0001144204-18-025554.txt : 20180507 0001144204-18-025554.hdr.sgml : 20180507 20180507102654 ACCESSION NUMBER: 0001144204-18-025554 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 53 CONFORMED PERIOD OF REPORT: 20180331 FILED AS OF DATE: 20180507 DATE AS OF CHANGE: 20180507 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ARQULE INC CENTRAL INDEX KEY: 0001019695 STANDARD INDUSTRIAL CLASSIFICATION: PHARMACEUTICAL PREPARATIONS [2834] IRS NUMBER: 043221586 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-21429 FILM NUMBER: 18810001 BUSINESS ADDRESS: STREET 1: ONE WALL STREET CITY: BURLINGTON STATE: MA ZIP: 01803 BUSINESS PHONE: 781-994-0300 MAIL ADDRESS: STREET 1: ONE WALL STREET CITY: BURLINGTON STATE: MA ZIP: 01803 10-Q 1 tv492670_10q.htm FORM 10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 10-Q

Quarterly report pursuant to Section 13 or 15(d)

of the Securities Exchange Act of 1934

For the Quarter Ended March 31, 2018

Commission File No. 000-21429

ArQule, Inc.

(Exact Name of Registrant as Specified in its Charter)

Delaware		04-3221586
(State of Incorporation)		(I.R.S. Employer Identification Number)

One Wall Street, Burlington, Massachusetts 01803

(Address of Principal Executive Offices)

(781) 994-0300

(Registrant’s Telephone Number, including Area Code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405) of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of “large accelerated filer,” “accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer ¨		Accelerated filer x
Non-accelerated filer ¨		Smaller reporting company ¨
(Do not check if a smaller reporting company)		Emerging growth company ¨

Indicate If an emerging growth company, indicate by check by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes ¨ No x

Number of shares outstanding of the registrant’s Common Stock as of April 20, 2018:

Common Stock, par value $.01

87,125,327 shares outstanding

ARQULE, INC.

QUARTER ENDED MARCH 31, 2018

TABLE OF CONTENTS

PART I - FINANCIAL INFORMATION

Item 1. — Unaudited Condensed Financial Statements

	Condensed Balance Sheets (Unaudited) March 31, 2018 and December 31, 2017	3

	Condensed Statements of Operations and Comprehensive Loss (Unaudited) three months ended March 31, 2018 and 2017	4

	Condensed Statements of Cash Flows (Unaudited) three months ended March 31, 2018 and 2017	5

	Notes to Unaudited Condensed Financial Statements	6

Item 2. — Management’s Discussion and Analysis of Financial Condition and Results of Operations		16

Item 3. — Quantitative and Qualitative Disclosures about Market Risk		22

Item 4. — Controls and Procedures		22

PART II - OTHER INFORMATION		23

Item 1. — Legal Proceedings		23

Item 1A. — Risk Factors		23

Item 2. — Unregistered Sales of Equity Securities and Use of Proceeds		23

Item 3. — Defaults Upon Senior Securities		23

Item 4. — Mine Safety Disclosures		23

Item 5. — Other Information		23

Item 6. — Exhibits		23

SIGNATURES		24

ARQULE, INC.

CONDENSED BALANCE SHEETS (Unaudited)

	March 31,			December 31,
	2018			2017
	(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
ASSETS
Current assets:
Cash and cash equivalents	$	10,537		$	20,229
Marketable securities-short term		32,347			27,807
Prepaid expenses and other current assets		1,913			547
Total current assets		44,797			48,583
Property and equipment, net		102			115
Other assets		204			204
Total assets	$	45,103		$	48,902

LIABILITIES, PREFERRED STOCK AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable and accrued expenses	$	8,269		$	8,259
Deferred revenue		—			1,500
Total current liabilities		8,269			9,759

Long-term liabilities:
Notes payable		14,517			14,607
Warrant liability		3,782			1,512
Total liabilities		26,568			25,878

Commitments and contingencies (Note 13)

Preferred stock, convertible, Series A $0.01 par value; 1,000,000, shares authorized; 8,370 shares issued and outstanding at March 31, 2018 and December 31, 2017, aggregate liquidation preference of $9,500		8,843			8,843

Stockholders’ equity:
Common stock, $0.01 par value; 100,000,000 shares authorized; 87,125,327 and 87,110,202 shares issued and outstanding at March 31, 2018 and December 31, 2017, respectively		871			871
Additional paid-in capital		547,932			547,364
Accumulated other comprehensive loss		(41	)		(16	)
Accumulated deficit		(539,070	)		(534,038	)
Total stockholders’ equity		9,692			14,181
Total liabilities, preferred stock and stockholders’ equity	$	45,103		$	48,902

The accompanying notes are an integral part of these interim unaudited financial statements.

ARQULE, INC.

CONDENSED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS (Unaudited)

	THREE MONTHS ENDED MARCH 31,
	2018			2017
	(IN THOUSANDS, EXCEPT PER SHARE DATA)
Revenue:
Research and development revenue	$	4,138		$	—

Costs and expenses:
Research and development		5,812			5,194
General and administrative		2,351			2,074
Total costs and expenses		8,163			7,268

Loss from operations		(4,025	)		(7,268	)

Interest income		159			22
Interest expense		(396	)		(330	)
Other expense		(2,270	)		—
Net loss		(6,532	)		(7,576	)

Unrealized loss on marketable securities		(25	)		(4	)
Comprehensive loss	$	(6,557	)	$	(7,580	)

Basic and diluted net loss per share:
Net loss per share	$	(0.07	)	$	(0.11	)

Weighted average basic and diluted common shares outstanding		87,112			71,138

The accompanying notes are an integral part of these interim unaudited financial statements.

ARQULE, INC.

CONDENSED STATEMENTS OF CASH FLOWS (Unaudited)

	THREE MONTHS ENDED March 31,
	2018			2017
	(IN THOUSANDS)
Cash flows from operating activities:
Net loss	$	(6,532	)	$	(7,576	)

Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		13			24
Amortization of premium (discount) on marketable securities		56			(3	)
Amortization of debt discount		78			60
Change in fair value of warrant liability		2,270			—
Non-cash stock compensation		423			543
Changes in operating assets and liabilities:
Prepaid expenses and other assets		(1,366	)		280
Accounts payable and accrued expenses		10			(1,653	)
Net cash used in operating activities		(5,048	)		(8,325	)
Cash flows from investing activities:
Purchases of marketable securities		(13,832	)		(1	)
Proceeds from sale or maturity of marketable securities		9,211			6,556
Net cash provided by (used in) investing activities		(4,621	)		6,555
Cash flows from financing activities:
Proceeds from notes payable and warrants, net		—			14,740
Payments for notes payable amendment costs		(48	)		—
Proceeds from stock option exercises and employee stock plan purchases		25			—
Net cash (used in) provided by financing activities		(23	)		14,740
Net (decrease) increase in cash and cash equivalents		(9,692	)		12,970
Cash and cash equivalents, beginning of period		20,229			15,267
Cash and cash equivalents, end of period	$	10,537		$	28,237

The accompanying notes are an integral part of these interim unaudited financial statements.

ARQULE, INC.

NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS

(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)

1. NATURE OF OPERATIONS AND BASIS OF PRESENTATION

We are a biopharmaceutical company engaged in the research and development of innovative therapeutics to treat cancers and rare diseases. Our mission is to discover, develop and commercialize novel small molecule drugs in areas of high unmet need that will dramatically extend and improve the lives of our patients. These product candidates target biological pathways implicated in a wide range of cancers and certain non-oncology indications. Our discovery and development efforts are guided, when possible, by an understanding of the role of biomarkers, which are indicators of a particular biological condition or process and may predict the clinical benefit of our compounds in defined patient populations. Our clinical-stage pipeline consists of five product candidates, all of which are in targeted patient populations, making ArQule a leader among companies our size in precision medicine.

ArQule has a long history of kinase drug discovery and development, having discovered and introduced ten kinase inhibitors into clinical trials. Our drug discovery efforts have been informed by our historical expertise in chemistry, our work in rational drug design and by our insight into kinase binding and regulation. We have applied this knowledge to produce significant chemical matter for a number of kinase targets and to build an extensive library of proprietary compounds with the potential to target multiple kinases in oncology and other therapeutic areas, such as rare diseases. We may bring further preclinical programs forward and interrogate our library against new targets beyond kinases either directly or with collaborators.

Our pipeline of product candidates is directed toward molecular targets and biological processes with demonstrated roles in the development of both human cancers and rare, non-oncology diseases. All of these programs are being developed in targeted, biomarker-defined patient populations. By seeking out subgroups of patients that are most likely to respond to our drugs, we intend to identify small, often orphan, indications that allow for focused and efficient development. At the same time, in addition to pursuing these potentially fast-to-market strategies, we also pursue development in other indications that could allow us to expand the utility of the drugs if approved. The pipeline includes the following compounds all of which are wholly-owned, except derazantinib, which is partnered with Basilea Pharmaceutic Ltd. in all parts of the world except the People’s Republic of China, Hong Kong, Macau and Taiwan (“Greater China”), where it is partnered with Sinovant Sciences Ltd., a subsidiary of Roivant Sciences Ltd.:

ARQ 531, an orally bioavailable, potent and reversible inhibitor of both wild type and C481S-mutant BTK, in Phase 1 for B-cell malignancies refractory to other therapeutic options;

Miransertib (ARQ 092), a selective inhibitor of AKT, a serine/threonine kinase, in Phase 1/2 in rare Overgrowth Diseases and in Phase 1 for the rare disease, Proteus syndrome, in partnership with the National Institutes of Health (NIH); also in phase 1b in oncology in combination with the hormonal therapy, anastrozole, in endometrial cancer;

ARQ 751, a next-generation inhibitor of AKT, in Phase 1 for solid tumors harboring the AKT1 or PI3K mutation;

Derazantinib (ARQ 087), a multi-kinase inhibitor designed to preferentially inhibit the FGFR family of kinases, in a registrational trial in intrahepatic cholangiocarcinoma (iCCA) in patients with FGFR 2 fusions; and

ARQ 761, a ß-lapachone analog being evaluated as a promoter of NQO1-mediated programmed cancer cell death, in Phase 1/2 in multiple oncology indications in partnership with The University of Texas Southwest Medical Center.

In February 2018, we entered into a License Agreement (the “Agreement”) with Sinovant Sciences Ltd. (“Sinovant”) and Roivant Sciences Ltd. (Roivant), the parent of Sinovant, pursuant to which ArQule granted Sinovant a license to develop, manufacture and exclusively commercialize its FGFR inhibitor, derazantinib (ARQ 087), in Greater China. The Agreement provides for an upfront payment to ArQule of $3 million and a guaranteed $2.5 million development milestone within the first year. ArQule is also eligible for an additional $82 million in regulatory and sales milestones. Upon commercialization, ArQule is entitled to receive double digit royalties in the low teens from Sinovant on net sales of derazantinib in the Greater China territory. Sinovant will be responsible for all costs and expenses of development, manufacture and commercialization in its territory. For the quarter ended March 31, 2018, we recognized revenue of $3.0 million for completing our performance obligation under this licensing agreement.

In April 2018, we entered into a License Agreement (the “Basilea Agreement”) with Basilea Pharmaceutic Ltd. (“Basilea”) pursuant to which ArQule granted Basilea an exclusive license to develop, manufacture and commercialize its FGFR inhibitor, derazantinib (ARQ 087), in the United States, EU, Japan and the rest of the world, excluding Greater China. Under the terms of the Basilea agreement, ArQule will receive an upfront payment of $10 million and is eligible for up to $326 million in regulatory and commercial milestones. Upon commercialization, ArQule is entitled to receive staggered royalties on future net sales of derazantinib ranging from the high-single digits to the mid-teens on direct sales and mid-single digits to low-double digits on indirect sales. Basilea will be responsible for all costs and expenses of development, manufacture and commercialization in its territory. Under certain circumstances, ArQule may have the opportunity to promote derazantinib in the US directly.

Tivantinib (ARQ 197), an orally administered, small molecule inhibitor of the c-Met receptor tyrosine kinase and its biological pathway is no longer being developed. We licensed commercial rights to tivantinib for human cancer indications to Daiichi Sankyo Co., Ltd. (“Daiichi Sankyo”) in the U.S., Europe, South America and the rest of the world, excluding Japan and certain other Asian countries, where we had licensed commercial rights to Kyowa Hakko Kirin Co., Ltd. (“Kyowa Hakko Kirin”).

Our uses of cash for operating activities have primarily consisted of salaries and wages for our employees, facility and facility-related costs for our offices and laboratories, fees paid in connection with preclinical and clinical studies, laboratory supplies and materials, and professional fees. The sources of our cash flow from operating activities have consisted primarily of payments received from our collaborators for services performed or upfront payments for license agreements or future services. In the three months ended March 31, 2018 and 2017, our net use of cash was primarily driven by payments for operating expenses which resulted in net cash outflows of $5.0 million and $8.3 million, respectively.

Our cash requirements may vary materially from those now planned depending upon the results of our drug discovery and development strategies, our ability to enter into additional corporate collaborations and the terms of such collaborations, results of research and development, unanticipated required capital expenditures, competitive and technological advances, acquisitions and other factors. We cannot guarantee that we will be able to develop any of our drug candidates into a commercial product. In January 2017, we entered into a loan and security agreement (the “Loan Agreement”) with a principal balance of $15 million (see Note 8). The terms of the Loan Agreement require payments of interest on a monthly basis through September 2018 and payments of interest from October 2018 to August 2021 and with principal payments commencing on September 1, 2019. The current maturity date of the loan is August 1, 2022 with principal payments commencing on September 1, 2019.

In September 2017, we sold 2.0 million shares of common stock through an at-the-market (ATM) offering and raised net proceeds of $2.3 million. In October 2017, we entered into definitive stock purchase agreements with certain institutional investors. In conjunction with this stock offering we issued 13,938,651 shares of our common stock and warrants to purchase 3,123,674 shares of our common stock for aggregate net proceeds of $15.6 million. Each warrant is exercisable for $1.75 per share and expires in four years from the date of issuance. In November 2017, we entered into definitive securities purchase agreements with certain institutional investors. In conjunction with this stock offering the Company raised net proceeds of $9.5 million through the sale of 8,370 shares of series A convertible preferred stock (Series A Preferred) and warrants to purchase 2,259 shares of Series A Preferred (Warrants). Each share of Series A Preferred together with the associated Warrant is priced at $1,135 and will automatically convert into 1,000 shares of common stock upon the adoption of an amendment to the Company’s restated certificate of incorporation to increase the number of authorized shares of common stock thereunder. The Warrants have a pre-conversion exercise price of $1,750 per share of Series A Preferred (post-conversion price of $1.75 per share of common stock), are exercisable immediately and expire approximately four years from the date of the adoption of the amendment to the Company’s restated certificate of incorporation.

We anticipate that our cash, cash equivalents and marketable securities on hand at March 31, 2018, and financial support from our licensing agreements will be sufficient to finance our operations for at least 12 months from the issuance date of these financial statements. We expect that we will need to raise additional capital or incur indebtedness to continue to fund our operations in the future. Our ability to raise additional funds will depend on financial, economic and market conditions, and due to global capital and credit market conditions or for other reasons, we may be unable to raise capital when needed, or on terms favorable to us. If necessary funds are not available, we may have to delay, reduce the scope of, or eliminate some of our development programs, potentially delaying the time to market for any of our product candidates.

Adoption and Impact of the New Revenue Standard

The Company adopted Accounting Standards Codification Topic 606—Revenue from Contracts with Customers, or Topic 606, on January 1, 2018, resulting in a change to its accounting policy for revenue recognition. Results for reporting periods beginning after January 1, 2018 are presented under the new standard, while prior period amounts are not adjusted and continue to be reported under the accounting standards in effect for the prior period. We recorded a net increase to opening equity of $1.5 million as of January 1, 2018 due to the cumulative impact of adopting this new standard. Without applying the new revenue standard, the disclosed research and development revenue would have been $1.5 million higher than currently disclosed for the first three months of 2018. Contract receivables of $1.2 million are included within prepaid expenses and other current assets. The adoption of the new revenue standard did not have a material impact on any other balances within the condensed consolidated financial statements as of and for the three-months ended March 31, 2018.

Under the new revenue standards, we recognize revenues when our customer obtains control of promised goods or services, in an amount that reflects the consideration which we expect to receive in exchange for those goods or services. We recognize revenues following the five step model prescribed under Topic 606: (i) identify contract(s) with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenues when (or as) we satisfy the performance obligation. The Company only applies the five-step model to contracts when it is probable that the entity will collect the consideration it is entitled to in exchange for the goods or services it transfers to the customer. At contract inception, the Company assesses the goods or services promised within each contract, and determines those that are performance obligations. Revenue is recognized when each distinct performance obligation is satisfied.

The Company has collaboration and license agreements with drug development and pharmaceutical companies. The Company’s proprietary technology and intellectual property is the basis for many of these collaboration and license agreements and generally include contractual milestone events that coincide with the progression of development, regulatory and commercialization milestones. At the inception of each collaboration that includes developmental, regulatory or commercial milestone payments, the Company evaluates whether achieving the milestones is considered probable and estimates the amount to be included in the transaction price using the most likely amount method. If it is probable that a significant revenue reversal would not occur, the value of the associated milestone is included in the transaction price. Milestone payments that are not within the control of the Company, such as approvals from regulators or where attainment of the specified event is dependent on the development activities of a third-party, are not considered probable of being achieved until those approvals are received or the specified event occurs. Revenue is recognized from the satisfaction of performance obligations in the amount billable to the customer.

2. COLLABORATIONS AND ALLIANCES

Roivant Sciences Licensing Agreement

Basilea Licensing Agreement

Other Licensing Agreements

In October 2017, we entered into a non-exclusive license agreement for certain library compounds. The licensed compounds were delivered and are subject to quality and acceptance testing. In 2017, we recorded deferred revenue of $1.5 million related to this licensing agreement which was recorded as an opening retained earnings adjustment upon the adoption of Accounting Standards Update (ASU) No. 2014-09, Revenue from Contracts with Customers on January 1, 2018. In the three months ended March 31, 2018, we recorded revenue of $1.1 million based upon the achievement of the quality and acceptance testing for the period.

3. MARKETABLE SECURITIES AND FAIR VALUE MEASUREMENTS

We generally classify our marketable securities as available-for-sale at the time of purchase and re-evaluate such designation as of each balance sheet date. Since we generally intend to convert them into cash as necessary to meet our liquidity requirements our marketable securities are classified as cash equivalents if the original maturity, from the date of purchase, is ninety days or less and as short-term investments if the original maturity, from the date of purchase, is in excess of ninety days but less than one year. Our marketable securities are classified as long-term investments if the maturity date is in excess of one year of the balance sheet date.

We report available-for-sale investments at fair value as of each balance sheet date and include any unrealized gains and, to the extent deemed temporary, unrealized losses in stockholders’ equity. Realized gains and losses are determined using the specific identification method and are included in other income (expense) in the statement of operations and comprehensive loss.

We conduct quarterly reviews to determine the fair value of our investment portfolio and to identify and evaluate each investment that has an unrealized loss, in accordance with the meaning of other-than-temporary impairment and its application to certain investments. An unrealized loss exists when the current fair value of an individual security is less than its amortized cost basis. In the event that the cost basis of a security exceeds its fair value, we evaluate, among other factors, the duration of the period that, and extent to which, the fair value is less than cost basis, the financial health of and business outlook for the issuer, including industry and sector performance, and operational and financing cash flow factors, overall market conditions and trends, our intent to sell the investment and if it is more likely than not that we would be required to sell the investment before its anticipated recovery. Unrealized losses on available-for-sale securities that are determined to be temporary, and not related to credit loss, are recorded in accumulated other comprehensive income (loss).

For available-for-sale debt securities with unrealized losses, we perform an analysis to assess whether we intend to sell or whether we would more likely than not be required to sell the security before the expected recovery of the amortized cost basis. Where we intend to sell a security, or may be required to do so, the security’s decline in fair value is deemed to be other-than-temporary and the full amount of the unrealized loss is reflected in the statement of operations and comprehensive loss as an impairment loss.

Regardless of our intent to sell a security, we perform additional analysis on all securities with unrealized losses to evaluate losses associated with the creditworthiness of the security. Credit losses are identified where we do not expect to receive cash flows sufficient to recover the amortized cost basis of a security.

We invest our available cash primarily in commercial paper, money market funds, and U.S. Treasury bill funds that have investment grade ratings.

The following is a summary of the fair value of available-for-sale marketable securities we held at March 31, 2018 and December 31, 2017:

March 31, 2018	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Security type
Corporate debt securities-short term	$	32,388	$	—	$	(41	)	$	32,347
Total available-for-sale marketable securities	$	32,388	$	—	$	(41	)	$	32,347

December 31, 2017	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Security type
Corporate debt securities-short term	$	27,823	$	1	$	(17	)	$	27,807
Total available-for-sale marketable securities	$	27,823	$	1	$	(17	)	$	27,807

None of our available-for-sale marketable securities were in a continuous unrealized loss position for more than 12 months at March 31, 2018 or December 31, 2017.

The following tables present information about our assets and liabilities that are measured at fair value on a recurring basis for the periods presented and indicates the fair value hierarchy of the valuation techniques we utilized to determine such fair value. There were no transfers in or out of Level 1 or Level 2 measurements for the periods presented:

	March 31, 2018		Quoted Prices in Active Markets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Cash equivalents	$	8,484	$	8,484	$	—	$	—
Corporate debt securities-short term		32,347		—		32,347		—
Total	$	40,831	$	8,484		32,347	$	—

	December 31, 2017		Quoted Prices in Active Markets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Cash equivalents	$	19,889	$	19,889	$	—	$	—
Corporate debt securities-short term		27,807		—		27,807		—
Total	$	47,696	$	19,889	$	27,807	$	—

	March 31, 2018		Quoted Prices in Active Markets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Warrant liability	$	3,782	$	—	$	—	$	3,782

	December 31, 2017		Quoted Prices in Active Markets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Warrant liability	$	1,512	$	—	$	—	$	1,512

Due to the lack of market quotes relating to our preferred stock warrants, the fair value of the preferred stock warrants was determined at March 31, 2018 and December 31, 2017 using the Black-Scholes model, which is based on Level 3 inputs. The inputs used in the Black-Scholes model are presented below. The assumptions used may change as the underlying sources of these assumptions and market conditions change. Based on the Black-Scholes model, the Company recorded a preferred stock warrant

liability of $3,782 at March 31, 2018 and $1,512 at December 31, 2017.

The following are the Black-Scholes inputs to the warrant liability valuation for the periods presented:

	March 31, 2018			December 31, 2017
Exercise price	$	1.75		$	1.75
Market price		2.88			1.65
Expected volatility		56.7	%		53.3	%
Risk-free interest		2.44	%		2.07	%
Expected term		3.61 years			3.85 years
Dividends		none			none

4. ACCOUNTS PAYABLE AND ACCRUED EXPENSES

Accounts payable and accrued expenses include the following at March 31, 2018 and December 31, 2017:

	March 31, 2018		December 31, 2017
Accounts payable	$	396	$	537
Accrued payroll		793		1,448
Accrued outsourced pre-clinical and clinical fees		6,039		5,409
Accrued professional fees		721		492
Other accrued expenses		320		373
	$	8,269	$	8,259

5. NET LOSS PER SHARE

Net loss per share is computed using the weighted average number of common shares outstanding. Basic and diluted net loss per share amounts are equivalent for the periods presented as the inclusion of potential common shares in the number of shares used for the diluted computation would be anti-dilutive to loss per share. Potential common shares, for the quarter ended March 31, 2018, include 10,921,388 shares that would be issued upon the exercise of outstanding employee and Board of Director stock options, 354,330 shares that would be issued upon the exercise of the warrants from our January 2017 loan agreement, 93,168 shares that would be issued upon the exercise of the warrants from our February 2018 amendment to our loan agreement, 3,123,674 shares that would be issued upon the exercise of the warrants from our October 2017 common stock offering, 8,370,000 common shares that would be issued upon the conversion of the shares from our November 2017 preferred stock offering and 2,259,000 common shares that would be issued upon the exercise of the warrants from our November 2017 preferred stock offering. Potential common shares, for the three months ended March 31, 2017, include 9,504,090 shares that would be issued upon the exercise of outstanding employee stock options and 354,330 shares that would be issued upon the exercise of the warrants issued in conjunction with our January 2017 loan agreement.

6. STOCK-BASED COMPENSATION AND STOCK PLANS

Our stock-based compensation cost is measured at the grant date, based on the calculated fair value of the award, and is recognized as an expense over the employees’ requisite service period (generally the vesting period of the equity grant). We estimate the fair value of stock options using the Black-Scholes valuation model. Key input assumptions used to estimate the fair value of stock options include the exercise price of the award, expected option term, expected volatility of our stock over the option’s expected term, risk-free interest rate over the option’s expected term, and the expected annual dividend yield. We believe that the valuation technique and approach utilized to develop the underlying assumptions are appropriate in calculating the fair values of our stock options granted in the three months ended March 31, 2018 and 2017.

