Arena Pharmaceuticals, Inc.
Jan 20, 2004

Arena Pharmaceuticals Announces Financial Results for the Fourth Quarter And Full Year of 2003

SAN DIEGO, Jan. 20 /PRNewswire-FirstCall/ -- Arena Pharmaceuticals, Inc. (Nasdaq: ARNA) today reported revenues of $1.6 million for the quarter ended December 31, 2003, compared to fourth quarter 2002 revenues of $6.4 million, and $12.8 million in revenues for the full year ended December 31, 2003, compared to $19.4 million in revenues for the full year ended December 31, 2002. Arena earns revenues under its collaborations primarily from research funding, milestone payments, and technology access and development fees. Arena reported a net loss allocable to common stockholders for the fourth quarter and the full year of 2003 of $14.7 million, or $.58 per share, and $47.1 million, or $1.74 per share, respectively. This compares with a net loss allocable to common stockholders for the fourth quarter and the full year of 2002 of $8.8 million, or $.32 per share, and $32.8 million, or $1.19 per share, respectively.

Research and development expenses totaled $13.1 million in the fourth quarter of 2003, compared to $13.3 million in the fourth quarter of 2002. In the year ended December 31, 2003, research and development expenses totaled $50.9 million, compared to $44.4 million in the full year ended December 31, 2002. General and administrative expenses totaled $2.5 million in the fourth quarter of 2003, compared to $2.0 million in the fourth quarter of 2002. In the year ended December 31, 2003, general and administrative expenses totaled $8.6 million, compared to $7.5 million in the year ended December 31, 2002.

Cash, cash equivalents and short-term investments totaled $154.0 million at December 31, 2003, and reflects net cash proceeds of $34.2 million from a private placement and net cash proceeds of $12.6 million from the sale and leaseback of one of Arena's facilities.

"Last year was pivotal as Arena began transitioning discoveries made via our GPCR technologies into drug development," stated Jack Lief, Arena's President and Chief Executive Officer. "I'm pleased to report that we are on schedule to begin human testing of our obesity drug candidate next month and are in the pre-clinical testing stages for our sleep and diabetes candidates, which are expected to enter human clinical testing in the next 12 to 18 months, assuming satisfactory toxicology results. We continue to make excellent progress in our research programs, and begin the new year with a strong financial position after last month's financing and sale and leaseback."

Arena is a biopharmaceutical company seeking to discover and develop drugs that act on an important class of drug targets called G protein-coupled receptors, or GPCRs. Arena uses its Constitutively Activated Receptor Technology, or CART, Melanophore technology and other proprietary technologies to identify small molecules that may lead to new drugs in four major therapeutic areas: metabolic diseases, cardiovascular diseases, central nervous system disorders and inflammatory diseases.

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 Arena's strategy, technologies, preclinical and clinical programs, future achievements, and statements that are not historical facts, including statements about Arena's ability to identify and develop small molecules or which are preceded by the words "will," "expect" 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. Important 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. 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.


                           Arena Pharmaceuticals, Inc.
                 Condensed Consolidated Statements of Operations

                              Three months ended            Year ended
                                 December 31,              December 31,
                            2003        2002          2003          2002
                                (unaudited)
     Revenues
      Total revenues     $1,616,394   $6,364,224  $12,834,279  $19,421,765

     Expenses
     Research and
      development        13,123,107   13,260,823   50,885,417   44,399,136
     General and
      administrative      2,526,921    2,035,225    8,553,910    7,499,011
     Amortization of
      non-cash deferred
      compensation          681,296      444,522    3,236,087    2,264,934
     Amortization of
      acquired technology   405,305      405,305    1,621,220    1,586,127
      Total expenses     16,736,629   16,145,875   64,296,634   55,749,208
     Interest and other
      income, net           510,181    1,003,108    4,402,916    5,284,302
     Investment
      writedown                  --           --           --  (1,786,797)
     Net loss           (14,610,054)  (8,778,543) (47,059,439) (32,829,938)
     Dividends on
      redeemable
      convertible
      preferred stock       (26,858)          --      (26,858)          --
     Accretion of
      discount related
      to redeemable
      convertible
      preferred stock       (35,516)          --      (35,516)          --
     Net loss allocable
      to common
      stockholders     $(14,672,428) $(8,778,543) $(47,121,813)$(32,829,938)

     Net loss per
      share, basic
      and diluted            $(0.58)      $(0.32)      $(1.74)     $(1.19)

     Shares used in
      calculating net
      loss per share,
      basic and diluted  25,464,075   27,545,937   27,159,234   27,487,537



                    Condensed Consolidated Balance Sheet Data

                                                 December 31,  December 31,
                                                     2003          2002
                                                           (Note)
     Assets
      Cash, cash equivalents and short-term
       investments                              $154,016,883   $185,142,885
      Other current assets                         4,758,673      8,166,767
      Land, property and equipment, net           55,729,472     44,073,365
      Acquired technology, investments and
       other assets                               15,393,081     17,507,030
        Total assets                            $229,898,109   $254,890,047

     Liabilities and Stockholders' Equity
      Liabilities                                $20,973,873    $12,838,346
      Redeemable convertible preferred stock      25,776,104             --
      Stockholders' equity                       183,148,132    242,051,701
        Total liabilities and stockholders'
         equity                                 $229,898,109   $254,890,047

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

Arena also announced that it intends to hold its 2004 Annual Meeting of Stockholders on Friday, June 11, 2004, at 10:00 a.m. San Diego local time, at Arena's offices located at 6150 Nancy Ridge Drive, San Diego, California 92121.

Arena will be hosting both a telephone and live Internet fourth quarter and full year 2003 conference call on Tuesday, January 20, 2004, at 5:00 p.m. Eastern Time (2:00 p.m. San Diego Time).

Jack Lief, President and Chief Executive Officer will discuss Arena's financial results, its recent equity financing, its recent sale and leaseback of one of its facilities and other topics. A Question and Answer session will follow the presentation. To access by telephone, dial in toll free at (800) 450-0788 (the international dial in number is (612) 332-0523), and specify that you would like to join the "Fourth Quarter Earnings Conference Call." To access the call via the Internet, go to www.arenapharm.com and click on "Investor Relations." Then, click on "Calendar of Events." The conference call will be listed at the top of the page. Click on the "Live Webcast" link. Then, follow the links and instructions provided. Listening to the conference call on the Internet will require speakers and Microsoft Windows Media Player. An archive of the webcast will be available on Arena's website until January 27, 2004.

Arena Pharmaceuticals® and Arena® are registered service marks of the company. CART is an unregistered service mark of the company. Arena's headquarters are at 6166 Nancy Ridge Drive, San Diego, CA 92121, and its telephone number is (858) 453-7200. On the Internet, please refer to Arena's website: www.arenapharm.com for further information.

For further information, please contact Jack Lief, President & CEO of Arena Pharmaceuticals, Inc., +1-858-453-7200, ext. 223.

SOURCE Arena Pharmaceuticals, Inc.

CONTACT: Jack Lief, President & CEO of Arena Pharmaceuticals, Inc., +1-858-453-7200, ext. 223