Exhibit 10.3


 


Confidential Materials omitted and filed
separately with the Securities and Exchange Commission.

***Triple asterisks denote omissions.


 


Scope
of Work #1


 


This Scope of Work (this “Scope of
Work” or “SOW”) is incorporated into the Master Services Agreement dated July 20, 2017 by and between
ArQule and ARUP (for the purposes of this Scope of Work, the “Agreement”). This Scope of Work describes Services
and Deliverables to be performed and provided by ARUP pursuant to the Agreement. In the event of any conflict between the Agreement
and any provision of this Scope of Work, the Agreement will control unless the Parties’ intent to alter the terms of the
Agreement is expressly set forth in such provision, and such alteration shall only apply to this Scope of Work and shall not be
construed as an amendment to the terms of the Agreement or to any other Scope of Work. All capitalized terms used and not expressly
defined in this Scope of Work will have the meanings given to them in the Agreement.


 


Overview 


The goal of this Scope of Work is to develop
and validate a FGFR2 FISH assay to be used as an IOU patient selection diagnostic for the ARQ 087 compound in connection with a
registrational Phase 3 trial in intrahepatic cholangiocarcinoma (the “Phase 3 Trial”) and to further validate
and seek FDA approval for such assay as a Companion Diagnostic under the FDA’s Humanitarian Device Exemption (HDE) for commercialization
in accordance with such regulations. The end point for the existing trial is overall response rate. The parties acknowledge that
ArQule may decide to pursue a trial endpoint of progression free survival. In such case, ArQule agrees to keep ARUP apprised of
its decision making, and the details of the new trial and protocol for the study will be shared with ARUP if and when made. For
purposes hereof, either trial shall be known as the Phase 3 Trial. Testing to support the Phase 3 Trial is outside the scope of
this SOW and will be included in a subsequent Scope of Work. For purposes of this Scope of Work #1, any reference herein to the
FGFR2 FISH assay shall mean the ARUP IUO or ARUP Companion Diagnostic, as applicable.


 


Approach


		1.	ARUP will conduct its existing design control program,
termed the “Product Development Program” or “PDP”, to develop and validate the FGFR2 FISH
assay in accordance with the FDA Quality System Regulations, 21 CFR part 820.



 


		2.	ARUP will prepare a modular application for the FGFR2 FISH
assay as a companion diagnostic for the ArQule compound ARQ 087 and will use Commercially Reasonable Efforts to obtain regulatory
approval for the FGFR2 FISH assay under the FDA’s Humanitarian Device Exemption (“HDE”) Program. In the
event that the FDA does not grant a Humanitarian Use Device (“HUD”) designation or permit the transfer of such
HUD designation to ARUP to enable ARUP to offer the companion diagnostic the Parties shall, at ArQule’s request, amend this
SOW to pursue a PMA for such companion diagnostic and ArQule will be responsible for the incremental costs and expenses related
to the additional work performed by ARUP in connection therewith and in connection with the preparation and filing of any required
regulatory applications, which costs and expenses will in all cases be reasonable and consistent with the billing practices and
procedures used by ARUP under this Agreement. ArQule and ARUP contemplate entering into the *** Supply Agreement with the Supplier
substantially contemporaneous with this SOW on terms mutually acceptable to ArQule, ARUP and the Supplier, pursuant to which the
Supplier will agree to provide support to ARUP as an *** and supply ARUP with certain quantities of the Supplier *** and ArQule
will agree to be responsible for all costs associated with supply of the Supplier *** to ARUP.



 




    	 	A-1	 



     


    

 


Confidential Materials omitted and filed
separately with the Securities and Exchange Commission.

***Triple asterisks denote omissions.


 


		3.	ARUP will develop, validate, and maintain the HDE assay
in accordance with the FDA Quality System Regulations for Medical Devices and the HDE requirements.



 


		4.	ARUP will submit a request for, and use commercially reasonable
efforts to obtain, HUD designation from the FDA for the assay being verified and validated by ARUP under the PDP design control
program. Once the HUD designation has been granted to ARUP, ARUP will remain solely responsible for all interactions with the
FDA’s Center for Devices and Radiological Health (CDRH) regarding the assay, including but not limited to interactions such
as scheduling all meetings with the CDRH, preparing and submitting meeting minutes, validation plans, the HDE application and
amendments, and annual reports. ArQule will not contact CDRH about the test without providing ARUP with prior written notification
and the opportunity to participate. Notwithstanding the foregoing ARUP may request that ArQule participate in any or all interactions
with the FDA regarding the FGFR2 FISH assay.