The following table presents stock-based compensation expense included in our Condensed Statements of Operations and Comprehensive Loss:

	Three Months Ended March 31,
	2018		2017
Research and development	$	106	$	130
General and administrative		317		413
Total stock-based compensation expense	$	423	$	543

In the three months ended March 31, 2018 and 2017, no stock-based compensation expense was capitalized and there were no recognized tax benefits associated with the stock-based compensation expense.

Option activity under our stock plans for the three months ended March 31, 2018 was as follows:

Stock Options	Number of Shares			Weighted Average Exercise Price
Outstanding as of December 31, 2017		10,622,455		$	3.01
Granted		831,270			1.73
Exercised		(15,125	)		1.68
Cancelled		(517,212	)		3.10
Outstanding as of March 31, 2018		10,921,388		$	2.91

Exercisable as of March 31, 2018		7,071,489		$	3.74

The aggregate intrinsic value of options outstanding at March 31, 2018 was $9,055 and $3,281 related to exercisable options. The weighted average fair value of options granted in the three months ended March 31, 2018 and 2017 was $1.07 and $0.93 per share, respectively. The intrinsic value of options exercised in the three months ended March 31, 2018 was $15.

	Shares		Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Term (in years)		Aggregate Intrinsic Value
Vested and unvested expected to vest at March 31, 2018		10,788,462	$	2.91		5.8	$	9,055
Exercisable at March 31, 2018		7,071,489	$	3.74		4.2	$	3,281

The total compensation cost not yet recognized as of March 31, 2018 related to non-vested option awards was $2.6 million, which will be recognized over a weighted-average period of 2.8 years. During the three months ended March 31, 2018, 275,587 shares expired and 241,625 shares were forfeited. The weighted average remaining contractual life for options exercisable at March 31, 2018 was 4.2 years.

7. COMMON STOCK OFFERINGS

In October 2017, we entered into definitive securities purchase agreements with certain institutional investors. In conjunction with this stock offering, we issued 13,938,651 shares of our common stock and warrants for 3,123,674 shares of our common stock for aggregate net proceeds of $15.6 million. Each warrant is exercisable for $1.75 per share and expires in four years from the date of issuance.

In September 2017, we sold 2.0 million shares of common stock through an at-the-market (“ATM”) offering and raised net proceeds of approximately $2.3 million.

In February 2016, we entered into definitive stock purchase agreements with certain institutional and accredited investors. In conjunction with this stock offering we issued 8,027,900 shares of our common stock and non-transferable options for 3,567,956 shares of our common stock for aggregate net proceeds of $15.2 million. Each option was exercisable for $2.50 per share and they all expired in March 2017.

8. LOAN AGREEMENT

In January 2017, Oxford Finance LLC, as collateral agent and a lender (the “Lender”), and any additional lenders that may become parties thereto, entered into a loan and security agreement with us (the “Loan Agreement”).

Pursuant to the terms of the Loan Agreement, the Lender issued us a loan in the principal amount of $15.0 million. The loan bears interest at the rate equal to (a) the greater of (i) the 30 day U.S. LIBOR rate reported in the Wall Street Journal on the date occurring on the last business day of the month that immediately precedes the month in which the interest will accrue or (ii) 0.65% (b) plus 6.85%. The applicable interest rate on the loan at December 31, 2017 was 8.22%. The Loan Agreement required interest-only payments for 18 months, followed by an amortization period of 36 months. The original maturity date of the loan was August 1, 2021 and in February 2018 we signed an amendment with the Lender which extended the maturity date by one year to August 1, 2022 with principal payments commencing on September 1, 2019.

The expected remaining repayment of the $15 million loan principal at March 31, 2018 is as follows:

2019	$	1,667
2020		5,000
2021		5,000
2022		3,333
	$	15,000

Upon the earlier of prepayment or the maturity date, we will pay to the Lender a final payment of 6% of the full principal amount of the loan. We may elect to prepay all amounts owed prior to the maturity date, provided that a prepayment fee also is paid equal to (i) 3% of the outstanding principal balance if prepayment occurs in months 1-12 following the closing, (ii) 2.0% of the outstanding principal balance in months 13-24 following the closing, and (iii) 1% thereafter.

Pursuant to the terms of the Loan Agreement, we are bound by certain affirmative covenants setting forth actions that are required during the term of the Loan Agreement, including, without limitation, certain information delivery requirements, obligations to maintain certain insurance, and certain notice requirements. Additionally, we are bound by certain negative covenants setting forth actions that are not permitted to be taken during the term of the Loan Agreement without consent, including, without limitation, incurring certain additional indebtedness, entering into certain mergers, acquisitions or other business combination transactions, or incurring any non-permitted lien or other encumbrance on our assets. We were in compliance with the loan covenants at March 31, 2018.

Upon the occurrence of an event of default under the Loan Agreement (subject to cure periods for certain events of default), all amounts owed by us thereunder will begin to bear interest at a rate that is 5% higher than the rate that is otherwise applicable and may be declared immediately due and payable by the Lender. Events of default under the Loan Agreement include, among other things, the following: the occurrence of certain bankruptcy events; the failure to make payments under the Loan Agreement when due; the occurrence of a material adverse change in our business, operations or financial condition; the rendering of certain types of fines or judgments against us; any breach by us of any covenant (subject to cure for certain covenants only) made in the Loan Agreement; and the failure of any representation or warranty made by us in connection with the Loan Agreement to be correct in all material respects when made.

We have granted the Lender, a security interest in substantially all of our personal property, rights and assets, other than intellectual property, to secure the payment of all amounts owed to the Lender under the Loan Agreement. We have also agreed not to encumber any of our intellectual property without required lenders’ prior written consent.

In connection with entering into the Loan Agreement, we issued to the Lender warrants to purchase an aggregate of 354,330 shares of our common stock (the “Lender Warrants”). The warrants are exercisable immediately, have a per-share exercise price of $1.27 and have a term of ten years. We have recorded the relative fair value of the warrants as a discount to the carrying value of the notes payable with a corresponding increase to additional paid in capital.

In February 2018, the Loan Agreement was amended requiring payments of interest on a monthly basis through August 2019 and payments of interest and principal from September 2019 to August 2022. In connection with entering into the amendment we issued to the Lender warrants to purchase an aggregate of 93,168 shares of our common stock. The warrants are exercisable immediately, have a per-share exercise price of $1.61 and have a term of ten years. The amendment was determined to be a modification of debt in accordance with ASC 470 Debt. We have recorded the relative fair value of the additional warrants as a discount to the carrying value of the notes payable with a corresponding increase to additional paid in capital.

9. PREFERRED STOCK AND WARRANT LIABILITY

Our amended Certificate of Incorporation authorizes the issuance of up to 1 million shares of $0.01 par value preferred stock.

In November 2017, we entered into definitive securities purchase agreements with certain institutional investors. In conjunction with this stock offering the Company raised net proceeds of $9.5 million through the sale of 8,370 shares of series A convertible preferred stock (Series A Preferred) and warrants covering 2,259 shares of Series A Preferred (Warrants). Each share of Series A Preferred together with the associated Warrant is priced at $1,135 and will automatically convert into 1,000 shares of common stock upon the adoption of an amendment to the Company’s restated certificate of incorporation to increase the number of authorized shares of common stock thereunder. The amount reported as preferred stock at March 31, 2018 and December 31, 2017 is $8.8 million.

The terms of the Series A Preferred, specifically the terms of the liquidation preference, require the classification of the preferred stock as temporary equity, which is reflected in our balance sheet as of March 31, 2018 and December 31, 2017. In addition, the terms of the Series A Preferred for which the warrants are exercisable require that the fair value allocated to the warrants at the date of issuance be recorded as a liability. The warrant liability is marked to market value through the income statement as a non-cash gain or loss at each reporting period.

The Warrants have a pre-conversion exercise price of $1,750 per share of Series A Preferred (post-conversion price of $1.75 per share of common stock), are exercisable immediately and expire approximately four years from the date of the adoption of the amendment to the Company’s restated certificate of incorporation. In the three months ended March 31, 2018 the fair value of the warrant liability increased to $3.8 million and consequently a $2.3 million non-cash expense was recorded. Upon conversion of the Series A Preferred common stock the warrant liability will be extinguished with an offsetting amount included as additional paid-in capital in stockholders’ equity. The Series A Preferred Stockholders vote on an as converted basis together as one class with the holders of common stock.

If declared by the board, the Series A Preferred are eligible for a dividend on an as-converted basis. If the Company’s restated certificate of incorporation has not been adopted by July 1, 2018, the Series A Preferred will obtain a dividend in kind until such time as the restated certificate of incorporation is adopted. In the case of a liquidation event or deemed liquidation event defined by the definitive securities purchase agreements the holders of Series A Preferred Stock have a liquidation preference on the greater of the Series A Preferred Stock stated value or the consideration that would have been paid on such Series A Preferred Stock in the applicable liquidation event.

10. RECENT ACCOUNTING PRONOUNCEMENTS

From time to time, new accounting pronouncements are issued by the Financial Accounting Standards Board (“FASB”) or other standard setting bodies that are adopted by us as of the specified effective date. Unless otherwise discussed, we believe that the impact of recently issued standards that are not yet effective will not have a material impact on our financial position or results of operations upon adoption.

In May 2017 the FASB issued Accounting Standard Update (“ASU”) No. 2017-09, Compensation—Stock Compensation (Topic 718): Scope of Modification Accounting. This new standard provides clarity and reduces both (1) diversity in practice and (2) cost and complexity when applying the guidance in Topic 718, Compensation-Stock Compensation, to a change to the terms or conditions of a share-based payment award. This new standard became effective for us on January 1, 2018. The adoption of this standard did not have a material impact on our financial position or results of operations.

In August 2016, the FASB issued ASU No. 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments. This new standard clarifies certain aspects of the statement of cash flows, including the classification of debt prepayment or debt extinguishment costs or other debt instruments with coupon interest rates that are insignificant in relation to the effective interest rate of the borrowing, contingent consideration payments made after a business combination, proceeds from the settlement of insurance claims, proceeds from the settlement of corporate-owned life insurance policies, distributions received from equity method investees and beneficial interests in securitization transactions. This new standard also clarifies that an entity should determine each separately identifiable source of use within the cash receipts and payments on the basis of the nature of the underlying cash flows. In situations in which cash receipts and payments have aspects of more than one class of cash flows and cannot be separated by source or use, the appropriate classification should depend on the activity that is likely to be the predominant source or use of cash flows for the item. This new standard became effective for us on January 1, 2018. The adoption of this standard did not have a material impact on our statements of cash flows upon adoption.

In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842). The new standard requires that all lessees recognize the assets and liabilities that arise from leases on the balance sheet and disclose qualitative and quantitative information about its leasing arrangements. The new standard will be effective for us on January 1, 2019. The company is currently assessing the impact that adoption of this standard will have on our financial statements.

In May 2014 the FASB issued Accounting Standards Update (ASU) No. 2014-09, Revenue from Contracts with Customers (Topic 606), which supersedes all existing revenue recognition requirements, including most industry specific guidance. This new standard requires a company to recognize revenue when it transfers goods or services to customers in an amount that reflects the consideration that the company expects to receive for those goods or services. The FASB subsequently issued amendments to ASU No. 2014-09 that have the same effective date and transition date. These new standards became effective for us on January 1, 2018, and we adopted them using the modified retrospective method through a $1.5 million cumulative-effect adjustment directly to retained earnings as of that date. The adoption of these new standards may result in a change in the timing of revenue recognition related to certain of our licensing activities.

11. INCOME TAXES

As of December 31, 2017, we had federal NOL, state NOL, and research and development credit carryforwards of approximately $409,409, $228,565 and $28,253 respectively, which expire at various dates through 2037. We recorded a deferred tax asset for previously unrecognized excess tax benefit, offset by valuation allowance upon the adoption in 2017 of ASU 2016-09, “Compensation—Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting.”

As of March 31, 2018 and December 31, 2017 we had no unrecognized tax benefits. We do not expect that the total amount of unrecognized tax benefits will significantly increase in the next twelve months. Our policy is to recognize interest and penalties related to uncertain tax positions in income tax expense. As of March 31, 2018 and December 31, 2017, we had no accrued interest or penalties related to uncertain tax positions. Our U.S. federal tax returns for the tax years 2013 through 2017 and our state tax returns for the tax years 2013 through 2017 remain open to examination. Prior tax years remain open to the extent of net operating loss and tax credit carryforwards.

Utilization of NOL and research and development credit carryforwards may be subject to a substantial annual limitation in the event of an ownership change that has occurred previously or could occur in the future pursuant to Section 382 and 383 of the Internal Revenue Code of 1986, as amended, as well as similar state provisions. An ownership change may limit the amount of NOL and research and development credit carryforwards that can be utilized annually to offset future taxable income, and may, in turn, result in the expiration of a portion of those carryforwards before utilization. In general, an ownership change, as defined by Section 382, results from transactions that increase the ownership of certain stockholders or public groups in the stock of a corporation by more than 50 percentage points over a three-year period. We undertook a detailed study of our NOL and research and development credit carryforwards through January 31, 2018, to determine whether such amounts are likely to be limited by Sections 382 or 383. As a result of this analysis, we currently do not believe any Sections 382 or 383 limitations will significantly impact our ability to offset income with available NOL and research and development credit carryforwards. However, future ownership changes under Section 382 may limit our ability to fully utilize these tax benefits.

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion should be read in conjunction with our condensed financial statements and accompanying notes contained in this quarterly report on Form 10-Q and our audited financial statements and related notes included in our Annual Report on Form 10-K for the year ended December 31, 2017.

ARQ 531, an orally bioavailable, potent and reversible inhibitor of both wild type and C481S-mutant BTK, in Phase 1 for B-cell malignancies refractory to other therapeutic options;

ARQ 751, a next-generation inhibitor of AKT, in Phase 1 for solid tumors harboring the AKT1 or PI3K mutation; and

In February 2018, we entered into a License Agreement (the “Agreement”) with Sinovant Sciences Ltd. (“Sinovant”) and Roivant Sciences Ltd. (Roivant), the parent of Sinovant, pursuant to which ArQule granted Sinovant a license to develop, manufacture and exclusively commercialize its FGFR inhibitor, derazantinib (ARQ 087), in Greater China. The Agreement provides for an upfront payment to ArQule of $3 million and a guaranteed $2.5 million development milestone within the first year. ArQule is also eligible for an additional $82 million in regulatory and sales milestones. Upon commercialization, ArQule is entitled to receive double digit royalties in the low teens from Sinovant on net sales of derazantinib in the Greater China territory. Sinovant will be responsible for all costs and expenses of development, manufacture and commercialization in its territory. For the quarter ended March 31, 2018, we recognized revenue of $3.0 for completing our performance obligation under this licensing agreement.

Tivantinib (ARQ 197), an orally administered, small molecule inhibitor of the c-Met receptor tyrosine kinase and its biological pathway is no longer being developed. We licensed commercial rights to tivantinib for human cancer indications to Daiichi Sankyo Co., Ltd. (“Daiichi Sankyo”) in the U.S., Europe, South America and the rest of the world, excluding Japan and certain other Asian countries, where we licensed commercial rights to Kyowa Hakko Kirin Co., Ltd. (“Kyowa Hakko Kirin”).

We have incurred a cumulative deficit of approximately $539 million from inception through March 31, 2018. We recorded a net loss for 2016 and 2017 and expect a net loss for 2018.

LIQUIDITY AND CAPITAL RESOURCES

	March 31,		December 31,		Increase (decrease)
	2018		2017		$			%
	(in millions)
Cash, cash equivalents and marketable securities-short term	$	42.9	$	48.0		(5.1	)		(11	)%
Working capital		36.5		38.8		(2.3	)		(6	)%

	Q1 2018			Q1 2017			Increase (decrease)
	(in millions)
Cash flow from:
Operating activities	$	(5.0	)	$	(8.3	)	$	3.3
Investing activities		(4.6	)		6.6			(11.2	)
Financing activities		—			14.7			(14.7	)

Cash flow from operating activities. Our uses of cash for operating activities have primarily consisted of salaries and wages for our employees, facility and facility-related costs for our offices and laboratories, fees paid in connection with preclinical and clinical studies, laboratory supplies and materials, and professional fees. The sources of our cash flow from operating activities have consisted primarily of payments received from our collaborators for services performed or upfront payments for future services. For the quarters ended March 31, 2018 and 2017 our net use of cash was primarily driven by payments for operating expenses which resulted in net cash outflows of $5.0 million and $8.3 million, respectively.

Cash flow from investing activities. Our net cash used by investing activities of $4.6 for the quarter ended March 31, 2018 was comprised of net purchases of marketable securities. Our net cash provided by investing activities of $ $6.6 million for the quarter ended March 31, 2017 was comprised of net maturities of marketable securities. The composition and mix of cash, cash equivalents and marketable securities may change frequently as a result of our constant evaluation of conditions in financial markets, the maturity of specific investments, and our near term liquidity needs.

Our cash equivalents and marketable securities typically include commercial paper, money market funds, and U.S. Treasury bill funds, which have investment grade ratings. Our cash equivalents and our portfolio of marketable securities are subject to market risk due to changes in interest rates. Fixed rate interest securities may have their market value adversely impacted due to a rise in interest rates, while floating rate securities may produce less income than expected if interest rates fall. Due in part to these factors, our future investment income may fall short of expectation due to changes in interest rates or we may suffer losses in principal if we are forced to sell securities that decline in market value due to changes in interest rates.

Cash flow from financing activities. Our net cash provided by financing activities was zero for the quarter ended March 31, 2018. Our net cash provided by financing activities for the quarter ended March 31, 2017, was comprised of $14.7 million net proceeds from the loan and security agreement that we entered into on January 6, 2017.

Our cash requirements may vary materially from those now planned depending upon the results of our drug discovery and development strategies, our ability to enter into additional corporate collaborations and the terms of such collaborations, results of research and development, unanticipated required capital expenditures, competitive and technological advances, acquisitions and other factors. We cannot guarantee that we will be able to develop any of our drug candidates into a commercial product. In January 2017, we entered into Loan Agreement with a principal balance of $15 million (see Note 8). The terms of the Loan Agreement required payments of interest on a monthly basis through September 2018 and payments of interest and principal from October 2018 to August 2021. In February 2018, the Loan Agreement was amended requiring payments of interest on a monthly basis through August 2019 and payments of interest and principal from September 2019 to August 2022.

We anticipate that our cash, cash equivalents and marketable securities on hand at March 31, 2018, financial support from our licensing agreements, and the one year extension of our Loan Agreement will be sufficient to finance our operations into 2020 which is in excess of at least 12 months from the issuance date of these financial statements.

We expect that we will need to raise additional capital or incur indebtedness to continue to fund our operations in the future. Our ability to raise additional funds will depend on financial, economic and market conditions, and due to global capital and credit market conditions or for other reasons, we may be unable to raise capital when needed, or on terms favorable to us. If necessary funds are not available, we may have to delay, reduce the scope of, or eliminate some of our development programs, potentially delaying the time to market for any of our product candidates.

Our contractual obligations were comprised of the following as of March 31, 2018 (in thousands):

	Payment due by period
Contractual Obligations	Total		Less than 1 year		1 - 3 years		3 - 5 years		More than 5 years
Notes payable	$	15,900	$	—	$	7,917	$	7,983	$	—
Interest on notes payable		3,336		1,159		1,812		365		—
Operating lease obligations		1,195		564		631		—		—
Purchase obligations		6,039		6,039		—		—		—
Total	$	26,470	$	7,762	$	10,360	$	8,348	$	—

In January 2015, we entered into a lease agreement for our headquarters facility. The lease commenced on May 1, 2015 for a term of five years and three months with an average annual rental rate of $455 thousand. The obligations for this facility are included in the table above.

Purchase obligations are comprised primarily of outsourced preclinical and clinical trial expenses and payments to license certain intellectual property to support our research efforts.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

A “critical accounting policy” is one which is both important to the portrayal of our financial condition and results and requires management’s most difficult, subjective or complex judgments, often as a result of the need to make estimates about the effect of matters that are inherently uncertain. For additional information, please see the discussion of our significant accounting policies in Note 2 to the Financial Statements included in our Annual Report for the fiscal year ended December 31, 2017 on Form 10-K filed with the SEC on March 5, 2018.

The Company adopted Accounting Standards Codification Topic 606—Revenue from Contracts with Customers, or Topic 606, on January 1, 2018, resulting in a change to its accounting policy for revenue recognition. Results for reporting periods beginning after January 1, 2018 are presented under the new standard, while prior period amounts are not adjusted and continue to be reported under the accounting standards in effect for the prior period. We recorded a net increase to opening equity of $1.5 million as of January 1, 2018 due to the cumulative impact of adopting this new standard. The adoption of the new revenue standard did not have a material impact on any other balances within the condensed consolidated financial statements as of and for the three-months ended March 31, 2018.

RESULTS OF OPERATIONS

The following are the results of operations for the three months ended March 31, 2018 and 2017:

Revenue

					Increase (decrease)
	2018		2017		$		%
	(in millions)
For the three months ended March 31:
Research and development revenue	$	$4.1	$	—	$	4.1		100	%

Research and development revenue in the three months ended March 31, 2018 consisted of $3 million from our February 2018 Roivant licensing agreement and $1.1 million from a non-exclusive license agreement for certain of our library compounds.

Research and development revenue in the three months ended March 31, 2017 was zero due to the end of the estimated development period on December 31, 2016 for both the Daiichi Sankyo tivantinib development agreement and the Kyowa Hakko Kirin exclusive license agreement.

Research and development

					Increase (decrease)
	2018		2017		$		%
	(in millions)
For the three months ended March 31:
Research and development	$	5.8	$	5.2	$	0.6		12	%

Research and development expense in the quarter ended March 31, 2018 increased by $0.6 million primarily due to higher outsourced preclinical, clinical and product development costs. At March 31, 2018 we had 18 employees dedicated to our research and development program compared to 20 at March 31, 2017.

Overview

Our research and development expense consists primarily of salaries and related expenses for personnel, costs of contract manufacturing services, costs of facilities and equipment, fees paid to professional service providers in conjunction with our clinical trials, fees paid to research organizations in conjunction with pre-clinical animal studies, costs of materials used in research and development, consulting, license, and sponsored research fees paid to third parties and depreciation of associated laboratory equipment. We expect that our research and development expense will remain significant as we continue to develop our portfolio of oncology programs.

We have not accumulated and tracked our internal historical research and development costs or our personnel and personnel-related costs on a program-by-program basis. Our employee and infrastructure resources are allocated across several projects, and many of our costs are directed to broadly applicable research endeavors. As a result, we cannot state the costs incurred for each of our oncology programs on a program-by-program basis.

Our future research and development expenses in support of our current and future oncology programs will be subject to numerous uncertainties in timing and cost to completion. We test potential products in numerous preclinical studies for safety, toxicology, and efficacy. We may conduct multiple clinical trials for each product. As we obtain results from trials, we may elect to discontinue or delay clinical trials for certain products in order to focus our resources on more promising products. Completion of clinical trials may take several years or more, and the length of time generally varies substantially according to the type, complexity, novelty, and intended use of a product. It is not unusual for the preclinical and clinical development of each of these types of products to take nine years or more, and for total development costs to exceed $500 million for each product.

We estimate that clinical trials of the type generally needed to secure new drug approval are typically completed over the following timelines:

Clinical Phase			Estimated Completion Period
Phase 1			1–2 years
Phase 2			2–3 years
Phase 3			2–4 years

The duration and the cost of clinical trials may vary significantly over the life of a project as a result of differences arising during clinical development, including, among others, the following:

the number of clinical sites included in the trials;

the length of time required to enroll suitable patients;

the number of patients that ultimately participate in the trials;

the duration of patient follow-up to ensure the absence of long-term product-related adverse events; and

the efficacy and safety profile of the product.

An element of our business strategy is to pursue the research and development of a broad pipeline of products. This is intended to allow us to diversify the risks associated with our research and development expenditures. As a result, we believe our future capital requirements and future financial success do not substantially depend on any one product. To the extent we are unable to build and maintain a broad pipeline of products, our dependence on the success of one or a few products increases.

Our strategy includes entering into alliance arrangements with third parties to participate in the development and commercialization of our products, such as our collaboration agreements with Roivant and Basilea. In the event that third parties have control over the clinical trial process for a product, the estimated completion date would be under control of that third party rather than under our control. We cannot forecast with any degree of certainty whether our products will be subject to future collaborative arrangements or how such arrangements would affect our development plans or capital requirements.

As a result of the uncertainties discussed above, we make significant estimates in determining the duration and completion costs of our oncology programs or when and to what extent we will receive cash inflows from the commercialization and sale of a product. Our inability to complete our oncology programs in a timely manner or our failure to enter into appropriate collaborative agreements could significantly increase our capital requirements and could adversely impact our liquidity. These uncertainties could force us to seek additional, external sources of financing from time-to-time in order to continue with our product development strategy. Our inability to raise additional capital, or to do so on terms reasonably acceptable to us, would jeopardize the future success of our business.

General and administrative

					Increase (decrease)
	2018		2017		$		%
	(in millions)
For the three months ended March 31:
General and administrative	$	2.4	$	2.1	$	0.3		13	%

General and administrative expense increased in the first quarter of 2018 principally due to $0.2 million higher labor related costs, and $0.1 million higher professional fees. General and administrative headcount was 13 at March 31, 2018, compared to 14 at March 31, 2017.

