Arena Pharmaceuticals, Inc.
Oct 17, 2005

Arena Pharmaceuticals Announces Third Quarter 2005 Financial Results

SAN DIEGO, Oct. 17 /PRNewswire-FirstCall/ -- Arena Pharmaceuticals, Inc. (Nasdaq: ARNA) today reported financial results for the third quarter and nine months ended September 30, 2005.

Total revenues in the third quarter of 2005 were $7.4 million, compared to $4.4 million in the third quarter of 2004. Total revenues in the nine months ended September 30, 2005, were $17.4 million, compared to $11.6 million in the nine months ended September 30, 2004. Arena reported a net loss allocable to common stockholders in the third quarter and the nine months ended September 30, 2005 of $16.1 million, or $0.46 per share, and $57.5 million, or $1.69 per share, respectively. This compares with a net loss allocable to common stockholders in the third quarter and the nine months ended September 30, 2004 of $13.6 million, or $0.54 per share, and $43.1 million, or $1.70 per share, respectively.

"During the last quarter, Arena continued to demonstrate the strength of its pipeline, which is diverse and not dependent on one program or partner for success," commented Jack Lief, Arena's President and CEO. "As we continue to work diligently to advance all our programs and timelines and build on our successes to date, we are particularly looking forward to obtaining additional APD356 safety and efficacy data from the Phase 2b obesity trial around year-end."

Research and development expenses totaled $20.8 million in the third quarter of 2005, compared to $13.9 million in the third quarter of 2004. Research and development expenses totaled $58.8 million in the nine months ended September 30, 2005, compared to $42.1 million in the nine months ended September 30, 2004. The increase in 2005 research and development expenses as compared to 2004 is primarily attributable to the clinical trials for Arena's most advanced product candidates, APD356 for obesity and APD125 for insomnia, as well as moving its research and preclinical pipeline forward for a number of additional compounds. General and administrative expenses totaled $2.6 million in the third quarter of both 2005 and 2004. General and administrative expenses totaled $8.2 million in the nine months ended September 30, 2005, compared to $7.6 million in the nine months ended September 30, 2004.

Cash, cash equivalents and short-term investments totaled $148.1 million at September 30, 2005.

Arena's Recent Highlights:

Arena will host both a conference call and webcast to discuss the third quarter 2005 financial results and to provide a corporate update today, Monday, October 17, 2005, at 5:00 p.m. EDT (2:00 p.m. PDT). Jack Lief, President and Chief Executive Officer and Robert Hoffman, Vice President, Finance and Chief Accounting Officer will be present on the conference call and webcast.

The conference call may be accessed by dialing (800) 659-1966 for domestic callers and (617) 614-2711 for international callers. Please specify to the operator that you would like to join the "Arena Third Quarter Earnings Call." The conference call will be webcast live under the investor relations section of Arena's website at http://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 conference call to ensure adequate time for any software download that may be necessary.

About Arena Pharmaceuticals

Arena is a clinical-stage biopharmaceutical company focusing on the discovery, development and commercialization of small molecule drugs in four major therapeutic areas: metabolic, cardiovascular, inflammatory and central nervous system diseases. Arena is developing a broad pipeline of compounds that act on an important class of drug targets called G protein-coupled receptors, or GPCRs, using its knowledge of GPCRs and its technologies, including CART (Constitutively Activated Receptor Technology) and Melanophore. Arena has three internally discovered, clinical-stage product candidates. Arena's most advanced clinical compound, APD356, a selective 5-HT2C serotonin receptor agonist for the treatment of obesity, is in Phase 2b. Arena's lead product candidate for the treatment of insomnia, APD125, a compound with a novel mechanism of action (a selective 5-HT2A receptor inverse agonist), is scheduled to begin a Phase 2 clinical trial by the end of 2005. As part of Arena's partnership with Merck & Co., Inc., an Arena product candidate for the treatment of atherosclerosis and related disorders is in a Phase 1 clinical trial. Arena also has an active collaboration with Ortho-McNeil, Inc., a Johnson & Johnson company, for the treatment of type 2 diabetes.

Arena Pharmaceuticals® and Arena® are registered service marks of the company. CART is an unregistered service mark of the company.

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 possible usefulness of 5-HT2C modulators in pharmaceutical compositions for the treatment of obesity, the protection provided by Arena's patents, and the expected timing of Arena's clinical trials and announcement of results and other statements about Arena's strategy, technologies, opportunity for success, efforts in advancing its programs and timelines, preclinical and 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, the results of Arena's clinical trials, the results of preclinical studies or clinical trials may not be predictive of future results, Arena's ability to partner APD356, APD125 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, Arena's patent protection, and the timing and receipt of payments and fees, if any, from Arena's collaborators, including Ortho-McNeil and Merck. 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.


                           Arena Pharmaceuticals, Inc.
                 Condensed Consolidated Statements of Operations

                           Three months ended        Nine months ended
                              September 30,            September 30,
                           2005         2004        2005         2004
                              (unaudited)               (unaudited)
    Revenues
       Total revenues  $7,431,887   $4,383,332  $17,356,879  $11,565,000


    Expenses
    Research and
     development       20,820,915    13,874,772    58,760,870    42,055,010
    General and
     administrative     2,558,556     2,639,117     8,210,171     7,610,225
    Amortization of
     non-cash deferred
     compensation          87,515       283,079       350,824     1,167,378
    Amortization of
     acquired
     technology           384,249       405,305     1,152,747     1,215,915
       Total expenses  23,851,235    17,202,273    68,474,612    52,048,528

    Interest and other
     income, net          781,931        19,561     2,287,016      (143,808)
    Net loss           15,637,417)  (12,799,380)  (48,830,717)  (40,627,336)
    Dividends on
     redeemable
     convertible
     preferred stock     (494,303)     (362,104)   (1,313,328)   (1,071,612)
    Accretion of
     discount related
     to redeemable
     convertible
     preferred stock           --      (462,970)   (7,372,014)   (1,388,912)
    Net loss allocable
     to common
     stockholders    $(16,131,720) $(13,624,454) $(57,516,059) $(43,087,860)

    Net loss per
     share, basic
     and diluted           $(0.46)       $(0.54)       $(1.69)       $(1.70)

    Shares used in
     calculating net
     loss per share,
     basic and
     diluted          35,241,050     25,362,644    34,064,695    25,313,716



                    Condensed Consolidated Balance Sheet Data

                                             September 30,     December 31,
                                                  2005             2004
                                              (unaudited)         (Note)
    Assets
      Cash, cash equivalents and
       short-term investments                $148,118,473     $113,313,839
      Accounts receivable                       1,502,192       22,590,323
      Other current assets                      4,131,974        5,331,799
      Land, property and equipment, net        50,457,738       52,994,209
      Acquired technology, investments
       and other assets                        14,222,434       12,134,825
         Total assets                        $218,432,811     $206,364,995
    Liabilities and Stockholders' Equity
      Deferred revenues                       $26,538,810      $30,070,188
      Other liabilities                        24,113,430       20,479,593
      Redeemable convertible preferred stock   49,277,570       29,092,228
      Stockholders' equity                    118,503,001      126,722,986
         Total liabilities and
          stockholders' equity               $218,432,811     $206,364,995


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

Contacts: Jack Lief
President and CEO
David Walsey
Director, Corporate Communications
Arena Pharmaceuticals
(858) 453-7200, ext. 1682
Web site: http://www.arenapharm.com

Carin Canale
Atkins + Associates
Media & Investor Relations
(858) 527-3498

SOURCE Arena Pharmaceuticals, Inc.