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| DELAWARE(STATE OR OTHER JURISDICTION OFINCORPORATION OR ORGANIZATION) | 04-3221586(I.R.S. EMPLOYERIDENTIFICATION NO.) |
|-----------------------------------------------------------------------|-----------------------------------------------|

| (TITLE OF EACH CLASS)        |   | NAME OF EACH EXCHANGEON WHICH REGISTERED               |
|------------------------------|--------|--------------------------------------------------------|
| COMMON STOCK, $.01 PAR VALUE |   | The NASDAQ Stock Market LLC(NASDAQ Global Market) |

| Large accelerated filer o | Accelerated filer x | Non-accelerated filer o(Do not check if a smallerreporting company) | Smaller reporting company o |
|--------------------------------|--------------------------|---------------------------------------------------------------------|-----------------------------|

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|          |                                                                                                | Page   |
|---------------|-----------------------------------------------------------------------------------------------------|--------|
| PART III      |                                                                                                |   |
| Item 10. | Directors, Executive Officers, and Corporate Governance                                             | 3      |
| Item 11. | Executive Compensation                                                                              | 7      |
| Item 12. | Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters | 23     |
| Item 13. | Certain Relationships and Related Transactions, and Director Independence                           | 25     |
| Item 14. | Principal Accounting Fees and Services                                                              | 26     |
|          |                                                                                                |   |
| PART IV       |                                                                                                |   |
| Item 15. | Exhibits, Financial Statement Schedules                                                             | 26     |
|          |                                                                                                |   |
| Signatures    |                                                                                                |   |

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| ITEM 10.  | DIRECTORS, EXECUTIVE OFFICERS, AND CORPORATE GOVERNANCE |
|----------------|---------------------------------------------------------|

| Name                                 |    | Age |    | Position                             |
|--------------------------------------|--------------|-----|--------------|--------------------------------------|
| Timothy C. Barabe (1)                |    | 59  |    | Director                             |
| Susan L. Kelley, M.D. (3)            |    | 57  |    | Director                             |
| Ronald M Lindsay, Ph.D. (3)          |    | 64  |    | Director                             |
| Michael D. Loberg, Ph.D. (3)         |    | 64  |    | Director                             |
| Paolo Pucci                          |    | 50  |    | Chief Executive Officer and Director |
| William G. Messenger, D. Min. (1)(2) |    | 51  |    | Director                             |
| Patrick J. Zenner (1)(2)             |    | 65  |    | Director (Chairman of the Board)     |

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| (1) | Member of the Audit Committee. |
|-----|--------------------------------|

| (2) | Member of the Compensation, Nominating and Governance Committee. |
|-----|------------------------------------------------------------------|

| (3) | Member of the Science Committee. |
|-----|----------------------------------|

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|                                                        |   | Timothy C.Barabe(1) |   | Ronald M.Lindsay(3) |   | MichaelLoberg(2)(3) |   | WilliamMessenger(1)(2) |   | PaoloPucci  |   | PatrickZenner(1)(2) |   | Susan L.Kelley(3) |
|-------------------------------------------------------------|--------|--------------------------|--------|--------------------------|--------|---------------------|--------|------------------------|--------|------------------|--------|---------------------|--------|------------------------|
| High level of financial literacy                            |   | X                        |   |                     |   | X                   |   | X                      |   | X                |   | X                   |   |                   |
| Relevant biotechnology business experience                  |   | X                        |   | X                        |   | X                   |   | X                      |   | X                |   | X                   |   | X                      |
| Extensive knowledge of drug research and development        |   |                     |   | X                        |   | X                   |   |                   |   | X                |   |                |   | X                      |
| Extensive knowledge of drug commercialization and marketing |   | X                        |   | X                        |   |                |   |                   |   | X                |   | X                   |   |                   |
| Expertise in corporate governance and business ethics       |   | X                        |   |                     |   |                |   | X                      |   |             |   | X                   |   |                   |
| Diversity of background, professional experience or culture |   |                     |   |                     |   | X                   |   | X                      |   | X                |   |                |   | X                      |

----

| (1) | Member of Audit Committee |
|-----|---------------------------|

| (2) | Member of Compensation Committee |
|-----|----------------------------------|

| (3) | Member of Science Committee |
|-----|-----------------------------|

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|   | ● | all relevant facts and circumstances, not only of the director’s relationship with the Company, but also that of the persons or organizations with which the director is affiliated; |
|--------|---------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | ● | the frequency and regularity of any services the director performed for the Company outside of the scope of duties as a director; |
|--------|---------|-----------------------------------------------------------------------------------------------------------------------------------|

|   | ● | whether the director carried out those services at arm’s length in the ordinary course of business; and |
|--------|---------|---------------------------------------------------------------------------------------------------------------|

|   | ● | whether the director provided those services on substantially the same terms as those prevailing at the time for unrelated parties in comparable transactions. |
|--------|---------|----------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | ● | the director is currently, or was at any time during the preceding three years, employed by the listed company, its parent or subsidiaries, or if any of the director’s family members is, or was, an executive officer of the listed company, its parent or subsidiaries, at any time during the preceding three years; |
|--------|---------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | ● | the director has accepted, or has a family member who has accepted, from the listed company, its parent or subsidiaries, any payment in excess of $120,000 during any twelve-month period within the preceding three years, other than (a) compensation for board or board committee services, (b) compensation paid to a family member who is a non-executive employee of the listed company, its parent or any subsidiary; or (c) benefits under a tax-qualified retirement plan or non-discretionary compensation; |
|--------|---------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | ● | the director is, or has a family member who is, employed as an executive officer of any other entity where at any time during the preceding three years any of the executive officers of the company served on the compensation committee of such other entity; |
|--------|---------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | ● | the director is, or has a family member who is, a partner in, or a controlling stockholder or an executive officer of, any organization to which the listed company made, or from which the company received, payments (other than payments arising solely from investments in the listed company’s securities or payments under non-discretionary charitable contribution matching programs) that exceed the greater of $200,000 or 5% of the recipient’s consolidated gross revenues during the current or any of the past three fiscal years; |
|--------|---------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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|   | ● | the director is, or has a family member who is, a current partner of the listed company’s outside auditors, or was a partner or employee of the listed company’s outside auditor who worked on the listed company’s audit at any time during the past three years; or |
|--------|---------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | ● | the director otherwise has a relationship that, in the opinion of the listed company’s board of directors, would interfere with the exercise of independent judgment in carrying out the responsibilities of a director. |
|--------|---------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ITEM 11.  | EXECUTIVE COMPENSATION |
|----------------|------------------------|

| Name                                |   | Fees Earned orPaid in Cash ($) |   |   | OptionAwards(1) ($) |   |    | Total ($) |   |
|-------------------------------------|--------|--------------------------------|--------|--------|--------------------------|--------|---------|----------------|--------|
| Timothy C. Barabe (2)               |   | $                              | 52,000 |   |                     | $      | 59,085  |           |   | $ | 111,085 |   |
| Ronald M. Lindsay, Ph.D.            |   |                           | 51,000 |   |                     |   | 59,085  |           |   |   | 110,085 |   |
| Michael D. Loberg, Ph.D. (3)        |   |                           | 43,000 |   |                     |   | 59,085  |           |   |   | 102,085 |   |
| William G. Messenger, D. Min.  |   |                           | 51,000 |   |                     |   | 59,085  |           |   |   | 110,085 |   |
| Susan L. Kelley, M.D. (4)           |   |                           | 27,000 |   |                     |   | 81,569  |           |   |   | 108,569 |   |
| Nancy A. Simonian, M.D. (5)         |   |                           | 11,000 |   |                     |   | — |           |   |   | 11,000 |   |
| Patrick J. Zenner                   |   |                           | 56,000 |   |                     |   | 98,475  |           |   |   | 154,475 |   |