Interest income, interest expense and other expense

							Increase (decrease)
	2018			2017			$		%
	(in thousands)
For the three months ended March 31:
Interest income	$	159		$	22		$	137		623	%
Interest expense		(396	)		(330	)		66		18	%
Other expense		(2,270	)		—			2,270		100	%

Interest income is derived from our portfolio of cash, cash equivalents and investments and increased in the first quarter of 2018 primarily due to an increase in our portfolio balance from stock offerings in the fourth quarter 2017 and increased interest rates.

Interest expense is from the loan agreement we entered into on January 6, 2017.

Other expense in 2018 includes a non-cash expense from an increase in fair value of our preferred stock warrant liability of $2.3 million.

RECENT ACCOUNTING PRONOUNCEMENTS

For a discussion of new accounting pronouncements please read Note 10, Recent Accounting Pronouncements to our financial statements included in this report.

FORWARD LOOKING STATEMENTS

In addition to historical information, this report contains forward-looking statements. You can identify these forward-looking statements by their use of words such as “anticipate,” “assume,” “believe,” “estimate,” “expect,” “forecast,” “intend,” “may,” “plan,” “project,” “target,” “will”, “potential” , “goal”, and other words and terms of similar meaning. You also can identify them by the fact that they do not relate strictly to historical or current facts. All statements which address operating performance, events or developments that the Company expects or anticipates will occur in the future, such as projections about its future results of operations, its financial condition, research, development and commercialization of its products and anticipated trends in its business are forward-looking statements.

In this report we make forward-looking statements regarding our drug development pipeline and our existing and planned clinical trials as well as future milestones and royalty payments, projected financial results and our ability to fund operations with current cash, cash equivalents and marketable securities.

Drug development involves a high degree of risk. Only a small number of research and development programs result in the commercialization of a product. For example, pre-clinical efforts associated with our product pipeline may fail or prove disappointing because our technology platform did not produce candidates with the desired characteristics. Animal xenograft pre-clinical studies may be unpredictive of human response. Positive information about early stage clinical trial results will not ensure that later stage or larger scale clinical trials will be successful. Furthermore, our drugs may not demonstrate promising therapeutic effects; in addition, they may not demonstrate appropriate safety profiles in ongoing or later stage or larger scale clinical trials as a result of known or as yet unidentified 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 our drugs that could lead us or our 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 our view of the data or require additional data or information or additional studies. Also, the planned timing of initiation of clinical trials and the duration and conclusion of such trials for our drugs are 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.

We also make forward-looking statements regarding the adequacy of our financial resources. Our capital resources may not be adequate because our cash requirements may vary materially from those now planned depending upon the results of our drug discovery and development strategies, the outcomes of our clinical trials, our ability to enter into additional corporate collaborations in the future and the terms of such collaborations, results of research and development, the need for currently unanticipated capital expenditures, competitive and technological advances, acquisitions, financial market conditions and other factors. Additionally, our corporate collaborators may terminate their agreements with us, thereby eliminating that source of funding, because we may fail to satisfy the prescribed terms of the collaborations or for other reasons.

We cannot guarantee that we will be able to develop any of our drug candidates into a commercial product generating revenues. If we experience increased losses, we may have to seek additional financing from public and private sales of our securities, including equity securities. There can be no assurance that additional funding will be available when needed or on acceptable terms.

The factors, risks and uncertainties referred to above and others are more fully described under the heading “Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2017 filed with the SEC on March 5, 2018, as updated from time to time in our subsequent Quarterly Reports on Form 10-Q and Current Reports on Form 8-K. The forward-looking statements contained herein represent our judgment as of the date of this report. We are not under any obligation, and we expressly disclaim any obligation, to update or alter any forward-looking statements, whether as a result of new information, future events or otherwise, except to the extent required by law.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We own financial instruments that are sensitive to market risk as part of our investment portfolio. We have implemented policies regarding the amount and credit ratings of investments. Our investment portfolio is used to preserve our capital until it is used to fund operations, including our research and development activities. Our investments are evaluated quarterly to determine the fair value of the portfolio.

Our cash equivalents and marketable securities typically include commercial paper, money market funds, and U.S. Treasury bill funds that have investment grade ratings.

Our cash equivalents and our portfolio of marketable securities are subject to market risk due to changes in interest rates. Fixed rate interest securities may have their market value adversely impacted due to a rise in interest rates, while floating rate securities may produce less income than expected if interest rates fall. Due in part to these factors, our future investment income may fall short of expectation due to changes in interest rates or we may suffer losses in principal if we are forced to sell securities that decline in market value due to changes in interest rates. Based on the type of securities we hold, we do not believe a change in interest rates would have a material impact on our financial statements. If interest rates were to increase or decrease by 1%, this would not result in a material change in the fair value of our investment portfolio.

ITEM 4. CONTROLS AND PROCEDURES

Our management, with the participation of our Chief Executive Officer (Principal Executive Officer) and President and Chief Operating Officer (Principal Financial Officer), evaluated the effectiveness of our disclosure controls and procedures as of March 31, 2018. The term “disclosure controls and procedures,” as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (“Exchange Act”), means controls and other procedures of a company that are designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the company’s management, including its principal executive and financial officer, as appropriate to allow timely decisions regarding required disclosure. Our management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives and our management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Based on the evaluation of our disclosure controls and procedures as of March 31, 2018, our Chief Executive Officer (Principal Executive Officer) and President and Chief Operating Officer (Principal Financial Officer) concluded that, as of such date, our disclosure controls and procedures were effective at the reasonable assurance level.

In the quarter ended March 31, 2018 the Company adopted Accounting Standards Codification Topic 606—Revenue from Contracts with Customers, or Topic 606, on January 1, 2018, resulting in a change to its accounting policy for revenue recognition and implementation of related revenue recognition internal controls. There have been no changes in our internal control over financial reporting during the most recently completed fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II - OTHER INFORMATION

ITEM 1. — LEGAL PROCEEDINGS. None.

ITEM 1A. — RISK FACTORS. For information regarding factors that could affect our results of operations, financial condition and liquidity, see the risk factors discussion provided under “Risk Factors” in Item 1A of ArQule’s Annual Report on Form 10-K for the year ended December 31, 2017 filed with the SEC on March 5, 2018, as updated from time to time in our subsequent Quarterly Reports on Form 10-Q and Current Reports on Form 8-K. See also, “Forward-Looking Statements” included in this Quarterly Report on Form 10-Q.

ITEM 2. — UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS. None.

ITEM 3. — DEFAULTS UPON SENIOR SECURITIES. None.

ITEM 4. — MINE SAFETY DISCLOSURES. Not applicable.

ITEM 5. — OTHERS INFORMATION. None.

ITEM 6. — EXHIBITS.

EXHIBIT NO.		DESCRIPTION
4.1		Warrant dated February 16, 2018. Filed as Exhibit 4.1 to our Current Report on Form 8-K filed on February 22, 2018 and incorporated herein by reference.
10.1		Second Amendment to Loan and Security Agreement between and among ArQule, Inc. and Oxford Finance LLC dated February 16, 2018. Filed as Exhibit 10.1 to our Current Report on Form 8-K filed on February 22, 2018 and incorporated herein by reference.
31.1		Rule 13a-14(a) Certificate of Chief Executive Officer, filed herewith.
31.2		Rule 13a-14(a) Certificate of Principal Financial Officer, filed herewith.
32		Rule 13a-14(b) Certificate of Chief Executive Officer and Chief Financial Officer, filed herewith.
101		Interactive Data File

ARQULE, INC.

SIGNATURES

Pursuant to the requirements of the Securities Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	ArQule, Inc.

Date: May 7, 2018	/s/ PETER S. LAWRENCE
	Peter S. Lawrence
	President and Chief Operating Officer
	(Principal Financial Officer)

	/s/ ROBERT J. WEISKOPF
	Robert J. Weiskopf
	Chief Financial Officer and Treasurer
	(Principal Accounting Officer)

EX-31.1 2 tv492670_ex31-1.htm EXHIBIT 31.1

Exhibit 31.1

CERTIFICATE OF THE CHIEF EXECUTIVE OFFICER

I, Paolo Pucci, certify that:

I have reviewed this quarterly report on Form 10-Q of ArQule, Inc.;

Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

Based on my knowledge, the financial statements, and other financial information included in this report fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures as of the end of the period covered by this report based on such evaluation; and

Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: May 7, 2018

		/s/ PAOLO PUCCI
		Paolo Pucci
		Chief Executive Officer
		(Principal Executive Officer)

EX-31.2 3 tv492670_ex31-2.htm EXHIBIT 31.2

Exhibit 31.2

CERTIFICATE OF THE PRINCIPAL FINANCIAL OFFICER

I, Peter S. Lawrence, certify that:

I have reviewed this quarterly report on Form 10-Q of ArQule, Inc.;

Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: May 7, 2018

		/s/ PETER S. LAWRENCE
		Peter S. Lawrence
		President and Chief Operating Officer
		(Principal Financial Officer)

EX-32 4 tv492670_ex32.htm EXHIBIT 32

Exhibit 32

ARQULE, INC.

CERTIFICATE OF THE CHIEF EXECUTIVE OFFICER AND

PRINCIPAL FINANCIAL OFFICER

The undersigned, Paolo Pucci Chief Executive Officer (Principal Executive Officer) of ArQule, Inc. (the “Company”) and Peter S. Lawrence, President and Chief Operating Officer (Principal Financial Officer), of the Company, both duly elected and currently serving, hereby certify that, to the best of his or her knowledge:

the quarterly report on Form 10-Q for the period ending March 31, 2018, filed on behalf of the Company pursuant to the Securities Exchange Act of 1934 (the “Exchange Act”) and containing the financial statements of the Company, fully complies with the requirements of section 13(a) of the Exchange Act; and

the information contained in such quarterly report fairly presents, in all material respects, the financial condition and results of operations of the Company for the dates and periods covered by such quarterly report.

This certification accompanies the Company’s Quarterly Report on Form 10-Q for the period ended March 31, 2018, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (the “2002 Act”) and shall not be deemed filed by the Company for purposes of Section 18 of the Exchange Act.

This certification is being made for the exclusive purpose of compliance by the Principal Executive Officer and Principal Financial Officer of the Company with the requirements of Section 906 of the 2002 Act, and may not be disclosed, distributed or used by any person for any reason other than as specifically required by law.

IN WITNESS WHEREOF, the undersigned have executed this Certificate as of the 7^th day of May 2018.

/s/ PAOLO PUCCI
Name:	Paolo Pucci
Title:	Chief Executive Officer
	(Principal Executive Officer)

/s/ PETER S. LAWRENCE
Name:	Peter S. Lawrence
Title:	President and Chief Operating Officer
	(Principal Financial Officer)

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<p style="widows: 2; text-transform: none; text-indent: 0px; margin: 0pt 0px; font: 10pt 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; word-spacing: 0px; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial; font-stretch: normal;">1. NATURE OF OPERATIONS AND BASIS OF PRESENTATION <p style="widows: 2; text-transform: none; text-indent: 0px; margin: 0pt 0px; font: 10pt 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; word-spacing: 0px; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial; font-stretch: normal;">  <p style="widows: 2; text-transform: none; text-indent: 20pt; margin: 0pt 0px; font: 10pt 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; word-spacing: 0px; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial; font-stretch: normal;">We are a biopharmaceutical company engaged in the research and development of innovative therapeutics to treat cancers and rare diseases. Our mission is to discover, develop and commercialize novel small molecule drugs in areas of high unmet need that will dramatically extend and improve the lives of our patients. These product candidates target biological pathways implicated in a wide range of cancers and certain non-oncology indications. Our discovery and development efforts are guided, when possible, by an understanding of the role of biomarkers, which are indicators of a particular biological condition or process and may predict the clinical benefit of our compounds in defined patient populations. Our clinical-stage pipeline consists of five product candidates, all of which are in targeted patient populations, making ArQule a leader among companies our size in precision medicine. <p style="widows: 2; text-transform: none; text-indent: 20pt; margin: 0pt 0px; font: 10pt 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; word-spacing: 0px; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial; font-stretch: normal;">  <p style="widows: 2; text-transform: none; text-indent: 20pt; margin: 0pt 0px; font: 10pt 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; word-spacing: 0px; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial; font-stretch: normal;">ArQule has a long history of kinase drug discovery and development, having discovered and introduced ten kinase inhibitors into clinical trials. Our drug discovery efforts have been informed by our historical expertise in chemistry, our work in rational drug design and by our insight into kinase binding and regulation. We have applied this knowledge to produce significant chemical matter for a number of kinase targets and to build an extensive library of proprietary compounds with the potential to target multiple kinases in oncology and other therapeutic areas, such as rare diseases. We may bring further preclinical programs forward and interrogate our library against new targets beyond kinases either directly or with collaborators. <p style="widows: 2; text-transform: none; text-indent: 20pt; margin: 0pt 0px; font: 10pt 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; word-spacing: 0px; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial; font-stretch: normal;">  <p style="widows: 2; text-transform: none; text-indent: 20pt; margin: 0pt 0px; font: 10pt 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; word-spacing: 0px; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial; font-stretch: normal;">Our pipeline of product candidates is directed toward molecular targets and biological processes with demonstrated roles in the development of both human cancers and rare, non-oncology diseases. All of these programs are being developed in targeted, biomarker-defined patient populations. By seeking out subgroups of patients that are most likely to respond to our drugs, we intend to identify small, often orphan, indications that allow for focused and efficient development. At the same time, in addition to pursuing these potentially fast-to-market strategies, we also pursue development in other indications that could allow us to expand the utility of the drugs if approved. The pipeline includes the following compounds all of which are wholly-owned, except derazantinib, which is partnered with Basilea Pharmaceutic Ltd. in all parts of the world except the People’s Republic of China, Hong Kong, Macau and Taiwan (“Greater China”), where it is partnered with Sinovant Sciences Ltd., a subsidiary of Roivant Sciences Ltd.: <p style="widows: 2; text-transform: none; text-indent: 20pt; margin: 0pt 0px; font: 10pt 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; word-spacing: 0px; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial; font-stretch: normal;">  <p style="widows: 2; text-transform: none; text-indent: 20pt; margin: 0pt 0px; font: 10pt 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; word-spacing: 0px; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial; font-stretch: normal;"> <table style="widows: 2; text-transform: none; margin-top: 0px; text-indent: 0px; width: 100%; font: 10pt 'times new roman', times, serif; orphans: 2; margin-bottom: 0px; letter-spacing: normal; word-spacing: 0px; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial; font-stretch: normal;" border="0" cellspacing="0" cellpadding="0"> <tr style="text-align: justify; vertical-align: top;"> <td style="width: 0.25in;"></td> <td style="text-align: left; width: 0.25in;">·</td> <td style="text-align: left;">ARQ 531, an orally bioavailable, potent and reversible inhibitor of both wild type and C481S-mutant BTK, in Phase 1 for B-cell malignancies refractory to other therapeutic options;</td> </tr> </table> <p style="widows: 2; text-transform: none; text-indent: 0px; margin: 0pt 0px; font: 10pt 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; word-spacing: 0px; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial; font-stretch: normal;">  <table style="widows: 2; text-transform: none; margin-top: 0pt; text-indent: 0px; width: 100%; font: 10pt 'times new roman', times, serif; orphans: 2; margin-bottom: 0pt; letter-spacing: normal; word-spacing: 0px; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial; font-stretch: normal;" border="0" cellspacing="0" cellpadding="0"> <tr style="vertical-align: top;"> <td style="width: 20.15pt;"></td> <td style="width: 20.15pt;">·</td> <td style="text-align: left;"> Miransertib (ARQ 092), a selective inhibitor of AKT, a serine/threonine kinase, in Phase 1/2 in rare Overgrowth Diseases and in Phase 1 for the rare disease, Proteus syndrome, in partnership with the National Institutes of Health (NIH); also in phase 1b in oncology in combination with the hormonal therapy, anastrozole, in endometrial cancer; </td> </tr> </table> <p style="widows: 2; text-transform: none; text-indent: -20.15pt; margin: 0pt 0px 0pt 40.3pt; font: 10pt 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; word-spacing: 0px; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial; font-stretch: normal;">  <table style="widows: 2; text-transform: none; margin-top: 0pt; text-indent: 0px; width: 100%; font: 10pt 'times new roman', times, serif; orphans: 2; margin-bottom: 0pt; letter-spacing: normal; word-spacing: 0px; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial; font-stretch: normal;" border="0" cellspacing="0" cellpadding="0"> <tr style="vertical-align: top;"> <td style="width: 20.15pt;"></td> <td style="width: 20.15pt;">·</td> <td style="text-align: left;">ARQ 751, a next-generation inhibitor of AKT, in Phase 1 for solid tumors harboring the AKT1 or PI3K mutation;</td> </tr> </table> <p style="widows: 2; text-transform: none; text-indent: 0px; margin: 0pt 0px; font: 10pt 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; word-spacing: 0px; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial; font-stretch: normal;">  <table style="widows: 2; text-transform: none; margin-top: 0pt; text-indent: 0px; width: 100%; font: 10pt 'times new roman', times, serif; orphans: 2; margin-bottom: 0pt; letter-spacing: normal; word-spacing: 0px; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial; font-stretch: normal;" border="0" cellspacing="0" cellpadding="0"> <tr style="vertical-align: top;"> <td style="width: 20.15pt;"></td> <td style="width: 20.15pt;">·</td> <td style="text-align: left;">Derazantinib (ARQ 087), a multi-kinase inhibitor designed to preferentially inhibit the FGFR family of kinases, in a registrational trial in intrahepatic cholangiocarcinoma (iCCA) in patients with FGFR 2 fusions; and</td> </tr> </table> <p style="widows: 2; text-transform: none; text-indent: 0px; margin: 0pt 0px; font: 10pt 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; word-spacing: 0px; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial; font-stretch: normal;">  <table style="widows: 2; text-transform: none; margin-top: 0pt; text-indent: 0px; width: 100%; font: 10pt 'times new roman', times, serif; orphans: 2; margin-bottom: 0pt; letter-spacing: normal; word-spacing: 0px; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial; font-stretch: normal;" border="0" cellspacing="0" cellpadding="0"> <tr style="vertical-align: top;"> <td style="width: 20.15pt;"></td> <td style="width: 20.15pt;">·</td> <td style="text-align: left;">ARQ 761, a ß-lapachone analog being evaluated as a promoter of NQO1-mediated programmed cancer cell death, in Phase 1/2 in multiple oncology indications in partnership with The University of Texas Southwest Medical Center.</td> </tr> </table> <p style="widows: 2; text-transform: none; text-indent: 0px; margin: 0pt 0px; font: 10pt 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; word-spacing: 0px; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial; font-stretch: normal;">  <p style="widows: 2; text-transform: none; text-indent: 20pt; margin: 0pt 0px; font: 10pt 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; word-spacing: 0px; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial; font-stretch: normal;">In February 2018, we entered into a License Agreement (the “Agreement”) with Sinovant Sciences Ltd. (“Sinovant”) and Roivant Sciences Ltd. (Roivant), the parent of Sinovant, pursuant to which ArQule granted Sinovant a license to develop, manufacture and exclusively commercialize its FGFR inhibitor, derazantinib (ARQ 087), in Greater China. The Agreement provides for an upfront payment to ArQule of $3 million and a guaranteed $2.5 million development milestone within the first year. ArQule is also eligible for an additional $82 million in regulatory and sales milestones. Upon commercialization, ArQule is entitled to receive double digit royalties in the low teens from Sinovant on net sales of derazantinib in the Greater China territory. Sinovant will be responsible for all costs and expenses of development, manufacture and commercialization in its territory. For the quarter ended March 31, 2018, we recognized revenue of $3.0 million for completing our performance obligation under this licensing agreement. <p style="widows: 2; text-transform: none; text-indent: 20pt; margin: 0pt 0px; font: 10pt 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; word-spacing: 0px; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial; font-stretch: normal;">  <p style="widows: 2; text-transform: none; text-indent: 20pt; margin: 0pt 0px; font: 10pt 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; word-spacing: 0px; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial; font-stretch: normal;">In April 2018, we entered into a License Agreement (the “Basilea Agreement”) with Basilea Pharmaceutic Ltd. (“Basilea”) pursuant to which ArQule granted Basilea an exclusive license to develop, manufacture and commercialize its FGFR inhibitor, derazantinib (ARQ 087), in the United States, EU, Japan and the rest of the world, excluding Greater China. Under the terms of the Basilea agreement, ArQule will receive an upfront payment of $10 million and is eligible for up to $326 million in regulatory and commercial milestones. Upon commercialization, ArQule is entitled to receive staggered royalties on future net sales of derazantinib ranging from the high-single digits to the mid-teens on direct sales and mid-single digits to low-double digits on indirect sales. Basilea will be responsible for all costs and expenses of development, manufacture and commercialization in its territory. Under certain circumstances, ArQule may have the opportunity to promote derazantinib in the US directly. <p style="widows: 2; text-transform: none; text-indent: 0px; margin: 0pt 0px; font: 10pt 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; word-spacing: 0px; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial; font-stretch: normal;">  <p style="widows: 2; text-transform: none; text-indent: 20pt; margin: 0pt 0px; font: 10pt 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; word-spacing: 0px; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial; font-stretch: normal;">Tivantinib (ARQ 197), an orally administered, small molecule inhibitor of the c-Met receptor tyrosine kinase and its biological pathway is no longer being developed. We licensed commercial rights to tivantinib for human cancer indications to Daiichi Sankyo Co., Ltd. (“Daiichi Sankyo”) in the U.S., Europe, South America and the rest of the world, excluding Japan and certain other Asian countries, where we had licensed commercial rights to Kyowa Hakko Kirin Co., Ltd. (“Kyowa Hakko Kirin”). <p style="widows: 2; text-transform: none; text-indent: 0px; margin: 0pt 0px; font: 10pt 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; word-spacing: 0px; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial; font-stretch: normal;">  <p style="widows: 2; text-transform: none; text-indent: 20.15pt; margin: 0pt 0px; font: 10pt 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; word-spacing: 0px; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial; font-stretch: normal;">Our uses of cash for operating activities have primarily consisted of salaries and wages for our employees, facility and facility-related costs for our offices and laboratories, fees paid in connection with preclinical and clinical studies, laboratory supplies and materials, and professional fees. The sources of our cash flow from operating activities have consisted primarily of payments received from our collaborators for services performed or upfront payments for license agreements or future services. In the three months ended March 31, 2018 and 2017, our net use of cash was primarily driven by payments for operating expenses which resulted in net cash outflows of $5.0 million and $8.3 million, respectively. <p style="widows: 2; text-transform: none; text-indent: 20.15pt; margin: 0pt 0px; font: 10pt 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; word-spacing: 0px; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial; font-stretch: normal;">  <p style="widows: 2; text-transform: none; text-indent: 20pt; margin: 0pt 0px; font: 10pt 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; word-spacing: 0px; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial; font-stretch: normal;">Our cash requirements may vary materially from those now planned depending upon the results of our drug discovery and development strategies, our ability to enter into additional corporate collaborations and the terms of such collaborations, results of research and development, unanticipated required capital expenditures, competitive and technological advances, acquisitions and other factors. We cannot guarantee that we will be able to develop any of our drug candidates into a commercial product. In January 2017, we entered into a loan and security agreement (the “Loan Agreement”) with a principal balance of  $15 million (see Note 8). The terms of the Loan Agreement require payments of interest on a monthly basis through September 2018 and payments of interest from October 2018 to August 2021 and with principal payments commencing on September 1, 2019. The current maturity date of the loan is August 1, 2022 with principal payments commencing on September 1, 2019. <p style="widows: 2; text-transform: none; text-indent: 20pt; margin: 0pt 0px; font: 10pt 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; word-spacing: 0px; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial; font-stretch: normal;">  <p style="widows: 2; text-transform: none; text-indent: 20pt; margin: 0pt 0px; font: 10pt 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; word-spacing: 0px; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial; font-stretch: normal;">In September 2017, we sold 2.0 million shares of common stock through an at-the-market (ATM) offering and raised net proceeds of  $2.3 million. In October 2017, we entered into definitive stock purchase agreements with certain institutional investors. In conjunction with this stock offering we issued 13,938,651 shares of our common stock and warrants to purchase 3,123,674 shares of our common stock for aggregate net proceeds of  $15.6 million. Each warrant is exercisable for $1.75 per share and expires in four years from the date of issuance. In November 2017, we entered into definitive securities purchase agreements with certain institutional investors. In conjunction with this stock offering the Company raised net proceeds of $9.5 million through the sale of 8,370 shares of series A convertible preferred stock (Series A Preferred) and warrants to purchase 2,259 shares of Series A Preferred (Warrants). Each share of Series A Preferred together with the associated Warrant is priced at $1,135 and will automatically convert into 1,000 shares of common stock upon the adoption of an amendment to the Company’s restated certificate of incorporation to increase the number of authorized shares of common stock thereunder. The Warrants have a pre-conversion exercise price of  $1,750 per share of Series A Preferred (post-conversion price of  $1.75 per share of common stock), are exercisable immediately and expire approximately four years from the date of the adoption of the amendment to the Company’s restated certificate of incorporation. <p style="widows: 2; text-transform: none; text-indent: 0px; margin: 0pt 0px; font: 10pt 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; word-spacing: 0px; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial; font-stretch: normal;">  <p style="widows: 2; text-transform: none; text-indent: 20pt; margin: 0pt 0px; font: 10pt 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; word-spacing: 0px; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial; font-stretch: normal;">We anticipate that our cash, cash equivalents and marketable securities on hand at March 31, 2018, and financial support from our licensing agreements will be sufficient to finance our operations for at least 12 months from the issuance date of these financial statements. We expect that we will need to raise additional capital or incur indebtedness to continue to fund our operations in the future. Our ability to raise additional funds will depend on financial, economic and market conditions, and due to global capital and credit market conditions or for other reasons, we may be unable to raise capital when needed, or on terms favorable to us. If necessary funds are not available, we may have to delay, reduce the scope of, or eliminate some of our development programs, potentially delaying the time to market for any of our product candidates. <p style="widows: 2; text-transform: none; text-indent: 20pt; margin: 0pt 0px; font: 10pt 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; word-spacing: 0px; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial; font-stretch: normal;">  <p style="widows: 2; text-transform: none; text-indent: 0px; margin: 0pt 0px; font: 10pt 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; word-spacing: 0px; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial; font-stretch: normal;">Adoption and Impact of the New Revenue Standard <p style="widows: 2; text-transform: none; text-indent: 0px; margin: 0pt 0px; font: 10pt 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; word-spacing: 0px; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial; font-stretch: normal;">  <p style="widows: 2; text-transform: none; text-indent: 0.5in; margin: 0pt 0px; font: 10pt 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; word-spacing: 0px; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial; font-stretch: normal;">The Company adopted Accounting Standards Codification Topic 606—Revenue from Contracts with Customers, or Topic 606, on January 1, 2018, resulting in a change to its accounting policy for revenue recognition. Results for reporting periods beginning after January 1, 2018 are presented under the new standard, while prior period amounts are not adjusted and continue to be reported under the accounting standards in effect for the prior period. We recorded a net increase to opening equity of $1.5 million as of January 1, 2018 due to the cumulative impact of adopting this new standard. Without applying the new revenue standard, the disclosed research and development revenue would have been $1.5 million higher than currently disclosed for the first three months of 2018. Contract receivables of $1.2 million are included within prepaid expenses and other current assets. The adoption of the new revenue standard did not have a material impact on any other balances within the condensed consolidated financial statements as of and for the three-months ended March 31, 2018. <p style="widows: 2; text-transform: none; text-indent: 0px; margin: 0pt 0px; font: 10pt 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; word-spacing: 0px; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial; font-stretch: normal;">  <p style="widows: 2; text-transform: none; text-indent: 0.5in; margin: 0pt 0px; font: 10pt 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; word-spacing: 0px; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial; font-stretch: normal;">Under the new revenue standards, we recognize revenues when our customer obtains control of promised goods or services, in an amount that reflects the consideration which we expect to receive in exchange for those goods or services. We recognize revenues following the five step model prescribed under Topic 606: (i) identify contract(s) with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenues when (or as) we satisfy the performance obligation. The Company only applies the five-step model to contracts when it is probable that the entity will collect the consideration it is entitled to in exchange for the goods or services it transfers to the customer. At contract inception, the Company assesses the goods or services promised within each contract, and determines those that are performance obligations. Revenue is recognized when each distinct performance obligation is satisfied. <p style="widows: 2; text-transform: none; text-indent: 0.5in; margin: 0pt 0px; font: 10pt 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; word-spacing: 0px; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial; font-stretch: normal;">  <p style="widows: 2; text-transform: none; text-indent: 0.5in; margin: 0pt 0px; font: 10pt 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; word-spacing: 0px; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial; font-stretch: normal;">The Company has collaboration and license agreements with drug development and pharmaceutical companies. The Company’s proprietary technology and intellectual property is the basis for many of these collaboration and license agreements and generally include contractual milestone events that coincide with the progression of development, regulatory and commercialization milestones. At the inception of each collaboration that includes developmental, regulatory or commercial milestone payments, the Company evaluates whether achieving the milestones is considered probable and estimates the amount to be included in the transaction price using the most likely amount method. If it is probable that a significant revenue reversal would not occur, the value of the associated milestone is included in the transaction price. Milestone payments that are not within the control of the Company, such as approvals from regulators or where attainment of the specified event is dependent on the development activities of a third-party, are not considered probable of being achieved until those approvals are received or the specified event occurs. Revenue is recognized from the satisfaction of performance obligations in the amount billable to the customer.

