Arena Pharmaceuticals, Inc.
Apr 18, 2007

Arena Pharmaceuticals Announces First Quarter 2007 Financial Results

SAN DIEGO, April 18 /PRNewswire-FirstCall/ -- Arena Pharmaceuticals, Inc. (Nasdaq: ARNA) today reported financial results for the first quarter ended March 31, 2007.

Total revenues in the first quarter of 2007 were $4.9 million, compared to $12.1 million in the first quarter of 2006. Revenues in the first quarter of 2006 included a $5.0 million milestone under our collaboration with Ortho-McNeil Pharmaceutical, Inc. related to the initiation of a Phase 1 clinical trial of APD668 for the treatment of type 2 diabetes. Arena reported a net loss allocable to common stockholders in the first quarter of 2007 of $32.4 million, or $0.53 per share. This compares with a net loss allocable to common stockholders in the first quarter of 2006 of $12.7 million, or $0.30 per share.

"In the first quarter we continued to execute on our clinical development plans by completing the enrollment of our Phase 3 lorcaserin trial known as BLOOM for the treatment of obesity and initiating our Phase 2 APD125 trial for the treatment of patients with chronic insomnia," stated Jack Lief, Arena's President and Chief Executive Officer. "We are pleased with the positive start to the year and look forward to the month-six DSMB review for lorcaserin, the results from our Phase 2 APD125 insomnia trial and the expected initiation of a Phase 1 trial of APD791 for the treatment and prevention of arterial thromboembolic diseases."

Research and development expenses totaled $35.8 million in the first quarter of 2007, compared to $20.5 million in the first quarter of 2006. The increase in research and development expenses in the first quarter of 2007 as compared to the first quarter of 2006 is primarily attributable to an increase in clinical trial costs related to the Phase 3 lorcaserin BLOOM (Behavioral modification and Lorcaserin for Overweight and Obesity Management) trial. Research and development expenses in the first quarter of 2007 included $1.0 million in non-cash, stock-based compensation expense, compared to $0.7 million in the first quarter of 2006. General and administrative expenses totaled $4.9 million in the first quarter of 2007, compared to $5.6 million in the first quarter of 2006. The decrease in general and administrative expenses in the first quarter of 2007 as compared to the first quarter of 2006 is primarily attributable to a decrease in patent costs partially offset by an increase in personnel-related expenses. Total patent costs, including patent costs related to partnered programs, were $0.7 million in the first quarter of 2007, compared to $2.7 million in the first quarter of 2006. To the extent Arena's collaborators are obligated to reimburse Arena for such costs, the reimbursements are classified as revenues. Arena recorded $0.6 million in patent reimbursement costs from its collaborators in the first quarter of 2007, compared to $1.6 million in the first quarter of 2006. General and administrative expenses in the first quarter of 2007 included $0.9 million in non-cash, stock-based compensation expense compared, to $0.5 million in the first quarter of 2006.

Cash, cash equivalents and short-term investments totaled $356.3 million at March 31, 2007. Approximately 60.9 million shares of common stock were outstanding at March 31, 2007.

Arena's First Quarter Highlights

Scheduled Earnings Call

Arena will host both a conference call and webcast to discuss the first quarter 2007 financial results, and to provide a corporate update today, Wednesday, April 18, 2007, at 5:00 p.m. EDT (2:00 p.m. PDT). Jack Lief, President and Chief Executive Officer and Robert E. Hoffman, Vice President, Finance and Chief Financial Officer will host the conference call.

The conference call may be accessed by dialing 866.383.7989 for domestic callers and 617.597.5328 for international callers. Please specify to the operator that you would like to join the "Arena First Quarter 2007 Earnings Call." The conference call will be webcast live under the investor relations section of Arena's website at www.arenapharm.com, and will be archived there for 30 days following the call. Please connect to Arena's website several minutes prior to the start of the broadcast to ensure adequate time for any software download that may be necessary.

Upcoming Corporate Presentations

Arena is currently scheduled to present at the following investment and industry conferences through June 2007:

About Arena Pharmaceuticals

Arena is a clinical-stage biopharmaceutical company focused on discovering, developing and commercializing oral drugs in four major therapeutic areas: cardiovascular, central nervous system, inflammatory, and metabolic diseases. Arena's most advanced product candidate, lorcaserin, is being investigated in a Phase 3 clinical trial program for the treatment of obesity. Arena's broad pipeline of novel compounds targeting G protein-coupled receptors, an important class of validated drug targets, includes compounds being evaluated independently and with its partners, Merck & Co., Inc. and Ortho-McNeil Pharmaceutical, Inc.

