalation with ARQ 197 is now informed by the Royal Marsden data.

We are pleased that the analysis of tumor biopsy samples from patients in this study confirms that c-Met was clearly inhibited in patients treated with 100 mg to 300 mg b.i.d. of ARQ 197, underscoring the activity of this compound against an important kinase target implicated in multiple oncogenic processes, said Dr. Thomas C. K. Chan, senior vice president, discovery and pre-clinical development.

Trial Design and Summary of Findings

The trial was of an open label, dose-escalation design. ARQ 197 was administered orally twice a day to patients with advanced solid tumors, beginning with a dose of 100 mg b.i.d. that was escalated incrementally up to 400 mg b.i.d. Dose escalation was discontinued when DLT was observed in two patients treated at the 400 mg b.i.d. dose level. Once the MTD of 300 mg b.i.d. was established, additional patients were enrolled at that dose level.

The trials primary objectives were to determine the safety, tolerability and MTD, or recommended Phase 2 dose, of ARQ 197. Secondary objectives included the evaluation of phosphorylated c-Met, total c-Met, and phosphorylated focal adhesion kinase (FAK) expression in pre- and post-treatment tumor tissues, as well as the determination of preliminary anti-tumor activity and pharmacokinetic profiles. In addition, researchers assessed the impact of ARQ 197 on numbers of circulating tumor cells and circulating endothelial cells in peripheral blood. Tumor responses were assessed every eight weeks according to RECIST.

Researchers found that ARQ 197 is safe and well tolerated up to 300 mg b.i.d., which was established as the MTD and recommended Phase 2 dose. Pharmacokinetic parameters (Cmax and AUC) of ARQ 197 increased linearly with dosing up to 300 mg b.i.d. Immunohistochemistry studies confirmed that ARQ 197 inhibited target phospho-c-Met and phospho-FAK in tumor biopsy samples from patient cohorts treated with doses from 100 mg b.i.d. to 300 mg b.i.d.

Among the 11 evaluable patients in this trial to date, stable disease was observed in seven patients, and prolonged stable disease by RECIST was observed for up to 32 weeks in five patients with multiple tumor types, including melanoma (two patients), Merkel cell carcinoma, chondrosarcoma, and gastric cancer. In addition, tumor regression was noted after eight weeks of treatment with ARQ 197 in a patient with metastatic gastric cancer who remains on study. Researchers also observed reductions in circulating endothelial cells that suggest the anti-angiogenic potential of this compound. This latter finding will now be explored further in additional patients.

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 wide range of human tumor cell lines 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.

ARQ 197 is currently being evaluated in Phase 2 clinical trials in MiT (Microphthalmia Transcription Factor)-driven tumors, which include clear cell sarcoma (CCS), alveolar soft parts sarcoma (ASPS) and translocation-associated renal cell carcinoma (RCC), and in pancreatic cancer. In addition, ArQule has initiated enrollment in a Phase 1/2 clinical trial program of ARQ 197 administered in combination with erlotinib in patients with advanced non-small cell lung cancer (NSCLC). The NSCLC program consists of two trials. The first is a Phase 1 trial in which investigators will determine the safety, tolerability and a recommended Phase 2 dose of ARQ 197 when administered in combination with erlotinib. Pending the completion of Phase 1, the Company plans to initiate a Phase 2 NSCLC trial.

ArQule has licensed rights to develop and commercialize ARQ 197 in Japan and parts of Asia to Kyowa Hakko Kogyo Co., Ltd. (Kyowa). Other than the rights licensed under the agreement with Kyowa, ArQule retains all worldwide rights to ARQ 197.

About ArQule

ArQule is a biotechnology company engaged in the research and development of next-generation, small-molecule cancer therapeutics. The Companys targeted, broad-spectrum products and research programs are focused on key biological processes that are central to cancer. ArQules lead products, which are in clinical-stage development, consist of ARQ 197, an inhibitor of the c-Met receptor tyrosine kinase, and ARQ 501, an activator of the cells DNA damage response mechanism mediated by the E2F-1 transcription factor. The Companys most advanced pre-clinical development programs are focused on ARQ 761, a second-generation E2F-1 product candidate, as well as compounds that inhibit the Eg5 kinesin spindle protein and the BRAF kinase. ArQules 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.

This press release contains forward-looking statements regarding the Companys Phase 1 and Phase 2 clinical trials with ARQ 197, including statements related to potential outcomes from increased dosing, perceived safety, perceived clinical benefits (including disease stabilization and possible anti-angiogenic effects) and changes to existing studies. These statements are based on the Companys current beliefs and expectations, and are subject to risks and uncertainties that could cause actual results to differ materially. Positive information about early stage clinical trial results does not ensure that later stage or larger scale clinical trials will be successful. For example, ARQ 197 may not demonstrate promising therapeutic effect; in addition, it may not demonstrate an appropriate safety profile in current or later stage or larger scale clinical trials as a result of known or as yet unanticipated side effects. The results achieved in later stage trials may not be sufficient to meet applicable regulatory standards. Problems or delays may arise during clinical trials or in the course of developing, testing or manufacturing these compounds that could lead the Company or Kyowa to discontinue development. Even if later stage clinical trials are successful, the risk exists that unexpected concerns may arise from analysis of data or from additional data or that obstacles may arise or issues be identified in connection with review of clinical data with regulatory authorities or that regulatory authorities may disagree with the Companys view of the data or require additional data or information or additional studies.In addition, the planned timing of initiation and completion of clinical trials for ARQ 197 are subject to the ability of the Company to enroll patients, enter into agreements with clinical trial sites and investigators, and other technical hurdles and issues that may not be resolved. Drug development involves a high degree of risk. Only a small number of research and development programs result in the commercialization of a product. Furthermore, ArQule may not have the financial or human resources to successfully pursue drug discovery in the future. For more detailed information on the risks and uncertainties associated with the Companys drug development and other activities see the Companys periodic reports filed with the Securities and Exchange Commission. The Company does not undertake any obligation to publicly update any forward-looking statements.

Contacts:

ArQule, Inc.
William B. Boni, 781-994-0300
VP, Investor Relations/Corp. Communications
www.ArQule.com

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