<div> <p style="widows: 2; text-transform: none; text-indent: 0px; margin: 0pt 0px; font: 10pt 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; word-spacing: 0px; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial; font-stretch: normal;">3. MARKETABLE SECURITIES AND FAIR VALUE MEASUREMENTS <p style="widows: 2; text-transform: none; text-indent: 20.15pt; margin: 0pt 0px; font: 10pt 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; word-spacing: 0px; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial; font-stretch: normal;">  <p style="widows: 2; text-transform: none; text-indent: 20.15pt; margin: 0pt 0px; font: 10pt 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; word-spacing: 0px; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial; font-stretch: normal;">We generally classify our marketable securities as available-for-sale at the time of purchase and re-evaluate such designation as of each balance sheet date. Since we generally intend to convert them into cash as necessary to meet our liquidity requirements our marketable securities are classified as cash equivalents if the original maturity, from the date of purchase, is ninety days or less and as short-term investments if the original maturity, from the date of purchase, is in excess of ninety days but less than one year. Our marketable securities are classified as long-term investments if the maturity date is in excess of one year of the balance sheet date. <p style="widows: 2; text-transform: none; text-indent: 20.15pt; margin: 0pt 0px; font: 10pt 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; word-spacing: 0px; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial; font-stretch: normal;">  <p style="widows: 2; text-transform: none; text-indent: 20.15pt; margin: 0pt 0px; font: 10pt 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; word-spacing: 0px; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial; font-stretch: normal;">We report available-for-sale investments at fair value as of each balance sheet date and include any unrealized gains and, to the extent deemed temporary, unrealized losses in stockholders’ equity. Realized gains and losses are determined using the specific identification method and are included in other income (expense) in the statement of operations and comprehensive loss. <div style="widows: 2; text-transform: none; text-indent: 20.15pt; margin: 0pt 0px; font: 10pt 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; word-spacing: 0px; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial; font-stretch: normal;"> </div> <p style="widows: 2; text-transform: none; text-indent: 20.15pt; margin: 0pt 0px; font: 10pt 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; word-spacing: 0px; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial; font-stretch: normal;">We conduct quarterly reviews to determine the fair value of our investment portfolio and to identify and evaluate each investment that has an unrealized loss, in accordance with the meaning of other-than-temporary impairment and its application to certain investments. An unrealized loss exists when the current fair value of an individual security is less than its amortized cost basis. In the event that the cost basis of a security exceeds its fair value, we evaluate, among other factors, the duration of the period that, and extent to which, the fair value is less than cost basis, the financial health of and business outlook for the issuer, including industry and sector performance, and operational and financing cash flow factors, overall market conditions and trends, our intent to sell the investment and if it is more likely than not that we would be required to sell the investment before its anticipated recovery. Unrealized losses on available-for-sale securities that are determined to be temporary, and not related to credit loss, are recorded in accumulated other comprehensive income (loss). <p style="widows: 2; text-transform: none; text-indent: 20.15pt; margin: 0pt 0px; font: 10pt 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; word-spacing: 0px; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial; font-stretch: normal;">  <p style="widows: 2; text-transform: none; text-indent: 20.15pt; margin: 0pt 0px; font: 10pt 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; word-spacing: 0px; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial; font-stretch: normal;">For available-for-sale debt securities with unrealized losses, we perform an analysis to assess whether we intend to sell or whether we would more likely than not be required to sell the security before the expected recovery of the amortized cost basis. Where we intend to sell a security, or may be required to do so, the security’s decline in fair value is deemed to be other-than-temporary and the full amount of the unrealized loss is reflected in the statement of operations and comprehensive loss as an impairment loss. <p style="widows: 2; text-transform: none; text-indent: 20.15pt; margin: 0pt 0px; font: 10pt 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; word-spacing: 0px; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial; font-stretch: normal;">  <p style="widows: 2; text-transform: none; text-indent: 20.15pt; margin: 0pt 0px; font: 10pt 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; word-spacing: 0px; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial; font-stretch: normal;">Regardless of our intent to sell a security, we perform additional analysis on all securities with unrealized losses to evaluate losses associated with the creditworthiness of the security. Credit losses are identified where we do not expect to receive cash flows sufficient to recover the amortized cost basis of a security. <p style="widows: 2; text-transform: none; text-indent: 20pt; margin: 0pt 0px; font: 10pt 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; word-spacing: 0px; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial; font-stretch: normal;">  <p style="widows: 2; text-transform: none; text-indent: 20pt; margin: 0pt 0px; font: 10pt 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; word-spacing: 0px; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial; font-stretch: normal;">We invest our available cash primarily in commercial paper, money market funds, and U.S. Treasury bill funds that have investment grade ratings. <p style="widows: 2; text-transform: none; text-indent: 0px; margin: 0pt 0px; font: 10pt 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; word-spacing: 0px; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial; font-stretch: normal;">  <p style="widows: 2; text-transform: none; text-indent: 20pt; margin: 0pt 0px; font: 10pt 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; word-spacing: 0px; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial; font-stretch: normal;">The following is a summary of the fair value of available-for-sale marketable securities we held at March 31, 2018 and December 31, 2017: <p style="widows: 2; text-transform: none; text-indent: 20pt; margin: 0pt 0px; font: 10pt 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; word-spacing: 0px; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial; font-stretch: normal;">  <table style="widows: 2; text-transform: none; text-indent: 0px; width: 100%; border-collapse: collapse; font: 10pt 'times new roman', times, serif; orphans: 2; letter-spacing: normal; word-spacing: 0px; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial; font-stretch: normal;" border="0" cellspacing="0" cellpadding="0"> <tr style="vertical-align: bottom;"> <td style="border-bottom: black 1pt solid; font-weight: bold;" nowrap="nowrap">March 31, 2018</td> <td style="padding-bottom: 1pt;"> </td> <td style="border-bottom: black 1pt solid; text-align: center;" colspan="2" nowrap="nowrap"> Amortized Cost </td> <td style="padding-bottom: 1pt;"> </td> <td style="padding-bottom: 1pt;"> </td> <td style="border-bottom: black 1pt solid; text-align: center;" colspan="2" nowrap="nowrap"> Gross Unrealized Gains </td> <td style="padding-bottom: 1pt;"> </td> <td style="padding-bottom: 1pt;"> </td> <td style="border-bottom: black 1pt solid; text-align: center;" colspan="2" nowrap="nowrap"> Gross Unrealized Losses </td> <td style="padding-bottom: 1pt;"> </td> <td style="padding-bottom: 1pt;"> </td> <td style="border-bottom: black 1pt solid; text-align: center;" colspan="2" nowrap="nowrap"> Fair Value </td> <td style="padding-bottom: 1pt;"> </td> </tr> <tr style="background-color: #cceeff; vertical-align: bottom;"> <td style="text-align: left; font-style: italic;">Security type</td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;"> </td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;"> </td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;"> </td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;"> </td> <td style="text-align: left;"> </td> </tr> <tr style="background-color: white; vertical-align: bottom;"> <td style="text-align: left; padding-bottom: 1pt; padding-left: 9pt; width: 741px;">Corporate debt securities-short term</td> <td style="padding-bottom: 1pt; width: 16px;"> </td> <td style="border-bottom: black 1pt solid; text-align: left; width: 16px;">$</td> <td style="border-bottom: black 1pt solid; text-align: right; width: 157px;">32,388</td> <td style="text-align: left; padding-bottom: 1pt; width: 16px;"> </td> <td style="padding-bottom: 1pt; width: 16px;"> </td> <td style="border-bottom: black 1pt solid; text-align: left; width: 16px;">$</td> <td style="border-bottom: black 1pt solid; text-align: right; width: 157px;">—</td> <td style="text-align: left; padding-bottom: 1pt; width: 16px;"> </td> <td style="padding-bottom: 1pt; width: 16px;"> </td> <td style="border-bottom: black 1pt solid; text-align: left; width: 16px;">$</td> <td style="border-bottom: black 1pt solid; text-align: right; width: 156px;">(41</td> <td style="text-align: left; padding-bottom: 1pt; width: 15px;">)</td> <td style="padding-bottom: 1pt; width: 15px;"> </td> <td style="border-bottom: black 1pt solid; text-align: left; width: 15px;">$</td> <td style="border-bottom: black 1pt solid; text-align: right; width: 156px;">32,347</td> <td style="text-align: left; padding-bottom: 1pt; width: 15px;"> </td> </tr> <tr style="background-color: #cceeff; vertical-align: bottom;"> <td style="text-align: left; padding-bottom: 2.5pt;">Total available-for-sale marketable securities</td> <td style="padding-bottom: 2.5pt;"> </td> <td style="border-bottom: black 2.5pt double; text-align: left;">$</td> <td style="border-bottom: black 2.5pt double; text-align: right;">32,388</td> <td style="text-align: left; padding-bottom: 2.5pt;"> </td> <td style="padding-bottom: 2.5pt;"> </td> <td style="border-bottom: black 2.5pt double; text-align: left;">$</td> <td style="border-bottom: black 2.5pt double; text-align: right;">—</td> <td style="text-align: left; padding-bottom: 2.5pt;"> </td> <td style="padding-bottom: 2.5pt;"> </td> <td style="border-bottom: black 2.5pt double; text-align: left;">$</td> <td style="border-bottom: black 2.5pt double; text-align: right;">(41</td> <td style="text-align: left; padding-bottom: 2.5pt;">)</td> <td style="padding-bottom: 2.5pt;"> </td> <td style="border-bottom: black 2.5pt double; text-align: left;">$</td> <td style="border-bottom: black 2.5pt double; text-align: right;">32,347</td> <td style="text-align: left; padding-bottom: 2.5pt;"> </td> </tr> </table> <p style="widows: 2; text-transform: none; text-indent: 0px; margin: 0pt 0px; font: 10pt 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; word-spacing: 0px; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial; font-stretch: normal;">  <table style="widows: 2; text-transform: none; text-indent: 0px; width: 100%; border-collapse: collapse; font: 10pt 'times new roman', times, serif; orphans: 2; letter-spacing: normal; word-spacing: 0px; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial; font-stretch: normal;" border="0" cellspacing="0" cellpadding="0"> <tr style="vertical-align: bottom;"> <td style="border-bottom: black 1pt solid; font-weight: bold;" nowrap="nowrap">December 31, 2017</td> <td style="padding-bottom: 1pt;"> </td> <td style="border-bottom: black 1pt solid; text-align: center;" colspan="2" nowrap="nowrap"> Amortized Cost </td> <td style="padding-bottom: 1pt;"> </td> <td style="padding-bottom: 1pt;"> </td> <td style="border-bottom: black 1pt solid; text-align: center;" colspan="2" nowrap="nowrap"> Gross Unrealized Gains </td> <td style="padding-bottom: 1pt;"> </td> <td style="padding-bottom: 1pt;"> </td> <td style="border-bottom: black 1pt solid; text-align: center;" colspan="2" nowrap="nowrap"> Gross Unrealized Losses </td> <td style="padding-bottom: 1pt;"> </td> <td style="padding-bottom: 1pt;"> </td> <td style="border-bottom: black 1pt solid; text-align: center;" colspan="2" nowrap="nowrap"> Fair Value </td> <td style="padding-bottom: 1pt;"> </td> </tr> <tr style="background-color: #cceeff; vertical-align: bottom;"> <td style="text-align: left; font-style: italic;">Security type</td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;"> </td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;"> </td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;"> </td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;"> </td> <td style="text-align: left;"> </td> </tr> <tr style="background-color: white; vertical-align: bottom;"> <td style="text-align: left; padding-bottom: 1pt; padding-left: 9pt; width: 741px;">Corporate debt securities-short term</td> <td style="padding-bottom: 1pt; width: 16px;"> </td> <td style="border-bottom: black 1pt solid; text-align: left; width: 16px;">$</td> <td style="border-bottom: black 1pt solid; text-align: right; width: 157px;">27,823</td> <td style="text-align: left; padding-bottom: 1pt; width: 16px;"> </td> <td style="padding-bottom: 1pt; width: 16px;"> </td> <td style="border-bottom: black 1pt solid; text-align: left; width: 16px;">$</td> <td style="border-bottom: black 1pt solid; text-align: right; width: 157px;">1</td> <td style="text-align: left; padding-bottom: 1pt; width: 16px;"> </td> <td style="padding-bottom: 1pt; width: 16px;"> </td> <td style="border-bottom: black 1pt solid; text-align: left; width: 16px;">$</td> <td style="border-bottom: black 1pt solid; text-align: right; width: 156px;">(17</td> <td style="text-align: left; padding-bottom: 1pt; width: 15px;">)</td> <td style="padding-bottom: 1pt; width: 15px;"> </td> <td style="border-bottom: black 1pt solid; text-align: left; width: 15px;">$</td> <td style="border-bottom: black 1pt solid; text-align: right; width: 156px;">27,807</td> <td style="text-align: left; padding-bottom: 1pt; width: 15px;"> </td> </tr> <tr style="background-color: #cceeff; vertical-align: bottom;"> <td style="text-align: left; padding-bottom: 2.5pt;">Total available-for-sale marketable securities</td> <td style="padding-bottom: 2.5pt;"> </td> <td style="border-bottom: black 2.5pt double; text-align: left;">$</td> <td style="border-bottom: black 2.5pt double; text-align: right;">27,823</td> <td style="text-align: left; padding-bottom: 2.5pt;"> </td> <td style="padding-bottom: 2.5pt;"> </td> <td style="border-bottom: black 2.5pt double; text-align: left;">$</td> <td style="border-bottom: black 2.5pt double; text-align: right;">1</td> <td style="text-align: left; padding-bottom: 2.5pt;"> </td> <td style="padding-bottom: 2.5pt;"> </td> <td style="border-bottom: black 2.5pt double; text-align: left;">$</td> <td style="border-bottom: black 2.5pt double; text-align: right;">(17</td> <td style="text-align: left; padding-bottom: 2.5pt;">)</td> <td style="padding-bottom: 2.5pt;"> </td> <td style="border-bottom: black 2.5pt double; text-align: left;">$</td> <td style="border-bottom: black 2.5pt double; text-align: right;">27,807</td> <td style="text-align: left; padding-bottom: 2.5pt;"> </td> </tr> </table> <p style="widows: 2; text-transform: none; text-indent: 20pt; margin: 0pt 0px; font: 10pt 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; word-spacing: 0px; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial; font-stretch: normal;">  <p style="widows: 2; text-transform: none; text-indent: 20pt; margin: 0pt 0px; font: 10pt 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; word-spacing: 0px; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial; font-stretch: normal;">None of our available-for-sale marketable securities were in a continuous unrealized loss position for more than 12 months at March 31, 2018 or December 31, 2017. <div style="widows: 2; text-transform: none; text-indent: 0px; margin: 0pt 0px; font: 10pt 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; word-spacing: 0px; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial; font-stretch: normal;"> </div> <p style="widows: 2; text-transform: none; text-indent: 0px; margin: 0pt 0px; font: 10pt 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; word-spacing: 0px; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial; font-stretch: normal;">The following tables present information about our assets and liabilities that are measured at fair value on a recurring basis for the periods presented and indicates the fair value hierarchy of the valuation techniques we utilized to determine such fair value. There were no transfers in or out of Level 1 or Level 2 measurements for the periods presented: <p style="widows: 2; text-transform: none; text-indent: 20.15pt; margin: 0pt 0px; font: 10pt 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; word-spacing: 0px; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial; font-stretch: normal;">  <table style="widows: 2; text-transform: none; text-indent: 0px; width: 100%; border-collapse: collapse; font: 10pt 'times new roman', times, serif; orphans: 2; letter-spacing: normal; word-spacing: 0px; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial; font-stretch: normal;" border="0" cellspacing="0" cellpadding="0"> <tr style="vertical-align: bottom;"> <td style="text-align: center;" nowrap="nowrap"> </td> <td style="padding-bottom: 1pt;"> </td> <td style="border-bottom: black 1pt solid; text-align: center;" colspan="2" nowrap="nowrap"> March 31, 2018 </td> <td style="padding-bottom: 1pt;"> </td> <td style="padding-bottom: 1pt; font-weight: bold;"> </td> <td style="border-bottom: black 1pt solid; text-align: center; font-weight: bold;" colspan="2" nowrap="nowrap">Quoted Prices in Active Markets (Level 1)</td> <td style="padding-bottom: 1pt; font-weight: bold;"> </td> <td style="padding-bottom: 1pt; font-weight: bold;"> </td> <td style="border-bottom: black 1pt solid; text-align: center; font-weight: bold;" colspan="2" nowrap="nowrap">Significant Other Observable Inputs (Level 2)</td> <td style="padding-bottom: 1pt; font-weight: bold;"> </td> <td style="padding-bottom: 1pt; font-weight: bold;"> </td> <td style="border-bottom: black 1pt solid; text-align: center; font-weight: bold;" colspan="2" nowrap="nowrap">Significant Unobservable Inputs (Level 3)</td> <td style="padding-bottom: 1pt; font-weight: bold;"> </td> </tr> <tr style="background-color: #cceeff; vertical-align: bottom;"> <td style="text-align: left; width: 753px;">Cash equivalents</td> <td style="width: 16px;"> </td> <td style="text-align: left; width: 16px;">$</td> <td style="text-align: right; width: 157px;">8,484</td> <td style="text-align: left; width: 16px;"> </td> <td style="width: 16px;"> </td> <td style="text-align: left; width: 16px;">$</td> <td style="text-align: right; width: 157px;">8,484</td> <td style="text-align: left; width: 16px;"> </td> <td style="width: 16px;"> </td> <td style="text-align: left; width: 16px;">$</td> <td style="text-align: right; width: 156px;">—</td> <td style="text-align: left; width: 15px;"> </td> <td style="width: 15px;"> </td> <td style="text-align: left; width: 15px;">$</td> <td style="text-align: right; width: 156px;">—</td> <td style="text-align: left; width: 15px;"> </td> </tr> <tr style="background-color: white; vertical-align: bottom;"> <td style="text-align: left; padding-bottom: 1pt;">Corporate debt securities-short term</td> <td style="padding-bottom: 1pt;"> </td> <td style="border-bottom: black 1pt solid; text-align: left;"> </td> <td style="border-bottom: black 1pt solid; text-align: right;">32,347</td> <td style="text-align: left; padding-bottom: 1pt;"> </td> <td style="padding-bottom: 1pt;"> </td> <td style="border-bottom: black 1pt solid; text-align: left;"> </td> <td style="border-bottom: black 1pt solid; text-align: right;">—</td> <td style="text-align: left; padding-bottom: 1pt;"> </td> <td style="padding-bottom: 1pt;"> </td> <td style="border-bottom: black 1pt solid; text-align: left;"> </td> <td style="border-bottom: black 1pt solid; text-align: right;">32,347</td> <td style="text-align: left; padding-bottom: 1pt;"> </td> <td style="padding-bottom: 1pt;"> </td> <td style="border-bottom: black 1pt solid; text-align: left;"> </td> <td style="border-bottom: black 1pt solid; text-align: right;">—</td> <td style="text-align: left; padding-bottom: 1pt;"> </td> </tr> <tr style="background-color: #cceeff; vertical-align: bottom;"> <td style="padding-bottom: 2.5pt; padding-left: 34.55pt;">Total</td> <td style="padding-bottom: 2.5pt;"> </td> <td style="border-bottom: black 2.5pt double; text-align: left;">$</td> <td style="border-bottom: black 2.5pt double; text-align: right;">40,831</td> <td style="text-align: left; padding-bottom: 2.5pt;"> </td> <td style="padding-bottom: 2.5pt;"> </td> <td style="border-bottom: black 2.5pt double; text-align: left;">$</td> <td style="border-bottom: black 2.5pt double; text-align: right;">8,484</td> <td style="text-align: left; padding-bottom: 2.5pt;"> </td> <td style="padding-bottom: 2.5pt;"> </td> <td style="border-bottom: black 2.5pt double; text-align: left;"> </td> <td style="border-bottom: black 2.5pt double; text-align: right;">32,347</td> <td style="text-align: left; padding-bottom: 2.5pt;"> </td> <td style="padding-bottom: 2.5pt;"> </td> <td style="border-bottom: black 2.5pt double; text-align: left;">$</td> <td style="border-bottom: black 2.5pt double; text-align: right;">—</td> <td style="text-align: left; padding-bottom: 2.5pt;"> </td> </tr> <tr style="background-color: white; vertical-align: bottom;"> <td style="padding-left: 34.55pt;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;"> </td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;"> </td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;"> </td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;"> </td> <td style="text-align: left;"> </td> </tr> <tr style="vertical-align: bottom;"> <td style="text-align: center;" nowrap="nowrap"> </td> <td style="padding-bottom: 1pt; font-weight: bold;"> </td> <td style="border-bottom: black 1pt solid; text-align: center; font-weight: bold;" colspan="2" nowrap="nowrap">December 31, 2017</td> <td style="padding-bottom: 1pt; font-weight: bold;"> </td> <td style="padding-bottom: 1pt; font-weight: bold;"> </td> <td style="border-bottom: black 1pt solid; text-align: center; font-weight: bold;" colspan="2" nowrap="nowrap">Quoted Prices in Active Markets (Level 1)</td> <td style="padding-bottom: 1pt; font-weight: bold;"> </td> <td style="padding-bottom: 1pt; font-weight: bold;"> </td> <td style="border-bottom: black 1pt solid; text-align: center; font-weight: bold;" colspan="2" nowrap="nowrap">Significant Other Observable Inputs (Level 2)</td> <td style="padding-bottom: 1pt; font-weight: bold;"> </td> <td style="padding-bottom: 1pt; font-weight: bold;"> </td> <td style="border-bottom: black 1pt solid; text-align: center; font-weight: bold;" colspan="2" nowrap="nowrap">Significant Unobservable Inputs (Level 3)</td> <td style="padding-bottom: 1pt; font-weight: bold;"> </td> </tr> <tr style="background-color: #cceeff; vertical-align: bottom;"> <td style="text-align: left; width: 753px;">Cash equivalents</td> <td style="width: 16px;"> </td> <td style="text-align: left; width: 16px;">$</td> <td style="text-align: right; width: 157px;">19,889</td> <td style="text-align: left; width: 16px;"> </td> <td style="width: 16px;"> </td> <td style="text-align: left; width: 16px;">$</td> <td style="text-align: right; width: 157px;">19,889</td> <td style="text-align: left; width: 16px;"> </td> <td style="width: 16px;"> </td> <td style="text-align: left; width: 16px;">$</td> <td style="text-align: right; width: 156px;">—</td> <td style="text-align: left; width: 15px;"> </td> <td style="width: 15px;"> </td> <td style="text-align: left; width: 15px;">$</td> <td style="text-align: right; width: 156px;">—</td> <td style="text-align: left; width: 15px;"> </td> </tr> <tr style="background-color: white; vertical-align: bottom;"> <td style="text-align: left; padding-bottom: 1pt;">Corporate debt securities-short term</td> <td style="padding-bottom: 1pt;"> </td> <td style="border-bottom: black 1pt solid; text-align: left;"> </td> <td style="border-bottom: black 1pt solid; text-align: right;">27,807</td> <td style="text-align: left; padding-bottom: 1pt;"> </td> <td style="padding-bottom: 1pt;"> </td> <td style="border-bottom: black 1pt solid; text-align: left;"> </td> <td style="border-bottom: black 1pt solid; text-align: right;">—</td> <td style="text-align: left; padding-bottom: 1pt;"> </td> <td style="padding-bottom: 1pt;"> </td> <td style="border-bottom: black 1pt solid; text-align: left;"> </td> <td style="border-bottom: black 1pt solid; text-align: right;">27,807</td> <td style="text-align: left; padding-bottom: 1pt;"> </td> <td style="padding-bottom: 1pt;"> </td> <td style="border-bottom: black 1pt solid; text-align: left;"> </td> <td style="border-bottom: black 1pt solid; text-align: right;">—</td> <td style="text-align: left; padding-bottom: 1pt;"> </td> </tr> <tr style="background-color: #cceeff; vertical-align: bottom;"> <td style="padding-bottom: 2.5pt; padding-left: 34.55pt;">Total</td> <td style="padding-bottom: 2.5pt;"> </td> <td style="border-bottom: black 2.5pt double; text-align: left;">$</td> <td style="border-bottom: black 2.5pt double; text-align: right;">47,696</td> <td style="text-align: left; padding-bottom: 2.5pt;"> </td> <td style="padding-bottom: 2.5pt;"> </td> <td style="border-bottom: black 2.5pt double; text-align: left;">$</td> <td style="border-bottom: black 2.5pt double; text-align: right;">19,889</td> <td style="text-align: left; padding-bottom: 2.5pt;"> </td> <td style="padding-bottom: 2.5pt;"> </td> <td style="border-bottom: black 2.5pt double; text-align: left;">$</td> <td style="border-bottom: black 2.5pt double; text-align: right;">27,807</td> <td style="text-align: left; padding-bottom: 2.5pt;"> </td> <td style="padding-bottom: 2.5pt;"> </td> <td style="border-bottom: black 2.5pt double; text-align: left;">$</td> <td style="border-bottom: black 2.5pt double; text-align: right;">—</td> <td style="text-align: left; padding-bottom: 2.5pt;"> </td> </tr> <tr style="background-color: white; vertical-align: bottom;"> <td style="padding-left: 34.55pt;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;"> </td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;"> </td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;"> </td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;"> </td> <td style="text-align: left;"> </td> </tr> <tr style="vertical-align: bottom;"> <td nowrap="nowrap"> </td> <td style="padding-bottom: 1pt;"> </td> <td style="border-bottom: black 1pt solid; text-align: center;" colspan="2" nowrap="nowrap"> March 31, 2018 </td> <td style="padding-bottom: 1pt;"> </td> <td style="padding-bottom: 1pt;"> </td> <td style="border-bottom: black 1pt solid; text-align: center;" colspan="2" nowrap="nowrap"> Quoted Prices in Active Markets (Level 1) </td> <td style="padding-bottom: 1pt;"> </td> <td style="padding-bottom: 1pt;"> </td> <td style="border-bottom: black 1pt solid; text-align: center;" colspan="2" nowrap="nowrap"> Significant Other Observable Inputs (Level 2) </td> <td style="padding-bottom: 1pt;"> </td> <td style="padding-bottom: 1pt;"> </td> <td style="border-bottom: black 1pt solid; text-align: center;" colspan="2" nowrap="nowrap"> Significant Unobservable Inputs (Level 3) </td> <td style="padding-bottom: 1pt;"> </td> </tr> <tr style="background-color: #cceeff; vertical-align: bottom;"> <td style="text-align: left; padding-bottom: 2.5pt; width: 753px;">Warrant liability</td> <td style="padding-bottom: 2.5pt; width: 16px;"> </td> <td style="border-bottom: black 2.5pt double; text-align: left; width: 16px;">$</td> <td style="border-bottom: black 2.5pt double; text-align: right; width: 157px;">3,782</td> <td style="text-align: left; padding-bottom: 2.5pt; width: 16px;"> </td> <td style="padding-bottom: 2.5pt; width: 16px;"> </td> <td style="border-bottom: black 2.5pt double; text-align: left; width: 16px;">$</td> <td style="border-bottom: black 2.5pt double; text-align: right; width: 157px;">—</td> <td style="text-align: left; padding-bottom: 2.5pt; width: 16px;"> </td> <td style="padding-bottom: 2.5pt; width: 16px;"> </td> <td style="border-bottom: black 2.5pt double; text-align: left; width: 16px;">$</td> <td style="border-bottom: black 2.5pt double; text-align: right; width: 156px;">—</td> <td style="text-align: left; padding-bottom: 2.5pt; width: 15px;"> </td> <td style="padding-bottom: 2.5pt; width: 15px;"> </td> <td style="border-bottom: black 2.5pt double; text-align: left; width: 15px;">$</td> <td style="border-bottom: black 2.5pt double; text-align: right; width: 156px;">3,782</td> <td style="text-align: left; padding-bottom: 2.5pt; width: 15px;"> </td> </tr> <tr style="background-color: white; vertical-align: bottom;"> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;"> </td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;"> </td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;"> </td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;"> </td> <td style="text-align: left;"> </td> </tr> <tr style="vertical-align: bottom;"> <td nowrap="nowrap"> </td> <td style="padding-bottom: 1pt;"> </td> <td style="border-bottom: black 1pt solid; text-align: center;" colspan="2" nowrap="nowrap"> December 31, 2017 </td> <td style="padding-bottom: 1pt;"> </td> <td style="padding-bottom: 1pt;"> </td> <td style="border-bottom: black 1pt solid; text-align: center;" colspan="2" nowrap="nowrap"> Quoted Prices in Active Markets (Level 1) </td> <td style="padding-bottom: 1pt;"> </td> <td style="padding-bottom: 1pt;"> </td> <td style="border-bottom: black 1pt solid; text-align: center;" colspan="2" nowrap="nowrap"> Significant Other Observable Inputs (Level 2) </td> <td style="padding-bottom: 1pt;"> </td> <td style="padding-bottom: 1pt;"> </td> <td style="border-bottom: black 1pt solid; text-align: center;" colspan="2" nowrap="nowrap"> Significant Unobservable Inputs (Level 3) </td> <td style="padding-bottom: 1pt;"> </td> </tr> <tr style="background-color: #cceeff; vertical-align: bottom;"> <td style="text-align: left; padding-bottom: 2.5pt; width: 753px;">Warrant liability</td> <td style="padding-bottom: 2.5pt; width: 16px;"> </td> <td style="border-bottom: black 2.5pt double; text-align: left; width: 16px;">$</td> <td style="border-bottom: black 2.5pt double; text-align: right; width: 157px;">1,512</td> <td style="text-align: left; padding-bottom: 2.5pt; width: 16px;"> </td> <td style="padding-bottom: 2.5pt; width: 16px;"> </td> <td style="border-bottom: black 2.5pt double; text-align: left; width: 16px;">$</td> <td style="border-bottom: black 2.5pt double; text-align: right; width: 157px;">—</td> <td style="text-align: left; padding-bottom: 2.5pt; width: 16px;"> </td> <td style="padding-bottom: 2.5pt; width: 16px;"> </td> <td style="border-bottom: black 2.5pt double; text-align: left; width: 16px;">$</td> <td style="border-bottom: black 2.5pt double; text-align: right; width: 156px;">—</td> <td style="text-align: left; padding-bottom: 2.5pt; width: 15px;"> </td> <td style="padding-bottom: 2.5pt; width: 15px;"> </td> <td style="border-bottom: black 2.5pt double; text-align: left; width: 15px;">$</td> <td style="border-bottom: black 2.5pt double; text-align: right; width: 156px;">1,512</td> <td style="text-align: left; padding-bottom: 2.5pt; width: 15px;"> </td> </tr> </table> <p style="widows: 2; text-transform: none; text-indent: 20pt; margin: 0pt 0px; font: 10pt 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; word-spacing: 0px; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial; font-stretch: normal;">  <p style="widows: 2; text-transform: none; text-indent: 20pt; margin: 0pt 0px; font: 10pt 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; word-spacing: 0px; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial; font-stretch: normal;">Due to the lack of market quotes relating to our preferred stock warrants, the fair value of the preferred stock warrants was determined at March 31, 2018 and December 31, 2017 using the Black-Scholes model, which is based on Level 3 inputs. The inputs used in the Black-Scholes model are presented below. The assumptions used may change as the underlying sources of these assumptions and market conditions change. Based on the Black-Scholes model, the Company recorded a preferred stock warrant <p style="widows: 2; text-transform: none; text-indent: 0px; margin: 0pt 0px; font: 10pt 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; word-spacing: 0px; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial; font-stretch: normal;">liability of $3,782 at March 31, 2018 and $1,512 at December 31, 2017. <p style="widows: 2; text-transform: none; text-indent: 20pt; margin: 0pt 0px; font: 10pt 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; word-spacing: 0px; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial; font-stretch: normal;">  <p style="widows: 2; text-transform: none; text-indent: 20pt; margin: 0pt 0px; font: 10pt 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; word-spacing: 0px; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial; font-stretch: normal;">The following are the Black-Scholes inputs to the warrant liability valuation for the periods presented: <p style="widows: 2; text-transform: none; text-indent: 20pt; margin: 0pt 0px; font: 10pt 'times new roman', times, serif; white-space: normal; orphans: 2; letter-spacing: normal; color: #000000; word-spacing: 0px; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial; font-stretch: normal;">  <table style="widows: 2; text-transform: none; text-indent: 0px; width: 90%; border-collapse: collapse; font: 10pt 'times new roman', times, serif; orphans: 2; letter-spacing: normal; margin-left: 0.5in; word-spacing: 0px; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial; font-stretch: normal;" border="0" cellspacing="0" cellpadding="0"> <tr style="vertical-align: bottom;"> <td nowrap="nowrap"> </td> <td style="padding-bottom: 1pt; font-weight: bold;"> </td> <td style="border-bottom: black 1pt solid; text-align: center; font-weight: bold;" colspan="2" nowrap="nowrap">March 31,  2018</td> <td style="padding-bottom: 1pt; font-weight: bold;"> </td> <td style="padding-bottom: 1pt;"> </td> <td style="border-bottom: black 1pt solid; text-align: center;" colspan="2" nowrap="nowrap"> December 31, 2017 </td> <td style="padding-bottom: 1pt;"> </td> </tr> <tr style="background-color: #cceeff; vertical-align: bottom;"> <td style="width: 903px;">Exercise price</td> <td style="width: 15px;"> </td> <td style="text-align: left; width: 14px;">$</td> <td style="text-align: right; width: 211px;" nowrap="nowrap">1.75</td> <td style="text-align: left; width: 14px;"> </td> <td style="width: 14px;"> </td> <td style="text-align: left; width: 14px;">$</td> <td style="text-align: right; width: 211px;" nowrap="nowrap">1.75</td> <td style="text-align: left; width: 14px;"> </td> </tr> <tr style="background-color: white; vertical-align: bottom;"> <td>Market price</td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;" nowrap="nowrap">2.88</td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;" nowrap="nowrap">1.65</td> <td style="text-align: left;"> </td> </tr> <tr style="background-color: #cceeff; vertical-align: bottom;"> <td style="text-align: left;">Expected volatility</td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;" nowrap="nowrap">56.7</td> <td style="text-align: left;">%</td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;" nowrap="nowrap">53.3</td> <td style="text-align: left;">%</td> </tr> <tr style="background-color: white; vertical-align: bottom;"> <td style="text-align: left;">Risk-free interest</td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;" nowrap="nowrap">2.44</td> <td style="text-align: left;">%</td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;" nowrap="nowrap">2.07</td> <td style="text-align: left;">%</td> </tr> <tr style="background-color: #cceeff; vertical-align: bottom;"> <td style="text-align: left;">Expected term</td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;" nowrap="nowrap">3.61 years</td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;" nowrap="nowrap">3.85 years</td> <td style="text-align: left;"> </td> </tr> <tr style="background-color: white; vertical-align: bottom;"> <td>Dividends</td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;" nowrap="nowrap">none</td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;" nowrap="nowrap">none</td> <td style="text-align: left;"> </td> </tr> </table> </div>

