AMENDMENT TO COLLABORATION AGREEMENT/ 2/12/2004



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EXHIBIT 10.48


January 29, 2004



Amendment of the December 18, 2001 Collaboration Agreement



This refers to the agreement between ArQule, Inc. (“ArQule”) and Pfizer Inc and
its Affiliates (“Pfizer”) dated December 18, 2001 (the “Agreement”). ArQule
and Pfizer hereby agree to amend the Agreement as follows:



	1.	 	Section 1.11 of the Agreement shall be deleted in its entirety and
replaced by the following:




	 	 	“1.11 “Pfizer Compounds” means 1) the compounds designed and produced by
ArQule (hereby “File Enrichment Compounds”), 2) those compounds designed and
produced by ArQule that are of greater than * compounds per library (hereby
“Large Libraries”), and 3) those compounds designed by Pfizer and produced
by ArQule that are of * compounds per library (hereby “Hit Follow-up
Compounds”), their intermediates, and the protocols used to produce those
compounds, pursuant to the Collaboration Program, and all Positional Isomers
related to such compounds.”




	2.	 	Section 2.3(c) of the Agreement shall be deleted in its entirety.
	 
	3.	 	Section 2.5 of the Agreement shall be amended to delete * from the Pfizer
Appointees and replaced by *. * shall also be removed from the ArQule
Appointees.
	 
	4.	 	Section 3.1 of the Agreement shall be deleted in its entirety.
	 
	5.	 	Section 4.3(b) of the Agreement shall be deleted in its entirety.
	 
	6.	 	Section 8.3(a) of the Agreement shall be deleted in its entirety and
replaced by the following;




	 	 	“8.3 Termination by either Party.




	 	a.	 	Notwithstanding any rights granted under this Section 8,
either Party shall have the right to terminate this Agreement,
without cause, anytime on or after December 21, 2005 upon six months
prior written notice. If Pfizer terminates this Agreement pursuant
to this Section 8.3(a), Pfizer will pay to ArQule contemporaneously
with delivery of such notice 100% of the Compound



[*]=CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO
THE OMITTED PORTIONS.


 






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	 	 	 	Costs (based on the amount of Pfizer Compounds to be produced or
designed in the immediately preceding Calendar Quarter as set
forth in the Project Plan) for the two full Calendar Quarters
following such notice. The Steering Committee will determine a
new Project Plan for such two final Calendar Quarters. If ArQule
terminates this Agreement pursuant to this Section 8.3(a), ArQule
will complete the Production plan until the effective date of
termination and Pfizer will pay to ArQule the corresponding
Compound Costs.




	7.	 	Exhibits C and F of the Agreement shall be replaced with the Exhibits C
and F attached to this letter agreement.



Except for the above changes, all other terms and conditions of the Agreement
shall remain in full force and effect for the remainder of the Term.



	 	 	 	 	 	 	 	 
	 	By: ArQule, Inc.	 	By: Pfizer Inc
	 	 	 	 	 	 	 	 
	 	By:	 	 	 	By:	 	 
	 	 	 	


	 	 	 	

	 	 	 	 	 	 	 	 
	 	Name:	 	 	 	Name:	 	 
	 	 	 	


	 	 	 	

	 	 	 	 	 	 	 	 
	 	Title:	 	 	 	Title:	 	 
	 	 	 	


	 	 	 	

	 	 	 	 	 	 	 	 
	 	Date:	 	 	 	Date:	 	 
	 	 	 	


	 	 	 	




 






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EXHIBIT C



Pfizer/ArQule Collaboration



Modified Research Plan



March 9, 2004



1









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	AMENDED AND RESTATED R&D LICENSE AGREEMENT
	R&D AGREEMENT DATED 11/11/1997
	TERMINATION AGREEMENT DATED 6/30/2000
	EMPLOYMENT AGREEMENT/ STEPHEN A. HILL/ 1/1/2004
	EMPLOYMENT AGREEMENT/ J. DAVID JACOBS/ 1/1/2004
	EMPLOYMENT AGREEMENT/ LOUISE MAWHINNEY/ 1/1/2004
	AMENDMENT TO COLLABORATION AGREEMENT/ 2/12/2004
	SUBSIDIARIES OF THE COMPANY
	CONSENT OF PRICEWATERHOUSE COOPERS LLP
	SEC 302 CERTIFICATION OF CEO
	SEC 302 CERTIFICATION OF CFO
	SEC 906 CERTIFICATION OF CEO AND CFO