 


		5.	ARUP will notify ArQule in advance of all material meetings
relating to the test, whether in person or by telephone or videoconference, and all other material communications, scheduled with
regulatory agencies. ArQule shall be entitled to attend and participate in such meetings with regulatory agencies, in person or
by means of telecommunication. ArQule’s participation may, for example, include providing regulatory authorities with the
pharmaceutical development perspective, including the therapeutic and diagnostic issues related to drug clinical trials and patient
specimens and clinical report forms collected in support of the application submission, as well as information on the relationship
between the use of the companion diagnostic and its relevance to ARQ 087 and the treatment of patients; provided, however, that
the Parties shall jointly agree on this support prior to communication to or with regulatory authorities. Prior to ARUP’s
submission of any filing to a regulatory authority, the Parties shall jointly review and approve such a filing. ARUP will create
meeting minutes from FDA interactions and provide such to ArQule along with any FDA acknowledgements (e.g. receipt of modules).



 


		6.	Upon FDA approval of the FGFR2 FISH assay, ARUP will perform
the assay in accordance with FDA regulations and make such assay publicly available for as long as requested by ArQule, provided
that ArQule continues to make the annual Maintenance Payments under the Agreement. In the event that ARUP is no longer capable
of performing the FDA-approved FGFR2 FISH assay for some unforeseen reason not within ARUP’s reasonable control such as
the termination of the *** Supply Agreement with the Supplier for supply of the *** and other than as a result of the breach of
this Agreement by ARUP, ARUP will, at ArQule’s request and expense, use commercially reasonable efforts to enable another
United States laboratory to offer the assay, or acceptable substitute companion diagnostic for the ArQule compound ARQ 087, including
by using commercially reasonable efforts to minimize any risk of interruption of the availability of the assay. Following FDA
approval of the FGFR2 FISH assay, ARUP will cooperate with ArQule, at ArQule’s request and expense, and pursuant to terms
and conditions set forth in an additional SOW mutually acceptable to the Parties, to enable other laboratories outside the United
States to offer the assay, or acceptable substitute companion diagnostic for the ArQule compound ARQ 087.



 




    	 	A-2	 



     


    

 


Confidential Materials omitted and filed
separately with the Securities and Exchange Commission.

***Triple asterisks denote omissions.


 


		7.	ARUP shall provide information regarding preanalytical
aspects of the FGFR2 FISH assay and pertaining to general laboratory practices, such as specimen collection, transport, storage,
preparation and handling for use with the assay. ArQule shall have the right to disseminate broadly to laboratories outside the
United States such information as is necessary for such laboratories to practice these general preanalytical methods in a manner
consistent with the assay performed in the Phase 3 Clinical Trial. For the avoidance of doubt, the PDP, including all related
processes and documents used in the generation of the HDE assay, will remain the sole property of ARUP and may not be sub-licensed
by any other laboratories for any use without ARUP’s express written consent.



 


		8.	ARUP will perform Services in furtherance of the goal of
this SOW substantially as set forth in the following table:



 


	Services	 	Description
	Project Initiation	 	
        Project initiation

        ·     Contracting

        ·     On-site
        quality audit of ARUP (2 days and up to 3 auditors)

        ·     Project
        charter

        ·     Project
        planning process

        ·     Establishment
        of design team and weekly team meetings

        ·     Commencement
        of design control activities, including initial design risk assessment activities

        ·     Establishment
        of design requirements including, but not limited to: product description, assay functional requirements, assay performance specifications,
        hardware/software requirements, manufacturing/QC specifications, regulatory requirements, draft Verification Master Plan, draft
        Validation Master Plan

        ·     Initiation
        of purchasing controls for critical components

        ·     In-sourcing
        of materials

         

	Humanitarian Use Device (HUD) Request	 	
        Preparation of HUD request

        ·     Collection
        of literature to support rare disease (<8,000 in US/year)

        ·     Preparation
        of HUD request and submission to FDA

        



 




    	 	A-3	 



     


    

 


Confidential Materials omitted and filed
separately with the Securities and Exchange Commission.