<table align="center" style="widows: 2; text-transform: none; text-indent: 0px; width: 80%; border-collapse: collapse; font: 10pt 'times new roman', times, serif; orphans: 2; letter-spacing: normal; word-spacing: 0px; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial; font-stretch: normal;" border="0" cellspacing="0" cellpadding="0"> <tr style="vertical-align: bottom;"> <td nowrap="nowrap"> </td> <td style="padding-bottom: 1pt; font-weight: bold;"> </td> <td style="border-bottom: black 1pt solid; text-align: center; font-weight: bold;" colspan="6" nowrap="nowrap">Three Months Ended March 31,</td> <td style="padding-bottom: 1pt; font-weight: bold;"> </td> </tr> <tr style="vertical-align: bottom;"> <td nowrap="nowrap"> </td> <td style="padding-bottom: 1pt; font-weight: bold;"> </td> <td style="border-bottom: black 1pt solid; text-align: center; font-weight: bold;" colspan="2" nowrap="nowrap">2018</td> <td style="padding-bottom: 1pt; font-weight: bold;"> </td> <td style="padding-bottom: 1pt; font-weight: bold;"> </td> <td style="border-bottom: black 1pt solid; text-align: center; font-weight: bold;" colspan="2" nowrap="nowrap">2017</td> <td style="padding-bottom: 1pt; font-weight: bold;"> </td> </tr> <tr style="background-color: #cceeff; vertical-align: bottom;"> <td style="text-align: left; padding-left: 8.65pt; width: 790px;">Research and development</td> <td style="width: 13px;"> </td> <td style="text-align: left; width: 13px;">$</td> <td style="text-align: right; width: 188px;">106</td> <td style="text-align: left; width: 13px;"> </td> <td style="width: 13px;"> </td> <td style="text-align: left; width: 12px;">$</td> <td style="text-align: right; width: 187px;">130</td> <td style="text-align: left; width: 12px;"> </td> </tr> <tr style="background-color: white; vertical-align: bottom;"> <td style="text-align: left; padding-bottom: 1pt; padding-left: 8.65pt;">General and administrative</td> <td style="padding-bottom: 1pt;"> </td> <td style="border-bottom: black 1pt solid; text-align: left;"> </td> <td style="border-bottom: black 1pt solid; text-align: right;">317</td> <td style="text-align: left; padding-bottom: 1pt;"> </td> <td style="padding-bottom: 1pt;"> </td> <td style="border-bottom: black 1pt solid; text-align: left;"> </td> <td style="border-bottom: black 1pt solid; text-align: right;">413</td> <td style="text-align: left; padding-bottom: 1pt;"> </td> </tr> <tr style="background-color: #cceeff; vertical-align: bottom;"> <td style="text-align: left; padding-bottom: 2.5pt; padding-left: 17.3pt;">Total stock-based compensation expense</td> <td style="padding-bottom: 2.5pt;"> </td> <td style="border-bottom: black 2.5pt double; text-align: left;">$</td> <td style="border-bottom: black 2.5pt double; text-align: right;">423</td> <td style="text-align: left; padding-bottom: 2.5pt;"> </td> <td style="padding-bottom: 2.5pt;"> </td> <td style="border-bottom: black 2.5pt double; text-align: left;">$</td> <td style="border-bottom: black 2.5pt double; text-align: right;">543</td> <td style="text-align: left; padding-bottom: 2.5pt;"> </td> </tr> </table>