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	1.0 Executive Summary
	 	 	3	 
	2.0 Introduction
	 	 	3	 
	3.0 Collaboration Plan
	 	 	4	 
	 	 	3.1 Library Ideas
	 	 	4	 
	 	 	3.2 Templates
	 	 	4	 
	 	 	3.3 Library Design
	 	 	5	 
	 	 	3.4 File Enrichment Protocol Development
	 	 	5	 
	 	 	3.5 Compound Production
	 	 	5	 
	 	 	3.6 HPLC Purification
	 	 	5	 
	 	 	3.7 Quality Control
	 	 	5	 
	 	 	3.8 Culling and Reformatting
	 	 	6	 
	 	 	3.9 Data Capture and Registration
	 	 	6	 
	 	Table 1
	 	 	7	 
	4.0
First Year of Modified Collaboration – 2004
	 	 	8	 
	 	 	4.1 File Enrichment Libraries
	 	 	8	 
	 	 	4.2 Hit Follow Up Libraries
	 	 	8	 
	 	 	4.3 Large Libraries
	 	 	9	 
	5.0 Second Year of Modified Collaboration – 2005
	 	 	9	 
	6.0 Third and Fourth Years of Modified Collaboration – 2006 and 2007
	 	 	10	 
	7.0 Fifth Year of Modified Collaboration – 2008
	 	 	10	 
	8.0 Collaboration Management and Staffing
	 	 	10	 
	 	 	8.1 Steering Committee
	 	 	10	 
	 	 	8.2 Staffing
	 	 	10	 
	 	 	8.3 Library Planning and Management
	 	 	11	 
	 	 	8.4 Key Personnel
	 	 	11	 
	 	 	8.5 Operations
	 	 	11	 
	9.0 Pfizer *
	 	 	12	 
	 	 	9.1 *
	 	 	12	 
	 	 	9.2 *
	 	 	12	 
	 	 	9.3 *
	 	 	12	 
	10.0 Glossary
	 	 	13	 



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1.0 Executive Summary



The Pfizer-ArQule collaboration has generated over * file enrichment (FE)
compounds in the previous four years that have augmented Pfizer’s repository
and contributed to available High Throughput Screening (HTS) hits. As a result,
the FE strategy has shifted the emphasis more to hit follow up (HF) and less on
FE. A new research plan has been prepared in order to accommodate the new
priorities. The new collaboration will continue with developing and producing
FE compounds at a reduced rate and include rapid turnaround of smaller HF
libraries. In anticipation of the potential uneven workload during the
necessary ramp up in HF, there will also be a small number of “large libraries”
(LL) available that are planned to be produced in the next two years of the
collaboration in order to manage the overall collaboration output. The
quarterly output of each type of deliverable will continue to be managed by the
Steering Committee to deliver approximately * compounds annually.


*     will be ArQule’s responsibility, whereas * will be Pfizer’s responsibility.
FE and LL compounds produced will consist of * and have structures confirmed by
mass spectrometry. HF compounds will consist of at least * and have structures
confirmed by mass spectrometry. Purity for all compounds will be determined by
HPLC *.


All data for these compounds, including physical, analytical, and quality
control data, will be stored in an SD file or other format agreed upon by the
Steering Committee. The data will be * with the physical samples. If there are
samples that do not meet the yield or purity requirement and Pfizer has no
interest in them, they will be destroyed and *. In order to ensure full value
from the collaboration, Pfizer will provide managerial and scientific staff.


2.0 Introduction



ArQule Inc., located in Woburn MA, is a 300 person oncology drug discovery
company focused on improving the discovery process by integrating high
throughput chemical synthesis, intelligent library design and high throughput
predictive and experimental ADME. Since its inception in 1993, ArQule has
established a track record of producing high quality compounds using its
industry recognized high throughput parallel synthesis AMAPTM system, which was
the basis for establishing the first ArQule/Pfizer collaboration in 1999
followed by the expansion in 2001.


