ArQule, Inc. (ARQL)

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ArQule, Inc. (ARQL)

Q4 2008 Earnings Call Transcript

March 5, 2009 9:00 am ET


Bill Boni – VP, IR

Paolo Pucci – CEO

Brian Schwartz – Chief Medical Officer

Thomas Chan – Chief Scientific Officer


Mark Monane – Needham & Company

Glenn [ph] – Needham & Company

Joel Sendek – Lazard Capital Markets

Bret Holley – Oppenheimer

Reni Benjamin – Rodman

Howard Liang – Leerink Swann

George Zavoico – Westport Capital Markets



Good day, ladies and gentlemen, and welcome to the ArQule Incorporated fiscal year 2008 investor conference call. My name is Dan and I will be your coordinator for today. At this time, all participants are in a listen-only mode. We will conduct a question-and-answer session towards the end of this conference. (Operator instructions) As a reminder this conference is being recorded for replay purposes.

I would now like to turn the call over to host for today's call Mr. Bill Boni. Please proceed sir.

Bill Boni

Good morning, everyone. Welcome to the ArQule investor conference call reviewing operation on financial results for fiscal year 2008. This is Bill Boni, Vice President of Investor Relations at ArQule.

This morning, we issued a press release that reported results for the fiscal quarter and year ended December 31st, 2008, as well as a press release announcing the expansion of our Phase II program with ARQ 197. These releases are both available on our Web site at

Leading the call today will be Paolo Pucci, Chief Executive Officer of ArQule. Also present for the company are Peter Lawrence, President and Chief Operating Officer, Dr. Brian Schwartz, Chief Medical Officer, Dr. Thomas Chan, Chief Scientific Officer, and Rob Weiskopf, Vice President of Finance.

Before we begin, please note that we will be making forward-looking statements as defined in the Private Securities Litigation Act of 1995. Actual results may differ materially from those projected in the forward-looking statements due to numerous risks and uncertainties that exist in ArQule's operations, development efforts, and the business environment.

Including those factors discussed in our press release, announcing this call and posted on our website, as well as in our reports on forms 10Q and 10K and subsequent documents filed with the Securities and Exchange Commission. These forward-looking statements in this call represent the judgment of ArQule as of today.

ArQule disclaims any intent or obligation to update any forward-looking statement except to the extent required by law. We will provide an opportunity for questions and answers at the end of the call. I would now like to introduce the CEO of ArQule, Paolo Pucci.

Paolo Pucci

Thank you, Bill. Good morning all on the call, and thank you for joining us today. I will begin by saying that we have been very busy over the past few months, taking a number of steps that were aimed at strengthening the company operations. And I'm glad to report that we have largely succeeded in laying the foundation for a strong business for ArQule for the future.

First, we have strengthened significantly our financial structure. We have a strong balance sheet and this balance sheet will allow us to go past the key inflection points that are ahead of us over the next three years relative to our key programs.

First and foremost, the ARQ 197 program, but also some of the others that we will discuss briefly today. Number two, we have refined and expanded the clinical development line for our lead project, which is ARQ 197.

We also have a plan to advance cost effectively some of the other projects that we consider interesting in our pipeline. Finally, we have taken the first step in applying our innovative discovery platform to the identification of novel compound, and that first step is something we have discussed in our Q3 call and it relates to the discovery agreement that we have signed with Daiichi Sankyo.

Now, we have heard repeatedly from our investors that the financial strength of the company is a fundamental prerequisite to go and meet our clinical goals and to go past the clinical milestones that we have in front of us over the next three years.

And we have been able to achieve financial strength and strong balance sheets in a non-dilutive manner. And I think this makes us a fairly unique company these days. The markets continue difficult and turbulent, and not many companies have been able to achieve greater financial strength through non-diluted financing.

We believe that this financial strength we have now, allow us – will allow us to manage our business for the next three years, and it positions us well for the future. Now, it is important for me to recount briefly the two agreements we have for our business development with 197. And then, I will go into the financial guidance and then into the operational guidance.

Let me summarize the nature of those two agreements with Daiichi Sankyo. The first one is a cooperation – a cooperation [ph], which is Co-Development and Co-Commercialization of ARQ 197 in Europe, U.S., South America and the rest of the world, and this goes to augment the previous agreement we had with Kyowa Hakko Kirin for the region Asia-Pacific, Japan.

The second agreement that we have with Daiichi Sankyo is a discovery collaboration that applied our discovery engine to the study of two specific targets, which remain undisclosed. Together, these two agreements have added $75 million to our cash resources, and they provide us in addition to that, for significant opportunities for cost sharing, as well as the support of our discovery engine.

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