----

| (1) | This column reflects the aggregate grant date fair value for all option awards granted during 2011. Assumptions used in the calculation of this amount are included in Note 2 to the Company’s audited financial statements for the year ended December 31, 2011, set forth in the Company’s Annual Report on Form 10-K filed with the SEC on March 1, 2012 (“2011 Annual Report on Form 10-K”). As of December 31, 2011, for each director the aggregate number of shares of Common Stock that may be acquired upon exercise of outstanding option awards is as follows: Mr. Barabe, 96,000; Dr. Kelley, 45,000; Dr. Lindsay, 80,000; Dr. Loberg, 80,000; Dr. Messenger, 85,000; Dr. Simonian, 65,000; and Mr. Zenner, 132,500. |
|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (2) | Mr. Barabe elected to have a portion of his fees for service as a director in the amount of $31,165 paid to him in the form of 5,384 shares of our Common Stock in accordance with our 2005 Director Stock Compensation Plan. The number of shares was determined on the date of the payment of director fees based on the closing market price for a share on that date. |
|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (3) | Dr. Loberg elected to have a portion of his fees for service as a director in the amount of $21,443 paid to him in the form of 3,671 shares of our Common Stock in accordance with our 2005 Director Stock Compensation Plan. The number of shares was determined on the date of the payment of director fees based on the closing market price for a share on that date. |
|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (4) | Dr. Kelley has been a member of our Board of Directors since April 27, 2011. |
|-----|----------------------------------------------------------------------------------------|

| (5) | On March 31, 2011, Dr. Simonian resigned as a member of our Board of Directors. |
|-----|---------------------------------------------------------------------------------|

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|   | ● | To attract and retain the best executive talent available; |
|--------|---------|------------------------------------------------------------|

|   | ● | To motivate our executives to achieve the goals inherent in our business strategy; |
|--------|---------|------------------------------------------------------------------------------------|

|   | ● | To link executive and stockholder interests through equity-based compensation; and |
|--------|---------|------------------------------------------------------------------------------------|

|   | ● | To provide a compensation package that recognizes individual contributions as well as corporate performance. |
|--------|---------|--------------------------------------------------------------------------------------------------------------|

|   | ● | Base salary; |
|--------|---------|--------------|

|   | ● | Annual performance-based cash bonuses; |
|--------|---------|----------------------------------------|

|   | ● | Stock-based incentive awards; and |
|--------|---------|-----------------------------------|

|   | ● | Employee benefits. |
|--------|---------|--------------------|

----

|   |  Allos Therapeutics, Inc.       | Maxygen, Inc.               |
|--------|-------------------------------------------|----------------------------------|
|   |  Alnylam Pharmaceuticals, Inc.  | Micromet Inc.               |
|   |  Ariad Pharmaceuticals, Inc.    | Novavax, Inc.               |
|   |  Array BioPharma, Inc.          | Rigel Pharmaceuticals, Inc. |
|   |  BioCyst Phramaceuticals, Inc.  | Sangamo BioSciences, Inc.   |
|   |  Cytokinetics Inc.              | SuperGen, Inc.              |
|   |  Dyax Corp.                          | Targacept, Inc.             |
|   |  Geron Corporation                   | VIVUS, INC.                 |
|   |  Infinity Pharmaceuticals, Inc. | XenoPort, Inc.              |

----

| Name and Principal Position    |   | 2010Annualized BaseSalary ($) |    |   | 2011Annualized BaseSalary ($) |   |    | %Increase |   | Comment |
|--------------------------------|--------|-------------------------------|---------|--------|-------------------------------|--------|---------|-----------|--------|---------|
| Paolo Pucci, CEO               |   |                          | 475,000 |   |                          |   | 485,000 |      |   |    | 2.0 |   | Base salary negotiated in and adjusted per amended employment agreement and annual review. |
| Peter S. Lawrence, COO         |   |                          | 392,000 |   |                          |   | 402,000 |      |   |    | 2.5 |   | Base salary negotiated in and adjusted per amended employment agreement and annual review. |
| Dr. Brian Schwartz, CMO   |   |                          | 338,000 |   |                          |   | 348,000 |      |   |    | 3.0 |   | Base salary negotiated in and adjusted per employment agreement and annual review. |
| Dr. Thomas C.K. Chan, CSO |   |                          | 332,000 |   |                          |   | 341,000 |      |   |    | 3.0 |   | Base salary negotiated in and adjusted per employment agreement and annual review. |

|   | ● | Open a specified percentage of participating clinical sites in ongoing Phase 3 non-small cell lung cancer trial and accrue a specified number of patients by the end of 2011. |
|--------|---------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | ● | Read-out of clinical data from the Phase 2 hepatocellular carcinoma (liver cancer) mono-therapy trial by a specified date. |
|--------|---------|---------------------------------------------------------------------------------------------------------------------------------|

|   | ● | Complete transfer of clinical data from Company-managed clinical trials to Daiichi Sankyo in support of regulatory filings. |
|--------|---------|-----------------------------------------------------------------------------------------------------------------------------|

----

|   | ● | Characterize lead compound in FGFR program and make certain regulatory filings by a specified date. |
|--------|---------|-----------------------------------------------------------------------------------------------------|

|   | ● | Complete GLP toxicology studies for lead molecule from our research and development collaboration with Daiichi Sankyo and agree upon a Phase 1 trial plan by specified dates. |
|--------|---------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | ● | Initiate lead optimization for third molecule from our research and development collaboration with Daiichi Sankyo in accordance with the research plan by a specified date. |
|--------|---------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | ● | For BRAF program, produce biomarker plan and make recommendation to Board regarding next steps for a clinical development plan. |
|--------|---------|---------------------------------------------------------------------------------------------------------------------------------|

|   | ● | Enter into a new collaboration for an early stage program or ArQule Kinase Inhibitor ProgramTM deal that includes specified minimum up front and pre-clinical milestone targets. |
|--------|---------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | ● | Kyowa Hakko Kirin initiates Phase 3 non-small cell lung cancer trial in Asia by end of 2011. |
|--------|---------|----------------------------------------------------------------------------------------------|

|   | ● | End 2011 with a specified amount of cash and marketable securities while meeting all key budget parameters. |
|--------|---------|-------------------------------------------------------------------------------------------------------------|

|   | ● | Publish and present in a specified number and type of public forums data regarding our drug discovery and development programs. |
|--------|---------|---------------------------------------------------------------------------------------------------------------------------------|

| Name and Principal Position    |   | 2011Bonus Target(% of Base Salary) |   | 2011Bonus Actual(% of Base Salary) |   | Comment                                                                                |
|--------------------------------|--------|------------------------------------|--------|------------------------------------|--------|----------------------------------------------------------------------------------------|
| Paolo Pucci, CEO               |   | 60.0%                              |   |   54.0%                  |   | Target bonus set by terms of amended employment agreement. Actual bonus 90% of target. |
| Peter S. Lawrence, COO         |   | 40.0%                              |   |   36.0%                  |   | Target bonus set by terms of amended employment agreement. Actual bonus 90% of target. |
| Dr. Brian Schwartz, CMO   |   | 35.0%                              |   | 31.5%                              |   | Target bonus set by terms of employment agreement. Actual bonus 90% of target.         |
| Dr. Thomas C.K. Chan, CSO |   | 35.0%                              |   | 31.5%                              |   | Target bonus set by terms of employment agreement. Actual bonus 90% of target.         |