<table style="widows: 2; text-transform: none; text-indent: 0px; width: 100%; border-collapse: collapse; font: 10pt 'times new roman', times, serif; orphans: 2; letter-spacing: normal; word-spacing: 0px; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial; font-stretch: normal;" border="0" cellspacing="0" cellpadding="0"> <tr style="vertical-align: bottom;"> <td style="text-align: center;" nowrap="nowrap"> </td> <td style="padding-bottom: 1pt;"> </td> <td style="border-bottom: black 1pt solid; text-align: center;" colspan="2" nowrap="nowrap"> March 31, 2018 </td> <td style="padding-bottom: 1pt;"> </td> <td style="padding-bottom: 1pt; font-weight: bold;"> </td> <td style="border-bottom: black 1pt solid; text-align: center; font-weight: bold;" colspan="2" nowrap="nowrap">Quoted Prices in Active Markets (Level 1)</td> <td style="padding-bottom: 1pt; font-weight: bold;"> </td> <td style="padding-bottom: 1pt; font-weight: bold;"> </td> <td style="border-bottom: black 1pt solid; text-align: center; font-weight: bold;" colspan="2" nowrap="nowrap">Significant Other Observable Inputs (Level 2)</td> <td style="padding-bottom: 1pt; font-weight: bold;"> </td> <td style="padding-bottom: 1pt; font-weight: bold;"> </td> <td style="border-bottom: black 1pt solid; text-align: center; font-weight: bold;" colspan="2" nowrap="nowrap">Significant Unobservable Inputs (Level 3)</td> <td style="padding-bottom: 1pt; font-weight: bold;"> </td> </tr> <tr style="background-color: #cceeff; vertical-align: bottom;"> <td style="text-align: left; width: 753px;">Cash equivalents</td> <td style="width: 16px;"> </td> <td style="text-align: left; width: 16px;">$</td> <td style="text-align: right; width: 157px;">8,484</td> <td style="text-align: left; width: 16px;"> </td> <td style="width: 16px;"> </td> <td style="text-align: left; width: 16px;">$</td> <td style="text-align: right; width: 157px;">8,484</td> <td style="text-align: left; width: 16px;"> </td> <td style="width: 16px;"> </td> <td style="text-align: left; width: 16px;">$</td> <td style="text-align: right; width: 156px;">—</td> <td style="text-align: left; width: 15px;"> </td> <td style="width: 15px;"> </td> <td style="text-align: left; width: 15px;">$</td> <td style="text-align: right; width: 156px;">—</td> <td style="text-align: left; width: 15px;"> </td> </tr> <tr style="background-color: white; vertical-align: bottom;"> <td style="text-align: left; padding-bottom: 1pt;">Corporate debt securities-short term</td> <td style="padding-bottom: 1pt;"> </td> <td style="border-bottom: black 1pt solid; text-align: left;"> </td> <td style="border-bottom: black 1pt solid; text-align: right;">32,347</td> <td style="text-align: left; padding-bottom: 1pt;"> </td> <td style="padding-bottom: 1pt;"> </td> <td style="border-bottom: black 1pt solid; text-align: left;"> </td> <td style="border-bottom: black 1pt solid; text-align: right;">—</td> <td style="text-align: left; padding-bottom: 1pt;"> </td> <td style="padding-bottom: 1pt;"> </td> <td style="border-bottom: black 1pt solid; text-align: left;"> </td> <td style="border-bottom: black 1pt solid; text-align: right;">32,347</td> <td style="text-align: left; padding-bottom: 1pt;"> </td> <td style="padding-bottom: 1pt;"> </td> <td style="border-bottom: black 1pt solid; text-align: left;"> </td> <td style="border-bottom: black 1pt solid; text-align: right;">—</td> <td style="text-align: left; padding-bottom: 1pt;"> </td> </tr> <tr style="background-color: #cceeff; vertical-align: bottom;"> <td style="padding-bottom: 2.5pt; padding-left: 34.55pt;">Total</td> <td style="padding-bottom: 2.5pt;"> </td> <td style="border-bottom: black 2.5pt double; text-align: left;">$</td> <td style="border-bottom: black 2.5pt double; text-align: right;">40,831</td> <td style="text-align: left; padding-bottom: 2.5pt;"> </td> <td style="padding-bottom: 2.5pt;"> </td> <td style="border-bottom: black 2.5pt double; text-align: left;">$</td> <td style="border-bottom: black 2.5pt double; text-align: right;">8,484</td> <td style="text-align: left; padding-bottom: 2.5pt;"> </td> <td style="padding-bottom: 2.5pt;"> </td> <td style="border-bottom: black 2.5pt double; text-align: left;"> </td> <td style="border-bottom: black 2.5pt double; text-align: right;">32,347</td> <td style="text-align: left; padding-bottom: 2.5pt;"> </td> <td style="padding-bottom: 2.5pt;"> </td> <td style="border-bottom: black 2.5pt double; text-align: left;">$</td> <td style="border-bottom: black 2.5pt double; text-align: right;">—</td> <td style="text-align: left; padding-bottom: 2.5pt;"> </td> </tr> <tr style="background-color: white; vertical-align: bottom;"> <td style="padding-left: 34.55pt;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;"> </td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;"> </td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;"> </td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;"> </td> <td style="text-align: left;"> </td> </tr> <tr style="vertical-align: bottom;"> <td style="text-align: center;" nowrap="nowrap"> </td> <td style="padding-bottom: 1pt; font-weight: bold;"> </td> <td style="border-bottom: black 1pt solid; text-align: center; font-weight: bold;" colspan="2" nowrap="nowrap">December 31, 2017</td> <td style="padding-bottom: 1pt; font-weight: bold;"> </td> <td style="padding-bottom: 1pt; font-weight: bold;"> </td> <td style="border-bottom: black 1pt solid; text-align: center; font-weight: bold;" colspan="2" nowrap="nowrap">Quoted Prices in Active Markets (Level 1)</td> <td style="padding-bottom: 1pt; font-weight: bold;"> </td> <td style="padding-bottom: 1pt; font-weight: bold;"> </td> <td style="border-bottom: black 1pt solid; text-align: center; font-weight: bold;" colspan="2" nowrap="nowrap">Significant Other Observable Inputs (Level 2)</td> <td style="padding-bottom: 1pt; font-weight: bold;"> </td> <td style="padding-bottom: 1pt; font-weight: bold;"> </td> <td style="border-bottom: black 1pt solid; text-align: center; font-weight: bold;" colspan="2" nowrap="nowrap">Significant Unobservable Inputs (Level 3)</td> <td style="padding-bottom: 1pt; font-weight: bold;"> </td> </tr> <tr style="background-color: #cceeff; vertical-align: bottom;"> <td style="text-align: left; width: 753px;">Cash equivalents</td> <td style="width: 16px;"> </td> <td style="text-align: left; width: 16px;">$</td> <td style="text-align: right; width: 157px;">19,889</td> <td style="text-align: left; width: 16px;"> </td> <td style="width: 16px;"> </td> <td style="text-align: left; width: 16px;">$</td> <td style="text-align: right; width: 157px;">19,889</td> <td style="text-align: left; width: 16px;"> </td> <td style="width: 16px;"> </td> <td style="text-align: left; width: 16px;">$</td> <td style="text-align: right; width: 156px;">—</td> <td style="text-align: left; width: 15px;"> </td> <td style="width: 15px;"> </td> <td style="text-align: left; width: 15px;">$</td> <td style="text-align: right; width: 156px;">—</td> <td style="text-align: left; width: 15px;"> </td> </tr> <tr style="background-color: white; vertical-align: bottom;"> <td style="text-align: left; padding-bottom: 1pt;">Corporate debt securities-short term</td> <td style="padding-bottom: 1pt;"> </td> <td style="border-bottom: black 1pt solid; text-align: left;"> </td> <td style="border-bottom: black 1pt solid; text-align: right;">27,807</td> <td style="text-align: left; padding-bottom: 1pt;"> </td> <td style="padding-bottom: 1pt;"> </td> <td style="border-bottom: black 1pt solid; text-align: left;"> </td> <td style="border-bottom: black 1pt solid; text-align: right;">—</td> <td style="text-align: left; padding-bottom: 1pt;"> </td> <td style="padding-bottom: 1pt;"> </td> <td style="border-bottom: black 1pt solid; text-align: left;"> </td> <td style="border-bottom: black 1pt solid; text-align: right;">27,807</td> <td style="text-align: left; padding-bottom: 1pt;"> </td> <td style="padding-bottom: 1pt;"> </td> <td style="border-bottom: black 1pt solid; text-align: left;"> </td> <td style="border-bottom: black 1pt solid; text-align: right;">—</td> <td style="text-align: left; padding-bottom: 1pt;"> </td> </tr> <tr style="background-color: #cceeff; vertical-align: bottom;"> <td style="padding-bottom: 2.5pt; padding-left: 34.55pt;">Total</td> <td style="padding-bottom: 2.5pt;"> </td> <td style="border-bottom: black 2.5pt double; text-align: left;">$</td> <td style="border-bottom: black 2.5pt double; text-align: right;">47,696</td> <td style="text-align: left; padding-bottom: 2.5pt;"> </td> <td style="padding-bottom: 2.5pt;"> </td> <td style="border-bottom: black 2.5pt double; text-align: left;">$</td> <td style="border-bottom: black 2.5pt double; text-align: right;">19,889</td> <td style="text-align: left; padding-bottom: 2.5pt;"> </td> <td style="padding-bottom: 2.5pt;"> </td> <td style="border-bottom: black 2.5pt double; text-align: left;">$</td> <td style="border-bottom: black 2.5pt double; text-align: right;">27,807</td> <td style="text-align: left; padding-bottom: 2.5pt;"> </td> <td style="padding-bottom: 2.5pt;"> </td> <td style="border-bottom: black 2.5pt double; text-align: left;">$</td> <td style="border-bottom: black 2.5pt double; text-align: right;">—</td> <td style="text-align: left; padding-bottom: 2.5pt;"> </td> </tr> <tr style="background-color: white; vertical-align: bottom;"> <td style="padding-left: 34.55pt;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;"> </td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;"> </td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;"> </td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;"> </td> <td style="text-align: left;"> </td> </tr> <tr style="vertical-align: bottom;"> <td nowrap="nowrap"> </td> <td style="padding-bottom: 1pt;"> </td> <td style="border-bottom: black 1pt solid; text-align: center;" colspan="2" nowrap="nowrap"> March 31, 2018 </td> <td style="padding-bottom: 1pt;"> </td> <td style="padding-bottom: 1pt;"> </td> <td style="border-bottom: black 1pt solid; text-align: center;" colspan="2" nowrap="nowrap"> Quoted Prices in Active Markets (Level 1) </td> <td style="padding-bottom: 1pt;"> </td> <td style="padding-bottom: 1pt;"> </td> <td style="border-bottom: black 1pt solid; text-align: center;" colspan="2" nowrap="nowrap"> Significant Other Observable Inputs (Level 2) </td> <td style="padding-bottom: 1pt;"> </td> <td style="padding-bottom: 1pt;"> </td> <td style="border-bottom: black 1pt solid; text-align: center;" colspan="2" nowrap="nowrap"> Significant Unobservable Inputs (Level 3) </td> <td style="padding-bottom: 1pt;"> </td> </tr> <tr style="background-color: #cceeff; vertical-align: bottom;"> <td style="text-align: left; padding-bottom: 2.5pt; width: 753px;">Warrant liability</td> <td style="padding-bottom: 2.5pt; width: 16px;"> </td> <td style="border-bottom: black 2.5pt double; text-align: left; width: 16px;">$</td> <td style="border-bottom: black 2.5pt double; text-align: right; width: 157px;">3,782</td> <td style="text-align: left; padding-bottom: 2.5pt; width: 16px;"> </td> <td style="padding-bottom: 2.5pt; width: 16px;"> </td> <td style="border-bottom: black 2.5pt double; text-align: left; width: 16px;">$</td> <td style="border-bottom: black 2.5pt double; text-align: right; width: 157px;">—</td> <td style="text-align: left; padding-bottom: 2.5pt; width: 16px;"> </td> <td style="padding-bottom: 2.5pt; width: 16px;"> </td> <td style="border-bottom: black 2.5pt double; text-align: left; width: 16px;">$</td> <td style="border-bottom: black 2.5pt double; text-align: right; width: 156px;">—</td> <td style="text-align: left; padding-bottom: 2.5pt; width: 15px;"> </td> <td style="padding-bottom: 2.5pt; width: 15px;"> </td> <td style="border-bottom: black 2.5pt double; text-align: left; width: 15px;">$</td> <td style="border-bottom: black 2.5pt double; text-align: right; width: 156px;">3,782</td> <td style="text-align: left; padding-bottom: 2.5pt; width: 15px;"> </td> </tr> <tr style="background-color: white; vertical-align: bottom;"> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;"> </td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;"> </td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;"> </td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;"> </td> <td style="text-align: left;"> </td> </tr> <tr style="vertical-align: bottom;"> <td nowrap="nowrap"> </td> <td style="padding-bottom: 1pt;"> </td> <td style="border-bottom: black 1pt solid; text-align: center;" colspan="2" nowrap="nowrap"> December 31, 2017 </td> <td style="padding-bottom: 1pt;"> </td> <td style="padding-bottom: 1pt;"> </td> <td style="border-bottom: black 1pt solid; text-align: center;" colspan="2" nowrap="nowrap"> Quoted Prices in Active Markets (Level 1) </td> <td style="padding-bottom: 1pt;"> </td> <td style="padding-bottom: 1pt;"> </td> <td style="border-bottom: black 1pt solid; text-align: center;" colspan="2" nowrap="nowrap"> Significant Other Observable Inputs (Level 2) </td> <td style="padding-bottom: 1pt;"> </td> <td style="padding-bottom: 1pt;"> </td> <td style="border-bottom: black 1pt solid; text-align: center;" colspan="2" nowrap="nowrap"> Significant Unobservable Inputs (Level 3) </td> <td style="padding-bottom: 1pt;"> </td> </tr> <tr style="background-color: #cceeff; vertical-align: bottom;"> <td style="text-align: left; padding-bottom: 2.5pt; width: 753px;">Warrant liability</td> <td style="padding-bottom: 2.5pt; width: 16px;"> </td> <td style="border-bottom: black 2.5pt double; text-align: left; width: 16px;">$</td> <td style="border-bottom: black 2.5pt double; text-align: right; width: 157px;">1,512</td> <td style="text-align: left; padding-bottom: 2.5pt; width: 16px;"> </td> <td style="padding-bottom: 2.5pt; width: 16px;"> </td> <td style="border-bottom: black 2.5pt double; text-align: left; width: 16px;">$</td> <td style="border-bottom: black 2.5pt double; text-align: right; width: 157px;">—</td> <td style="text-align: left; padding-bottom: 2.5pt; width: 16px;"> </td> <td style="padding-bottom: 2.5pt; width: 16px;"> </td> <td style="border-bottom: black 2.5pt double; text-align: left; width: 16px;">$</td> <td style="border-bottom: black 2.5pt double; text-align: right; width: 156px;">—</td> <td style="text-align: left; padding-bottom: 2.5pt; width: 15px;"> </td> <td style="padding-bottom: 2.5pt; width: 15px;"> </td> <td style="border-bottom: black 2.5pt double; text-align: left; width: 15px;">$</td> <td style="border-bottom: black 2.5pt double; text-align: right; width: 156px;">1,512</td> <td style="text-align: left; padding-bottom: 2.5pt; width: 15px;"> </td> </tr> </table>

<table style="widows: 2; text-transform: none; text-indent: 0px; width: 90%; border-collapse: collapse; font: 10pt 'times new roman', times, serif; orphans: 2; letter-spacing: normal; margin-left: 0.5in; word-spacing: 0px; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial; font-stretch: normal;" border="0" cellspacing="0" cellpadding="0"> <tr style="vertical-align: bottom;"> <td nowrap="nowrap"> </td> <td style="padding-bottom: 1pt; font-weight: bold;"> </td> <td style="border-bottom: black 1pt solid; text-align: center; font-weight: bold;" colspan="2" nowrap="nowrap">March 31,  2018</td> <td style="padding-bottom: 1pt; font-weight: bold;"> </td> <td style="padding-bottom: 1pt;"> </td> <td style="border-bottom: black 1pt solid; text-align: center;" colspan="2" nowrap="nowrap"> December 31, 2017 </td> <td style="padding-bottom: 1pt;"> </td> </tr> <tr style="background-color: #cceeff; vertical-align: bottom;"> <td style="width: 903px;">Exercise price</td> <td style="width: 15px;"> </td> <td style="text-align: left; width: 14px;">$</td> <td style="text-align: right; width: 211px;" nowrap="nowrap">1.75</td> <td style="text-align: left; width: 14px;"> </td> <td style="width: 14px;"> </td> <td style="text-align: left; width: 14px;">$</td> <td style="text-align: right; width: 211px;" nowrap="nowrap">1.75</td> <td style="text-align: left; width: 14px;"> </td> </tr> <tr style="background-color: white; vertical-align: bottom;"> <td>Market price</td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;" nowrap="nowrap">2.88</td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;" nowrap="nowrap">1.65</td> <td style="text-align: left;"> </td> </tr> <tr style="background-color: #cceeff; vertical-align: bottom;"> <td style="text-align: left;">Expected volatility</td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;" nowrap="nowrap">56.7</td> <td style="text-align: left;">%</td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;" nowrap="nowrap">53.3</td> <td style="text-align: left;">%</td> </tr> <tr style="background-color: white; vertical-align: bottom;"> <td style="text-align: left;">Risk-free interest</td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;" nowrap="nowrap">2.44</td> <td style="text-align: left;">%</td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;" nowrap="nowrap">2.07</td> <td style="text-align: left;">%</td> </tr> <tr style="background-color: #cceeff; vertical-align: bottom;"> <td style="text-align: left;">Expected term</td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;" nowrap="nowrap">3.61 years</td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;" nowrap="nowrap">3.85 years</td> <td style="text-align: left;"> </td> </tr> <tr style="background-color: white; vertical-align: bottom;"> <td>Dividends</td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;" nowrap="nowrap">none</td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;" nowrap="nowrap">none</td> <td style="text-align: left;"> </td> </tr> </table>

<table align="center" style="widows: 2; text-transform: none; text-indent: 0px; width: 80%; border-collapse: collapse; font: 10pt 'times new roman', times, serif; orphans: 2; letter-spacing: normal; word-spacing: 0px; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial; font-stretch: normal;" border="0" cellspacing="0" cellpadding="0"> <tr style="vertical-align: bottom;"> <td nowrap="nowrap"> </td> <td style="padding-bottom: 1pt; font-weight: bold;"> </td> <td style="border-bottom: black 1pt solid; text-align: center; font-weight: bold;" colspan="2" nowrap="nowrap">March 31, 2018</td> <td style="padding-bottom: 1pt; font-weight: bold;"> </td> <td style="padding-bottom: 1pt; font-weight: bold;"> </td> <td style="border-bottom: black 1pt solid; text-align: center; font-weight: bold;" colspan="2" nowrap="nowrap">December 31, 2017</td> <td style="padding-bottom: 1pt; font-weight: bold;"> </td> </tr> <tr style="background-color: #cceeff; vertical-align: bottom;"> <td style="text-align: left; width: 802px;">Accounts payable</td> <td style="width: 13px;"> </td> <td style="text-align: left; width: 13px;">$</td> <td style="text-align: right; width: 188px;">396</td> <td style="text-align: left; width: 13px;"> </td> <td style="width: 13px;"> </td> <td style="text-align: left; width: 12px;">$</td> <td style="text-align: right; width: 187px;">537</td> <td style="text-align: left; width: 12px;"> </td> </tr> <tr style="background-color: white; vertical-align: bottom;"> <td style="text-align: left;">Accrued payroll</td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">793</td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">1,448</td> <td style="text-align: left;"> </td> </tr> <tr style="background-color: #cceeff; vertical-align: bottom;"> <td style="text-align: left;">Accrued outsourced pre-clinical and clinical fees</td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">6,039</td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">5,409</td> <td style="text-align: left;"> </td> </tr> <tr style="background-color: white; vertical-align: bottom;"> <td style="text-align: left;">Accrued professional fees</td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">721</td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">492</td> <td style="text-align: left;"> </td> </tr> <tr style="background-color: #cceeff; vertical-align: bottom;"> <td style="text-align: left; padding-bottom: 1pt;">Other accrued expenses</td> <td style="padding-bottom: 1pt;"> </td> <td style="border-bottom: black 1pt solid; text-align: left;"> </td> <td style="border-bottom: black 1pt solid; text-align: right;">320</td> <td style="text-align: left; padding-bottom: 1pt;"> </td> <td style="padding-bottom: 1pt;"> </td> <td style="border-bottom: black 1pt solid; text-align: left;"> </td> <td style="border-bottom: black 1pt solid; text-align: right;">373</td> <td style="text-align: left; padding-bottom: 1pt;"> </td> </tr> <tr style="background-color: white; vertical-align: bottom;"> <td style="padding-bottom: 2.5pt;"> </td> <td style="padding-bottom: 2.5pt;"> </td> <td style="border-bottom: black 2.5pt double; text-align: left;">$</td> <td style="border-bottom: black 2.5pt double; text-align: right;">8,269</td> <td style="text-align: left; padding-bottom: 2.5pt;"> </td> <td style="padding-bottom: 2.5pt;"> </td> <td style="border-bottom: black 2.5pt double; text-align: left;">$</td> <td style="border-bottom: black 2.5pt double; text-align: right;">8,259</td> <td style="text-align: left; padding-bottom: 2.5pt;"> </td> </tr> </table>

<table align="center" style="widows: 2; text-transform: none; text-indent: 0px; width: 90%; border-collapse: collapse; font: 10pt 'times new roman', times, serif; orphans: 2; letter-spacing: normal; word-spacing: 0px; -webkit-text-stroke-width: 0px; text-decoration-style: initial; text-decoration-color: initial; font-stretch: normal;" border="0" cellspacing="0" cellpadding="0"> <tr style="vertical-align: bottom;"> <td style="border-bottom: black 1pt solid; font-weight: bold;" nowrap="nowrap">Stock Options</td> <td style="padding-bottom: 1pt; font-weight: bold;"> </td> <td style="border-bottom: black 1pt solid; text-align: center; font-weight: bold;" colspan="2" nowrap="nowrap">Number of Shares</td> <td style="padding-bottom: 1pt; font-weight: bold;"> </td> <td style="padding-bottom: 1pt; font-weight: bold;"> </td> <td style="border-bottom: black 1pt solid; text-align: center; font-weight: bold;" colspan="2" nowrap="nowrap">Weighted Average Exercise Price</td> <td style="padding-bottom: 1pt; font-weight: bold;"> </td> </tr> <tr style="background-color: #cceeff; vertical-align: bottom;"> <td style="padding-left: 8.65pt; width: 891px;">Outstanding as of December 31, 2017</td> <td style="width: 15px;"> </td> <td style="text-align: left; width: 14px;"> </td> <td style="text-align: right; width: 211px;">10,622,455</td> <td style="text-align: left; width: 14px;"> </td> <td style="width: 14px;"> </td> <td style="text-align: left; width: 14px;">$</td> <td style="text-align: right; width: 211px;">3.01</td> <td style="text-align: left; width: 14px;"> </td> </tr> <tr style="background-color: white; vertical-align: bottom;"> <td style="padding-left: 8.65pt;">Granted</td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">831,270</td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">1.73</td> <td style="text-align: left;"> </td> </tr> <tr style="background-color: #cceeff; vertical-align: bottom;"> <td style="padding-left: 8.65pt;">Exercised</td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">(15,125</td> <td style="text-align: left;">)</td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">1.68</td> <td style="text-align: left;"> </td> </tr> <tr style="background-color: white; vertical-align: bottom;"> <td style="padding-bottom: 1pt; padding-left: 8.65pt;">Cancelled</td> <td style="padding-bottom: 1pt;"> </td> <td style="border-bottom: black 1pt solid; text-align: left;"> </td> <td style="border-bottom: black 1pt solid; text-align: right;">(517,212</td> <td style="text-align: left; padding-bottom: 1pt;">)</td> <td style="padding-bottom: 1pt;"> </td> <td style="border-bottom: black 1pt solid; text-align: left;"> </td> <td style="border-bottom: black 1pt solid; text-align: right;">3.10</td> <td style="text-align: left; padding-bottom: 1pt;"> </td> </tr> <tr style="background-color: #cceeff; vertical-align: bottom;"> <td style="padding-bottom: 2.5pt; padding-left: 8.65pt;">Outstanding as of March 31, 2018</td> <td style="padding-bottom: 2.5pt;"> </td> <td style="border-bottom: black 2.5pt double; text-align: left;"> </td> <td style="border-bottom: black 2.5pt double; text-align: right;">10,921,388</td> <td style="text-align: left; padding-bottom: 2.5pt;"> </td> <td style="padding-bottom: 2.5pt;"> </td> <td style="border-bottom: black 2.5pt double; text-align: left;">$</td> <td style="border-bottom: black 2.5pt double; text-align: right;">2.91</td> <td style="text-align: left; padding-bottom: 2.5pt;"> </td> </tr> <tr style="background-color: white; vertical-align: bottom;"> <td style="padding-left: 8.65pt;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;"> </td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;"> </td> <td style="text-align: left;"> </td> </tr> <tr style="background-color: #cceeff; vertical-align: bottom;"> <td style="padding-bottom: 2.5pt; padding-left: 8.65pt;">Exercisable as of March 31, 2018</td> <td style="padding-bottom: 2.5pt;"> </td> <td style="border-bottom: black 2.5pt double; text-align: left;"> </td> <td style="border-bottom: black 2.5pt double; text-align: right;">7,071,489</td> <td style="text-align: left; padding-bottom: 2.5pt;"> </td> <td style="padding-bottom: 2.5pt;"> </td> <td style="border-bottom: black 2.5pt double; text-align: left;">$</td> <td style="border-bottom: black 2.5pt double; text-align: right;">3.74</td> <td style="text-align: left; padding-bottom: 2.5pt;"> </td> </tr> </table>

15000000

2000000

13938651

8370

2259

1135000

1000

15600000

1750 1.75

354330

3123674

93168

1.27

1.75

1.61

P4Y P4Y 3000000 10000000 2500000 82000000 326000000

543000

130000

413000

423000

106000

317000

1500000

9504090

354330

10921388

93168

354330

3123674

8370000

2259000

3000000 1100000

1500000

27823000

32388000

1000

17000

41000

27807000

32347000

19889000

8484000

47696000

19889000

27807000

40831000

8484000

32347000

1512000

3782000

1.75

1.65

2.88

0.533

0.567

0.0207

0.0244

P3Y10M6D

P3Y7M10D

0.00

Black-Scholes model

537000

396000

1448000

793000

5409000 6039000

492000

721000

373000

320000

1667000

5000000

3333000

15000000

<div>(a) the greater of (i) the 30 day U.S. LIBOR rate reported in the Wall Street Journal on the date occurring on the last business day of the month that immediately precedes the month in which the interest will accrue or (ii) 0.65% (b) plus 6.85%</div>

0.0065

0.0685

0.0822

18 months

P36M

2021-08-01

2022-08-01

0.06 0.03 0.020 0.01 0.05 P10Y P10Y Monthly basis through August 2019 From September 2019 to August 2022

8800000

3800000

2300000

8027900

3567956

15200000

2.50

10921388

10622455

831270

517212

7071489

2.91

3.01

1.73

1.68

3.10

3.74

10788462

2.91

P5Y9M18D

9055000

7071489

3.74

P4Y2M12D

3281000

9055000

0.93

1.07

2600000

P2Y9M18D

241625

275587

P4Y2M12D

409409000

228565000

28253000

more than 50 percentage points P3Y

48000

3281000

15000

1200000

0001019695arql:RoivantSciencesMemberarql:RoivantSciencesLicensingAgreementMember2018-01-012018-03-31