ArQule’s capacity to generate large numbers of compounds fits well with
Pfizer’s expertise in the area of high throughput screening. A great portion
of all discovery programs are working on leads discovered through HTS, and
increasing knowledge of the human genome may well place an even greater
reliance on HTS as a pre-requisite for project initiation. The ArQule
collaboration will continue to augment Pfizer’s Gene-to-Candidate process in
three ways. First, by increasing the size of the screening file, it is likely
to increase the proportion of screens that are successful. Second, compounds
with a high-speed synthesis heritage will improve the entire efficiency of the
hit to candidate process. Third, the early ADME and physical property measures
should reduce candidate attrition. Thus, project teams will have more lead
compounds available to them, these leads should more closely embody the


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desirable properties of a candidate, and they have the potential to be
incorporated into an automated closed loop optimization cycle.


3.0 Collaboration Plan



There are multiple components to the annual production of approximately * FE
compounds in the form of approximately * libraries per year and these are very
well established and understood by the collaboration team based on the previous
four years. The key components in the FE process can be segmented into the
following categories: * and *. These same steps are also similar for HF and LL
production, however, the range of available parameters and responsibility may
be different from FE.


For FE and LL, Pfizer will provide * and * while ArQule will be responsible for
* and *. For HF, Pfizer will be responsible for * as well as provide *. ArQule
will be responsible for the * and *.


A summary of the research plan details are given in Table 1.



     3.1 Library Ideas


Library ideas for FE development will be provided *, to insure that the ideas *
(Section 9.1). If the proposed library idea is cleared, it will be registered
as * and *. If the idea is encumbered and does not clear, then it will be *.


HF and LL request will be cleared through a similar process as FE before they
are accepted as part of the production plan.


     3.2 Templates


Bulk template provided for protocol development and production will, be
obtained through * and provided to ArQule in a timely manner to meet the
development and production plan defined by the Steering Committee.


     3.3 Library Design


Library design for FE libraries will continue to be *, as performed currently.
A similar approach will be adopted for LL and also be the responsibility of *.
Library design criteria may be modified or specific criteria or monomers may be
applied to designated libraries as determined by *. Library design for HF will
be * and designed libraries with monomer combinations will be *.


     3.4 File Enrichment Protocol Development


Protocol development and the reduction of an idea to a synthetic procedure
capable of making *, will be the responsibility of *. The number of automated
synthetic and workup steps per protocol is anticipated to average no more than
* and *, respectively.


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     3.5 Compound Production


Execution of the developed protocols for FE, HF and LL to produce the *
compounds in parallel using the *. The reaction scale for FE will average *.
Due to the limited amount of individual templates for LL, the reaction scale
will be managed at *. For HF the reaction scale will be adjusted based on the
number of steps in the protocol. A one-step protocol will be at approximately
*, whereas protocols with two and three steps will be run at * and *,
respectively. The reaction scale has a direct impact on the final compound
quantity as well as the overall cost, thus it will be appropriately managed by
the Steering Committee for cost-effective success. All available technology
will be used as necessary to make the compounds of interest.


     3.6 HPLC Purification


HPLC purification will be conducted using the developed purification methods on
*. HF and LL protocols that do not have developed purification methods will be
reviewed by the analytical staff and a * will be *. Limited purification
development will be done for HF and LL libraries and this effort will be
reserved for those where little information is available or major difficulties
are anticipated.


     3.7 Quality Control


The primary analytical QC method to assess compound * for all compounds
produced will be *. * will be the primary sample quantification method. The
passing criteria for HPLC purified samples are:
*


As analytical and purification technologies evolve, the criteria to best
establish the most accurate nature of the final products may be modified by the
Steering Committee.


     3.8 Culling and Reformatting


All compounds that meet the acceptance criteria identified in Section 3.7 will
be consolidated into full arrays using Pfizer microtiter plates and screening
format.


For FE and LL compounds there will be * and the remaining material in a third
plate. Compounds * plus the remaining compound in a second microtiter plate and
they will be *.


For HF compounds there will be 1 plate (A-plate) with * plus a second plate
(B-plate) with *, depending on the requested microtiter plate. Any additional
material will be discarded. Compounds * will be * plus the * and they will be
*. Compounds * will be * but they will not be *.


The quarterly success payments for FE, LL and HF compounds will be recognized
for each compound type independent of the others. All compounds will be
delivered * with the associated pertinent information in a SD file. Compounds
with unacceptable purity will be removed, discarded and not count towards the
annual production goal.


