While it awaits further Phase II data from its lead E21 Pathway activator in multiple cancer indications, ArQule Inc. padded its bank account with a $54.3 million public offering of 7 million shares priced at $7.75 each.

The Woburn, Mass.-based firm said in its prospectus that proceeds - expected to total about $62.4 million if underwriters exercise in full the 1.5 million-share overallotment option - will support research and development activities, clinical trials and other general corporate purposes.

ArQule ended the first quarter with $83.7 million in cash, and subsequently added nearly $30 million more in up-front payments in an April out-licensing. The company granted rights to ARQ 197, its Phase I-stage oral c-Met receptor tyrosine kinase, to Kyowa Hakko Kogyo Co. Ltd., for Japan and other Asian areas in a deal that could bring the company up to $123 million in up-front and milestone payments, in addition to double-digit royalties on product sales.

ARQ 197 is expected to enter Phase II trials later this year in several indications, starting with pancreatic cancer and MiT tumors, or pediatric soft-tissue sarcomas. (See BioWorld Today, April 30, 2007.)

But an even bigger licensing deal lies ahead, pending data from the company's Activated Checkpoint Therapy platform, which aims to develop drugs designed to kill cancer cells selectively without damaging normal cells.

The lead program is based on the E2F-1 pathway, which, in 2004, captured the attention of F. Hoffmann La-Roche Ltd. The Basel, Switzerland-based pharma firm is supporting ArQule's ongoing development activities - to date, ArQule has received about $29.3 million in R&D funding - and retains an option to license worldwide rights for development and commercialization of any candidates emerging from the E2F-1 program. If Roche exercises that option, ArQule could receive up to an additional $276 million in milestones, plus royalties. (See BioWorld Today, April 15, 2004.)

ArQule is completing three Phase II studies of ARQ 501, its lead E2F-1 candidate, and interim results showed that the primary endpoint already was achieved in a monotherapy trial in leiomyosarcoma and is likely to be achieved in a combination trial with gemcitabine in pancreatic cancer. Interim data from the third Phase II study indicated that the drug likely would miss its primary endpoint in head and neck cancer. The primary endpoint for all three trials is defined as an objective response rate of 15 percent. Further data from the trials are expected in the third quarter.

Those results, along with Phase I results from ARQ 171, a second E2F-1 compound, will be submitted in a data package to Roche, which will decide whether to license the program for further development. If all proceeds as planned, ArQule anticipates a decision from Roche in early 2008.

In its preclinical pipeline, the company is working on a B-RAF kinase inhibitor program and expects to start toxicology testing in late 2007.

Additional targets being explored by ArQule include Eg5, Hsp90 and HDAC.

Shares of ArQule (NASDAQ:ARQL) closed at $7.88 Thursday, down 3 cents.

The company reported a net loss of $14.5 million, or 40 cents per share, for the three months ending March 31. Following the offering, it will have about 42.8 million shares outstanding.

UBS Investment Bank and CIBC World Markets are acting as joint book-running managers, and Leerink Swann & Co., Fortis Securities LLT and Rodman & Renshaw LLC are serving as co-managers.

In other financings news:

• BioSante Pharmaceuticals Inc., of Lincolnshire, Ill., completed its 18.3 million private placement, selling a total of 3.1 million shares of common stock at $6 each. Investors also received warrants to purchase 763,750 shares of stock at an exercise price of $8 per share. About half the shares were placed with U.S.-based investors and the other half with Israeli investors. Net proceeds are expected to be about $17.3 million and will be used to continue and expand the company's Phase III program of LibiGel in female sexual dysfunction, as well as for general corporate purposes. BioSante believes the financing, in addition to existing cash, should fund its development activities over the next 18 months. Rodman & Renshaw LLC served as lead placement agent, with Oppenheimer & Co. Inc. acting as an additional placement agent. Shares of BioSante (AMEX:BPA) gained 3 cents Thursday to close at $6.88.