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Costs and Expenses [Abstract] Costs and expenses: Research and Development Expense Research and development Research and development General and Administrative Expense General and administrative General and administrative Costs and Expenses Total costs and expenses Total costs and expenses Operating Income (Loss) Loss from operations Loss from operations Investment Income, Interest Interest income Interest Expense Interest expense Interest expense Interest expense Nonoperating Income (Expense), Total Other expense Net Income (Loss) Attributable To Parent Net income (loss) Net loss Net loss Other Comprehensive Income (Loss), Unrealized Holding Gain (Loss) on Securities Arising During Period, Net of Tax Unrealized loss on marketable securities Comprehensive Income (Loss), Net Of Tax, Attributable To Parent Comprehensive loss Comprehensive loss Earnings Per Share, Basic and Diluted [Abstract] Basic and diluted net loss per share: Earnings Per Share, Basic and Diluted Net loss per share (in dollars per share) Net loss per share Net loss per share (in dollars per share) Net loss per share (in dollars per share) Weighted Average Number Of Shares Outstanding, Basic and Diluted Weighted average basic and diluted common shares outstanding (in shares) Equity Components [Axis] Equity Components [Axis] Common Stock [Member] Common Stock COMMON STOCK Lender Warrants Equity Component [Domain] Equity Component [Domain] Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercises in Period Exercised Stock option exercises and issuance of common stock (in shares) Exercised Statement Of Cash Flows [Abstract] Statement of Cash Flows [Abstract] Net Cash Provided By (Used In) Operating Activities, Continuing Operations [Abstract] Cash flows from operating activities: Adjustments To Reconcile Net Income (Loss) To Cash Provided By (Used In) Operating Activities [Abstract] Adjustments to reconcile net loss to net cash used in operating activities: Depreciation, Depletion and Amortization Depreciation and amortization expense Depreciation and amortization Depreciation and amortization Accretion (Amortization) Of Discounts and Premiums, Investments Amortization of premium/discount on marketable securities Amortization of premium (discount) on marketable securities Amortization of Debt Discount (Premium) Amortization of debt discount Fair Value Adjustment of Warrants Change in fair value of warrant liability Warrant liability Share-Based Compensation Share-based compensation expense related to restricted stock Non-cash stock compensation Non-cash stock compensation Increase (Decrease) In Operating Capital [Abstract] Changes in operating assets and liabilities: Increase (Decrease) In Prepaid Expense and Other Assets Prepaid expenses and other current assets Prepaid expenses and other current assets Prepaid expenses and other assets Increase (Decrease) In Accounts Payable and Accrued Liabilities Accounts payable and accrued expenses Accounts payable and accrued expenses Accounts payable and accrued expenses Net Cash Provided By (Used In) Operating Activities, Continuing Operations Net use of cash Net use of cash Net cash used in operating activities Net Cash Provided By (Used In) Investing Activities, Continuing Operations [Abstract] Cash flows from investing activities: Payments To Acquire Marketable Securities Purchases of marketable securities Purchases of marketable securities Purchases of marketable securities Proceeds From Sale and Maturity Of Marketable Securities Proceeds from sale or maturity of marketable securities Proceeds from sale or maturity of marketable securities Net Cash Provided By (Used In) Investing Activities, Continuing Operations Net cash provided by (used in) investing activities Net cash provided by (used in) investing activities Net Cash Provided By (Used In) Financing Activities, Continuing Operations [Abstract] Cash flows from financing activities: Proceeds From Notes Payable And Warrants Proceeds from notes payable and warrants, net Represents cash inflow from a borrowing supported by a written promise to pay an obligation and warrants. Proceeds from notes payable and warrants, net Proceeds From Stock Options Exercised Proceeds from stock option exercises and employee stock plan purchases Net Cash Provided By (Used In) Financing Activities, Continuing Operations Net cash provided by (used in) financing activities Net cash (used in) provided by financing activities Cash and Cash Equivalents, Period Increase (Decrease) Net decrease in cash and cash equivalents Net (decrease) increase in cash and cash equivalents Organization and Nature Of Operations [Abstract] Organization and Nature Of Operations [Abstract] Business Description and Basis of Presentation [Text Block] NATURE OF OPERATIONS AND BASIS OF PRESENTATION Organization, Consolidation and Presentation Of Financial Statements [Abstract] Organization, Consolidation and Presentation of Financial Statements [Abstract] Collaborative Arrangement Disclosure [Text Block] COLLABORATIONS AND ALLIANCES Marketable Securities and Fair Value Measurements [Abstract] Marketable Securities and Fair Value Measurements [Abstract] Financial Instruments Disclosure [Text Block] MARKETABLE SECURITIES AND FAIR VALUE MEASUREMENTS Payables and Accruals [Abstract] ACCOUNTS PAYABLE AND ACCRUED EXPENSES [Abstract] Accounts Payable and Accrued Liabilities Disclosure [Text Block] ACCOUNTS PAYABLE AND ACCRUED EXPENSES Earnings Per Share [Abstract] Earnings Per Share [Text Block] NET LOSS PER SHARE Disclosure Of Compensation Related Costs, Share-Based Payments [Abstract] Disclosure of Compensation Related Costs, Share-based Payments [Abstract] Disclosure of Compensation Related Costs, Share-based Payments [Text Block] STOCK-BASED COMPENSATION AND STOCK PLANS Common Stock [Abstract] Common Stock [Text Block] COMMON STOCK OFFERINGS The entire disclosure for common stock Long-term Debt, Unclassified [Abstract] Long-term Debt [Text Block] LOAN AGREEMENT Preferred Stock And Warrant Liability [Abstract] Preferred Stock And Warrant Liability [Text Block] PREFERRED STOCK AND WARRANT LIABILITY The entire disclosure for preferred stock and warrant liability New Accounting Pronouncements and Changes in Accounting Principles [Abstract] New Accounting Pronouncements and Changes in Accounting Principles [Text Block] RECENT ACCOUNTING PRONOUNCEMENTS Income Tax Disclosure [Abstract] Income Tax Disclosure [Abstract] Income Tax Disclosure [Text Block] INCOME TAXES Available-For-Sale Securities [Table Text Block] Schedule of fair value of available-for-sale marketable securities Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis [Table Text Block] Schedule of assets and liabilities that are measured at fair value on recurring basis Schedule Of Warrant Liability [Table Text Block] Schedule of warrant liability Tabular disclosure of warrant liability Schedule Of Accounts Payable and Accrued Liabilities [Table Text Block] Schedule of accounts payable and accrued expenses Schedule of Long-term Debt Instruments [Table Text Block] Schedule of expected remaining repayment Schedule of Compensation Cost for Share-based Payment Arrangements, Allocation of Share-based Compensation Costs by Plan [Table Text Block] Schedule of stock-based compensation expense Schedule Of Share-Based Compensation, Shares Authorized Under Stock Option Plans, By Exercise Price Range [Table Text Block] Schedule of options outstanding Share-Based Compensation Arrangement By Share-Based Payment Award, Options, Vested and Expected To Vest, Exercisable [Table Text Block] Schedule of options vested, expected to vest and exercisable Organization And Nature Of Operations [Table] Schedule of organization and nature of operations. Subsequent Event Type [Axis] Subsequent Event Type [Domain] Subsequent Event [Member] Subsequent event Type of Arrangement and Non-arrangement Transactions [Axis] Type of Arrangement and Non-arrangement Transactions [Axis] Arrangements and Non-arrangement Transactions [Domain] Arrangements and Non-arrangement Transactions [Domain] Definitive Stock Purchase Agreements [Member] Definitive stock purchase agreements Definitive stock purchase agreements Represents definitive stock purchase agreements. Roivant Sciences Licensing Agreement [Member] Roivant Sciences Licensing Agreement Contractual agreement of the company. Basilea Pharmaceutica International Licensing Agreement [Member] Basilea Licensing Agreement Contractual agreement of the company. Class of Stock [Axis] Class of Stock [Domain] Series A Convertible Preferred Stock And Warrants [Member] Series A convertible preferred stock and warrants Series A Convertible Preferred Stock and Warrants Series A convertible preferred stock and warrants. Series A Preferred Stock [Member] Series A convertible preferred stock Series A Preferred Stock Series A Preferred Warrants [Member] Series A Preferred Warrants Series A Preferred Warrants Series A Preferred Warrants. Legal Entity [Axis] Legal Entity [Axis] Entity [Domain] Entity [Domain] Roivant Sciences [Member] Roivant Sciences Represents details of legal entity. Basilea Pharmaceutica International Limited [Member] Basilea Pharmaceutica International Limited Represents information about Basilea Pharmaceutica International Limited ("Basilea"). Organization And Nature Of Operations [Line Items] Organization and nature of operations Organization And Nature Of Operations [Line Items] Line items represent financial concepts included in a table. These concepts are used to disclose reportable information associated with domain members defined in one or many axes to the table. Debt Instrument, Face Amount Loan principal amount Loan principal amount Proceeds from Issuance Initial Public Offering Proceeds from stock offering Proceeds from stock offering Stock Issued During Period, Shares, New Issues Number of common stock issued under agreement Number of stock issued under agreement Number of stock issued under agreement Stock Issued During Period, Value, New Issues Value of each share of Series A Preferred and Warrant Value of each share of Series A Preferred and Warrant Convertible Preferred Stock, Shares Issued upon Conversion Number of common stock issued upon conversion Number of common stock issued upon conversion Proceeds from Issuance of Common Stock Proceeds from sale of common stock Proceeds from sale of common stock Proceeds from Issuance of Preferred Stock and Preference Stock Net proceeds from offering Net proceeds from offering Warrants Pre Conversion Exercise Price Warrants, pre-conversion exercise price Warrants, pre-conversion exercise price Warrants pre conversion exercise price. Common Stock Conversion Price Post-conversion price of common stock Common stock conversion price. Class of Warrant or Right, Number of Securities Called by Warrants or Rights Number of warrants issued to purchase common stock Number of warrants issued to purchase common stock Class of Warrant or Right, Exercise Price of Warrants or Rights Exercise price of warrants or rights Exercise price of warrants or rights Pre-share exercise price of warrants or rights Term Of Warrant Term of warrant Term of warrant Represents term of warrant. Revenue Recognition, Milestone Method, Upfront Payment Upfront payment Represents upfront payment. Revenue Recognition, Milestone Method, Additional Development Milestone Additional development milestone Represents additional development milestone. Revenue Recognition, Milestone Method, Revenue Expected Regulatory and sales milestones Represents regulatory and sales milestones. Cumulative Effect of New Accounting Principle in Period of Adoption Cumulative impact for accounting changes Schedule Of Collaborative Arrangements and Non-Collaborative Arrangement Transactions [Table] Schedule of Collaborative Arrangements and Non-collaborative Arrangement Transactions [Table] Other Licensing Agreements [Member] Other Licensing Agreements Represents other licensing agreements. Products and Services [Domain] Products and Services [Domain] Collaborative Arrangements and Non-Collaborative Arrangement Transactions [Line Items] Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items] Deferred Revenue Deferred revenue Schedule Of Available-For-Sale Securities [Table] Schedule of Available-for-sale Securities [Table] Debt Security [Axis] Debt Security [Axis] Major Types Of Debt Securities [Domain] Major Types of Debt Securities [Domain] Corporate Debt Securities [Member] Corporate debt securities Corporate debt securities Balance Sheet Location [Axis] Balance Sheet Location [Axis] Balance Sheet Location [Domain] Balance Sheet Location [Domain] Current [Member] Short term Financial instruments current member. Schedule Of Available-For-Sale Securities [Line Items] Schedule of Available-for-sale Securities [Line Items] Available-For-Sale Securities, Amortized Cost Basis Amortized Cost Amortized Cost Available-for-sale Securities, Accumulated Gross Unrealized Gain, before Tax Gross Unrealized Gains Available-for-sale Securities, Accumulated Gross Unrealized Loss, before Tax Gross Unrealized Losses Gross Unrealized Losses Available-for-sale Securities Corporate debt securities-short term Fair Value Fair Value Fair Value Measurements, Recurring and Nonrecurring [Table] Fair Value Measurements, Recurring and Nonrecurring [Table] Measurement Frequency [Axis] Measurement Frequency [Axis] Fair Value, Measurement Frequency [Domain] Fair Value, Measurement Frequency [Domain] Fair Value, Measurements, Recurring [Member] Fair Value, Measurements, Recurring Fair Value By Asset Class [Domain] Fair Value by Asset Class [Domain] Fair Value, Hierarchy [Axis] Fair Value, Hierarchy [Axis] Fair Value, Measurements, Fair Value Hierarchy [Domain] Fair Value, Measurements, Fair Value Hierarchy [Domain] Fair Value, Inputs, Level 1 [Member] Quoted Prices in Active Markets (Level 1) Fair Value, Inputs, Level 2 [Member] Significant Other Observable Inputs (Level 2) Fair Value, Inputs, Level 3 [Member] Significant Unobservable Inputs (Level 3) Fair Value, Inputs, Level 3 Fair Value, Assets and Liabilities Measured On Recurring and Nonrecurring Basis [Line Items] Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] Cash and Cash Equivalents, Fair Value Disclosure Cash equivalents Cash and cash equivalents Cash and Cash Equivalents, at Carrying Value, Total Cash and cash equivalents, beginning of period Cash and cash equivalents, end of period Assets, Fair Value Disclosure Total Total Financial and Nonfinancial Liabilities, Fair Value Disclosure, Total Warrant liability Warrant liability Fair Value, by Balance Sheet Grouping [Table] Warrant Liability [Member] Warrant liability Represents warrant liability. Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] Share Price Warrant stock price Exercise price EX-101.PRE 10 arql-20180331_pre.xml XBRL TAXONOMY EXTENSION PRESENTATION LINKBASE XML 11 R1.htm IDEA: XBRL DOCUMENT

Document and Entity Information - shares	3 Months Ended
Document and Entity Information - shares	Mar. 31, 2018	Apr. 20, 2018
Document and Entity Information [Abstract]
Entity Registrant Name	ARQULE INC
Entity Central Index Key	0001019695
Trading Symbol	arql
Current Fiscal Year End Date	--12-31
Entity Filer Category	Accelerated Filer
Entity Common Stock, Shares Outstanding		87,125,327
Document Type	10-Q
Document Period End Date	Mar. 31, 2018
Amendment Flag	false
Document Fiscal Year Focus	2018
Document Fiscal Period Focus	Q1

XML 12 R2.htm IDEA: XBRL DOCUMENT

BALANCE SHEETS - USD ($) $ in Thousands	Mar. 31, 2018	Dec. 31, 2017
Current assets:
Cash and cash equivalents	$ 10,537	$ 20,229
Marketable securities-short term	32,347	27,807
Prepaid expenses and other current assets	1,913	547
Total current assets	44,797	48,583
Property and equipment, net	102	115
Other assets	204	204
Total assets	45,103	48,902
Current liabilities:
Accounts payable and accrued expenses	8,269	8,259
Deferred revenue		1,500
Total current liabilities	8,269	9,759
Long-term liabilities:
Notes payable	14,517	14,607
Warrant liability	3,782	1,512
Total liabilities	26,568	25,878
Commitments and contingencies (Note 13)
Preferred stock, convertible, Series A $0.01 par value; 1,000,000, shares authorized; 8,370 shares issued and outstanding at March 31, 2018 and December 31, 2017, aggregate liquidation preference of $9,500	8,843	8,843
Stockholders' equity:
Common stock, $0.01 par value; 100,000,000 shares authorized; 87,125,327 and 87,110,202 shares issued and outstanding at March 31, 2018 and December 31, 2017, respectively	871	871
Additional paid-in capital	547,932	547,364
Accumulated other comprehensive loss	(41)	(16)
Accumulated deficit	(539,070)	(534,038)
Total stockholders' equity	9,692	14,181
Total liabilities, preferred stock and stockholders' equity	$ 45,103	$ 48,902

XML 13 R3.htm IDEA: XBRL DOCUMENT

BALANCE SHEETS (Parentheticals) - USD ($) $ in Thousands	Mar. 31, 2018	Dec. 31, 2017
Statement Of Financial Position [Abstract]
Series A Preferred stock, par value (in dollars per share)	$ 0.01	$ 0.01
Series A Preferred stock, shares authorized	1,000,000	1,000,000
Series A Preferred stock, shares issued	8,370	8,370
Series A Preferred stock, shares outstanding	8,370	8,370
Aggregate liquidation preference (in dollars)	$ 9,500	$ 9,500
Common stock, par value (in dollars per share)	$ 0.01	$ 0.01
Common stock, shares authorized	100,000,000	100,000,000
Common stock, shares issued	87,125,327	87,110,202
Common stock, shares outstanding	87,125,327	87,110,202

XML 14 R4.htm IDEA: XBRL DOCUMENT

STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS (Unaudited) - USD ($) shares in Thousands, $ in Thousands	3 Months Ended
	Mar. 31, 2018	Mar. 31, 2017
Revenue:
Research and development revenue	$ 4,138
Costs and expenses:
Research and development	5,812	$ 5,194
General and administrative	2,351	2,074
Total costs and expenses	8,163	7,268
Loss from operations	(4,025)	(7,268)
Interest income	159	22
Interest expense	(396)	(330)
Other expense	(2,270)
Net loss	(6,532)	(7,576)
Unrealized loss on marketable securities	(25)	(4)
Comprehensive loss	$ (6,557)	$ (7,580)
Basic and diluted net loss per share:
Net loss per share (in dollars per share)	$ (0.07)	$ (0.11)
Weighted average basic and diluted common shares outstanding (in shares)	87,112	71,138

XML 15 R5.htm IDEA: XBRL DOCUMENT

STATEMENTS OF CASH FLOWS (Unaudited) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2018	Mar. 31, 2017
Cash flows from operating activities:
Net loss	$ (6,532)	$ (7,576)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization	13	24
Amortization of premium (discount) on marketable securities	56	(3)
Amortization of debt discount	78	60
Change in fair value of warrant liability	2,270
Non-cash stock compensation	423	543
Changes in operating assets and liabilities:
Prepaid expenses and other assets	(1,366)	280
Accounts payable and accrued expenses	10	(1,653)
Net cash used in operating activities	(5,048)	(8,325)
Cash flows from investing activities:
Purchases of marketable securities	(13,832)	(1)
Proceeds from sale or maturity of marketable securities	9,211	6,556
Net cash provided by (used in) investing activities	(4,621)	6,555
Cash flows from financing activities:
Proceeds from notes payable and warrants, net		14,740
Payments for notes payable amendment costs	(48)
Proceeds from stock option exercises and employee stock plan purchases	25
Net cash (used in) provided by financing activities	(23)	14,740
Net (decrease) increase in cash and cash equivalents	(9,692)	12,970
Cash and cash equivalents, beginning of period	20,229	15,267
Cash and cash equivalents, end of period	$ 10,537	$ 28,237

XML 16 R6.htm IDEA: XBRL DOCUMENT

NATURE OF OPERATIONS AND BASIS OF PRESENTATION

3 Months Ended

Mar. 31, 2018

Organization and Nature Of Operations [Abstract]

NATURE OF OPERATIONS AND BASIS OF PRESENTATION

1. NATURE OF OPERATIONS AND BASIS OF PRESENTATION

ARQ 531, an orally bioavailable, potent and reversible inhibitor of both wild type and C481S-mutant BTK, in Phase 1 for B-cell malignancies refractory to other therapeutic options;

ARQ 751, a next-generation inhibitor of AKT, in Phase 1 for solid tumors harboring the AKT1 or PI3K mutation;

Adoption and Impact of the New Revenue Standard

XML 17 R7.htm IDEA: XBRL DOCUMENT

COLLABORATIONS AND ALLIANCES

3 Months Ended

Mar. 31, 2018

Organization, Consolidation and Presentation Of Financial Statements [Abstract]

COLLABORATIONS AND ALLIANCES

2. COLLABORATIONS AND ALLIANCES

Roivant Sciences Licensing Agreement

Basilea Licensing Agreement

Other Licensing Agreements

XML 18 R8.htm IDEA: XBRL DOCUMENT

MARKETABLE SECURITIES AND FAIR VALUE MEASUREMENTS

3 Months Ended

Mar. 31, 2018

Marketable Securities and Fair Value Measurements [Abstract]

MARKETABLE SECURITIES AND FAIR VALUE MEASUREMENTS

3. MARKETABLE SECURITIES AND FAIR VALUE MEASUREMENTS

We invest our available cash primarily in commercial paper, money market funds, and U.S. Treasury bill funds that have investment grade ratings.

The following is a summary of the fair value of available-for-sale marketable securities we held at March 31, 2018 and December 31, 2017:

March 31, 2018	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Security type
Corporate debt securities-short term	$	32,388	$	—	$	(41	)	$	32,347
Total available-for-sale marketable securities	$	32,388	$	—	$	(41	)	$	32,347

December 31, 2017	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Security type
Corporate debt securities-short term	$	27,823	$	1	$	(17	)	$	27,807
Total available-for-sale marketable securities	$	27,823	$	1	$	(17	)	$	27,807

None of our available-for-sale marketable securities were in a continuous unrealized loss position for more than 12 months at March 31, 2018 or December 31, 2017.

	March 31, 2018		Quoted Prices in Active Markets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Cash equivalents	$	8,484	$	8,484	$	—	$	—
Corporate debt securities-short term		32,347		—		32,347		—
Total	$	40,831	$	8,484		32,347	$	—

	December 31, 2017		Quoted Prices in Active Markets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Cash equivalents	$	19,889	$	19,889	$	—	$	—
Corporate debt securities-short term		27,807		—		27,807		—
Total	$	47,696	$	19,889	$	27,807	$	—

	March 31, 2018		Quoted Prices in Active Markets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Warrant liability	$	3,782	$	—	$	—	$	3,782

	December 31, 2017		Quoted Prices in Active Markets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Warrant liability	$	1,512	$	—	$	—	$	1,512

liability of $3,782 at March 31, 2018 and $1,512 at December 31, 2017.

The following are the Black-Scholes inputs to the warrant liability valuation for the periods presented:

	March 31, 2018			December 31, 2017
Exercise price	$	1.75		$	1.75
Market price		2.88			1.65
Expected volatility		56.7	%		53.3	%
Risk-free interest		2.44	%		2.07	%
Expected term		3.61 years			3.85 years
Dividends		none			none

XML 19 R9.htm IDEA: XBRL DOCUMENT

ACCOUNTS PAYABLE AND ACCRUED EXPENSES

3 Months Ended

Mar. 31, 2018

Payables and Accruals [Abstract]

ACCOUNTS PAYABLE AND ACCRUED EXPENSES

4. ACCOUNTS PAYABLE AND ACCRUED EXPENSES

Accounts payable and accrued expenses include the following at March 31, 2018 and December 31, 2017:

	March 31, 2018		December 31, 2017
Accounts payable	$	396	$	537
Accrued payroll		793		1,448
Accrued outsourced pre-clinical and clinical fees		6,039		5,409
Accrued professional fees		721		492
Other accrued expenses		320		373
	$	8,269	$	8,259

XML 20 R10.htm IDEA: XBRL DOCUMENT

NET LOSS PER SHARE

3 Months Ended

Mar. 31, 2018

Earnings Per Share [Abstract]

NET LOSS PER SHARE

5. NET LOSS PER SHARE

XML 21 R11.htm IDEA: XBRL DOCUMENT

STOCK-BASED COMPENSATION AND STOCK PLANS

3 Months Ended

Mar. 31, 2018

Disclosure Of Compensation Related Costs, Share-Based Payments [Abstract]

STOCK-BASED COMPENSATION AND STOCK PLANS

6. STOCK-BASED COMPENSATION AND STOCK PLANS

The following table presents stock-based compensation expense included in our Condensed Statements of Operations and Comprehensive Loss:

	Three Months Ended March 31,
	2018		2017
Research and development	$	106	$	130
General and administrative		317		413
Total stock-based compensation expense	$	423	$	543

In the three months ended March 31, 2018 and 2017, no stock-based compensation expense was capitalized and there were no recognized tax benefits associated with the stock-based compensation expense.

Option activity under our stock plans for the three months ended March 31, 2018 was as follows:

Stock Options	Number of Shares			Weighted Average Exercise Price
Outstanding as of December 31, 2017		10,622,455		$	3.01
Granted		831,270			1.73
Exercised		(15,125	)		1.68
Cancelled		(517,212	)		3.10
Outstanding as of March 31, 2018		10,921,388		$	2.91

Exercisable as of March 31, 2018		7,071,489		$	3.74

	Shares		Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Term (in years)		Aggregate Intrinsic Value
Vested and unvested expected to vest at March 31, 2018		10,788,462	$	2.91		5.8	$	9,055
Exercisable at March 31, 2018		7,071,489	$	3.74		4.2	$	3,281

XML 22 R12.htm IDEA: XBRL DOCUMENT

COMMON STOCK OFFERINGS	3 Months Ended
COMMON STOCK OFFERINGS	Mar. 31, 2018
Common Stock [Abstract]
COMMON STOCK OFFERINGS	7. COMMON STOCK OFFERINGS In October 2017, we entered into definitive securities purchase agreements with certain institutional investors. In conjunction with this stock offering, we issued 13,938,651 shares of our common stock and warrants for 3,123,674 shares of our common stock for aggregate net proceeds of $15.6 million. Each warrant is exercisable for $1.75 per share and expires in four years from the date of issuance. In September 2017, we sold 2.0 million shares of common stock through an at-the-market (“ATM”) offering and raised net proceeds of approximately $2.3 million. In February 2016, we entered into definitive stock purchase agreements with certain institutional and accredited investors. In conjunction with this stock offering we issued 8,027,900 shares of our common stock and non-transferable options for 3,567,956 shares of our common stock for aggregate net proceeds of $15.2 million. Each option was exercisable for $2.50 per share and they all expired in March 2017.

XML 23 R13.htm IDEA: XBRL DOCUMENT

LOAN AGREEMENT

3 Months Ended

Mar. 31, 2018

Long-term Debt, Unclassified [Abstract]

LOAN AGREEMENT

8. LOAN AGREEMENT

The expected remaining repayment of the $15 million loan principal at March 31, 2018 is as follows:

2019	$	1,667
2020		5,000
2021		5,000
2022		3,333
	$	15,000

XML 24 R14.htm IDEA: XBRL DOCUMENT

PREFERRED STOCK AND WARRANT LIABILITY

3 Months Ended

Mar. 31, 2018

Preferred Stock And Warrant Liability [Abstract]

PREFERRED STOCK AND WARRANT LIABILITY

9. PREFERRED STOCK AND WARRANT LIABILITY

Our amended Certificate of Incorporation authorizes the issuance of up to 1 million shares of $0.01 par value preferred stock.

XML 25 R15.htm IDEA: XBRL DOCUMENT

RECENT ACCOUNTING PRONOUNCEMENTS	3 Months Ended
RECENT ACCOUNTING PRONOUNCEMENTS	Mar. 31, 2018
New Accounting Pronouncements and Changes in Accounting Principles [Abstract]
RECENT ACCOUNTING PRONOUNCEMENTS	10. RECENT ACCOUNTING PRONOUNCEMENTS From time to time, new accounting pronouncements are issued by the Financial Accounting Standards Board (“FASB”) or other standard setting bodies that are adopted by us as of the specified effective date. Unless otherwise discussed, we believe that the impact of recently issued standards that are not yet effective will not have a material impact on our financial position or results of operations upon adoption. In May 2017 the FASB issued Accounting Standard Update (“ASU”) No. 2017-09, Compensation—Stock Compensation (Topic 718): Scope of Modification Accounting. This new standard provides clarity and reduces both (1) diversity in practice and (2) cost and complexity when applying the guidance in Topic 718, Compensation-Stock Compensation, to a change to the terms or conditions of a share-based payment award. This new standard became effective for us on January 1, 2018. The adoption of this standard did not have a material impact on our financial position or results of operations. In August 2016, the FASB issued ASU No. 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments. This new standard clarifies certain aspects of the statement of cash flows, including the classification of debt prepayment or debt extinguishment costs or other debt instruments with coupon interest rates that are insignificant in relation to the effective interest rate of the borrowing, contingent consideration payments made after a business combination, proceeds from the settlement of insurance claims, proceeds from the settlement of corporate-owned life insurance policies, distributions received from equity method investees and beneficial interests in securitization transactions. This new standard also clarifies that an entity should determine each separately identifiable source of use within the cash receipts and payments on the basis of the nature of the underlying cash flows. In situations in which cash receipts and payments have aspects of more than one class of cash flows and cannot be separated by source or use, the appropriate classification should depend on the activity that is likely to be the predominant source or use of cash flows for the item. This new standard became effective for us on January 1, 2018. The adoption of this standard did not have a material impact on our statements of cash flows upon adoption. In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842). The new standard requires that all lessees recognize the assets and liabilities that arise from leases on the balance sheet and disclose qualitative and quantitative information about its leasing arrangements. The new standard will be effective for us on January 1, 2019. The company is currently assessing the impact that adoption of this standard will have on our financial statements. In May 2014 the FASB issued Accounting Standards Update (ASU) No. 2014-09, Revenue from Contracts with Customers (Topic 606), which supersedes all existing revenue recognition requirements, including most industry specific guidance. This new standard requires a company to recognize revenue when it transfers goods or services to customers in an amount that reflects the consideration that the company expects to receive for those goods or services. The FASB subsequently issued amendments to ASU No. 2014-09 that have the same effective date and transition date. These new standards became effective for us on January 1, 2018, and we adopted them using the modified retrospective method through a $1.5 million cumulative-effect adjustment directly to retained earnings as of that date. The adoption of these new standards may result in a change in the timing of revenue recognition related to certain of our licensing activities.