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     3.9 Data Capture and Registration


Protocol development information will be recorded in the * following *.
Production information will be recorded in the * as well as maintaining * as
necessary. All electronic in-process information will be maintained in the *.
Analytical data that supports compound production will be maintained in the *
and transmitted to *. All appropriate data supporting compound production *
and the requisite information will be included in an SD file that will *.


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     Table 1. Research Plan Summary



	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	2004	 	2005	 	2006	 	2007	 	2008
	File
Enrichment

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	Library Ideas
	 	 	*	 	 	 	*	 	 	 	*	 	 	 	*	 	 	 	*	 
	 	Templates
	 	 	 	 	*	 	 	 	*	 	 	 	*	 	 	 	*	 	 	 	*	 
	 	Library Design
	 	 	 	 	*	 	 	 	*	 	 	 	*	 	 	 	*	 	 	 	*	 
	 	Protocol Development
	 	 	 	*	 	 	 	*	 	 	 	*	 	 	 	*	 	 	 	*	 
	 	Compound Production
	 	 	 	*	 	 	 	*	 	 	 	*	 	 	 	*	 	 	 	*	 
	 	Average Library Size
	 	 	 	*	 	 	 	*	 	 	 	*	 	 	 	*	 	 	 	*	 
	 	Culling and Reformatting
	 	 	*	 	 	 	*	 	 	 	*	 	 	 	*	 	 	 	*	 
	Hit Follow Up
	 	 	*	 	 	 	*	 	 	 	*	 	 	 	*	 	 	 	*	 
	 	Templates
	 	 	 	 	*	 	 	 	*	 	 	 	*	 	 	 	*	 	 	 	*	 
	 	Monomers
	 	 	 	 	 	*	 	 	 	*	 	 	 	*	 	 	 	*	 	 	 	*	 
	 	Library Design
	 	 	 	 	*	 	 	 	*	 	 	 	*	 	 	 	*	 	 	 	*	 
	 	Compound Production
	 	 	 	*	 	 	 	*	 	 	 	*	 	 	 	*	 	 	 	*	 
	 	Libraries
	 	 	 	 	 	*	 	 	 	*	 	 	 	*	 	 	 	*	 	 	 	*	 
	 	Average Library Size
	 	 	 	*	 	 	 	*	 	 	 	*	 	 	 	*	 	 	 	*	 
	 	Culling and Reformatting
	 	 	*	 	 	 	*	 	 	 	*	 	 	 	*	 	 	 	*	 
	Large Libraries
	 	 	*	 	 	 	*	 	 	 	*	 	 	 	*	 	 	 	*	 
	 	Templates
	 	 	 	 	*	 	 	 	*	 	 	 	*	 	 	 	*	 	 	 	*	 
	 	Library Design
	 	 	 	 	*	 	 	 	*	 	 	 	*	 	 	 	*	 	 	 	*	 
	 	Compound Production
	 	 	 	*	 	 	 	*	 	 	 	*	 	 	 	*	 	 	 	*	 
	 	Average Library Size
	 	 	 	*	 	 	 	*	 	 	 	*	 	 	 	*	 	 	 	*	 
	 	Culling and Reformatting
	 	 	*	 	 	 	*	 	 	 	*	 	 	 	*	 	 	 	*	 
	Purification
	 	 	*	 	 	 	*	 	 	 	*	 	 	 	*	 	 	 	*	 
	Quality Control
	 	 	*	 	 	 	*	 	 	 	*	 	 	 	*	 	 	 	*	 
	Data Capture and Registration
	 	 	*	 	 	 	*	 	 	 	*	 	 	 	*	 	 	 	*	 



 






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4.0 First Year of Modified
Collaboration - 2004



The goal of the first year is to *. This includes *. The *.


     4.1 File Enrichment Libraries


Approximately * protocols, inclusive of *%), must be *. Presently, there
are a significant number of protocols in the various stages of development
as well as in the backlog section, and therefore new ideas are not
immediately necessary to support the program. New ideas can be incorporated
into the development plan as necessary to support *, however, the number of
new ideas that would be initiated need to * in early development.


Compound production, purification, analysis and shipment will continue as
presently defined.


     4.2 Hit Follow Up Libraries


Although a steady state of * HF compounds * are desired to support the new
Pfizer strategy, it is recognized that a *. The goal for the * is to *,
deliver a * and prepare to *.


