Arena Pharmaceuticals, Inc.
Jan 17, 2002

Arena Pharmaceuticals Announces Financial Results For the Fourth Quarter and Full Year of 2001

SAN DIEGO, Jan. 17 /PRNewswire-FirstCall/ -- Arena Pharmaceuticals, Inc. (Nasdaq: ARNA) today reported record revenues of $5.9 million for the quarter ended December 31, 2001, a 44% increase over fourth quarter 2000 revenues, and $18.1 million for the full year ended December 31, 2001, a 135% increase over the full year ended December 31, 2000. Increased revenues in the fourth quarter and the full year of 2001 were primarily attributable to collaborations, which included research funding, milestone payments and technology access and development fees. The Company reported a net loss for the fourth quarter and full year of 2001 of $2.8 million, or $.10 per share, and $6.9 million, or $.28 per share, after non-cash amortization charges of $1.2 million and $5.5 million, respectively. This compares with prior year results for the fourth quarter and full year of a net profit of $1.1 million, or $.05 per share, and a net loss of $6.4 million, or $.37 per share, on a pro forma basis, respectively. The pro forma loss of $.37 per share for the full year of 2000 does not take into account the non-cash preferred stock charge applicable to common stockholders of $22.4 million and assumes the conversion of redeemable preferred stock into common stock as of the date of issuance. The Company's redeemable preferred stock converted into common stock at the closing of the Company's initial public offering on a one-for-one basis. The net loss for the full year of 2000 in accordance with generally accepted accounting principles was $28.8 million, or $2.84 per share.

Research and development expenses increased to $7.5 million in the fourth quarter of 2001 as compared to $3.5 million in the fourth quarter of 2000. For the full year ended December 31, 2001, research and development expenses increased by $10.8 million to $22.9 million from $12.1 million for the full year ended December 31, 2000.

Cash, cash equivalents and short-term investments totaled $226.9 million at December 31, 2001.

"This past year represented an important transition for Arena as we become a product focused company," said Jack Lief, President and CEO. "We intend to continue our excellent partnering relationships, enter into new collaborations and leverage our financial strength as Arena discovered compounds enter the IND process."

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 estimated 800 therapeutically relevant GPCRs 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 and statements that are not historical facts, including statements which are preceded by the words "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 registration statement filed June 21, 2001 on Form S-1, as amended, its 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,
                          2001          2000         2001           2000
                             (unaudited)
     Revenues
       Total revenues   $5,865,071  $4,079,999   $18,059,999     $7,683,396

     Expenses

     Research and
      development        7,488,427   3,533,857    22,864,250     12,080,204
     General and
      administrative     1,570,111     959,097     5,390,446      2,678,980
     Amortization of
      non-cash deferred
      compensation         826,690   1,390,494     4,239,740      4,342,896
     Amortization of
      acquired technology
      and other purchased
      intangibles          384,249          --     1,280,830             --
         Total
         expenses       10,269,477   5,883,448    33,775,266     19,102,080

     Interest and
      other income, net  1,601,922   2,868,355     8,832,543      5,056,714
     Net income (loss)  (2,802,484)  1,064,906    (6,882,724)    (6,361,970)

     Non-cash preferred
      stock charge              --          --            --    (22,391,068)

     Net income (loss)
      applicable to
      common
      stockholders     $(2,802,484) $1,064,906   $(6,882,724)  $(28,753,038)

     Net income (loss)
      per share, basic
      and diluted          $(0.10)       $0.05         $(0.28)      $(2.84)

     Shares used in
      calculating
      net income (loss)
      per share,
      basic             27,280,258  22,166,822    24,989,067     10,139,755

     Shares used in
      calculating
      net income (loss)
      per share,
      diluted           27,280,258  22,692,988    24,989,067     10,139,755

     Pro forma net loss
      per share                                                      $(1.65)

     Shares used in
      calculating
      pro forma net loss
      per share                                                  17,411,028

     Note: The loss per share on a pro forma basis assumes the conversion
     of the redeemable preferred stock into common stock as of the date of
     issuance.  The redeemable preferred stock converted into common stock
     at the closing of the Company's initial public offering on a one-for-one
     basis.


     Condensed Consolidated Balance Sheet Data:

                                                December 31,    December 31,
                                                    2001           2000

     Assets
       Cash, cash equivalents and
        short-term investments                  $226,924,293   $144,413,176
       Other current assets                        6,384,531      3,801,268
       Land, property and equipment, net          23,268,567      4,265,260
       Acquired technology, investments
        and other assets                          20,396,319        232,225
         Total assets                           $276,973,710   $152,711,929

     Liabilities and Stockholders' Equity
       Liabilities                                $7,500,032     $3,927,604
       Stockholders' equity                      269,473,678    148,784,325
         Total liabilities and
          stockholders' equity                  $276,973,710   $152,711,929
"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 Technology and the Melanophore Technology.

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

SOURCE Arena Pharmaceuticals, Inc.

CONTACT:          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.