Daiichi Sankyo and ArQule Enroll First Non-Small Cell Lung Cancer Patient Into Global Phase III Trial for ARQ 197

TOKYO and WOBURN, Massachusetts, January 12, 2011 - Daiichi Sankyo Company, Limited (TSE 4568) and ArQule, Inc. (Nasdaq:
ARQL) today announced that the first patient has been enrolled in the phase
III trial of ARQ 197, an investigational selective inhibitor of the c-Met
receptor tyrosine kinase, in combination with erlotinib, for patients
diagnosed with non-squamous, non-small cell lung cancer (NSCLC), who have
received one or two prior systemic anti-cancer therapies.

The phase III trial is a randomised, double-blinded, controlled study of
previously treated patients with locally advanced or metastatic, non-squamous
NSCLC who will receive ARQ 197 plus erlotinib or placebo plus erlotinib.

The primary objective is to evaluate the overall survival (OS) in the
intent-to-treat (ITT) population. Secondary endpoints include OS in the
subpopulation of patients with epidermal growth factor receptor (EGFR) wild
type, progression-free survival (PFS) in the ITT population, and further
assessment of the safety of ARQ 197 in combination with erlotinib.

According to the International Agency for Research on Cancer, more than
1.6 million new cases of lung cancer were diagnosed in 2008 globally,[1] and
NSCLC accounted for 80 percent of those cases.[2] According to the American
Cancer Society more than 220,000 cases of lung cancer will have been
diagnosed in 2010 in the U.S.[3] Of patients diagnosed with lung cancer in
Europe, almost 90 percent die of the disease.[4]

"With lung cancer accounting for more deaths than colon, breast and
prostate cancers combined,[5] we are very pleased to begin this phase III
trial to advance the knowledge about the role ARQ 197 might have in the
treatment of patients with non-small cell lung cancer in combination with
erlotinib," said Dr. Kazunori Hirokawa, global head of R&D Unit, Daiichi
Sankyo. "It is our hope and expectation that this late-stage study will
confirm the results we observed in patients with non-squamous cell histology
in phase II, which showed promise toward extending overall survival and
progression-free survival in this group when ARQ 197 was combined with
erlotinib."

"The start of this phase III trial marks a key milestone in the
development of ARQ 197 and our partnership with Daiichi Sankyo," said Paolo
Pucci, chief executive officer of ArQule. "Lung cancer is a devastating
disease, and our hope is that ARQ 197 will prove to be an effective treatment
option that will help patients diagnosed with this disease."

In October 2010, agreement was reached with the U.S. Food and Drug
Administration (FDA) on a Special Protocol Assessment (SPA) for the phase III
trial comparing ARQ 197 plus erlotinib against erlotinib plus placebo. The
phase III study of ARQ 197 plus erlotinib will enroll 988 patients in 150
sites in the U.S., Canada, Eastern and Western Europe, Australia and Latin
America. Additional details are available on www.clinicaltrials.gov.

About ARQ 197 and c-Met

ARQ 197 is an orally available, selective inhibitor of c-Met, a receptor
tyrosine kinase that is currently in phase II and phase III clinical trials
and is not yet approved for use. In healthy adult cells, c-Met is present in
normal levels to support natural cellular function, but in cancer cells,
c-Met is inappropriately and continuously activated for unknown reasons. 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 range of human tumor cell lines and shows anti-tumor activity
against several human tumor xenografts. In clinical trials to date, treatment
with ARQ 197 has been well-tolerated and has resulted in tumor responses and
prolonged stable disease across a broad range of tumors.

In December 2008, ArQule and Daiichi Sankyo signed a license,
co-development and co-commercialisation 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 commercialisation.

About Daiichi Sankyo

The Daiichi Sankyo Group is dedicated to the creation and
supply of innovative pharmaceutical products to address the diversified,
unmet medical needs of patients in both mature and emerging markets. While
maintaining its portfolio of marketed pharmaceuticals for hypertension,
hyperlipidemia, and bacterial infections, the Group is engaged in the
development of treatments for thrombotic disorders and focused on the
discovery of novel oncology and cardiovascular-metabolic therapies.
Furthermore, the Daiichi Sankyo Group has created a "Hybrid Business Model,"
which will respond to market and customer diversity and optimise growth
opportunities across the value chain. For more information, please visit
www.daiichisankyo.com.

The company's world headquarters are in Tokyo. Its European
base is located in Munich. DAIICHI SANKYO EUROPE has affiliates in 12
European countries in addition to a global manufacturing site located in
Pfaffenhofen, Germany.

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 human cancers. ArQule's lead
product, in phase II and phase III clinical development, is ARQ 197, an
inhibitor of the c-Met receptor tyrosine kinase. The Company has also
initiated phase I clinical testing with ARQ 621, designed to inhibit the Eg5
kinesin motor protein, and with ARQ 736, designed to inhibit the RAF kinases.
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
progress of the Companies' phase II and phase III clinical trials with ARQ
197. These statements are based on the Companies' current beliefs and
expectations, and are subject to risks and uncertainties that could cause
actual results to differ materially. Positive information about early stage
clinical trial results is not necessarily indicative of clinical efficacy and
does not ensure that later stage or larger scale clinical trials will be
successful. 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 Companies or their collaborators 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 Companies' views of the data or
require additional data, information or studies. 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. In addition, the planned timing of
initiation and completion of clinical trials for ARQ 197 is subject to the
ability of the Companies 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
commercialisation 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.

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[1] International Agency for Cancer Research, URL:
globocan.iarc.fr/factsheets/cancers/lung.asp. Last accessed November
10, 2010.

[2] American Cancer Society. Lung Cancer. URL:
www.cancer.org/Cancer/LungCancer-Non-SmallCell/OverviewGuide/lung-cancer-non-small-cell-overview-non-small-cell-lung-cancer
Last accessed November 10, 2010.

[3] American Cancer Society. Lung Cancer. URL:
www.cancer.org/Cancer/LungCancer-Non-SmallCell/OverviewGuide/lung-cancer-non-small-cell-overview-key-statistics
Last accessed November 9,
2010.

[4](GLOBOCAN 2008) International Agency for Research on Cancer:
globocan.iarc.fr

[5] American Cancer Society. Lung Cancer. URL:
www.cancer.org/Cancer/LungCancer-Non-SmallCell/DetailedGuide/non-small-cell-lung-cancer-key-statistics
Last accessed November 9, 2010.

(Due to the length of these URLs, it may be necessary to copy and paste
the hyperlinks into your Internet browser's URL address field. Remove the
space if one exists.)

For more information, please contact:

    William B. Boni
    ArQule, Inc.
    +1(781)994-0300

    Toshiaki Sai
    Daiichi Sankyo, Co., Ltd. (Japan)
    +81-3-6225-1126

    Kimberly Wix
    Daiichi Sankyo, Inc. (US)
    +1(973)944-2338

    Tetsuya Ohira
    Daiichi Sankyo Europe
    +49(0)89-7808-694

William B. Boni, ArQule, Inc., +1(781)994-0300; Toshiaki Sai, Daiichi Sankyo, Co., Ltd. (Japan), +81-3-6225-1126; Kimberly Wix, Daiichi Sankyo, Inc. (US), +1(973)944-2338, Tetsuya Ohira, Daiichi Sankyo Europe, +49(0)89-7808-694