The planning assumptions and expectations to support the * are as follows:



	•	 	*% average passing rate for all HF libraries but that the range for any
particular library could be *% passing
	 
	•	 	Eventually, the collaboration should reach a steady state of
approximately * libraries designed to * and *
	 
	•	 	* responsible for *% of the library design. Approximately *% of the
library designs will *
	 
	•	 	* will eventually *
	 
	•	 	* will provide all * protocols
	 
	•	 	* will provide * with *.
	 
	•	 	* will provide * with all necessary *
	 
	•	 	Approximately *% of the libraries will *.
	 
	•	 	* will proceed as *.
	 
	•	 	Average cycle time of * from receipt of monomers and
templates to delivery by *, assuming *. Compounds that
take longer than * to deliver would be *, as agreed to,
unless otherwise modified by the Steering Committee.
	 
	•	 	Approximately * will require * prior to * and thus *



     4.3 Large Libraries


Large library compounds are generated by * of * provided by *. The average
number of steps will be *, which accounts for approximately *% of the
transformations being *. The same * will be provided by * and will be *.


The planning assumptions and expectations to support the * are as follows:



	•	 	* will be available *
	 
	•	 	* will be available in * and the *
	 
	•	 	An average of * per template will be *



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	•	 	Library design will be * and *
	 
	•	 	Passing rate is expected at *%
	 
	•	 	No development resource *.
	 
	•	 	* will proceed as *.



Based on the speed of HF ramp up, the Steering Committee will manage the
blend of the * within the * in order to set the * and *.


5.0 Second Year of Modified
Collaboration - 2005



The goal of the collaboration’s second year is to * and * for 2005. The LL
compounds will * to manage the *.


All assumptions, expectations and deliverables for * will be *.


6.0 Third and Fourth Years of
Modified Collaboration – 2006 and 2007



The goal of the third and fourth years is to deliver the *.


All assumptions, expectations and deliverable for * will be *.


7.0 Fifth Year of Modified
Collaboration – 2008



The goal for the last year is to *. The goal for protocol development and
total number of HF libraries will be decided by the Steering Committee at that
time.


All assumptions, expectations and deliverable for * will be *.


8.0 Collaboration Management and Staffing



     8.1 Steering Committee


The Steering Committee for this collaboration will have representatives from
ArQule, and Pfizer. The committee will meet each year on a quarterly basis,
and the Steering Committee members will establish the dates and locations of
these meetings annually. These meetings will serve both to review overall
progress, and to establish *. Key issues will include progress towards
production goals, ensuring that the development pipeline is maintained, approve
changes to plans, verify Pfizer compound delivery and manage conflict
resolution. Most importantly, the Steering Committee may choose to change the
priorities as a result of their assessment.


The scientific component of these meetings will be open to *, as well as *.


     8.2 Staffing


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•     will be responsible for providing the appropriate staffing in order to meet
the collaboration goals and deliverables. Chemistry development staff will be
a combination of Ph.D. and MS/BS staff with a variety of experience in library
design and development. Production, purification and analytical staff will
also be a combination of Ph.D., MS/BS and technician level as appropriate for
each function. All * employees assigned to this collaboration will have had
the appropriate level of safety training.


* will also provide *.



     8.3 Library Planning and Management


The present operations workgroups — chemistry workgroup, library production
workgroup, library design workgroup, template workgroup and analytical
workgroup (CWG, LPWG, LDWG, TWG and AWG, respectively) will continue to meet *.
However, since the deliverables and expectations will be different for the
modified collaborations, the remit of these groups is expected to change and
will be managed by the strategic workgroup as necessary.


     8.4 Key Personnel


Key Investigators

     ArQule: *



Steering Committee Members

     ArQule: *

     Pfizer: *


     8.5 Operations


All operational costs for * will be *. The annual expected expenses for * are
approximated at $* per year and any excess expenses beyond the approximated
amount will be approved by the Steering Committee and paid quarterly *. * will
supply any necessary * that are * for FE and LL compounds and all monomersin
vials for HF compounds.


Routine maintenance of the equipment to keep them operational would be the
responsibility of *. * will also be responsible for any maintenance beyond
routine and handled, at * expense by service contracts or for custom components
by the *.