----

|   | ● | health (medical, dental and vision) insurance for which the Company pays a portion of the premiums; |
|--------|---------|-----------------------------------------------------------------------------------------------------|

|   | ● | a life insurance benefit equivalent to two times base salary up to a maximum of $400,000 for which the Company pays the premiums; |
|--------|---------|-----------------------------------------------------------------------------------------------------------------------------------|

|   | ● | long-term disability insurance equal to 60% of base salary up to $15,000 per month, the premiums for which are paid by the Company with the amount of the premiums being included in the taxable compensation of employees; |
|--------|---------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | ● | if necessary in given circumstances to attract management talent, housing allowances and relocation costs; |
|--------|---------|------------------------------------------------------------------------------------------------------------|

|   | ● | a retirement plan (401(k) Plan) under which an employee can choose to contribute up to 60% (subject to Tax Code limits) of compensation on a pre-tax basis with a matching contribution from the Company of $0.50 for each $1.00 contributed up to the first 6% of compensation; |
|--------|---------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | ● | a tax-qualified stock purchase plan which permits participants to acquire shares of Common Stock at a price that is 85% of the stock price on either the first day or last day of the designated offering period (generally six months), whichever is lower; and |
|--------|---------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | ● | tuition reimbursement up to $3,000 per year for undergraduate courses and $6,000 for graduate courses. |
|--------|---------|--------------------------------------------------------------------------------------------------------|

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|   | ● | a member of the compensation committee (or equivalent) of any other entity, one of whose executive officers served as one of our directors or was an immediate family member of a director, or served on our Compensation Committee; or |
|--------|---------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | ● | a director of any other entity, one of whose executive officers or their immediate family member served on our Compensation Committee. |
|--------|---------|----------------------------------------------------------------------------------------------------------------------------------------|

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|   | Submitted by the Compensation,Nominating and Governance Committee, |
|--------|--------------------------------------------------------------------|
|   | William G. Messenger, ChairmanMichael D. LobergPatrick J. Zenner   |

----

| Name and Principal Position |   | Year   |   | Salary ($)(1) |    |   | Bonus($) |   |    | StockAwards ($)(2) |   |   | OptionAwards ($)(3) |   |   | Non-EquityIncentive PlanCompensation ($)(4) |      |   | All OtherCompensation ($)(5) |   |    | Total($) |   |
|-----------------------------|--------|--------|--------|---------------|---------|--------|----------|--------|---------|--------------------|--------|--------|---------------------|--------|--------|---------------------------------------------|-----------|--------|------------------------------|--------|---------|----------|--------|
| Paolo Pucci                 |   | 2011   |   |          | 483,769 |   |     |   | — |               |   |   | —             |   |   |                                        | 1,214,070 |   |                         |   | 261,630 |     |   |   | 7,950 |   |   |   | 1,967,419 |   |
| Chief Executive Officer     |   | 2010   |   |          | 461,250 |   |     |   | — |               |   |   | —             |   |   |                                        | 714,688   |   |                         |   | 313,500 |     |   |   | 7,926 |   |   |   | 1,497,364 |   |
|                        |   | 2009   |   |          | 450,000 |   |     |   | — |               |   |   | 238,950             |   |   |                                        | —   |   |                         |   | 202,500 |     |   |   | 11,890 |   |   |   | 903,340 |   |
|                        |   |   |   |          |    |   |     |   |    |               |   |   |                |   |   |                                        |      |   |                         |   |    |     |   |   |   |   |   |   |   |   |
| Peter S. Lawrence           |   | 2011   |   |          | 401,111 |   |     |   | — |               |   |   | —             |   |   |                                        | 627,270   |   |                         |   | 144,671 |     |   |   | 7,950 |   |   |   | 1,181,002 |   |
| President, Chief            |   | 2010   |   |          | 391,472 |   |     |   | — |               |   |   | —             |   |   |                                        | 270,075   |   |                         |   | 172,508 |     |   |   | 7,926 |   |   |   | 841,981 |   |
| Operating Officer,          |   | 2009   |   |          | 383,654 |   |     |   | — |               |   |   | 265,500             |   |   |                                        | —   |   |                         |   | 138,375 |     |   |   | 7,890 |   |   |   | 795,419 |   |
| General Counsel and         |   |   |   |          |    |   |     |   |    |               |   |   |                |   |   |                                        |      |   |                         |   |    |     |   |   |   |   |   |   |   |   |
| Secretary                   |   |   |   |          |    |   |     |   |    |               |   |   |                |   |   |                                        |      |   |                         |   |    |     |   |   |   |   |   |   |   |   |
|                        |   |   |   |          |    |   |     |   |    |               |   |   |                |   |   |                                        |      |   |                         |   |    |     |   |   |   |   |   |   |   |   |
| Dr. Brian Schwartz     |   | 2011   |   |          | 347,630 |   |     |   | — |               |   |   | —             |   |   |                                        | 566,566   |   |                         |   | 109,749 |     |   |   | 7,950 |   |   |   | 1,031,895 |   |
| Chief Medical Officer       |   | 2010   |   |          | 337,753 |   |     |   | — |               |   |   | —             |   |   |                                        | 186,975   |   |                         |   | 130,231 |     |   |   | 7,926 |   |   |   | 662,885 |   |
| and Senior Vice             |   | 2009   |   |          | 331,120 |   |     |   | — |               |   |   | 41,418              |   |   |                                        | —   |   |                         |   | 104,463 |     |   |   | 7,673 |   |   |   | 484,674 |   |
| President                   |   |   |   |          |    |   |     |   |    |               |   |   |                |   |   |                                        |      |   |                         |   |    |     |   |   |   |   |   |   |   |   |
|                        |   |   |   |          |    |   |     |   |    |               |   |   |                |   |   |                                        |      |   |                         |   |    |     |   |   |   |   |   |   |   |   |
| Dr. Thomas C. K. Chan  |   | 2011   |   |          | 340,680 |   |     |   | — |               |   |   | —             |   |   |                                        | 566,566   |   |                         |   | 107,555 |     |   |   | 600 |   |   |   | 1,015,401 |   |
| Chief Scientific Officer    |   | 2010   |   |          | 331,000 |   |     |   | — |               |   |   | —             |   |   |                                        | 186,975   |   |                         |   | 127,628 |     |   |   | 576 |   |   |   | 646,179 |   |
| and Senior Vice             |   | 2009   |   |          | 323,769 |   |     |   | — |               |   |   | 70,800              |   |   |                                        | —   |   |                         |   | 87,750  |     |   |   | 540 |   |   |   | 482,859 |   |
| President                   |   |   |   |          |    |   |     |   |    |               |   |   |                |   |   |                                        |      |   |                         |   |    |     |   |   |   |   |   |   |   |   |

