Arena Pharmaceuticals, Inc.
Sep 6, 2000

Arena Pharmaceuticals Announces 2000 Second Quarter Results

SAN DIEGO, Sept. 6 /PRNewswire/ -- Arena Pharmaceuticals, Inc. (Nasdaq: ARNA) today reported results for the quarter ended June 30, 2000. During the second quarter 2000, the Company reported revenues of $1.3 million versus no revenues for the second quarter of 1999. Revenues in the second quarter of 2000 were attributable to new collaborations, which included research funding, milestone payments and technology access and development fees. Net loss for the second quarter 2000 was $2.9 million, or $0.21 per share on a pro forma basis, excluding the impact of a $8.2 million or $0.60 per share on a pro forma basis non-cash preferred stock charge related to the issuance of preferred stock in the quarter. In the comparable quarter of 1999, Arena reported a net loss of $2.5 million or $0.32 per share on a pro forma basis. Included in the second quarter 2000 net loss were non-cash charges related to amortization of deferred compensation of $1.4 million; excluding these charges as well as the non-cash preferred stock charge, the net loss was $1.5 million, or $0.11 per share on a pro forma basis.

Revenues for the six months ended June 30, 2000 were $1.3 million compared to no revenues for the six months ended June 30, 1999. Revenues were attributable to new collaborations, which included research funding, milestone payments and technology access and development fees. Net loss for the six months ended June 30, 2000 was $6.0 million, or $0.51 per share on a pro forma basis, excluding the impact of a $22.4 million or $1.92 per share on a pro forma basis non-cash preferred stock charge related to the issuance of preferred stock in the quarter. In the comparable six months of 1999, Arena reported a net loss of $4.5 million or $0.63 per share on a pro forma basis. Included in the six months ended June 30, 2000 net loss were non-cash charges related to amortization of deferred compensation of $1.8 million; excluding these charges as well as the non-cash preferred stock charge, the net loss was $4.2 million, or $0.36 per share on a pro forma basis.

In April 2000, Arena entered into a collaborative agreement with Eli Lilly, one of the world's leading pharmaceutical companies. This collaboration principally focuses on diseases of the central nervous system and endocrine system, as well as cardiovascular diseases. The collaboration may be expanded to other diseases, including cancer. Arena will activate a number of mutually selected G protein-coupled receptors and will provide Eli Lilly with biochemical assays for use in their screening facilities. Arena has received, and will continue to receive, research funding from Eli Lilly for Arena's internal resources committed to these tasks, which will be augmented by substantial resource commitments by Eli Lilly. Under the terms of the agreement, Arena received a one-time up-front payment in which Arena is recognizing ratably over the five-year collaboration term. In the future, Arena may receive up to $1.25 million per receptor based upon milestone payments in connection with the successful application of CART to each receptor, and up to an additional $6.0 million based upon clinical development milestone payments for each drug candidate discovered using CART. Arena may also receive additional milestone and royalty payments associated with the commercialization of drugs discovered using CART, if any. In addition, Arena has entered into other collaborative agreements, including agreements with Taisho Pharmaceutical Co., Ltd. and Fujisawa Pharmaceutical Co., Ltd., regarding the application of CART to G protein-coupled receptors. Arena has received approximately $1.5 million in cash proceeds from Eli Lilly, and approximately $800,000 in cash proceeds from Taisho in the second quarter of 2000.

In addition, on July 28, 2000 the Company completed an Initial Public Offering and on August 10, 2000, Arena's underwriters exercised its over-allotment option in connection with the Initial Public Offering, with total net proceeds to the Company of approximately $114.3 million. The Company intends to utilize its net proceeds for general corporate purposes, including working capital, drug candidate discovery, development and clinical testing using non-partnered G protein-coupled receptor targets, and other research and development and clinical activities.

Arena's CART Technology allows for the direct identification of modulators of G protein-coupled receptors (GPCR) in a ligand-independent manner, making the technology particularly useful with respect to the over 2,000 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 from Arena's expectations. For example, the timing, success and cost of preclinical research, out-licensing endeavors and clinical studies, attainment of milestone payments, if any, from collaborators, and the risk factors listed in Arena's SEC filings including but not limited to its Form S-1, may affect the actual results achieved by Arena. 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          Six months ended
                                June 30,                    June 30,
                            2000         1999          2000          1999
                        (unaudited)  (unaudited)   (unaudited)   (unaudited)

    Revenues
     Total revenues     $1,289,271          $--    $1,289,271           $--

    Expenses
    Research and
     development         2,681,629    1,767,767     5,080,987     3,544,417
    General and
     administrative        495,672      694,574       919,500       998,970
    Amortization of
     deferred
    compensation         1,419,565      179,386     1,829,044       179,386
     Total expenses      4,596,866    2,641,727     7,829,531     4,722,773

    Interest Income        465,939      135,666       623,400       249,591
    Interest expense       (58,056)     (21,594)     (117,635)      (52,708)
    Other income            13,630        1,105        26,213         1,105
     Total other income
    and expenses           421,513      115,177       531,978       197,988
    Net loss           $(2,886,082) $(2,526,550)  $(6,008,282)  $(4,524,785)

    Non-cash preferred
     stock charge       (8,203,505)          --   (22,391,068)           --

    Net loss applicable
     to common
     stockholders     $(11,089,587) $(2,526,550) $(28,399,350)  $(4,524,785)

    Historical net
     loss per share,
     basic and diluted      $(8.47)      $(2.48)      $(23.70)       $(4.52)

    Shares used in
     calculating
     historical net loss
     per share, basic
     and diluted         1,309,968    1,019,375     1,198,238     1,001,625

    Pro forma net
     loss per share         $(0.81)      $(0.32)       $(2.43)       $(0.63)

    Shares used in
     calculating pro
     forma net
     loss per share     13,761,385    7,927,968    11,695,092     7,134,060
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:      June 30,     December 31,
                                                      2000           1999
                                                 (Unaudited)
    Assets
     Cash and cash equivalents                   $31,941,743     $5,401,508
     Other current assets                            274,488        172,052
     Property and equipment, net                   2,942,498      2,773,382
     Other assets                                    856,325        178,898
       Total assets                               36,015,054      8,525,840
    Liabilities and Stockholders' Deficit
     Liabilities                                   5,355,549      4,173,440
     Redeemable convertible preferred stock       48,317,013     18,251,949
     Stockholders' deficit                       (17,657,508)   (13,899,549)
       Total liabilities and
        stockholders' deficit                    $36,015,054     $8,525,840

"Arena Pharmaceuticals" is a registered U.S. trademark 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 Relation's Center at Arena's website: http://www.arenapharm.com for further information. SOURCE Arena Pharmaceuticals, Inc.



CONTACT: Jack Lief, President & Chief Executive Officer of Arena Pharmaceuticals, 858-453-7200/