Arena Pharmaceuticals, Inc.
Oct 22, 2003

Arena Pharmaceuticals Reports 2003 Third Quarter and Nine Months Results

SAN DIEGO, Oct 22, 2003 /PRNewswire-FirstCall via COMTEX/ -- Arena Pharmaceuticals, Inc. (Nasdaq: ARNA) today reported revenues of $2.9 million for the quarter ended September 30, 2003, compared to third quarter 2002 revenues of $3.0 million, and $11.2 million in revenues for the nine months ended September 30, 2003, compared to $13.1 million in revenues for the nine months ended September 30, 2002. Arena earns revenues under its collaborations primarily from research funding, milestone payments, and technology access and development fees. Arena reported a net loss for the third quarter and first nine months of 2003 of $11.9 million, or $.43 per share, and $32.4 million, or $1.17 per share, respectively. This compares with a net loss for the third quarter and first nine months of 2002 of $10.3 million, or $.37 per share, and $24.1 million, or $.88 per share, respectively.

Research and development expenses totaled $12.6 million in the third quarter of 2003, compared to $12.0 million in the third quarter of 2002. In the nine months ended September 30, 2003, research and development expenses totaled $37.8 million, compared to $31.1 million in the nine months ended September 30, 2002. General and administrative expenses totaled $2.1 million in the third quarter of 2003, compared to $1.8 million in the third quarter of 2002. In the nine months ended September 30, 2003, general and administrative expenses totaled $6.0 million, compared to $5.5 million in the nine months ended September 30, 2002.

Cash, cash equivalents and short-term investments totaled $146.0 million at September 30, 2003. Total shares outstanding were 28.6 million at September 30, 2003.

"This past quarter we completed the major portion of our preclinical testing for our obesity product, APD356, and made significant advances in the sleep, diabetes, cardiovascular and inflammation areas," stated Jack Lief, President and CEO of Arena. "I am pleased with our significant progress toward moving our R&D programs forward while maintaining overall spending comparable to last year."

Subsequent to the third quarter of 2003, Arena announced that Biotechnology Value Fund, L.P. and certain of its affiliates accepted Arena's offer to purchase three million shares of Arena common stock from them at a cash price per share of $7.69. Arena made the offer on October 7, 2003, pursuant to the Stockholders Agreement dated as of January 17, 2003, by and among Arena and Biotechnology Value Fund, L.P., Biotechnology Value Fund II, L.P., BVF Investments, L.L.C., BVF Partners L.P., BVF Inc. and Investment 10, L.L.C. Arena paid cash of $23.1 million for this purchase.

Arena is a biopharmaceutical company focused on discovering and developing 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 better understand GPCRs and to identify small molecules that may lead to new drugs. Arena focuses its efforts in four therapeutic areas: metabolic diseases, cardiovascular diseases, central nervous system disorders and inflammatory diseases. Within these areas, Arena is developing a portfolio of internally discovered, highly selective small molecules for large markets with unmet medical needs, including obesity, diabetes, depression and sleep disorders.

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, internal 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 word "will" 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            Nine months ended
                           September 30,                September 30,
                       2003           2002           2003           2002
                            (unaudited)                 (unaudited)
     Revenues
       Total
        revenues     $2,868,675     $2,987,741    $11,217,885    $13,057,541

     Expenses

     Research and
      development    12,565,001     12,001,252     37,762,310     31,138,313
     General and
      administrative  2,059,818      1,842,302      6,026,989      5,463,786
     Amortization
      of non-cash
      deferred
      compensation      692,141        463,931      2,554,791      1,820,412
     Amortization of
      acquired
      technology        405,305        405,305      1,215,915      1,180,822
        Total
         expenses    15,722,265     14,712,790     47,560,005     39,603,333

     Interest and
      other
      income, net       977,955      1,543,823      3,892,735      4,281,194

     Investment
      writedown              --        (86,797)            --     (1,786,797)

     Net loss      $(11,875,635)  $(10,268,023)  $(32,449,385)  $(24,051,395)

     Net loss per
      share, basic
      and diluted        $(0.43)       $(0.37)        $(1.17)         $(0.88)

     Shares used
      in calculating
      net loss per
      share, basic
      and diluted   27,764,676     27,514,085     27,725,907     27,464,983



                     Condensed Consolidated Balance Sheet Data

                                              September 30,     December 31,
                                                  2003             2002
                                              (unaudited)         (Note)
     Assets
       Cash, cash equivalents and
        short-term investments                $146,027,914     $185,142,885
       Other current assets                      5,128,713        8,166,767
       Land, property and equipment, net        55,025,979       44,073,365
       Acquired technology, investments
        and other assets                        14,137,305       17,507,030
          Total assets                        $220,319,911     $254,890,047

     Liabilities and Stockholders' Equity
       Liabilities                              $9,298,153      $12,838,346
       Stockholders' equity                    211,021,758      242,051,701
          Total liabilities and
           stockholders' equity               $220,319,911     $254,890,047

     Note: The Condensed Consolidated Balance Sheet Data at December 31, 2002,
     has been derived from the audited financial statements as of that date.

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.

Arena will be hosting both a telephone and live Internet second quarter 2003 conference call on Wednesday October 22, 2003, at 5:00 p.m. Eastern Time (2:00 p.m. San Diego Time).

Jack Lief, President and Chief Executive Officer, and Joseph Mooney, Chief Financial Officer, will discuss the third quarter results, the progress of Arena's collaborations and other topics. A Question and Answer session will follow the presentation. To access by telephone, dial in toll free at (888) 273-9887 (the international dial in number is (612) 332-0345), and specify that you would like to join the "Third 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 October 29, 2003.

SOURCE Arena Pharmaceuticals, Inc.

Jack Lief, President & CEO, +1-858-453-7200 ext. 223, or Joseph Mooney, CFO, +1-858-453-7200 ext. 508, both of Arena Pharmaceuticals, Inc.