Arena Pharmaceuticals, Inc.
Jan 20, 2003

Arena Pharmaceuticals Announces Financial Results for the Fourth Quarter and Full Year of 2002

SAN DIEGO, Jan. 20 /PRNewswire-FirstCall/ -- Arena Pharmaceuticals, Inc. (Nasdaq: ARNA) today reported record revenues of $6.4 million for the quarter ended December 31, 2002, a 9% increase over revenues of $5.9 million for the quarter ended December 31, 2001, and record revenues of $19.4 million for the full year ended December 31, 2002, an 8% increase over revenues of $18.1 million for the full year ended December 31, 2001. Revenues in the fourth quarter and the full year of 2002 were attributable to collaborations, which included research funding, milestone payments and technology access and development fees. The Company reported a net loss of $8.8 million, or $.32 per share, for the fourth quarter of 2002 and a net loss of $32.8 million, or $1.19 per share, for the full year of 2002. The net loss includes non-cash amortization charges totaling $850,000 for the fourth quarter and non-cash amortization charges and an investment write-down totaling $5.6 million for the full year of 2002. The net loss for the fourth quarter of 2001 was $2.8 million, or $.10 per share, and the net loss for the full year of 2001 was $6.9 million, or $.28 per share.

Research and development expenses totaled $13.3 million in the fourth quarter of 2002, compared to $7.5 million in the fourth quarter of 2001. For the full year ended December 31, 2002, research and development expenses totaled $44.4 million, compared to $22.9 million for the full year ended December 31, 2001.

Cash, cash equivalents and short-term investments totaled $185.1 million at December 31, 2002. Total shares outstanding at December 31, 2002 were 27.7 million.

"Arena's reported record revenues of $19.4 million were derived largely from our partnering and licensing activities," stated Jack Lief, President and CEO of Arena Pharmaceuticals. "I am pleased to report such significant progress this past year and expect continued increases in the current year."

Arena's CART and Melanophore technologies allow for the direct identification of modulators of G protein-coupled receptors ("GPCRs") in a ligand-independent manner, making the technologies particularly useful with respect to the GPCRs of therapeutic interest within the human genome. Arena has initiated "Project Genesis," an internal program aimed at obtaining all of the human GPCRs, identifying the location of these receptors within the human body for purposes of understanding their function, and screening such receptors to identify receptor modulators that form the basis of drug candidates. We believe that our CART and Melanophore technologies will facilitate completion of Project Genesis within the next two to three years.

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 Company's strategy, internal programs, future achievements, and statements that are not historical facts, including statements which are preceded by the words "hopes," "intends," "will," "plans," "expects," "anticipates," "estimates," "aims," and "believes" 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 due to risks and uncertainties associated with Arena's business include, but are not limited to, the following: the timing, success and cost of preclinical research, out-licensing endeavors and clinical studies and development; the timing of receipt of additional milestone or other payments, if any, from new or existing collaborators; future quarterly or annual financial results; and the ability to complete Project Genesis, if at all, within a reasonable time period. Additional risk factors that could cause actual results to differ materially from those in Arena's forward-looking statements are disclosed in Arena's SEC reports, including, but not limited to, Arena's most recent quarterly report on Form 10-Q and its most recent annual report on Form 10-K. These forward-looking statements represent Arena's judgment as of the date of this release. Arena disclaims, however, 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,
                          2002          2001          2002          2001
                      (unaudited)    (unaudited)
     Revenues
      Total revenues   $6,364,224    $5,865,071   $19,421,765    $18,059,999

     Expenses

     Research and
      development      13,260,823     7,488,427    44,399,136     22,864,250
     General and
      administrative    2,035,225     1,570,111     7,499,011      5,390,446
     Amortization of
      non-cash deferred
      compensation        444,522       826,690     2,264,934      4,239,740
     Amortization of
      acquired
      technology          405,305       384,249     1,586,127      1,280,830
      Total expenses   16,145,875    10,269,477    55,749,208     33,775,266
     Interest and other
      income, net       1,003,108     1,601,922     5,284,302      8,832,543
     Investment
      write-down               --            --    (1,786,797)            --

     Net loss         $(8,778,543)  $(2,802,484) $(32,829,938)   $(6,882,724)

     Net loss per share,
      basic and diluted     $(.32)       $(0.10)       $(1.19)        $(0.28)

     Shares used in
      calculating net
      loss per share,
     Basic and
      diluted          27,545,937    27,280,258    27,487,537     24,989,067


    Condensed Consolidated Balance Sheet Data:  December 31,    December 31,
                                                    2002            2001

     Assets
      Cash, cash equivalents and
       short-term investments                   $185,142,885   $226,924,293
      Other current assets                         8,166,767      6,384,531
      Land, property and equipment, net           44,073,365     23,268,567
      Acquired technology, investments
       and other assets                           17,507,030     20,396,319
       Total assets                             $254,890,047   $276,973,710
     Liabilities and Stockholders' Equity
      Liabilities                                $12,838,346     $7,500,032
      Stockholders' equity                       242,051,701    269,473,678
       Total liabilities and
        stockholders' equity                    $254,890,047   $276,973,710

"Arena Pharmaceuticals" and "Arena" are registered U.S. trademarks of the company. "CART" is a trademark of the company. Arena's headquarters is at 6166 Nancy Ridge Drive, San Diego, CA 92121. Arena's telephone number is (858) 453-7200. On the Internet, please refer to Arena's website: http://www.arenapharm.com for further information.

Arena will be hosting both a telephone and live internet fourth quarter conference call on Tuesday, January 21, 2003 at 9:00 a.m. Eastern Time (6:00 a.m. San Diego Time).

Jack Lief, President and Chief Executive Officer, and Joseph Mooney, Chief Financial Officer, will discuss the fourth quarter results, the progress of Arena's collaborations, Project Genesis and other topics. A Question and Answer session will follow the presentation. To access by telephone, dial in toll free at (800) 450-0785 (the international dial in number is (612) 332-1213), 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 28, 2003.

For further information, contact: Jack Lief, President & CEO, Extension 223, or Joseph Mooney, CFO, Extension 508, both of Arena Pharmaceuticals, Inc., +1-858-453-7200.

SOURCE:
Arena Pharmaceuticals, Inc.

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