***Triple asterisks denote omissions.


 


	Services	 	Description
	Investigational Device Exemption (IDE)	 	
        Investigational Device Exemption activities

        Assumption: FGFR2 FISH assay will be significant risk
        (SR)

        ·     Preparation
        of request for pre-IDE meeting to discuss IDE development and validation plan

        ·     Submission
        of pre-IDE meeting request to FDA

        ·     Briefing
        book preparation

        ·    FDA
        pre-IDE meeting and slide preparation

        ·     Preparation
        of slide deck, dialog with FDA

        ·     Fulfillment
        of IDE requirements including labeling, investigational plan, subject selection criteria, informed consent

        ·     Review
        and revision of IDE application

        ·     Submission
        of IDE application

        ·     Preparation
        of IRB application

        ·     Payment
of IRB fees

	 	 	 
	ARUP IUO Development & Validation	 	
        ARUP IUO Development and Validation 

        ·     Feasibility
        studies of conducting assay using ARUP standard FISH method

        ·     Establishment
        of assay reference range, sensitivity, specificity

        ·     Verification
        of ARUP IUO performance (concordance, reproducibility/precision)

        ·     Transfer
        of assay to clinical lab including training of operators

        ·     Preparation
        of quality plan

        ·     Preparation
        of experimental coversheets

        ·     Preparation
        of results, summaries

        ·     Preparation
        of protocol history table with itemization of protocol changes

        ·     Quality
        audits

        ·     Medical
        director approvals

        ·     Executive
        approvals



 




    	 	A-4	 



     


    

 


Confidential Materials omitted and filed
separately with the Securities and Exchange Commission.

***Triple asterisks denote omissions.


 


	Services	 	Description
	Design Control	 	
        Implementation of Design Control (Phase 1-3)

        ·     Design
        control documentation including, but not limited to, project plan, project schedule, component list, design history file, checklists,
        summaries

        ·     Supplier
        assessment and drafting of component specifications under purchasing controls

        ·     Preliminary
        hazard analysis and failure mode and effects analysis (FMEA); multiple and iterative

        ·     Finalization
        and approval of assay SOP and forms

        ·     Development
        of process documents (batch records)

        ·     End
        of phase design reviews

        ·     Preparation
        of MasterControl organizer

        ·     Development
        of Device Master Record

        ·     Design
        History File development and audit

        ·     Laboratory
        notebook, correspondence, memo and meeting minutes maintenance

	 	 	 
	HDE Application Preparation	 	
        HDE application preparation

        ·    Modular
        submission: quality/manufacturing, analytical, clinical, software

        ·    Required
        forms and sections including coversheet, indications for use, summary, description of disease and assay, results, summary of safety
        and probable benefit, product description

        ·    Development
        and iterative revision of labeling documents (test request form, physician instructions, product datasheet, website)

        ·    Literature
        review and reference collection

        ·    Development
        of FDA interaction history

        ·    Collection
        of all referenced documents (current versions; estimated 100-150)

        ·    Electronic
        and paper copies of modules

        ·    Document
        archiving



 




    	 	A-5	 



     


    

 


Confidential Materials omitted and filed
separately with the Securities and Exchange Commission.

***Triple asterisks denote omissions.


 


	Services	 	Description
	HDE Approval and Post-Approval Activities	 	
        HDE approval and post-approval activities
        

        ·     IRB
        application and approval

        ·     Build
        of test in ARUP’s laboratory information system (LIS) 

        ·     Validation
        of test build 

        ·     Addition
        of test to ARUP’s laboratory test directory 

        ·     Development
        of test-specific website 

        ·     Registration
        of test with FDA 

        ·     Physician
        IRB enrollment instructions 

        ·     Training
        of Client Services 

        o     Test
        ordering information for ARUP non-clients

        o     Other
        test-specific topics included but not limited to IRB enrollment requirements for ordering physicians (HDE requirement), intended
        use, specimen requirements

        ·     Maintenance
        of test under QSR (21 CFR Part 820) and all FDA conditions of approval

        ·     Complaint
        handling

        ·     Medical
        device reporting

         

	HDE Application Amendments	 	
        Estimate of two (2) amendments

        *Note – this does not include
        additional experimentation if required by FDA.