----

| (1) | The amounts in this column include compensation earned but deferred at the election of the named executive officer, under the Company’s retirement savings plan established under Section 401(k) of the Tax Code. |
|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (2) | This column reflects the aggregate grant date fair value for all stock awards granted during the fiscal year. Assumptions used in the calculation of this amount are included in Note 2 to the Company’s audited financial statements for the year ended December 31, 2011, included in the Company’s Annual Report on Form 10-K filed with the SEC on March 1, 2012 (“2011 Annual Report on Form 10-K”). Additional information regarding stock options issued to the named executive officers is provided in the table “Outstanding Equity Awards at Fiscal Year-End”. |
|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (3) | This column reflects the aggregate grant date fair value for all option awards granted during the fiscal year. Assumptions used in the calculation of this amount are included in Note 2 to the Company’s audited financial statements for the year ended December 31, 2011, included in the Company’s 2011 Annual Report on Form 10-K. Additional information regarding stock options issued to the named executive officers is provided in the table “Outstanding Equity Awards at Fiscal Year-End”. |
|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (4) | Represents bonus amounts earned under our annual incentive program for 2011 and paid in the first quarter of 2012. Additional information regarding the annual incentive program is provided in the “Compensation Discussion and Analysis—Performance-Based Bonuses”. |
|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (5) | In 2011, for each named executive officer, the amount includes the Company’s contributions to a 401(k) plan account for the executive and payment of group term life insurance premiums. |
|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

----

|                      |   |       |   |   | Estimated Future PayoutsUnder Non-EquityIncentive Plan Awards(1) |    |   |      |   |    |       |   |
|---------------------------|--------|------------|--------|--------|------------------------------------------------------------------|---------|--------|-----------|--------|---------|------------|--------|
| Name                      |   | Grant Date |   |   | Threshold($)                                                     |    |   | Target($) |   |    | Maximum($) |   |   | All OtherOptionAwards:Number ofSecuritiesUnderlyingOptions(#) |   |   | Grant Date FairValue of Stockand OptionAwards(2)($) |   |
| Paolo Pucci               |   | N/A        |   |   |                                                             | — |   |      |   | 293,607 |       |   |   | 440,411 |   |   |   |   |   |   |   |
|                      |   | 1/20/2011  |   |   |                                                             |    |   |      |   |    |       |   |   |   |   |   |   | 300,000 |   |   |   | 1,214,070 |   |
| Peter S. Lawrence         |   | N/A        |   |   |                                                             | — |   |      |   | 165,568 |       |   |   | 248,353 |   |   |   |   |   |   |   |   |   |
|                      |   | 1/20/2011  |   |   |                                                             |    |   |      |   |    |       |   |   |   |   |   |   | 130,000 |   |   |   | 526,097 |   |
|                      |   | 1/20/2011  |   |   |                                                             |    |   |      |   |    |       |   |   |   |   |   |   | 25,000 |   |   |   | 101,173 |   |
| Dr. Brian Schwartz   |   | N/A        |   |   |                                                             | — |   |      |   | 129,504 |       |   |   | 194,256 |   |   |   |   |   |   |   |   |   |
|                      |   | 1/20/2011  |   |   |                                                             |    |   |      |   |    |       |   |   |   |   |   |   | 90,000 |   |   |   | 364,221 |   |
|                      |   | 1/20/2011  |   |   |                                                             |    |   |      |   |    |       |   |   |   |   |   |   | 50,000 |   |   |   | 202,345 |   |
| Dr. Thomas C.K. Chan |   | N/A        |   |   |                                                             | — |   |      |   | 120,701 |       |   |   | 181,051 |   |   |   |   |   |   |   |   |   |
|                      |   | 1/20/2011  |   |   |                                                             |    |   |      |   |    |       |   |   |   |   |   |   | 90,000 |   |   |   | 364,221 |   |
|                      |   | 1/20/2011  |   |   |                                                             |    |   |      |   |    |       |   |   |   |   |   |   | 50,000 |   |   |   | 202,345 |   |

----

| (1) | The threshold amount under the cash bonus program is zero. The target amount is based on the individual’s current salary. The target represents 60% of Mr. Pucci’s base salary, 40%, 35% and 35% of the base salaries of Mr. Lawrence, Dr. Schwartz and Dr. Chan respectively. The maximum amount is 150% of the target amount. |
|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (2) | The dollar amount for PSUs is calculated as the number of PSUs granted times the market price on the date of award. |
|-----|--------------------------------------------------------------------------------------------------------------------------|