Appropriate documentation regarding protocol development, library production
and analysis will be maintained according to Pfizer’s and ArQule’s
documentation procedures. Pertinent data regarding the physical compounds *
will be transferred by SD file and *.


9.0 Pfizer *



     9.1 Procedure for *


     *



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9.2 Procedure for *

*



9.3 Procedure for *

*


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10.0 Glossary



The following definitions are provided to clarify terms used in the
Collaboration Plan and they relate directly to the activities described in such
Plan. They are not intended, necessarily to correspond directly to definitions
in Section 1 of the Agreement, unless there is a direct correlation between the
term used in the Collaboration Plan, its definition below and its definition in
Section 1 of the Agreement. For avoidance of doubt, the definition in Section
1 of the Agreement supercedes the definition of any term used herein:


ADME – Absorption Distribution Metabolism and Excretion are important
pharmacokinetic parameters that contribute in part to determining the potential
of a compound being a drug.


AIMS – Array Information Management System is the integrated software that
tracks the array through the production, purification, analytical and
reformatting process.


AMAPTM - Automated Molecular Assembly Plant parallel synthesis system that
functions as a combinatorial chemistry synthesis platform comprising library
protocols, automated transformations, robotic chemical process workstations,
workflow procedures, compound purification systems, analytical QC systems, user
interface software, library design software and information management
software.


Analytical Workgroup – The group of Pfizer and ArQule scientists that meet
biweekly to discuss the analytical issues associated with the development and
production.


Array – The subset of library compounds that move through the production,
purification, analytical and reformatting process as a related unit.


ASPECT – The ArQule integrated analytical LIMS software that tracks all of the
information regarding the ArQule specific analytical process.


CGN – Computer Generated Notebooks are three ring binders that have a
computer-generated identifier that tracks loose-leaf information associated
with a particular array synthesis.


Chemistry Workgroup – The group of Pfizer and ArQule scientists that meet
biweekly to discuss the progress of the file enrichment protocol development
effort.


Culling – The process of removing the compounds of a library that do not
conform to the acceptance criteria.


Development - The process of performing the necessary chemistry and monomer
validation to produce a protocol that will go into Production


Development Goal - The work product that is to be achieved by Development in a
given year.


Development Staff - The staff that is responsible for carrying out the
necessary chemistry and monomer validation to produce a protocol for
Production.



*


File Enrichment – The process of *.


Hit Follow Up – The process of rapidly synthesizing additional analogs related
to hits that have a high throughput heritage.


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HPLC – High performance liquid chromatography is an analytical separation
method that separates a mixture into its components in order to determine
sample purity and/or component quantity


HPLC Purification – The process of separating the components of a mixture into
discrete segments separated by time on a column and collecting only the
fraction(s) that contain(s) the compound(s) of interest.


HTS - High Throughput Screening



IT - Information Technology


IP – Intellectual property


Large Libraries – Producing libraries of related compounds by one-step
diversification of template analogs obtained through outsourcing relationships.


Library – The anticipated compounds to be made in production that are related
by a common protocol.


Library Design - The process by which a set of compounds are constructed
virtually and selected to give the most useful set of compounds with acceptable
physical properties.


Library Design Workgroup – The group of Pfizer and ArQule scientists that * the
library designs.


Library Idea - The idea, scheme, template(s), around which a set of compounds
will be made. This could also include literature precedent for the reaction(s)
involved in constructing the library, and an analysis of necessary commercially
available monomers to validate that an acceptable library could be made.


Library Production Workgroup – The group of Pfizer and ArQule scientists that
meet biweekly to prioritize and manage the quarterly production plans


Library Synthesis – Producing related compounds using a common development
protocol.


LIMS – Laboratory Information Management System is a software package dedicated
to tracking the development and production samples through the analytical
process.


Monomer – Chemical reagents that couple to a core structure to provide
diversity to the analogs of a library.


Monomer Selection - The process whereby the monomers that are to be used in a
library are selected.


*


Production – The process of performing the unit operations to synthesize
library compounds, submit QC samples for analysis, then cull, reformat, package
and ship the compound library with the associated data.


Production Goal - The work product that is to be achieved by Production in a
given year.


Production Staff - The staff that is responsible for carrying out the
production process.


Protocol - The set of instructions that include, monomers (passed and failed),
reagents, solvents, reaction conditions, equipment, and process by which a
library is synthesized.


