PREVIEW-Investors seek clarity on ArQule trial plan

* What: ArQule to present detailed mid-stage data at ASCO

* When: June 5

* Shares more than doubled with Phase II results in March

* Investors look for parameters on Phase III trial

By Deena Beasley

LOS ANGELES, June 3 (BestGrowthStock) – ArQule Inc (ARQL.O: ) on
Saturday will present detailed trial results for its
experimental lung cancer drug, which investors hope will help
define the next step for a pivotal trial program.

The details could spell the difference between a potential
biotech success story and a return to the trenches of
early-stage drug discovery.

Shares of the company, based in Woburn, Massachusetts, have
risen about 56 percent so far this year, but still trade at
less than half their 1996 initial public offering price of
$12.25. In March, the shares doubled in value to a year high of
$7.49 in one day when the company posted the Phase II trial
summary for the drug, known as ARQ197.

“What I would like to see at ASCO (American Society of
Clinical Oncology) is good identification of a population of
patients that they will then go into the Phase III trial with,”
said George Zavoico, an analyst at McNicoll, Lewis and Vlak.

ArQule’s data will be presented at the ASCO annual meeting
in Chicago.

The company said in March that the Phase II trial of the
drug, used in combination with Tarceva, showed a 66 percent
improvement in the amount of time patients lived without their
cancer worsening, compared with use of Tarceva alone.

ARQ197 is part of a potential new class of cancer drugs
designed to block a protein, called C-met, involved in cancer
cell growth and survival.

But the trial of 167 patients with advanced non-small cell
lung cancer achieved statistical significance only after
adjusting for “molecular factors,” such as whether a patient’s
tumor had a genetic mutation in the epidermal growth factor
receptor (EGFR) or KRAS gene, said ArQule spokesman William
Boni.

Tarceva, which is designed to target EGFR, is sold by Roche
AG (ROG.VX: ) and OSI Pharmaceuticals Inc (OSIP.O: ).

In the sub-group of patients with non-squamous lung cancer,
ArQule said the drug combination improved survival with no
cancer growth by 94 percent. Non-squamous is the most common
type of non-small cell lung cancer.

“We expect ArQule to begin a Phase III program for ARQ197
plus Tarceva in non-squamous NSCLC in second-half 2010,”
Oppenheimer analyst Bret Holley said in a research note.

ArQule began life as a provider of contract chemistry
services to drugmakers, but that business model fell apart as
drugmakers shifted to lower-cost centers in China and
elsewhere.

A key step in the transformation from a combinatorial
chemistry company to a drug developer was its 2003 acquisition
of Cyclis Pharmaceuticals.

In 2008, ArQule hired Paolo Pucci, formerly a senior vice
president at Bayer AG (BAYGn.DE: ), as its chief executive. Brian
Schwartz, also a former executive at Bayer, was brought in as
chief medical officer.

The pair had helped to develop targeted cancer drug
Nexavar, which is sold by Bayer and Onyx Pharmaceuticals Inc
(ONXX.O: ).

ArQule, in partnership with with Japan’s Daiichi Sankyo
(4568.T: ), is testing ARQ 197 in several different types of
cancer.

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(Reporting by Deena Beasley; Editing by Steve Orlofsky)

PREVIEW-Investors seek clarity on ArQule trial plan