On August 1, 2018 ArQule, Inc. (Nasdaq: ARQL) reported its financial results for the second quarter of 2018 (Press release, ArQule, AUG 1, 2018, View Source [SID1234528286]).

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For the quarter ended June 30, 2018, the Company reported net income of $5,156,000 or $0.05 per diluted share, compared with a net loss of $7,201,000 or $0.10 per basic share, for the second quarter of 2017. For the six-month period ended June 30, 2018, the Company reported a net loss of $1,376,000 or $0.02 per basic share, compared with a net loss of $14,777,000 or $0.21 per basic share, for the six-month period ended June 30, 2017.

As of June 30, 2018, the Company had a total of approximately $46,075,000 in cash, equivalents and marketable securities.

Key Highlights

In July 2018, the Company raised approximately $70 million of gross proceeds in a public offering of common stock. Net proceeds will be used to fund its core clinical programs and for general corporate purposes
ARQ 531, our potent and reversible BTK inhibitor, demonstrated good oral bioavailability, pharmacokinetics and early signs of activity in data presented at the European Hematological Association (EHA) (Free EHA Whitepaper) in June 2018. The Phase 1 portion of the Phase 1a/b trial continues to recruit on schedule, and we plan to present additional data at a major congress later in 2018
A comprehensive preclinical publication on ARQ 531 has been accepted in a major scientific journal
We and our academic collaborators at Memorial Sloan Kettering have initiated an expansion cohort for miransertib in combination with anastrazole in patients with endometrial cancer, and are targeting to enroll up to 40 patients in this cohort
We and our scientific collaborators have compiled a foundational clinical data set from miransertib in rare diseases that we plan to present at the American Society of Human Genetics (ASHG) Annual Meeting in October
"We were gratified by the high level of interest and quality of investors that participated in our recent public offering," said Paolo Pucci, Chief Executive Officer of ArQule. "Our core clinical programs continue to progress, and the capital we received in the upsized offering significantly enhances our ability to expand our plans and to sustain them over a longer period of time."

Brian Schwartz, M.D., Head of Research and Development and Chief Medical Officer of ArQule said, "We are pleased with the continued progress of our clinical programs in oncology and rare diseases. Data recently presented at EHA (Free EHA Whitepaper) on ARQ 531, our reversible BTK inhibitor, have further validated the potential of this promising drug candidate, and we are now planning for the next data releases in the second part of the year."

Revenues and Expenses

Revenues for the quarter ended June 30, 2018, were $13,706,000 compared with revenues of zero for the quarter ended June 30, 2017. Research and development revenue in the quarter ended June 30, 2018 consisted of $13,706,000 from our April 2018 Basilea licensing agreement.

Revenues for the six months ended June 30, 2018, were $17,844,000 compared with revenues of zero for the six months ended June 30, 2017. Research and development revenue in the six months ended June 30, 2018 consisted of $13,706,000 from our April 2018 Basilea licensing agreement, $3,000,000 from our February 2018 Roivant licensing agreement and $1,138,000 from our October 2017 non-exclusive license agreement for certain library compounds.

Research and development expense in the second quarter of 2018 was $6,787,000 compared with $4,983,000 for the second quarter of 2017. Research and development expense increased $1.8 million in the second quarter of 2018 primarily due to higher outsourced preclinical, clinical and product development costs.

Research and development expense in the six-months ended June 30, 2018 was $12,599,000 compared with $10,177,000 in the six months ended June 30, 2017. The $2.4 million increase in research and development expense in the six months ended June 30, 2018 was primarily due to higher outsourced preclinical, clinical and product development costs.

General and administrative expense was $2,234,000 in the second quarter of 2018 compared with $1,866,000 in the second quarter 2017. The $0.4 million increase in general and administrative expense in the three months ended June 30, 2018 was primarily due to increased professional fees.

General and administrative expense was $4,585,000 in the six months ended June 30, 2018 compared with $3,940,000 in the six months ended June 30, 2017. The $0.6 million increase in general and administrative expense in the six months ended June 30, 2018 was primarily due to increased professional fees and labor related costs.

2018 Updated Financial Guidance

As a result of the July 2018 stock offering and the prior conversion of our preferred stock into 8,370,000 shares of common stock, we have updated our 2018 guidance. For 2018, ArQule now expects revenue to range between $21 and $23 million. Net use of cash is expected to range between $28 and $30 million for the year. Net loss is expected to range between $10 and $14 million, and net loss per share to range between $(0.10) and $(0.14) for the year. ArQule expects to end 2018 with between $100 and $102 million in cash and marketable securities.

Conference Call and Webcast

ArQule will hold its second quarter 2018 financial results call today, August 1, 2018 at 9:00 a.m. ET. The live webcast can be accessed in the "Investors & Media" section of our website, www.arqule.com, under "Events & Presentations." You may also listen to the call by dialing (877) 868-1831 within the U.S. or (914) 495-8595 outside the U.S. A replay will be available two hours after the completion of the call and can be accessed in the "Investor and Media" section of our website, www.arqule.com, under "Events & Presentations."