Arena Pharmaceuticals, Inc.
Jul 23, 2002

Arena Pharmaceuticals Announces 2002 Second Quarter and Six Months Results

SAN DIEGO, Jul 23, 2002 /PRNewswire-FirstCall via COMTEX/ -- Arena Pharmaceuticals, Inc. (Nasdaq: ARNA) today reported revenues of $5.8 million for the quarter ended June 30, 2002, a 75% increase over second quarter 2001 revenues of $3.3 million, and $10.1 million for the six months ended June 30, 2002, a 15% increase over the six months ended June 30, 2001 revenues of $8.7 million. Increased revenues in the second quarter and the first half of 2002 were attributable to collaborations, which included research funding, milestone payments and technology access and development fees. The Company reported a net loss for the second quarter and first half of 2002 of $7.3 million, or $.27 per share and $13.8 million, or $.50 per share, respectively. The net loss for the second quarter and first half of 2002 includes non-cash amortization charges and an investment writedown, totaling $2.7 million and $3.8 million, respectively. This compares with prior year losses for the second quarter and first half of $3.1 million, or $.14 per share, and $2.1 million, or $.09 per share, respectively.

Research and development expenses totaled $10.3 million in the second quarter of 2002 as compared to $5.2 million in the second quarter of 2001. For the six months ended June 30, 2002 research and development expenses totaled $19.1 million as compared to $9.1 million for the six months ended June 30, 2001.

Cash, cash equivalents and short-term investments totaled $208.8 million at June 30, 2002. Total shares outstanding at June 30, 2002 were 27.7 million.

"In these turbulent markets, I'm pleased to report year-to-date revenues of $10 million," said Jack Lief, President and CEO. "During the past quarter, Arena continued our GPCR discovery via Project Genesis, enhanced our research capabilities and announced a new collaboration with Ferring Pharmaceuticals. I hope to share additional positive achievements in the coming months."

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 the function of such receptors, and screening each GPCR 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 four 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, our 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 ability to complete Project Genesis, if at all, within a reasonable time period; future quarterly or annual financial results; the timing, success and cost of preclinical research, out-licensing endeavors and clinical studies; and receipt of additional milestone payments, if any, from collaborators. 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           Six months ended
                               June 30,                    June 30,
                         2002          2001          2002           2001
                      (unaudited)   (unaudited)   (unaudited)    (unaudited)
     Revenues
      Total revenues  $5,829,496    $3,330,255    $10,069,800    $8,722,590

     Expenses

     Research and
      development     10,296,001     5,241,523     19,137,061     9,144,864
     General and
      administrative   1,851,731     1,331,573      3,621,484     2,357,556
     Amortization of
      non-cash deferred
      compensation       600,872     1,072,731      1,356,481     2,341,397
     Amortization of
      acquired
      technology         391,268       384,249        775,517       512,332
        Total
         expenses     13,139,872     8,030,076     24,890,543    14,356,149

     Interest and other
      income, net      1,696,738     1,554,141      2,737,371     3,572,873

     Investment
      writedown       (1,700,000)           --     (1,700,000)          --

     Net loss        $(7,313,638)  $(3,145,680)  $(13,783,372)  $(2,060,686)

     Net loss per
      share, basic
      and diluted         $(0.27)       $(0.14)        $(0.50)       $(0.09)

     Shares used in
      calculating net
      loss per share,
      basic and
      diluted         27,445,282    22,819,360     27,413,696    22,556,573



     Condensed Consolidated
      Balance Sheet Data:                         June 30,     December 31,
    2002                                            2001
     (unaudited)
     Assets
       Cash, cash equivalents and short-term
        investments                             $208,837,030   $226,924,293
       Other current assets                        8,092,271      6,384,531
       Land, property and equipment, net          29,043,242     23,268,567
       Acquired technology, investments and
        other assets                              18,277,410     20,396,319
         Total assets                           $264,249,953   $276,973,710
     Liabilities and Stockholders' Equity
       Liabilities                                $6,344,972     $7,500,032
       Stockholders' equity                      257,904,981    269,473,678
         Total liabilities and stockholders'
          equity                                $264,249,953   $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 are located 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 regarding CART and Melanophore technologies.

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