Arena Pharmaceuticals, Inc.
Oct 25, 2000

Arena Pharmaceuticals Announces 2000 Third Quarter Results; Sequential Quarterly Revenue Growth of 79%

SAN DIEGO, Oct. 25 /PRNewswire/ -- Arena Pharmaceuticals, Inc. (Nasdaq: ARNA - news) today reported results for the quarter ended September 30, 2000. During the third quarter 2000, the Company reported revenues of $2.3 million versus no revenues for the third quarter of 1999. Revenues in the third quarter of 2000 were attributable to collaborations, which included research funding, milestone payments and technology access and development fees. Net loss for the third quarter 2000 was $1.4 million, or $0.07 per share on a pro forma basis. In the comparable quarter of 1999, Arena reported a net loss of $2.7 million or $0.34 per share on a pro forma basis. Included in the third quarter 2000 net loss were non-cash charges related to amortization of deferred compensation of $1.1 million; excluding these charges, the net loss was approximately $295,000, or $0.02 per share on a pro forma basis.

Revenues for the nine months ended September 30, 2000 were $3.6 million compared to no revenues for the nine months ended September 30, 1999. Revenues were attributable to collaborations, which included research funding, milestone payments and technology access and development fees. Net loss for the nine months ended September 30, 2000 was $7.4 million, or $0.47 per share on a pro forma basis, excluding the impact of a non-cash preferred stock charge related to the issuance of preferred stock in the period of $22.4 million or $1.42 per share on a pro forma basis. In the comparable nine months of 1999, Arena reported a net loss of $7.3 million or $0.98 per share on a pro forma basis. Included in the nine months ended September 30, 2000 net loss were non-cash charges related to amortization of deferred compensation of $3.0 million; excluding these charges as well as the non-cash preferred stock charge, the net loss was $4.5 million, or $0.28 per share on a pro forma basis. Cash and cash equivalents at September 30, 2000 totaled $144.6 million.

"In the third quarter, we completed a successful Initial Public Offering with total net proceeds to the Company of approximately $114 million," stated Jack Lief, Arena's President and CEO. Mr. Lief further noted that "Arena made significant progress towards our goal of sustained profitability by achieving sequential third quarter revenue growth of 79%."

Arena's CART Technology allows for the direct identification of modulators of G protein-coupled receptors (GPCRs) in a ligand-independent manner, making the technology particularly useful with respect to the over 1,900 orphan GPCRs that are estimated to be a part of the human genome. Such ligand independent screening is made possible by genetic alteration of these receptors, using routinely applicable and proprietary genetic cassettes. Arena has established CART Technology collaborations with Eli Lilly and Company, Fujisawa Pharmaceutical Co., Ltd., Taisho Pharmaceutical Co., Ltd., Lexicon Genetics, Inc. and Neurocrine Biosciences, Inc.

The statements made in this press release contain certain forward-looking statements that involve a number of risks and uncertainties. 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 our forward looking statements due to risks and uncertainties associated with the Company's business include, but are not limited to, the following: future quarterly or annual financial results, the timing, success and cost of preclinical research, out-licensing endeavors and clinical studies, attainment of milestone payments, if any, from collaborators. Additional risk factors that could cause actual results to differ materially from those in our forward looking statements are disclosed in the Company's Form S-1 and most recent quarterly report on Form 10-Q. These forward-looking statements represent the Company's judgment as of the date of this release. The Company disclaims, however, 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,
                           2000          1999          2000         1999
                       (unaudited)   (unaudited)  (unaudited)   (unaudited)
    Revenues
      Total revenues   $ 2,314,126         $ --   $ 3,603,397          $ --

    Expenses

    Research and
     development         3,465,360     2,332,866    8,546,347     5,877,283
    General and
     administrative        800,383       378,703    1,719,883     1,377,673
    Amortization of
     deferred
     compensation        1,123,358        97,628    2,952,402       277,014
      Total expenses     5,389,101     2,809,197   13,218,632     7,531,970

     Interest income     1,701,698       110,942    2,325,098       360,533
     Interest expense      (59,448)      (38,646)    (177,083)      (91,354)
     Other income           14,131         2,796       40,344         3,901
      Total other
       income and
       expenses          1,656,381        75,092    2,188,359       273,080
     Net loss           (1,418,594)   (2,734,105)  (7,426,876)   (7,258,890)

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

     Net loss applicable
      to common
      stockholders     $(1,418,594) $(2,734,105) $(29,817,944)  $(7,258,890)

    Historical net loss
     per share, basic
     and diluted            $(0.09)       $(2.65)       $(4.91)      $(7.18)

     Shares used in
      calculating
      historical net
      loss per share,
      basic and
      diluted           15,706,593     1,030,125    6,069,278     1,011,125

     Pro forma net
     loss per share        $(0.07)       $(0.34)      $(1.89)       $(0.98)

     Shares used in
      calculating pro
      forma net loss
      per share         19,571,378     7,938,718   15,801,764     7,404,168

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:                         September 30,  December 31,
                                                     2000            1999
                                                 (Unaudited)
    Assets
      Cash and cash equivalents                 $144,648,198     $5,401,508
      Other current assets                         1,535,037        172,052
      Property and equipment, net                  3,726,679      2,773,382
      Other assets                                 1,054,969        178,898
        Total assets                            $150,964,883     $8,525,840
    Liabilities and Stockholders'
     Equity (Deficit)
      Liabilities                                  4,607,526      4,173,440
      Redeemable convertible preferred stock              --     18,251,949
      Stockholders' equity (deficit)             146,357,357    (13,899,549)
        Total liabilities and
         stockholders' equity (deficit)         $150,964,883     $8,525,840

"Arena Pharmaceuticals" and the Company logo are registered U.S. trademarks of the Company. "Arena" and "CART" are trademarks of the Company. Arena's headquarters are located at 6166 Nancy Ridge Drive, San Diego, CA 92121. On the Internet, please refer to the Investor Relations Center at Arena's website: http://www.arenapharm.com for further information.