	 	 	 
	Companion Diagnostic (CDx) Development & Validation	 	
        Additional assay development & validation activities required
        for CDx to include but not limited (final determined in conjunction with Sponsor and FDA):

        ·    To
        conduct any required bridging studies 

        ·    Sensitivity
        

        ·    Specificity
        

        ·    Interference
        

        ·    Reproducibility
        (including Intra-Run, Inter-Run) 

        ·    Guard-banding
        

        ·    Specimen
        stability 

        ·    Reagent
        stability 

        ·    Accuracy
        

         



 




    	 	A-6	 



     


    

 


Confidential Materials omitted and filed
separately with the Securities and Exchange Commission.

***Triple asterisks denote omissions.


 


	Services	 	Description
	Design Control	 	
        Design Control (Phase 3-5)

        Implementation of design control under ARUP's PDP Program portion
        of the Quality Management System including:

         

        ·     Phase
        3 – Design Verification (2nd part) 

        ·     Phase
        4 – Design Transfer 

        ·     Phase
        5 – Design Validation

         

        

        Regulatory
oversight throughout the assay lifecycle with regards to quality audits, document controls, design controls, design reviews, purchasing
controls, software validation, risk management, change controls, process controls and CAPA to maintain compliance with QSR (21
CFR §820.30).



 


Meeting and Reporting Schedule


		1.	ARUP will host teleconferences with ArQule not less than
*** per calendar month, with meeting minutes prepared and shared with ArQule.



 


		2.	ARUP will provide written *** reports of the progress of
its activities in reasonable detail, including (i) a description of activities for the past quarter, any key accomplishments,
milestones, deviations, or delays, including, to the extent applicable, mitigation plans and/or suggestions for further discussion
by the Parties respective Point of Contact; and (ii) a summary statement regarding the tracking of the project against the Activities
and Milestones described below.



 


		3.	ARUP will host *** meetings or will agree to otherwise
meet with ArQule at least ***.



 


Obligations of ArQule


		1.	ArQule will make payments to ARUP as outlined in Exhibit
B and as directed in the Agreement.



 


		2.	ArQule will make annual payments to ARUP following the
one year anniversary of FDA approval of the assay for as long as ArQule requires ARUP to maintain the FDA-approved assay on its
test menu (“Maintenance Payments”).



 


		3.	ArQule will reimburse ARUP for necessary travel expenses
related to work performed under this Statement of Work. Any travel expenses for which ARUP seeks reimbursement under this Statement
of Work must be pre-approved by ArQule in writing.



 


		4.	ArQule will remain solely responsible for all interactions
with the FDA’s Center for Drug Evaluation and Research (CDER). Upon request, ARUP will assist in interactions with the FDA
regarding ARQ 087 and the Phase 3 Trial.



 




    	 	A-7	 



     


    

 


Confidential
                                         Materials omitted and filed separately with the Securities and Exchange Commission.

                                         ***Triple asterisks denote omissions.


 


Intellectual Property


 


		1.	The Parties hereby agree that Article 6 of the Agreement
shall control the Parties’ ownership of, and respective rights to, Background Know-How, Background Patents and Inventions
under this Scope or Work The following provisions are intended to supplement, and not amend, Article 6 of the Agreement:



 


For purposes of clarification, ARUP
Background Know-How includes but is not limited to the following:


 


		a.	PDP policy, processes, procedures, forms, strategies, best
practices and know-how.



 


		b.	Other laboratory, diagnostic or business practices inherent
to a national reference laboratory or specific to ARUP.



 


		2.	Academic and Research Use FGFR2 FISH Data



Publications or presentations pertaining
to the FGFR2 FISH data will be handled on a case-by-case basis. Each party has a right to review any proposed disclosures of data
generated under this SOW pertaining to the FGFR2 FISH assay, including but not limited to publications, presentations or press
releases for the purpose of protecting against disclosure of confidential information that would be prejudicial to the rights of
the reviewing party. The disclosing party must provide the other party a minimum of *** days to review the proposed disclosure
and to provide input, provided that if no feedback is provided within *** days, the proposed publication shall be deemed approved.


 


Points of Contact: 


 


For ArQule:


ArQule, Inc.