Arena Pharmaceuticals® and Arena® are registered service marks of the company. "APD" is an abbreviation for Arena Pharmaceuticals Development.

Forward-Looking Statements

Certain statements in this press release are forward-looking statements that involve a number of risks and uncertainties. Such forward-looking statements include statements about the timing, protocol, design, scope and other aspects of the Phase 3 clinical trials for lorcaserin and the Phase 2 clinical trial of APD125, including the expected month-six DSMB review for lorcaserin and the results from the Phase 2 APD125 clinical trial, the expected Phase 1 clinical trial of APD791, the tolerability, side effects, efficacy and potential of Arena's product candidates and compounds, the advancement and content of Arena's pipeline, the closing of the transactions contemplated under the purchase and sale agreement with BioMed, the entry into lease agreements with BioMed, BioMed's expected payments to Arena, and other statements about Arena's strategy, preclinical and internal and partnered clinical programs, and ability to develop compounds and commercialize drugs. For such statements, Arena claims the protection of the Private Securities Litigation Reform Act of 1995. Actual events or results may differ materially from Arena's expectations. Factors that could cause actual results to differ materially from the forward-looking statements include, but are not limited to, Arena's planned clinical trials may not proceed at the time Arena expects or at all, the results of preclinical studies or clinical trials may not be predictive of future results, Arena's ability to partner lorcaserin, APD125, APD791 or other of its compounds or programs, the timing, success and cost of Arena's research, out-licensing endeavors and clinical trials, Arena's ability to obtain additional financing, Arena's ability to obtain and defend its patents, and the timing and receipt of payments and fees, if any, from Arena's collaborators. Additional factors that could cause actual results to differ materially from those stated or implied by Arena's forward-looking statements are disclosed in Arena's filings with the Securities and Exchange Commission. These forward-looking statements represent Arena's judgment as of the time of this release. Arena disclaims any intent or obligation to update these forward-looking statements, other than as may be required under applicable law.

    Contacts:   Jack Lief                               E. Blair Schoeb
                President and CEO                       WeissComm Partners
                                                        Media Relations
                David Walsey                            760.365.1857
                Director, Corporate Communications

                Arena Pharmaceuticals, Inc.
                858.453.7200, ext. 1682



                         Arena Pharmaceuticals, Inc.
               Condensed Consolidated Statements of Operations
                   (In thousands, except per share amounts)

                                                        Three months ended
                                                            March 31,
                                                        2007         2006
                                                           (unaudited)
    Revenues
      Total revenues                                  $4,911        $12,126

    Expenses
    Research and development                          35,755         20,490
    General and administrative                         4,923          5,608
    Amortization of acquired technology                  384            384
      Total expenses                                  41,062         26,482

    Interest and other income, net                     4,256          2,130
    Net loss                                         (31,895)       (12,226)
    Dividends on redeemable convertible
     preferred stock                                    (514)          (493)
    Net loss allocable to common stockholders       $(32,409)      $(12,719)

    Net loss per share allocable to common
     stockholders, basic and diluted                  $(0.53)        $(0.30)

    Shares used in calculating net loss per
     share allocable to common stockholders,
     basic and diluted                                60,734         42,363



                         Arena Pharmaceuticals, Inc.
                  Condensed Consolidated Balance Sheet Data
                                (In thousands)
                                                    March 31,    December 31,
                                                      2007          2006
                                                  (unaudited)      (Note)
    Assets
      Cash, cash equivalents and
       short-term investments                       $356,303       $388,825
      Accounts receivable                                415            310
      Other current assets                            11,293         10,551
      Land, property and equipment, net               56,607         56,500
      Acquired technology, investments and
       other assets                                   12,148         12,279
        Total assets                                $436,766       $468,465
    Liabilities and Stockholders' Equity
      Deferred revenues                              $12,144        $13,054
      Other liabilities                               35,414         37,488
      Redeemable convertible preferred stock          52,322         51,808
      Stockholders' equity                           336,886        366,115
        Total liabilities and stockholders'
         equity                                     $436,766       $468,465


    Note: The Condensed Consolidated Balance Sheet Data has been derived from
          the audited financial statements as of that date.

SOURCE Arena Pharmaceuticals, Inc.