----

|                      |   | Option Awards                                                  |    |   |                                                                | Stock Awards |    |
|---------------------------|--------|----------------------------------------------------------------|---------|--------|---------------------------------------------------------------------|--------------|---------|
| Name                      |   | Number ofSecuritiesUnderlyingUnexercisedOptions (#)Exercisable |    |   | Number ofSecuritiesUnderlyingUnexercisedOptions (#)(1)Unexercisable |         |    | OptionExercisePrice ($) |   | OptionExpiration Date |   | Number of Sharesor Unitsof Stockthat HaveNot Vested |   |   | Market Valueof Shares orUnits of Stockthat HaveNot Vested(3) |   |
| Paolo Pucci(2)            |   |                                                           | 500,000 |   |                                                                |         |    |   | $ | 3.95 |   | 6/9/2018 |   |   |   |   |   |   |
|                      |   |                                                           | 56,250  |   |                                                                |         | 168,750 |   |   |   | 3.42 |   | 1/21/2020 |   |   |   |   |   |   |
|                      |   |                                                           | 50,000  |   |                                                                |         | 50,000  |   |   |   | 4.14 |   | 7/15/2020 |   |   |   |   |   |   |
|                      |   |                                                           |    |   |                                                                |         | 300,000 |   |   |   | 6.70 |   | 1/24/2021 |   |   |   |   |   |   |
|                      |   |                                                           |    |   |                                                                |         |    |   |   |   |   |   |   |   |   | 33,750 |   |   | $ | 119,475 |   |
|                      |   |                                                           |    |   |                                                                |         |    |   |   |   |   |   |   |   |   | 390,000 |   |   | $ | 1,614,600 |   |
| Peter S. Lawrence         |   |                                                           | 300,000 |   |                                                                |         |    |   |   |   | 6.20 |   | 4/13/2016 |   |   |   |   |   |   |   |   |
|                      |   |                                                           | 50,000  |   |                                                                |         |    |   |   |   | 6.16 |   | 1/16/2017 |   |   |   |   |   |   |   |   |
|                      |   |                                                           | 100,000 |   |                                                                |         |    |   |   |   | 7.56 |   | 10/4/2017 |   |   |   |   |   |   |   |   |
|                      |   |                                                           | 150,000 |   |                                                                |         | 50,000  |   |   |   | 4.75 |   | 1/17/2018 |   |   |   |   |   |   |   |   |
|                      |   |                                                           | 32,500  |   |                                                                |         | 97,500  |   |   |   | 3.42 |   | 1/21/2020 |   |   |   |   |   |   |   |   |
|                      |   |                                                           |    |   |                                                                |         | 130,000 |   |   |   | 6.70 |   | 1/24/2021 |   |   |   |   |   |   |   |   |
|                      |   |                                                           |    |   |                                                                |         | 25,000  |   |   |   | 6.70 |   | 1/24/2021 |   |   |   |   |   |   |   |   |
|                      |   |                                                           |    |   |                                                                |         |    |   |   |   |   |   |   |   |   | 37,500 |   |   | $ | 132,750 |   |
| Dr. Brian Schwartz   |   |                                                           | 150,000 |   |                                                                |         | 50,000  |   |   |   | 3.62 |   | 7/14/2018 |   |   |   |   |   |   |   |   |
|                      |   |                                                           | 22,500  |   |                                                                |         | 67,500  |   |   |   | 3.42 |   | 1/21/2020 |   |   |   |   |   |   |   |   |
|                      |   |                                                           |    |   |                                                                |         | 90,000  |   |   |   | 6.70 |   | 1/24/2021 |   |   |   |   |   |   |   |   |
|                      |   |                                                           |    |   |                                                                |         | 50,000  |   |   |   | 6.70 |   | 1/24/2021 |   |   |   |   |   |   |   |   |
|                      |   |                                                           |    |   |                                                                |         |    |   |   |   |   |   |   |   |   | 5,850 |   |   | $ | 20,709 |   |
| Dr. Thomas C.K. Chan |   |                                                           | 50,000  |   |                                                                |         |    |   |   |   | 6.93 |   | 12/1/2015 |   |   |   |   |   |   |   |   |
|                      |   |                                                           | 50,000  |   |                                                                |         |    |   |   |   | 6.16 |   | 1/16/2017 |   |   |   |   |   |   |   |   |
|                      |   |                                                           | 37,500  |   |                                                                |         | 12,500  |   |   |   | 4.75 |   | 1/17/2018 |   |   |   |   |   |   |   |   |
|                      |   |                                                           | 75,000  |   |                                                                |         | 25,000  |   |   |   | 2.86 |   | 11/21/2018 |   |   |   |   |   |   |   |   |
|                      |   |                                                           | 22,500  |   |                                                                |         | 67,500  |   |   |   | 3.42 |   | 01/21/2020 |   |   |   |   |   |   |   |   |
|                      |   |                                                           |    |   |                                                                |         | 90,000  |   |   |   | 6.70 |   | 1/24/2021 |   |   |   |   |   |   |   |   |
|                      |   |                                                           |    |   |                                                                |         | 50,000  |   |   |   | 6.70 |   | 1/24/2021 |   |   |   |   |   |   |   |   |
|                      |   |                                                           |    |   |                                                                |         |    |   |   |   |   |   |   |   |   | 10,000 |   |   | $ | 35,400 |   |

----

| (1) | Except as otherwise noted, each option vests at the rate of one-fourth of the underlying shares annually beginning on the anniversary of the date of grant. |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (2) | In accordance with Mr. Pucci’s employment agreement dated as of April 15, 2008, Mr. Pucci was granted an option to purchase 500,000 shares of the Company’s Common Stock, of which 125,000 vested on June 9, 2008, and 125,000 vested on the anniversary of the date of grant for the following three years. On June 9, 2008, Mr. Pucci was also awarded 125,000 shares of restricted stock 50% of which vested immediately and the remaining shares vested on June 9, 2009. |
|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (3) | Market Value is calculated as the number of shares of non vested stock awarded times the market price on the date of award. |
|-----|-----------------------------------------------------------------------------------------------------------------------------|

----

|                       |   | Option Awards                            |    |   | Stock Awards                   |   |
|----------------------------|--------|------------------------------------------|---------|--------|--------------------------------|--------|
| Name                       |   | Number of SecuritiesAcquired on Exercise |    |   | Value RealizedUpon Exercise($) |   |   | Number of SharesAcquired on Vesting |   |   | Value Realized onVesting($)(1) |   |
| Paolo Pucci                |   |                                     | — |   |                           |   | — |   |   |   | 16,875 |   |   | $ | 114,750 |   |
| Peter S. Lawrence          |   |                                     | — |   |                           |   | — |   |   |   | 18,750 |   |   |   | 127,500 |   |
| Dr. Brian Schwartz    |   |                                     | — |   |                           |   | — |   |   |   | 2,925 |   |   |   | 19,890 |   |
| Dr. Thomas C. K. Chan |   |                                     | — |   |                           |   | — |   |   |   | 5,000 |   |   |   | 34,000 |   |

----

| (1) | On January 20, 2009, Mr. Pucci, Mr. Lawrence, Dr. Schwartz and Dr. Chan were awarded 67,500, 75,000, 11,700 and 20,000 shares of restricted stock respectively, 25% of which vested on January 20, 2010 and 25% of which will vest on each anniversary of the date of award for the following three years. The fair market value of the Company’s Common Stock was $6.80 on January 20, 2011. |
|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | ● | “Change in Control” means any of the following: |
|--------|---------|-------------------------------------------------------------|

|   | ● | the acquisition by any person or entity of our Common Stock so that such person or entity holds or controls 50% or more of our outstanding Common Stock; |
|--------|---------|----------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | ● | the merger or consolidation of the Company with or into any other entity in circumstances where the holders of the Company’s outstanding shares of capital stock before the transaction do not retain stock representing a majority of the voting power of the surviving entity; |
|--------|---------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | ● | a sale of all or substantially all of the assets of the Company to a third party; |
|--------|---------|-----------------------------------------------------------------------------------|

|   | ● | within any 24-month period, the election by the Company’s stockholders of 20% or more of the Company’s directors other than pursuant to nomination by management; or |
|--------|---------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | ● | the execution of an agreement approved by the Board providing for any of the above. |
|--------|---------|-------------------------------------------------------------------------------------|

|   | ● | “Cause” means any of the following: |
|--------|---------|-------------------------------------------------|

|   | ● | arbitrary, unreasonable, or willful failure of the executive to follow the reasonable instructions of the Chief Executive Officer (or, in the case of the Chief Executive Officer, the Board), or otherwise perform his or her duties; |
|--------|---------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | ● | willful misconduct by the executive that is materially injurious to the Company; |
|--------|---------|----------------------------------------------------------------------------------|

|   | ● | willful commission by the executive of an act constituting fraud with respect to the Company; |
|--------|---------|-----------------------------------------------------------------------------------------------|

|   | ● | conviction of the executive for a felony under state or federal law; or |
|--------|---------|-------------------------------------------------------------------------|

|   | ● | material breach by the executive of his or her obligations to the Company regarding confidentiality of information, rights in intellectual property. |
|--------|---------|------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|   | ● | Termination “without Cause” means any of the following occurrences: |
|--------|---------|---------------------------------------------------------------------------------|

|   | ● | the Company terminates the executive’s employment without Cause; or |
|--------|---------|---------------------------------------------------------------------------|