XML 26 R16.htm IDEA: XBRL DOCUMENT

INCOME TAXES	3 Months Ended
INCOME TAXES	Mar. 31, 2018
Income Tax Disclosure [Abstract]
INCOME TAXES	11. INCOME TAXES As of December 31, 2017, we had federal NOL, state NOL, and research and development credit carryforwards of approximately $409,409, $228,565 and $28,253 respectively, which expire at various dates through 2037. We recorded a deferred tax asset for previously unrecognized excess tax benefit, offset by valuation allowance upon the adoption in 2017 of ASU 2016-09, “Compensation—Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting.” As of March 31, 2018 and December 31, 2017 we had no unrecognized tax benefits. We do not expect that the total amount of unrecognized tax benefits will significantly increase in the next twelve months. Our policy is to recognize interest and penalties related to uncertain tax positions in income tax expense. As of March 31, 2018 and December 31, 2017, we had no accrued interest or penalties related to uncertain tax positions. Our U.S. federal tax returns for the tax years 2013 through 2017 and our state tax returns for the tax years 2013 through 2017 remain open to examination. Prior tax years remain open to the extent of net operating loss and tax credit carryforwards. Utilization of NOL and research and development credit carryforwards may be subject to a substantial annual limitation in the event of an ownership change that has occurred previously or could occur in the future pursuant to Section 382 and 383 of the Internal Revenue Code of 1986, as amended, as well as similar state provisions. An ownership change may limit the amount of NOL and research and development credit carryforwards that can be utilized annually to offset future taxable income, and may, in turn, result in the expiration of a portion of those carryforwards before utilization. In general, an ownership change, as defined by Section 382, results from transactions that increase the ownership of certain stockholders or public groups in the stock of a corporation by more than 50 percentage points over a three-year period. We undertook a detailed study of our NOL and research and development credit carryforwards through January 31, 2018, to determine whether such amounts are likely to be limited by Sections 382 or 383. As a result of this analysis, we currently do not believe any Sections 382 or 383 limitations will significantly impact our ability to offset income with available NOL and research and development credit carryforwards. However, future ownership changes under Section 382 may limit our ability to fully utilize these tax benefits.

XML 27 R17.htm IDEA: XBRL DOCUMENT

MARKETABLE SECURITIES AND FAIR VALUE MEASUREMENTS (Tables)

3 Months Ended

Mar. 31, 2018

Marketable Securities and Fair Value Measurements [Abstract]

Schedule of fair value of available-for-sale marketable securities

March 31, 2018	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Security type
Corporate debt securities-short term	$	32,388	$	—	$	(41	)	$	32,347
Total available-for-sale marketable securities	$	32,388	$	—	$	(41	)	$	32,347

December 31, 2017	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Security type
Corporate debt securities-short term	$	27,823	$	1	$	(17	)	$	27,807
Total available-for-sale marketable securities	$	27,823	$	1	$	(17	)	$	27,807

Schedule of assets and liabilities that are measured at fair value on recurring basis

	March 31, 2018		Quoted Prices in Active Markets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Cash equivalents	$	8,484	$	8,484	$	—	$	—
Corporate debt securities-short term		32,347		—		32,347		—
Total	$	40,831	$	8,484		32,347	$	—

	December 31, 2017		Quoted Prices in Active Markets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Cash equivalents	$	19,889	$	19,889	$	—	$	—
Corporate debt securities-short term		27,807		—		27,807		—
Total	$	47,696	$	19,889	$	27,807	$	—

	March 31, 2018		Quoted Prices in Active Markets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Warrant liability	$	3,782	$	—	$	—	$	3,782

	December 31, 2017		Quoted Prices in Active Markets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Warrant liability	$	1,512	$	—	$	—	$	1,512

Schedule of warrant liability

	March 31, 2018			December 31, 2017
Exercise price	$	1.75		$	1.75
Market price		2.88			1.65
Expected volatility		56.7	%		53.3	%
Risk-free interest		2.44	%		2.07	%
Expected term		3.61 years			3.85 years
Dividends		none			none

- Definition

Tabular disclosure of available-for-sale securities which includes, but is not limited to, changes in the cost basis and fair value, fair value and gross unrealized gain (loss), fair values by type of security, contractual maturity and classification, amortized cost basis, contracts to acquire securities to be accounted for as available-for-sale, debt maturities, transfers to trading, change in net unrealized holding gain (loss) net of tax, continuous unrealized loss position fair value, aggregate losses qualitative disclosures, other than temporary impairment (OTTI) losses or other disclosures related to available for sale securities.

+ References + Details

XML 28 R18.htm IDEA: XBRL DOCUMENT

ACCOUNTS PAYABLE AND ACCRUED EXPENSES (Tables)

3 Months Ended

Mar. 31, 2018

Payables and Accruals [Abstract]

Schedule of accounts payable and accrued expenses

	March 31, 2018		December 31, 2017
Accounts payable	$	396	$	537
Accrued payroll		793		1,448
Accrued outsourced pre-clinical and clinical fees		6,039		5,409
Accrued professional fees		721		492
Other accrued expenses		320		373
	$	8,269	$	8,259

XML 29 R19.htm IDEA: XBRL DOCUMENT

STOCK-BASED COMPENSATION AND STOCK PLANS (Tables)

3 Months Ended

Mar. 31, 2018

Disclosure Of Compensation Related Costs, Share-Based Payments [Abstract]

Schedule of stock-based compensation expense

	Three Months Ended March 31,
	2018		2017
Research and development	$	106	$	130
General and administrative		317		413
Total stock-based compensation expense	$	423	$	543

Schedule of options outstanding

Stock Options	Number of Shares			Weighted Average Exercise Price
Outstanding as of December 31, 2017		10,622,455		$	3.01
Granted		831,270			1.73
Exercised		(15,125	)		1.68
Cancelled		(517,212	)		3.10
Outstanding as of March 31, 2018		10,921,388		$	2.91

Exercisable as of March 31, 2018		7,071,489		$	3.74

Schedule of options vested, expected to vest and exercisable

	Shares		Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Term (in years)		Aggregate Intrinsic Value
Vested and unvested expected to vest at March 31, 2018		10,788,462	$	2.91		5.8	$	9,055
Exercisable at March 31, 2018		7,071,489	$	3.74		4.2	$	3,281

XML 30 R20.htm IDEA: XBRL DOCUMENT

LOAN AGREEMENT (Tables)

3 Months Ended

Mar. 31, 2018

Long-term Debt, Unclassified [Abstract]

Schedule of expected remaining repayment

2019	$	1,667
2020		5,000
2021		5,000
2022		3,333
	$	15,000

- Definition

Tabular disclosure of long-debt instruments or arrangements, including identification, terms, features, collateral requirements and other information necessary to a fair presentation. These are debt arrangements that originally required repayment more than twelve months after issuance or greater than the normal operating cycle of the entity, if longer.

+ References

Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 210
-SubTopic 10
-Section S99
-Paragraph 1
-Subparagraph (SX 210.5-02.22)
-URI http://asc.fasb.org/extlink&oid=6877327&loc=d3e13212-122682

Reference 2: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 10
-Section 50
-Paragraph 3
-URI http://asc.fasb.org/extlink&oid=84159872&loc=d3e21475-112644

Reference 3: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 942
-SubTopic 470
-Section 50
-Paragraph 3
-URI http://asc.fasb.org/extlink&oid=75038535&loc=d3e64711-112823

Reference 4: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 235
-SubTopic 10
-Section S99
-Paragraph 1
-Subparagraph (SX 210.4-08.(e),(f))
-URI http://asc.fasb.org/extlink&oid=26873400&loc=d3e23780-122690

Reference 5: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 835
-SubTopic 30
-Section 55
-Paragraph 8
-URI http://asc.fasb.org/extlink&oid=64930739&loc=d3e28878-108400

Reference 6: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 10
-Section 50
-Paragraph 8
-URI http://asc.fasb.org/extlink&oid=84159872&loc=d3e21538-112644

Reference 7: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 10
-Section 50
-Paragraph 6
-URI http://asc.fasb.org/extlink&oid=84159872&loc=d3e21506-112644

Reference 8: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 835
-SubTopic 30
-Section 45
-Paragraph 1A
-URI http://asc.fasb.org/extlink&oid=64930785&loc=d3e28541-108399

Reference 9: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 835
-SubTopic 30
-Section 45
-Paragraph 2
-URI http://asc.fasb.org/extlink&oid=64930785&loc=d3e28551-108399

Reference 10: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 10
-Section 50
-Paragraph 7
-URI http://asc.fasb.org/extlink&oid=84159872&loc=d3e21521-112644

+ Details

XML 31 R21.htm IDEA: XBRL DOCUMENT

NATURE OF OPERATIONS AND BASIS OF PRESENTATION (Detail Textuals) - USD ($) $ / shares in Units, $ in Thousands	1 Months Ended					3 Months Ended		12 Months Ended
	Apr. 30, 2018	Feb. 28, 2018	Nov. 30, 2017	Oct. 31, 2017	Sep. 30, 2017	Mar. 31, 2018	Mar. 31, 2017	Dec. 31, 2017	Jan. 31, 2017
Organization And Nature Of Operations [Line Items]
Net use of cash						$ (5,048)	$ (8,325)
Loan principal amount									$ 15,000
Proceeds from stock offering					$ 2,300
Number of stock issued under agreement					2,000,000
Cumulative impact for accounting changes						1,500
Contract receivables included in prepaid expenses and other current assets						1,200
Definitive stock purchase agreements
Organization And Nature Of Operations [Line Items]
Number of stock issued under agreement				13,938,651
Proceeds from sale of common stock				$ 15,600
Number of warrants issued to purchase common stock				3,123,674
Exercise price of warrants or rights				$ 1.75
Term of warrant				4 years
Definitive stock purchase agreements \| Series A Convertible Preferred Stock and Warrants
Organization And Nature Of Operations [Line Items]
Proceeds from stock offering			$ 9,500
Value of each share of Series A Preferred and Warrant			$ 1,135
Number of common stock issued upon conversion			1,000
Net proceeds from offering						8,800		$ 8,800
Definitive stock purchase agreements \| Series A convertible preferred stock
Organization And Nature Of Operations [Line Items]
Number of stock issued under agreement			8,370
Definitive stock purchase agreements \| Series A Preferred Warrants
Organization And Nature Of Operations [Line Items]
Number of stock issued under agreement			2,259
Warrants, pre-conversion exercise price			$ 1,750
Post-conversion price of common stock			$ 1.75
Term of warrant			4 years
Roivant Sciences Licensing Agreement \| Roivant Sciences
Organization And Nature Of Operations [Line Items]
Upfront payment		$ 3,000
Additional development milestone		2,500
Regulatory and sales milestones		$ 82,000
Revenue for completing performance obligation						$ 3,000
Subsequent event \| Basilea Licensing Agreement \| Basilea Pharmaceutica International Limited
Organization And Nature Of Operations [Line Items]
Upfront payment	$ 10,000
Regulatory and sales milestones	$ 326,000

XML 32 R22.htm IDEA: XBRL DOCUMENT

COLLABORATIONS AND ALLIANCES (Detail Textuals) - USD ($) $ in Millions	1 Months Ended		3 Months Ended
	Apr. 30, 2018	Feb. 28, 2018	Mar. 31, 2018	Oct. 31, 2017
Other Licensing Agreements
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]
Deferred revenue				$ 1.5
Revenue for completing performance obligation			$ 1.1
Roivant Sciences Licensing Agreement \| Roivant Sciences
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]
Upfront payment		$ 3.0
Additional development milestone		2.5
Regulatory and sales milestones		$ 82.0
Revenue for completing performance obligation			$ 3.0
Basilea Licensing Agreement \| Basilea Pharmaceutica International Limited \| Subsequent event
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]
Upfront payment	$ 10.0
Regulatory and sales milestones	$ 326.0

XML 33 R23.htm IDEA: XBRL DOCUMENT

MARKETABLE SECURITIES AND FAIR VALUE MEASUREMENTS - Summary of fair value of available-for-sale securities (Details) - USD ($) $ in Thousands	Mar. 31, 2018	Dec. 31, 2017
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	$ 32,388	$ 27,823
Gross Unrealized Gains	0	1
Gross Unrealized Losses	(41)	(17)
Fair Value	32,347	27,807
Corporate debt securities \| Short term
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	32,388	27,823
Gross Unrealized Gains	0	1
Gross Unrealized Losses	(41)	(17)
Fair Value	$ 32,347	$ 27,807

XML 34 R24.htm IDEA: XBRL DOCUMENT

MARKETABLE SECURITIES AND FAIR VALUE MEASUREMENTS - Assets measured at fair value on a recurring basis (Details 1) - USD ($) $ in Thousands	Mar. 31, 2018	Dec. 31, 2017
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Corporate debt securities-short term	$ 32,347	$ 27,807
Warrant liability	3,782	1,512
Fair Value, Measurements, Recurring
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash equivalents	8,484	19,889
Corporate debt securities-short term	32,347	27,807
Total	40,831	47,696
Warrant liability	3,782	1,512
Fair Value, Measurements, Recurring \| Quoted Prices in Active Markets (Level 1)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash equivalents	8,484	19,889
Corporate debt securities-short term	0	0
Total	8,484	19,889
Warrant liability	0	0
Fair Value, Measurements, Recurring \| Significant Other Observable Inputs (Level 2)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash equivalents	0	0
Corporate debt securities-short term	32,347	27,807
Total	32,347	27,807
Warrant liability	0	0
Fair Value, Measurements, Recurring \| Significant Unobservable Inputs (Level 3)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash equivalents	0	0
Corporate debt securities-short term	0	0
Total	0	0
Warrant liability	$ 3,782	$ 1,512

XML 35 R25.htm IDEA: XBRL DOCUMENT

MARKETABLE SECURITIES AND FAIR VALUE MEASUREMENTS - Warrant liability valuation (Details 2) - Warrant liability - $ / shares	3 Months Ended	12 Months Ended
	Mar. 31, 2018	Dec. 31, 2017
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Exercise price	$ 1.75	$ 1.75
Market price	$ 2.88	$ 1.65
Expected volatility	56.70%	53.30%
Risk-free interest	2.44%	2.07%
Expected term	3 years 7 months 10 days	3 years 10 months 6 days
Dividends	0.00%	0.00%

XML 36 R26.htm IDEA: XBRL DOCUMENT

MARKETABLE SECURITIES AND FAIR VALUE MEASUREMENTS (Detail Textuals) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2018	Dec. 31, 2017
Marketable Securities and Fair Value Measurements [Abstract]
Valuation method	Black-Scholes model
Warrant liability	$ 3,782	$ 1,512

XML 37 R27.htm IDEA: XBRL DOCUMENT

ACCOUNTS PAYABLE AND ACCRUED EXPENSES - Summary of accounts payable and accrued expenses (Details) - USD ($) $ in Thousands	Mar. 31, 2018	Dec. 31, 2017
Payables and Accruals [Abstract]
Accounts payable	$ 396	$ 537
Accrued payroll	793	1,448
Accrued outsourced pre-clinical and clinical fees	6,039	5,409
Accrued professional fees	721	492
Other accrued expenses	320	373
Accounts payable and accrued expenses, Total	$ 8,269	$ 8,259

XML 38 R28.htm IDEA: XBRL DOCUMENT

NET LOSS PER SHARE (Detail Textuals) - Stock Options - shares	3 Months Ended
	Mar. 31, 2018	Mar. 31, 2017
Exercise of outstanding employee and Board of Director stock options
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Shares of common stock not included in computations of diluted net loss per share	10,921,388	9,504,090
Exercise of warrants from January 2017 loan agreement
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Shares of common stock not included in computations of diluted net loss per share	354,330	354,330
Exercise of options from February 2018 loan agreement
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Shares of common stock not included in computations of diluted net loss per share	93,168
Exercise of warrants from October 2017 common stock offering
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Shares of common stock not included in computations of diluted net loss per share	3,123,674
Conversion of shares from November 2017 preferred stock offering
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Shares of common stock not included in computations of diluted net loss per share	8,370,000
Exercise of warrants from November 2017 preferred stock offering
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Shares of common stock not included in computations of diluted net loss per share	2,259,000

XML 39 R29.htm IDEA: XBRL DOCUMENT

STOCK-BASED COMPENSATION AND STOCK PLANS - Stock-based compensation expense (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2018	Mar. 31, 2017
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Total stock-based compensation expense	$ 423	$ 543
Research and development
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Total stock-based compensation expense	106	130
General and administrative
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Total stock-based compensation expense	$ 317	$ 413

XML 40 R30.htm IDEA: XBRL DOCUMENT

STOCK-BASED COMPENSATION AND STOCK PLANS - Option activity (Details 1) - Stock Options	3 Months Ended
	Mar. 31, 2018 $ / shares shares
Number of Shares
Outstanding as of December 31, 2017 \| shares	10,622,455
Granted \| shares	831,270
Exercised \| shares	(15,125)
Cancelled \| shares	(517,212)
Outstanding as of March 31, 2018 \| shares	10,921,388
Exercisable as of March 31, 2018 \| shares	7,071,489
Weighted Average Exercise Price
Outstanding as of December 31, 2017 \| $ / shares	$ 3.01
Granted \| $ / shares	1.73
Exercised \| $ / shares	1.68
Cancelled \| $ / shares	3.10
Outstanding as of March 31, 2018 \| $ / shares	2.91
Exercisable as of March 31, 2018 \| $ / shares	$ 3.74

XML 41 R31.htm IDEA: XBRL DOCUMENT

STOCK-BASED COMPENSATION AND STOCK PLANS - Shares vested, expected to vest and exercisable (Details 2) - Stock Options $ / shares in Units, $ in Thousands	3 Months Ended
	Mar. 31, 2018 USD ($) $ / shares shares
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vested and unvested expected to vest, Options \| shares	10,788,462
Vested and unvested expected to vest, weighted-average exercise price \| $ / shares	$ 2.91
Vested and unvested expected to vest, weighted-average remaining contractual term (in years)	5 years 9 months 18 days
Vested and unvested expected to vest, aggregate intrinsic value \| $	$ 9,055
Exercisable, Options \| shares	7,071,489
Exercisable, weighted-average exercise price \| $ / shares	$ 3.74
Exercisable, weighted-average remaining contractual term (in years)	4 years 2 months 12 days
Exercisable, aggregate intrinsic value \| $	$ 3,281

XML 42 R32.htm IDEA: XBRL DOCUMENT

STOCK-BASED COMPENSATION AND STOCK PLANS (Detail Textuals) - Stock Options - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended
	Mar. 31, 2018	Mar. 31, 2017
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Aggregate intrinsic value of options outstanding	$ 9,055
Intrinsic value of options exercisable	$ 3,281
Weighted average grant date fair value of options granted (in dollars per share)	$ 1.07	$ 0.93
Intrinsic value of options exercised	$ 15
Compensation cost not yet recognized related to non-vested option awards	$ 2,600
Weighted-average recognition period related to non-vested option awards	2 years 9 months 18 days
Number of shares expired during the period	275,587
Number of shares forfeited during the period	241,625
Weighted average remaining contractual life for options exercisable	4 years 2 months 12 days

XML 43 R33.htm IDEA: XBRL DOCUMENT

COMMON STOCK (Detail Textuals) - USD ($) $ / shares in Units, $ in Millions	1 Months Ended
	Oct. 31, 2017	Sep. 30, 2017	Feb. 29, 2016	Mar. 31, 2018	Dec. 31, 2017
Common Stock [Line Items]
Common stock, shares authorized				100,000,000	100,000,000
Common stock, par value (in dollars per share)				$ 0.01	$ 0.01
Number of common stock issued under agreement		2,000,000
Proceeds from stock offering		$ 2.3
Definitive stock purchase agreements
Common Stock [Line Items]
Number of shares available for grant			8,027,900
Number of common stock issued under agreement	13,938,651
Number of warrants issued to purchase common stock	3,123,674
Proceeds from Issuance of Common Stock	$ 15.6
Exercise price of warrants or rights	$ 1.75
Term of warrant	4 years
Number of non transferable options issued			3,567,956
Aggregate net proceeds			$ 15.2
Stock option exercise price			$ 2.50

XML 44 R34.htm IDEA: XBRL DOCUMENT

LOAN AGREEMENT (Details) $ in Thousands	Mar. 31, 2018 USD ($)
Long-term Debt, Unclassified [Abstract]
2019	$ 1,667
2020	5,000
2021	5,000
2022	3,333
Loan principal amount	$ 15,000

XML 45 R35.htm IDEA: XBRL DOCUMENT

LOAN AGREEMENT (Detail Textuals) - USD ($) $ / shares in Units, $ in Millions	1 Months Ended		12 Months Ended
	Feb. 28, 2018	Jan. 31, 2017	Dec. 31, 2017
Debt Instrument [Line Items]
Loan principal amount		$ 15.0
Oxford Finance Llc \| Loan Agreement
Debt Instrument [Line Items]
Loan principal amount		$ 15.0
Interest rate description		(a) the greater of (i) the 30 day U.S. LIBOR rate reported in the Wall Street Journal on the date occurring on the last business day of the month that immediately precedes the month in which the interest will accrue or (ii) 0.65% (b) plus 6.85%
Interest rate		0.65%
Basis spread interest rate		6.85%
Applicable interest rate			8.22%
Period of interest rate payments		18 months
Amortization period		36 months
Maturity date	Aug. 01, 2022	Aug. 01, 2021
Percentage of final principal payment		6.00%
Percentage of prepayment fee if payment made in 1 to 12 months		3.00%
Percentage of prepayment fee if payment made in 13 to 24 months		2.00%
Percentage of prepayment fee if payment made thereafter 24 months		1.00%
Additional interest rate after default		5.00%
Term of payment of interest after amendment	Monthly basis through August 2019
Term of payment of interest and principal after amendment	From September 2019 to August 2022
Oxford Finance Llc \| Loan Agreement \| Lender Warrants
Debt Instrument [Line Items]
Number of warrants issued to purchase common stock	93,168	354,330
Pre-share exercise price of warrants or rights	$ 1.61	$ 1.27
Exercise term of warrants or rights	10 years	10 years

XML 46 R36.htm IDEA: XBRL DOCUMENT

PREFERRED STOCK AND WARRANT LIABILITY (Detail Textuals) - USD ($) $ / shares in Units, $ in Thousands	1 Months Ended			3 Months Ended	12 Months Ended
	Nov. 30, 2017	Oct. 31, 2017	Sep. 30, 2017	Mar. 31, 2018	Dec. 31, 2017
Preferred Stock And Warrant Liability [Line Items]
Series A Preferred stock, shares authorized				1,000,000	1,000,000
Series A Preferred stock, par value (in dollars per share)				$ 0.01	$ 0.01
Proceeds from stock offering			$ 2,300
Number of stock issued under agreement			2,000,000
Definitive stock purchase agreements
Preferred Stock And Warrant Liability [Line Items]
Number of stock issued under agreement		13,938,651
Exercise price of warrants or rights		$ 1.75
Term of warrant		4 years
Definitive stock purchase agreements \| Series A convertible preferred stock and warrants
Preferred Stock And Warrant Liability [Line Items]
Proceeds from stock offering	$ 9,500
Value of each share of Series A Preferred and Warrant	$ 1,135
Number of common stock issued upon conversion	1,000
Net proceeds from offering				$ 8,800	$ 8,800
Definitive stock purchase agreements \| Series A convertible preferred stock
Preferred Stock And Warrant Liability [Line Items]
Number of stock issued under agreement	8,370
Definitive stock purchase agreements \| Series A Preferred Warrants
Preferred Stock And Warrant Liability [Line Items]
Number of stock issued under agreement	2,259
Warrants, pre-conversion exercise price	$ 1,750
Post-conversion price of common stock	$ 1.75
Term of warrant	4 years
Fair value of warrants liability increased				3,800
Non-cash expense				$ 2,300

XML 47 R37.htm IDEA: XBRL DOCUMENT

RECENT ACCOUNTING PRONOUNCEMENTS (Detail Textuals) $ in Millions	Mar. 31, 2018 USD ($)
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Cumulative impact for accounting changes	$ 1.5
Accounting Standards Update 2014-09 \| Other Licensing Agreements
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Cumulative impact for accounting changes	$ 1.5

XML 48 R38.htm IDEA: XBRL DOCUMENT

INCOME TAXES (Detail Textuals) - USD ($) $ in Thousands	3 Months Ended
INCOME TAXES (Detail Textuals) - USD ($) $ in Thousands	Mar. 31, 2018	Dec. 31, 2017
Operating Loss Carryforwards [Line Items]
Increase in ownership percentage of certain stockholders or public groups	more than 50 percentage points
Ownership change, increase in ownership percentage, term	3 years
Federal income tax
Operating Loss Carryforwards [Line Items]
Net operating loss carryforwards		$ 409,409
State income tax
Operating Loss Carryforwards [Line Items]
Net operating loss carryforwards		228,565
Research and development credit carryforwards
Operating Loss Carryforwards [Line Items]
Net operating loss carryforwards		$ 28,253

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