13G Filing: Biotechnology Value Fund L P and Arqule Inc (ARQL)

Common Stock, par value $0.01 per share (the “Common
Stock”)

04269E107

On October 11, 2017, the Reporting
Persons participated in a private placement (the “Private Placement”) with the Issuer. Pursuant to the Private Placement,
the Reporting Persons acquired in the aggregate 9,037,054 Shares of Common Stock and warrants (the “Warrants”) exercisable
for an aggregate of 2,439,932 Shares of Common Stock. Pursuant to the Private Placement, the Warrants are subject to an exercise
limitation, and may not be exercised if, after such exercise, the Reporting Persons would beneficially own in the aggregate, as
determined in accordance with Section 13(d) of the Securities Exchange Act of 1934, more than 19.9% of the number of shares of
Common Stock then issued and outstanding. Such Warrants have an initial exercise price of $1.75 per Share, subject to adjustment
pursuant to the terms of the Warrants, and expire on October 11, 2021. As of October 16, 2017, the warrant exercise limitation
described in the prior sentence limits the aggregate exercise of the Warrants by the Reporting Persons to 1,115,932 out of the
2,439,932 shares of Common Stock underlying the Warrants owned by the Reporting Persons in the aggregate. In providing beneficial
ownership described herein, the Reporting Persons have assumed 1,115,932 of the 1,201,053 warrants owned by BVF would be exercised.
BVF2 holds warrants to purchase 823,231 additional shares which are excluded herein as a result of the 19.9% limitation. BVTOS
holds warrants to purchase 199,687 additional shares which are excluded herein as a result of the 19.9% limitation. The Reporting
Persons through certain managed accounts holds warrants to purchase 215,961 additional shares which are excluded herein as a result
of the 19.9% limitation.