|   | ● | the executive terminates his employment upon the occurrence of any of the following: (a) the Company substantially reduces or diminishes the executive’s responsibilities or title without cause; (b) the Company reduces the executive’s base salary or bonus target (other than in connection with a Company-wide decrease in salary or bonus, respectively); (c) the Company materially breaches any of its obligations to the executive under his or her employment agreement, and fails to cure such breach; (d) the Company relocates the executive’s place of employment without his or her consent by a distance of more than fifty (50) miles; or (e) a successor in interest to the Company fails to assume the obligations of the employment agreement. |
|--------|---------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | ● | In the case of Mr. Pucci, Termination without Cause shall also occur if, following a Change in Control, the executive terminates his employment: |
|--------|---------|-------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | ● | because the executive is unable to have direct responsibility for the Company’s fully-integrated profit and loss statement (whether as a stand-alone entity or as a division or other business unit of some other acquiring entity); or |
|--------|---------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | ● | because of the exclusion from, or failure to appoint the executive to, the board of directors, or the executive committee, management committee or equivalent corporate managerial body of senior executives, of the acquiring company. |
|--------|---------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| Name                      |   | CashPayment(1)($) |      |   | EquityAcceleration(2)($) |   |    | Benefits andPerquisites(3)($) |   |   | Total($) |   |
|---------------------------|--------|-------------------|-----------|--------|--------------------------|--------|---------|-------------------------------|--------|--------|----------|--------|
| Paolo Pucci               |   | $                 | 1,485,000 |   |                     |   | 449,625 |                          |   | $      | 22,951   |   |   | $ | 1,957,576 |   |
| Peter S. Lawrence         |   |              | 562,611   |   |                     |   | 260,950 |                          |   |   | 22,093   |   |   |   | 845,654 |   |
| Dr. Brian Schwartz   |   |              | 470,354   |   |                     |   | 250,850 |                          |   |   | 22,093   |   |   |   | 743,297 |   |
| Dr. Thomas C.K. Chan |   |              | 460,951   |   |                     |   | 230,475 |                          |   |   | 14,659   |   |   |   | 706,085 |   |

----

| (1) | For Mr. Pucci, the cash payment is calculated as the sum of an amount equal to two times his annual salary as of December 31, 2011, plus a bonus payment equal to the sum of the 2010 and 2011 bonus. For each of Mr. Lawrence, Dr. Schwartz and Dr. Chan, the cash payment is calculated as the sum of the executive’s annual salary as of December 31, 2011, plus a bonus payment equal to 40%, 35% and 35%, respectively, of annual salary. |
|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (2) | Reflects the aggregate intrinsic value of unvested stock options as of December 31, 2011. Aggregate intrinsic value represents the value for only those options which have an exercise price less than the market value of our stock on December 31, 2011. |
|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (3) | Reflects the premiums for twelve months for group medical, dental, life and disability programs. Amounts are based on the premiums in effect at December 31, 2011. |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| ITEM 12.  | SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS |
|----------------|------------------------------------------------------------------------------------------------|

| Name                                                                                               |   | CommonStock Owned |      |   | Options toPurchaseCommon Stock |   |    | Total StockandStock-basedHoldings |   |   | Percentof Class |   |
|----------------------------------------------------------------------------------------------------|--------|-------------------|-----------|--------|--------------------------------|--------|---------|-----------------------------------|--------|--------|-----------------|--------|
| FMR LLC(1)82 Devonshire Street,Boston, MA 02109                                               |   |              | 7,948,445 |   |                           |   | — |                              |   |   | 7,948,445       |   |   |   | 14.782 | % |
| BlackRock, Inc.(2)55 East 52nd StreetNew York, NY 10055                                  |   |              | 5,466,931 |   |                           |   | — |                              |   |   | 5,466,931       |   |   |   | 10.17 | % |
| Franklin Resources, Inc.(3)One Franklin ParkwaySan Mateo, CA 94403                            |   |              | 3,410,000 |   |                           |   | — |                              |   |   | 3,410,000       |   |   |   | 6.3 | % |
| Pfizer Inc(4)235 East 42nd StreetNew York, New York 10017                                     |   |              | 3,273,679 |   |                           |   | — |                              |   |   | 3,273,679       |   |   |   | 6.07 | % |
| The Vanguard Group, Inc (5)   100 Vanguard Blvd.   Malvern, PA 19355 |   |              | 2,723,675 |   |                           |   | — |                              |   |   | 2,723,675       |   |   |   | 5.06 | % |

----

| (1) | These shares are beneficially owned by FMR LLC based on the Schedule 13G Amendment it filed with the SEC on February 14, 2012. The percentage of ownership is calculated as of the filing date of the Schedule 13G Amendment.  According to the Schedule 13G Amendment, FMR, LLC is a parent holding company and has sole power to vote or to direct the vote of 787 shares and sole power to dispose or to direct the disposition of 7,948,445 shares. |
|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  (2) | These shares are beneficially owned by BlackRock, Inc. These shares are based on the Schedule 13G Amendment it filed with the SEC on March 12, 2012. The percentage of ownership is calculated as of the filing date of the Schedule 13G.  According to the Schedule 13G Amendment, BlackRock, Inc. has sole voting power and sole dispositive power over all of the shares. |
|-----------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (3) | These shares are beneficially owned by Franklin Resources, Inc. based on the Schedule 13G Amendment it filed with the SEC on February 9, 2012. The percentage of ownership is calculated as of the filing date of the Schedule 13G Amendment.  According to the Schedule 13G, (a) Franklin Advisers, Inc. has sole power to vote or to direct the vote of, and sole power to dispose or to direct the disposition of, 3,224,100 shares; (b) Fiduciary Trust Company International has sole power to vote or to direct the vote of, and sole power to dispose or to direct the disposition of, 35,200 shares, and Franklin Templeton Institutional, LLC has the sole power to dispose or to direct the disposition of 150,700 shares. |
|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (4) | These shares (issued to Pfizer Holdings Europe, Latouche House, International Financial Services Centre, Dublin 1, Ireland, a subsidiary of Pfizer Inc) are beneficially owned by Pfizer Inc based on the Schedule 13D filed with the SEC on February 14, 2006 by Pfizer Inc. The percentage of ownership is calculated as of February 16, 2012. |
|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (5) | These shares are beneficially owned by The Vanguard Group, Inc. based on the Schedule 13G it filed with the SEC on February 8, 2012. The percentage of ownership is calculated as of the filing date of the Schedule 13G Amendment. According to the Schedule 13G Amendment, The Vanguard Group, Inc. has sole voting power over 77,290 shares, sole dispositive power over 2,646,385 shares and shared dispositive power over 77,290 shares. |
|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| Directors and Executive Officers(1)                           |   | CommonStock Owned |    |   | Options toPurchaseCommon Stock |   |      | Total StockandStock-basedHoldings |   |   | Percentof Class |   |
|---------------------------------------------------------------|--------|-------------------|---------|--------|--------------------------------|--------|-----------|-----------------------------------|--------|--------|-----------------|--------|
| Timothy C. Barabe(2)                                          |   |              | 42,439  |   |                           |   | 96,000    |                              |   |   | 138,439         |   |   |   |   | *  |
| Susan L. Kelley                                               |   |              | — |   |                           |   | 25,000    |                              |   |   | 25,000          |   |   |   |   | *  |
| Ronald M. Lindsay                                             |   |              | 20,000  |   |                           |   | 80,000    |                              |   |   | 100,000         |   |   |   |   | *  |
| Michael D. Loberg                                             |   |              | 71,688  |   |                           |   | 80,000    |                              |   |   | 151,688         |   |   |   |   | *  |
| William G. Messenger                                          |   |              | 1,500   |   |                           |   | 85,000    |                              |   |   | 86,500          |   |   |   |   | *  |
| Nancy A. Simonian(3)                                          |   |              | — |   |                           |   | 65,000    |                              |   |   | 65,000          |   |   |   |   | *  |
| Patrick J. Zenner                                             |   |              | 31,300  |   |                           |   | 132,500   |                              |   |   | 163,800         |   |   |   |   | *  |
| Thomas C. K. Chan                                             |   |              | 16,994  |   |                           |   | 305,000   |                              |   |   | 321,994         |   |   |   |   | *  |
| Peter S. Lawrence                                             |   |              | 52,723  |   |                           |   | 753,750   |                              |   |   | 806,473         |   |   |   | 1.5 | % |
| Paolo Pucci                                                   |   |              | 208,606 |   |                           |   | 737,500   |                              |   |   | 946,106         |   |   |   | 1.8 | % |
| Brian Schwartz                                                |   |              | 31,543  |   |                           |   | 230,000   |                              |   |   | 261,543         |   |   |   |   | *  |
| Directors and executive officers as a group (11 persons) |   |              | 476,793 |   |                           |   | 2,589,750 |                              |   |   | 3,066,543       |   |   |   | 5.7 | % |