One Wall Street, Burlington, MA 01803


Attention: Ron Savage


Title: Senior Director, Preclinical Development


Tel: 781-994-0300


Email: rsavage@arqule.com


 


With a copy to Peter S. Lawrence


Email: plawrence@arqule.com


 


For ARUP:


ARUP Laboratories, Inc.


500 Chipeta Way


Salt Lake City, UT 84108


Attention: Karen A. Heichman, PhD


Director, PharmaDx


Phone: (801) 584-5068


Email: karen.heichman@aruplab.com


 




    	 	A-8	 



     


    

 


Confidential Materials omitted and filed
separately with the Securities and Exchange Commission.

***Triple asterisks denote omissions.


 


Exhibit B - Activities, Budget and Payment
Schedule


 


Milestone Fee Basis: Fees payable in accordance
with the table immediately below. All milestones to be invoiced upon ArQule’s acceptance of Milestone Achievement. All ARUP
invoiced milestones are non-refundable. Timelines in the table below assume a July 1, 2017 start date of the Agreement and are
meant to be estimates.


 


	Milestone Payment Schedule	 	 	 
	Milestone	 	 	 	Cost	 
	1 
7/1/2017	 	Project Initiation* 
 Evidence of milestone achievement – Execution of Master Services Agreement including SOW #1
	 	$	***	 
	 	 	 	 	 	 	 
	2 
9/1/2017	 	Humanitarian Use Device Exemption (HUD)*
 Evidence of milestone achievement – Notification from FDA of receipt of HUD request
	 	$	***	 
	 	 	 	 	 	 	 
	3a 
8/1/2017	 	Investigational Device Exemption (IDE)*
 Evidence of milestone achievement – Submission of request for pre-IDE meeting to CDRH and acknowledgement of delivery
	 	$	***	 
	 	 	 	 	 	 	 
	3b 
4/1/2018	 	IDE application
 Evidence of milestone achievement – Notification from CDRH of successful IDE application
	 	$	***	 
	 	 	 	 	 	 	 
	Subtotal of Initiation Activities	 	$	***	 
	 	 	 	 	 
	4a 
8/1/2017	 	ARUP IUO Analytical Development and Validation*
 First 50% of activity
 Evidence of milestone achievement – ArQule’s review and acceptance of development and validation plan. 
	 	$	***	 
	 	 	 	 	 	 	 
	4b 
2/1/2018 
	 	ARUP IUO Analytical Development and Validation*
 Second 50% of activity
 Evidence of milestone achievement – ArQule’s review and acceptance of ARUP IUO validation report.
	 	$	***	 
	 	 	 	 	 	 	 
	5a 
7/1/2017	 	Design Control for ARUP IUO(Phases 1-3)*
 First 50% of activity
 Evidence of milestone achievement – ArQule’s review and acceptance of design control plans and Project Charter
	 	$	***	 



 




     


     


    

 


Confidential Materials omitted and filed
separately with the Securities and Exchange Commission.

***Triple asterisks denote omissions.


 


	5b 
2/1/2018	 	Design Control for ARUP IUO (Phases 1-3)*
 Second 50% of activity
 Evidence of milestone achievement – completion of ARUP IUO validation
	 	$	***	 
	 	 	 	 	 	 	 
	Subtotal of  ARUP IUO Verification and Design Controls	 	$	***	 
	 	 	 	 	 
	6a 
6/1/2018	 	HDE Application Preparation*
 First 50% of activity
 Payable upon commencement of application preparation.
	 	$	***	 
	 	 	 	 	 	 	 
	6b 
TBD	 	HDE Application Preparation*
 Second 50% of activity
 Evidence of milestone achievement – evidence of receipt by CDRH
	 	$	***	 
	 	 	 	 	 	 	 
	6c 
TBD	 	HDE Application Amendments*
 (if
                                         required)
 Each
                                         amendment is $*** with a **% project management fee (estimated that two (2) amendments
                                         may be needed)
 Evidence of milestone achievement – Acknowledgement of receipt by CDRH
	 	$	***  **	 
	 	 	 	 	 	 	 
	Subtotal of HDE Application Costs	 	$	***	 
	 	 	 	 	 
	7a 
2/1/2018	 	Companion Diagnostic (CDx) Development and Validation*
 First 50% of activity
 Evidence of milestone achievement – ArQule’s review and acceptance of validation plan
	 	$	***	 
	 	 	 	 	 	 	 
	7b 
2/1/2019	 	Companion Diagnostic (CDx) Development and Validation*
 Second 50% of activity
 Evidence of milestone achievement – ArQule’s review and acceptance of validation report
	 	$	***	 



 




     


     


    

 


Confidential Materials omitted and filed
separately with the Securities and Exchange Commission.

