A Little Bit of Cash for ArQule

Development-stage drugmaker ArQule (Nasdaq: ARQL  ) announced yesterday that it had received a milestone payment for discovery-stage drug work that it performed for partner Wyeth (NYSE: WYE  ) .

Like other chemistry or drug discovery specialists, such as Pharmacopeia (Nasdaq: PCOP  ) and Array BioPharma (Nasdaq: ARRY  ) , ArQule has partnerships with a number of big pharmaceutical companies that it helps identify suitable drug candidates to bring into human clinical trial testing.

ArQule's deal with Wyeth was part of its former chemistry operations, which ArQule terminated in the middle of 2006 so it could focus on its own oncology drug development programs. The Wyeth deal was part of legacy operations, and the milestone payment that Wyeth made yesterday was related to an Alzheimer's disease drug candidate from this deal.

ArQule stands to gain royalties and milestone payments on this drug candidate, now in phase 1 clinical study, if the drug makes it to market. When you're a development-stage pharma like ArQule, any cash from milestone payments helps. But ArQule didn't disclose the size of the payment from Wyeth, so we can surmise that it was not a huge amount of money.

ArQule has other deals with drugmakers such as Roche. Its two lead oncology compounds are in phase 2 testing with several other cancer-fighting compounds in earlier stages of development. The Wyeth deal may not mean much to ArQule any more, but it reminds us that ArQule's roots lie with its chemistry services operations, which could provide much-needed cash down the road.

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