Arena Pharmaceuticals, Inc.
Jul 20, 2004

Arena Pharmaceuticals Announces Second Quarter 2004 Financial Results

SAN DIEGO, July 20 /PRNewswire-FirstCall/ -- Arena Pharmaceuticals, Inc. (Nasdaq: ARNA) today reported financial results for the second quarter and six months ended June 30, 2004.

Total revenues in the second quarter of 2004 were $1.4 million, compared to $3.0 million in the second quarter of 2003. Total revenues for the six months ended June 30, 2004 were $7.2 million, compared to $8.3 million for the six months ended June 30, 2003. Arena reported a net loss allocable to common stockholders for the second quarter and the first six months of 2004 of $17.0 million, or $0.67 per share, and $29.5 million, or $1.17 per share, respectively. This compares with a net loss allocable to common stockholders for the second quarter and the first six months of 2003 of $11.8 million, or $0.42 per share, and $20.6 million, or $0.74 per share, respectively.

Research and development expenses totaled $14.4 million in the second quarter of 2004, compared to $13.1 million in the second quarter of 2003. Research and development expenses totaled $28.2 million in the first six months of 2004, compared to $25.2 million in the first six months of 2003. General and administrative expenses totaled $2.4 million in the second quarter of 2004, compared to $2.1 million in the second quarter of 2003. General and administrative expenses totaled $5.0 million in the first six months of 2004, compared to $4.0 million in the first six months of 2003.

Cash, cash equivalents and short-term investments totaled $130.6 million at June 30, 2004.

"The second quarter of 2004 was pivotal for Arena, as we completed a Phase 1a clinical trial for our lead compound, APD356 for obesity. We are excited by the favorable results we achieved in our Phase 1a trial and plan to initiate our Phase 1b trial later this month," commented Jack Lief, President and CEO of Arena. "We look forward to continuing our progress in the second half of 2004 by further advancing our pipeline, including, APD125, which we hope to move into a Phase 1 clinical trial later this year."

    Arena's Second Quarter Highlights:
     *  Completed dosing in its Phase 1a single-dose study of its lead obesity
        compound, APD356
     *  Completed planning for its Phase 1b multiple-dose study of APD356
     *  Advanced its insomnia compound, APD125, into IND-enabling toxicity
        studies; a Phase 1 study is scheduled for the second half of this year
     *  Progressed its 19AJ program for diabetes into a selection process
        between two lead compounds; a Phase 1 study is anticipated to begin in
        the second half of 2005

Arena will be hosting both a conference call and webcast to discuss second quarter 2004 financial results, highlights from the quarter and results from the Phase 1a APD356 trial on Tuesday, July 20, 2004, at 5:00 PM Eastern Time (2:00 PM Pacific Time). Jack Lief, President and CEO, Robert Hoffman, Vice President, Finance and Chief Accounting Officer and William Shanahan, M.D., Vice President and Chief Medical Officer will be present on the conference call.

The conference call can be accessed by dialing (888) 273-9887 for domestic callers and (612) 332-0820 for international callers. Please specify to the operator that you would like to join the "Arena Pharmaceuticals Second Quarter Earnings Conference Call." Additionally, the conference call will be webcast live on Arena's website at http://www.arenapharm.com, under the investor relations section, 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

Arena is a biopharmaceutical company focusing on the discovery, development and commercialization of 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, and that are being developed using Arena's proprietary technologies, including CART (Constitutively Activated Receptor Technology) and Melanophore. Arena also has research collaborations with Merck, Fujisawa, Taisho and TaiGen for products in a number of different indications. For additional information about Arena, visit their website at http://www.arenapharm.com.

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 when and whether Arena expects to continue developing its pipeline of compounds, including APD356, APD125 and 19AJ, and Arena's strategy, technologies, preclinical and clinical programs, ability to identify and develop drugs, future achievements, goals and expectations, as well as other statements that are not historical facts, including statements that are preceded by the word "will," "plan," "hope" or similar words. 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 timing, success and cost of Arena's research, out-licensing endeavors and clinical studies, Arena's ability to obtain additional financing from collaborators or investors, 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 SEC reports, including Arena's most recent quarterly report on Form 10-Q and its recently filed registration statement on Form S-3. These forward-looking statements represent Arena's judgment as of the date of this release. Arena disclaims any intent or obligation to update these forward-looking statements.

For further information please contact Jack Lief of Arena Pharmaceuticals, +1-858-453-7200, ext. 223; or Susan Neath of Atkins + Associates, +1-858-527-3486, for Arena Pharmaceuticals.

                         Arena Pharmaceuticals, Inc.
               Condensed Consolidated Statements of Operations

                          Three months ended            Six months ended
                               June 30,                     June 30,
                            2004          2003         2004          2003
                               (unaudited)                 (unaudited)
     Revenues
       Total
        revenues         $1,398,334   $2,973,770    $7,181,668    $8,349,210

     Expenses

     Research and
      development        14,382,211   13,131,197    28,180,238    25,197,309
     General and
      administrative      2,424,919    2,081,980     4,971,108     3,967,171
     Amortization
      of non-cash
      deferred
      compensation          383,671      828,684       884,299     1,862,650
     Amortization of
      acquired
      technology            405,305      405,305       810,610       810,610
       Total expenses    17,596,106   16,447,166    34,846,255    31,837,740
     Interest and
      other income,
      net                    59,408    1,711,081      (163,369)    2,914,780
     Net loss           (16,138,364) (11,762,315)  (27,827,956) (20,573,750)
     Dividends on
      redeemable
      convertible
      preferred stock      (354,594)          --      (709,508)           --
     Accretion of
      discount related
      to redeemable
      convertible
      preferred stock      (462,971)          --      (925,942)           --
     Net loss
      allocable to
      common
      stockholders    $(16,955,929) $(11,762,315) $(29,463,406) $(20,573,750)

     Net loss per
      share, basic
      and diluted          $(0.67)       $(0.42)       $(1.17)      $(0.74)

     Shares used in
      calculating net
      loss per share,
      basic and diluted  25,318,761   27,718,235    25,252,592    27,703,961



                  Condensed Consolidated Balance Sheet Data

                                                  June 30,     December 31,
                                                    2004           2003
                                                (unaudited)       (Note)
     Assets
      Cash, cash equivalents and
       short-term investments                   $130,561,143   $154,016,883
      Other current assets                         4,129,444      4,758,673
      Land, property and equipment, net           54,723,154     55,729,472
      Acquired technology, investments
       and other assets                           13,581,239     15,393,081
        Total assets                            $202,994,980   $229,898,109
      Liabilities and Stockholders' Equity
      Liabilities                                $21,776,118    $20,973,873
      Redeemable convertible preferred
       stock                                      27,438,411     25,776,104
      Stockholders' equity                       153,780,451    183,148,132
        Total liabilities and
         stockholders' equity                   $202,994,980   $229,898,109

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

SOURCE Arena Pharmaceuticals, Inc.
07/20/2004
CONTACT: Jack Lief of Arena Pharmaceuticals, +1-858-453-7200, ext. 223
or Susan Neath of Atkins + Associates, +1-858-527-3486
for Arena Pharmaceuticals
Web site: http://www.arenapharm.com