Protocol Validation - After the reaction and monomers have been optimized, a
subset of the library is run at the production facility.


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QC Analysis – Quality Control analysis of the products from a library, assuring
that only products that meet the acceptance criteria are packaged and shipped.


Reformatting – The process of redistributing the compounds that conform to the
acceptance criteria into full microtiter plates.


Registration – The process of transferring the structural information as well
as the associated pertinent production and analytical data to a database *.


SD File – Structure data file associates the compound structure with the
pertinent information regarding that structure in a user defined format that
can be used to transfer information between two registration databases easily,
efficiently and effectively.


Steering Committee – The group of Pfizer and ArQule staff that manage the
collaboration.


Strategic Workgroup – The scientific core team of the Steering Committee that
makes and implements decisions on an interim basis as necessary.


Template – The structural component(s) of library members on which diversity
elements are introduced by monomer attachment.


Template Workgroup – The group of Pfizer and ArQule scientists that meet
biweekly to discuss the status and issues of outsourced template and identify
expected template receipt timelines to coordinate associated development and
production activities



*


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Exhibit F:


Payment Schedule – ArQule / Pfizer collaboration



	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Item	 	Total
	
	 	

	 	 	 	 	 	Total 2002	 	Total 2003	 	Total 2004	 	Total 2005	 	Total 2006	 	Total 2007	 	Total 2008	 	Total
	Technology Access Fee ($*)
	 	 	*	 	 	 	*	 	 	 	*	 	 	 	*	 	 	 	*	 	 	 	*	 	 	 	*	 	 	 	*	 
	Lease Payments ($ *)
	 	 	*	 	 	 	*	 	 	 	*	 	 	 	*	 	 	 	*	 	 	 	*	 	 	 	*	 	 	 	*	 
	 
	 	 	*	 	 	 	*	 	 	 	*	 	 	 	*	 	 	 	*	 	 	 	*	 	 	 	*	 	 	 	*	 
	# Compounds ( Million)
	 	 	*	 	 	 	*	 	 	 	*	 	 	 	*	 	 	 	*	 	 	 	*	 	 	 	*	 	 	 	*	 
	 	File Enrichment (*)
	 	 	*	 	 	 	*	 	 	 	*	 	 	 	*	 	 	 	*	 	 	 	*	 	 	 	*	 	 	 	*	 
	 	Large Libraries (*)
	 	 	*	 	 	 	*	 	 	 	*	 	 	 	*	 	 	 	*	 	 	 	*	 	 	 	*	 	 	 	*	 
	 	Hit Follow-up (*)
	 	 	*	 	 	 	*	 	 	 	*	 	 	 	*	 	 	 	*	 	 	 	*	 	 	 	*	 	 	 	*	 
	 	Totals (*)
	 	 	*	 	 	 	*	 	 	 	*	 	 	 	*	 	 	 	*	 	 	 	*	 	 	 	*	 	 	 	*	 
	Compound Cost
	 	 	*	 	 	 	*	 	 	 	*	 	 	 	*	 	 	 	*	 	 	 	*	 	 	 	*	 	 	 	*	 
	 
	 	 	*	 	 	 	*	 	 	 	*	 	 	 	*	 	 	 	*	 	 	 	*	 	 	 	*	 	 	 	*	 
	 	Casf Flow ($ *)
	 	 	*	 	 	 	*	 	 	 	*	 	 	 	*	 	 	 	*	 	 	 	*	 	 	 	*	 	 	 	*	 
	 	*% quarterly in advance ($ *)
	 	 	*	 	 	 	*	 	 	 	*	 	 	 	*	 	 	 	*	 	 	 	*	 	 	 	*	 	 	 	*	 
	 	*% on delivery ($ *)
	 	 	*	 	 	 	*	 	 	 	*	 	 	 	*	 	 	 	*	 	 	 	*	 	 	 	*	 	 	 	*	 
	 
	 	 	
	 	 	 	
	 	 	 	
	 	 	 	
	 	 	 	
	 	 	 	
	 	 	 	
	 	 	 	
	 
	Total Cash Flow / Year
	 	$	53.250	 	 	$	53.250	 	 	$	42.000	 	 	$	42.000	 	 	$	42.000	 	 	$	42.000	 	 	$	16.900	 	 	$	291.400