----

| * | Indicates less than 1%. |
|---|-------------------------|

| (1) | The persons named in the table have sole voting and investment power with respect to the shares beneficially owned by them, except as noted below or as otherwise provided under community property laws. Total Stock and Stock-based Holdings numbers include shares of Common Stock issuable pursuant to outstanding options that may be exercised within 60 days after March 23, 2012. |
|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (2) | Mr. Barabe disclaims any direct, indirect or beneficial ownership of 420 shares of Common Stock owned by his spouse. |
|-----|---------------------------------------------------------------------------------------------------------------------------|

| (3) | Dr. Simonian resigned from the Board, effective March 31, 2011. |
|-----|---------------------------------------------------------------------------|

----

|                                                       |   | (a)                                                                                                                                        |      |   | (b)                                                                                               |   |    | (c)(1)                                                                                                                                                                                       |   |
|------------------------------------------------------------|--------|--------------------------------------------------------------------------------------------------------------------------------------------|-----------|--------|---------------------------------------------------------------------------------------------------|--------|---------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|
| Plan Category                                         |   | Number of securities tobe issued upon exerciseof outstanding options,warrants and rights |      |   | Weighted-averageexercise price ofoutstanding options,warrants and rights |   |    | Number of securitiesremaining available forfuture issuance underequity compensationplans (excludingsecurities reflectedin column (a)) |   |
| Equity compensation plans approved by security holders     |   |                                                                                                                                       | 6,547,433 |   |                                                                                              | $      | 5.34    |                                                                                                                                                                                         |   |   | 5,345,645 |   |
| Equity compensation plans not approved by security holders |   |                                                                                                                                       | —   |   |                                                                                              |   | — |                                                                                                                                                                                         |   |   | — |   |
| Total                                                      |   |                                                                                                                                       | 6,547,433 |   |                                                                                              | $      | 5.34    |                                                                                                                                                                                         |   |   | 5,345,645 |   |

----

| (1) | Column “(c)” includes 681,900 shares available for issuance under the ArQule, Inc. Amended and Restated 1996 Employee Stock Purchase Plan, 4,387,745 available for issuance under the ArQule, Inc. Amended and Restated 1994 Equity Incentive Plan and 276,000 available for issuance under the ArQule, Inc. Amended and Restated 1996 Director Stock Option Plan. |
|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ITEM 13.  | CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE |
|----------------|---------------------------------------------------------------------------|

----

| ITEM 14.  | PRINCIPAL ACCOUNTING FEES AND SERVICES |
|----------------|----------------------------------------|

|               |   | 2011   |    |   | 2010   |   |
|--------------------|--------|--------|---------|--------|--------|--------|
| Audit Fees         |   | $      | 474,786 |   |   | $      | 420,399 |   |
| Audit-Related Fees |   |   | — |   |   |   | 11,900 |   |
| Tax Fees           |   |   | — |   |   |   | — |   |
| All Other Fees     |   |   | — |   |   |   | — |   |
| Total              |   | $      | 474,786 |   |   | $      | 432,299 |   |

| ITEM 15.  | EXHIBITS AND FINANCIAL STATEMENTS SCHEDULES |
|----------------|---------------------------------------------|

| EXHIBITNO. |   | DESCRIPTION                                                                                                                                                                                                                   |
|------------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 3.1        |   | Restated Certificate of Incorporation of the Company, Filed as Exhibit 3.1 to the Company’s Annual Report on Form 10-K filed on March 2, 2011 (File No. 000-21429) and incorporated herein by reference.                |
|       |   |                                                                                                                                                                                                                          |
| 3.3        |   | Amended and Restated By-laws of the Company. Filed as Exhibit 3.1 to the Company’s Current Report on Form 8-K filed on November 19, 2007 (File No. 000-21429) and incorporated herein by reference. |
|       |   |                                                                                                                                                                                                                          |
| 4.1        |   | Specimen Common Stock Certificate. Filed as Exhibit 4.2 to the Company’s Registration Statement on Form S-1 filed on August 19, 1996 (File No. 333-11105) and incorporated herein by reference.     |
|       |   |                                                                                                                                                                                                                          |
| 10.1*      |   | Amended and Restated 1994 Equity Incentive Plan. Filed as Appendix A to the Company’s Definitive Proxy Statement filed on April 29, 2011 (File No. 000-21429) and incorporated herein by reference.                |

