) reported a loss of 11 cents per share in the first quarter of
2014, narrower than the Zacks Consensus Estimate of a loss of 12
cents per share. The company had reported a loss of 9 cents in the
Revenues plummeted 52.7% to $2.7 million in the first quarter of
2014, but surpassed the Zacks Consensus Estimate of $2 million.
Quarter in Detail
The decline in quarterly revenues was primarily due to a
decrease of $0.6 million each from the tivantinib program with
Daiichi Sankyo as well as from its Daiichi Sankyo agreement on ARQ
092 (that ended in Jun 2013). In addition, the company also
incurred a $1.8 reduction in revenues related to a one-time
research project in the quarter ended Mar 31, 2013.
Research and development expenses were $6.7 million, down 17.7%
from the year-ago quarter mainly due to lower labor related costs
and reduced lab expenses.
General and administrative expenses decreased 4.4% to $3.2
million. ArQule exited the first quarter with cash and equivalents
of $85.8 million.
We remind investors that ArQule announced a workforce reduction
of approximately 25 positions in 2013 in order to accumulate cash
and sustain its business into 2016, independently fund its clinical
trials and effectively deploy core discovery capabilities
concurrent with the second quarter results.
ArQule now expects revenues between $8 million and $10 million
in 2014. The Zacks Consensus Estimate of $9 million is well within
the guidance. ArQule anticipates net loss per share between 48
cents and 52 cents. The Zacks Consensus Estimate for 2014 hints at
a loss of 49 cents.
ArQule is evaluating its lead oncology candidate, tivantinib
(ARQ 197), for the treatment of hepatocellular carcinoma (HCC or
liver cancer). Two phase III trials are underway on tivantinib.
The two trials include METIV-HCC, conducted by Daiichi Sankyo
and ArQule, and JET-HCC (Japanese Evaluation of tivantinib in HCC)
conducted by Kyowa Hakko Kirin. The METIV-HCC trial is conducted
under special protocol assessment with the U.S. Food and Drug
Administration (FDA) and the primary endpoint of this trial is
overall survival whereas JET-HCC trial's primary endpoint is
The first quarter results did not surprise us. ArQule currently
does not have any marketed product in its portfolio and tivantinib
is its most advanced stage candidate. Hence, we expect investor
focus on to remain on further updates on the phase III results.
ArQule currently carries a Zacks Rank #3 (Hold). Right now,
Johnson & Johnson
) look attractive. All three carry a Zacks Rank #2 (Buy).
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