***Triple asterisks denote omissions.


 


	8a 
2/1/2018	 	Design Control (Phases 3-5)*
 First 50% of activity
 Evidence of milestone achievement – ArQule’s review and acceptance of validation plan
	 	$	***	 
	 	 	 	 	 	 	 
	8b 
2/1/2019	 	Design Control (Phases 3-5)*
 Second 50% of activity
 Evidence of milestone achievement – completion of Phase 5 Design Validation summary 
	 	$	***	 
	 	 	 	 	 	 	 
	9 
3/1/2019	 	Development of the final CDx test procedure (SOP)*	 	$	***	 
	 	 	 	 	 	 	 
	10 
3/1/2019	 	Submission Plan Preparation*	 	$	***	 
	 	 	 	 	 	 	 
	Subtotal of CDx Validation and Design Controls	 	$	***	 
	 	 	 	 	 
	11 
TBD	 	Registration of the test with FDA*
 Evidence of milestone achievement – Acknowledgement of registration receipt by the FDA
	 	$	***	 
	 	 	 	 	 	 	 
	12 
TBD	 	Preparation of IRB (post-approval)*
 Evidence of milestone achievement – Acknowledgement of submission by the University of Utah IRB
	 	$	***	 
	 	 	 	 	 	 	 
	13 
TBD	 	Development and Maintenance of Website for Test*
 Evidence of milestone achievement – Release of Test on ARUP’s Test Directory
	 	$	***	 
	 	 	 	 	 	 	 
	Total Milestone Costs (not including optional costs)	 	$	***	 



 


*Costs include a ***% project management fee


**Optional costs not included in subtotal


 




     


     


    

 


Confidential
                                         Materials omitted and filed separately with the Securities and Exchange Commission.

                                         ***Triple asterisks denote omissions.


 


Additional Costs


Additional costs are described in the table
below and are to be invoiced upon ArQule’s acceptance of evidence of achievement.


 


	Additional Costs
	Type	 	Details	 	 	Cost
	Travel	 	
        Travel to meetings including

        ·     Pre-submission
        meetings

        ·     Travel
        to ArQule up to *** yearly

        ·     Travel
        must be in accordance with ArQule’s Travel Policy

        Evidence of achievement – Receipts
attached to invoice 
	 	 	TBD
	 	 	 	 	 	 
	
        License agreement

        (if required)
	 	
        Third-party license agreement if required to practice the FGFR2
        FISH assay

        ·     Upfront
        license fee

        ·     Royalties

        ·     Other
fees 
	 	 	TBD
	 	 	 	 	 	 
	
        Assay Annual Maintenance Fee

         
	 	
        Annual assay maintenance

        ·     Training
        of personnel

        ·     Troubleshooting

        ·     Instrument
        service contract

        ·     Instrument
        preventive maintenance

        ·     Proficiency
        testing (CAP requirement)

        ·     Annual
        device report to FDA

        ·     Reagent
        procurement, qualification and performance monitoring of critical component suppliers

        Evidence
of achievement – Acknowledgement of annual device report submission to FDA
	 	$	***


 


Term


The term of this Scope of Work will begin on
July 20, 2017 and shall terminate on completion of all activities described in this Scope of Work, unless earlier terminated by
the Parties in accordance with the Agreement.


 




     


     


    

 


Confidential Materials omitted and filed
separately with the Securities and Exchange Commission.

***Triple asterisks denote omissions.


 


	ArQule, Inc.	 	ARUP Laboratories, Inc.
	 	 	 
	Signed:	/s/ Peter S. Lawrence	 	Signed:	 /s/ Sherrie L. Perkins 
	 	 	 	 	 
	Name:	Peter S. Lawrence	 	Name:	 Sherrie L. Perkins MD PhD 
	 	 	 	 	 
	Title:	President and Chief Operating Officer	 	Title:	 SVP Research 
	 	 	 	 	 
	Dated:	July 20, 2017	 	Dated:	July 20, 2017