European Medicines Evaluation Agency Grants Orphan Drug Designation to ARQ 197 for Treatment of Soft Tissue Sarcoma

Under the guidelines of the EMEA, medicinal products are designated as orphan drugs when they are used to treat illnesses affecting small numbers of patients, such as soft tissue sarcoma. Such designation provides for incentives for investment in the research and development of such drugs, including exclusive distribution rights throughout the European Union for ten years, during which period no other product with the same active ingredient would be authorized for use for the same therapeutic application.

ArQule is conducting a Phase 2 clinical trial with ARQ 197 in a sub-group of soft tissue sarcoma known as MiT (Microphthalmia Transcription Factor)-associated tumors. The designation of ARQ 197 as an orphan medical product in soft tissue sarcoma, combined with the evaluation of clinical data from this trial expected to be available in early 2010, will inform the decisions related to the advancement of the program.

About ARQ 197 and c-MET

In addition to soft tissue sarcoma, ARQ 197 is currently being evaluated in Phase 2 clinical trials in non-small cell lung cancer, pancreatic cancer and hepatocellular carcinoma.

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.

About ArQule and Daiichi Sankyo Co., Ltd.

On December 19, 2008, ArQule and Daiichi Sankyo signed a license, co-development and co-commercialization agreement to co-develop ARQ 197 in the U.S., Europe, South America and the rest of the world, excluding Japan, China (including Hong Kong), South Korea and Taiwan, where Kyowa Hakko Kirin Co., Ltd. has exclusive rights for development and commercialization.

About ArQule

ArQule is a biotechnology company engaged in the research and development of next-generation, small-molecule cancer therapeutics. The Company's targeted, broad-spectrum products and research programs are focused on key biological processes that are central to cancer. ArQule's lead product, in Phase 2 clinical development, is ARQ 197, an inhibitor of the c-MET receptor tyrosine kinase. The Company has also initiated Phase 1 clinical testing with ARQ 621, designed to inhibit the Eg5 kinesin motor protein. An additional clinical-stage program includes compounds that activate the cell's DNA damage response mechanism mediated by the E2F-1 transcription factor. The Company's pre-clinical pipeline includes a compound designed to inhibit the BRAF kinase. ArQule's current discovery efforts, which are based on the ArQule Kinase Inhibitor Platform (AKIP(TM)), are focused on the identification of novel kinase inhibitors that are potent, selective and do not compete with ATP (adenosine triphosphate) for binding to the kinase.

This press release contains forward-looking statements regarding the orphan drug designation of ARQ 197 by the European Commission and the future clinical development of ARQ 197 in a sub-group of soft tissue sarcoma known as MiT(Microphthalmia Transcription Factor)-associated tumors. These statements are based on the Company's current beliefs and expectations, and are subject to risks and uncertainties that could cause actual results to differ materially. Positive information and statements about such designation by the European Commission do not ensure that regulatory review and approval of ARQ 197 will take place on a timely basis or at all in Europe, the United States or other parts of the world. In addition, early stage clinical trial results do 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, this compound may not demonstrate an appropriate safety profile in further pre-clinical testing and in current, 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 its partner 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 Company's view of the data or require additional data, information or studies. In addition, the planned timing of initiation and completion of clinical trials for ARQ 197 is 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 pursue drug discovery successfully in the future. For more detailed information on the risks and uncertainties associated with the Company's drug development and other activities see the Company's periodic reports filed with the Securities and Exchange Commission. The Company does not undertake any obligation to publicly update any forward-looking statements.

SOURCE: ArQule, Inc.

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