----

| EXHIBITNO. |   | DESCRIPTION                                                                                                                                                                                                                                                                                                                                                                                       |
|------------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 10.2*      |   | Amended and Restated 1996 Employee Stock Purchase Plan. Filed as Appendix B to the Company’s Definitive Proxy Statement filed on April 29, 2011 (File No. 000-21429) and incorporated herein by reference.                                                                                                                                                                        |
|       |   |                                                                                                                                                                                                                                                                                                                                                                                              |
| 10.3*      |   | Amended and Restated 1996 Director Stock Option Plan. Filed as Appendix C to the Company’s Definitive Proxy Statement filed on April 29, 2011 (File No. 000-21429) and incorporated herein by reference.                                                                                                                                                                     |
|       |   |                                                                                                                                                                                                                                                                                                                                                                                              |
| 10.4*      |   | 2005 Director Stock Compensation Plan. Filed as Exhibit 4 to the Company’s Registration Statement on Form S-8 filed on December 6, 2005 (File No. 333-130159) and incorporated herein by reference.                                                                                                                                                                     |
|       |   |                                                                                                                                                                                                                                                                                                                                                                                              |
| 10.5       |   | Amended and Restated Lease by and between ARE-MA Region No. 20, LLC and the Company, dated June 30, 2005. Filed as Exhibit 10.21 to the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2005 filed on August 5, 2005 (File No. 000-21429) and incorporated herein by reference.                                              |
|       |   |                                                                                                                                                                                                                                                                                                                                                                                              |
| 10.6*      |   | Employment Agreement between the Company and Peter S. Lawrence, dated April 13, 2006. Filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K dated April 18, 2006 (File No. 000-21429) and incorporated herein by reference.                                                                                                                            |
|       |   |                                                                                                                                                                                                                                                                                                                                                                                              |
| 10.7+      |   | Exclusive License Agreement, by and between the Company and Kyowa Hakko Kogyo Co., Ltd. Filed as Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2007 filed on August 7, 2007 (File No. 000-21429) and incorporated herein by reference.                                                                      |
|       |   |                                                                                                                                                                                                                                                                                                                                                                                              |
| 10.8*      |   | Amendment to Employment Agreement, dated as of October 4, 2007, by and between the Company and Peter S. Lawrence. Filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on October 10, 2007 (File No. 000-21429) and incorporated herein by reference.                                                                                           |
|       |   |                                                                                                                                                                                                                                                                                                                                                                                              |
| 10.9*      |   | Form of Incentive Stock Option Agreement. Filed as Exhibit 10.16 to the Company’s Annual Report on Form 10-K filed on March 17, 2008 (File No. 000-21429) and incorporated herein by reference.                                                                                                                                                                         |
|       |   |                                                                                                                                                                                                                                                                                                                                                                                              |
| 10.10*     |   | Form of Non-Statutory Stock Option Agreement. Filed as Exhibit 10.17 to the Company’s Annual Report on Form 10-K filed on March 17, 2008 (File No. 000-21429) and incorporated herein by reference.                                                                                                                                                                     |
|       |   |                                                                                                                                                                                                                                                                                                                                                                                              |
| 10.11*     |   | Second Amendment to Employment Agreement, dated April 14, 2008, by and between ArQule, Inc. and Peter S. Lawrence. Filed as Exhibit 10.4 to the Company’s Current Report on Form 8-K, filed on April 18, 2008 (File No. 000-21429) and incorporated herein by reference.                                                                                      |
|       |   |                                                                                                                                                                                                                                                                                                                                                                                              |
| 10.12*     |   | Employment Agreement, dated as of April 15, 2008, by and between ArQule, Inc. and Paolo Pucci. Filed as Exhibit 10.4 to the Company’s Current Report on Form 8-K, filed on April 18, 2008 (File No. 000-21429) and incorporated herein by reference.                                                                                                          |
|       |   |                                                                                                                                                                                                                                                                                                                                                                                              |
| 10.13+     |   | Collaborative Research, Development and License Agreement, dated November 7, 2008, by and between ArQule, Inc. and Daiichi Sankyo Co., Ltd. Filed as Exhibit 10.22 to the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2008 filed on March 6, 2009 (File No. 000-21429) and incorporated herein by reference.   |
|       |   |                                                                                                                                                                                                                                                                                                                                                                                              |
| 10.14+     |   | License, Co-Development and Co-Commercialization Agreement, dated December 18, 2008, by and between ArQule, Inc. and Daiichi Sankyo Co., Ltd. Filed as Exhibit 10.23 to the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2008 filed on March 6, 2009 (File No. 000-21429) and incorporated herein by reference. |
|       |   |                                                                                                                                                                                                                                                                                                                                                                                              |
| 10.15+     |   | Agreement on Milestone Payments and Royalties, effective as of May 25, 2009 by and between ArQule, Inc. and Daiichi Sankyo Co., Ltd. Filed as Exhibit 10.1 to the Company’s Current Report on Form 10-Q for the quarter ended June 30, 2009, filed on August 7, 2009 (File No. 000-21429) and incorporated herein by reference.                |
|       |   |                                                                                                                                                                                                                                                                                                                                                                                              |
| 10.16*     |   | Amendment to Employment Agreement, dated as of July 15, 2010, by and between the Company and Paolo Pucci. Filed as Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2010 filed on August 4, 2010, (File No. 000-21429) and incorporated herein by reference.                                                        |
|       |   |                                                                                                                                                                                                                                                                                                                                                                                              |
| 10.17*     |   | Form of Stock Unit Agreement. Filed as Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2010, filed on August 4, 2010, (File No. 000-21429) and incorporated herein by reference.                                                                                                                                        |
|       |   |                                                                                                                                                                                                                                                                                                                                                                                              |
| 10.19*     |   | Form of Restricted Stock Agreement. Filed as Exhibit 10.3 to the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2010, filed on August 4, 2010, (File No. 000-21429) and incorporated herein by reference.                                                                                                                                  |

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| EXHIBITNO. |   | DESCRIPTION                                                                                                                                                                                                                                                                                                                                                                                                                                 |
|------------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 10.20+     |   | Amendment No. 1 to Collaborative Research, Development and License Agreement, dated October 8, 2010, by and between ArQule, Inc. and Daiichi Sankyo Co., Ltd. Filed as Exhibit 10.1 to the Company’s Amendment No.1 to Quarterly Report on Form 10-Q for the quarter ended September 30, 2010 filed on January 14, 2011, (File No. 000-21429) and incorporated herein by reference. |
|       |   |                                                                                                                                                                                                                                                                                                                                                                                                                                        |
| 10.21*     |   | Employment Agreement, dated as of November 21, 2008 by and between ArQule, Inc. and Thomas C. K. Chan, filed as Exhibit 10.21 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2011 filed on March 1, 2012 (File No. 000-21429) and incorporated herein by reference.                                                                                                             |
|       |   |                                                                                                                                                                                                                                                                                                                                                                                                                                        |
| 10.22*     |   | Amendment to Employment Agreement dated as of February 23, 2012 by and between ArQule, Inc. and Brian Schwartz, filed as Exhibit 10.2 to Amendment No. 1 to the Company’s Current Report on Form 8-K filed on February 27, 2012 (File No. 000-21429) and incorporated herein by reference.                                                                                                                        |
|       |   |                                                                                                                                                                                                                                                                                                                                                                                                                                        |
| 10.23*     |   | Employment Agreement, dated as of June 17, 2008, by and between ArQule, Inc. and Brian Schwartz, filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on February 24, 2012 (File No. 000-21429) and incorporated herein by reference.                                                                                                                                                          |
|       |   |                                                                                                                                                                                                                                                                                                                                                                                                                                        |
| 10.24+     |   | License and Co-Commercialization Agreement, dated November 8, 2011, by and between ArQule, Inc. and Daiichi Sankyo Co., Ltd., filed as Exhibit 10.24 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2011 filed on March 1, 2012 (File No. 000-21429) and incorporated herein by reference..                                                                                     |
|       |   |                                                                                                                                                                                                                                                                                                                                                                                                                                        |
| 23.1       |   | Consent of PricewaterhouseCoopers LLP, an Independent Registered Public Accounting Firm (previously filed).                                                                                                                                                                                                                                                                                                                            |
|       |   |                                                                                                                                                                                                                                                                                                                                                                                                                                        |
| 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 Principal Financial Officer, filed herewith.                                                                                                                                                                                                                                                                                                                                 |

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| * | Indicates a management contract or compensatory plan. |
|---|-------------------------------------------------------|

| + | Certain confidential material contained in the document has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 406 of the Securities Act of 1933, as amended or Rule 24b-2 of the Securities and Exchange Act of 1934, as amended. |
|---|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|   | ArQule, Inc.    |
|--------|----------------------|
|   |                 |   |
|   | By:                  | /s/ Paolo Pucci |
|   |                 | Paolo PucciChief Executive Officer |
|   | Date: April 10, 2012 |