Arena Pharmaceuticals Announces Third Quarter 2009 Financial Results and Recent Developments

Arena Pharmaceuticals Announces Third Quarter 2009 Financial Results and
Recent Developments

SAN DIEGO, Nov. 9, 2009 /PRNewswire-FirstCall/ -- Arena Pharmaceuticals, Inc.
(Nasdaq: ARNA) today reported financial results for the third quarter ended
September 30, 2009.

Arena reported a lower net loss allocable to common stockholders in the third
quarter of 2009 of $34.8 million, or $0.38 per share, compared to a net loss
allocable to common stockholders in the third quarter of 2008 of $56.2
million, or $0.76 per share, and a net loss allocable to common stockholders
in the first nine months of 2009 of $123.4 million, or $1.51 per share,
compared to a net loss allocable to common stockholders in the first nine
months of 2008 of $177.0 million, or $2.40 per share.

"The successful completion of the lorcaserin pivotal program in the third
quarter was a critical milestone for Arena," stated Jack Lief, Arena's
President and Chief Executive Officer. "The positive results were received
with support and enthusiasm at The Obesity Society's annual meeting last
month. Participating physicians shared with us three clear themes: the
pressing need for new weight management treatments, the paramount importance
of safety in treating overweight and obese patients, and that weight reduction
should translate into improvements in cardiometabolic health. If approved, the
unique combination of efficacy, safety and tolerability positions lorcaserin
as first-line therapy."

As expected, research and development expenses declined significantly to $22.1
million in the third quarter of 2009 from $47.5 million in the third quarter
of 2008. Research and development expenses declined to $89.0 million in the
first nine months of 2009 from $151.0 million in the first nine months of
2008. This decrease is primarily due to the completion of the BLOOM
(Behavioral modification and Lorcaserin for Overweight and Obesity Management)
and BLOSSOM (Behavioral modification and LOrcaserin Second Study for Obesity
Management) Phase 3 clinical trials evaluating the safety and efficacy of
lorcaserin for weight management, and prioritizing spending towards activities
that support filing a New Drug Application, or NDA, for lorcaserin. Arena
expects its research and development expenses to continue to decline this year
due to completing the BLOOM and BLOSSOM clinical trials and expected cost
savings from the second-quarter workforce reduction and other cost-containment
measures. Research and development expenses in the first nine months of 2009
included $2.9 million in non-cash, share-based compensation expense, compared
to $3.3 million in the first nine months of 2008. General and administrative
expenses totaled $5.4 million in the third quarter of 2009, compared to $5.9
million in the third quarter of 2008, and $18.7 million in the first nine
months of 2009, compared to $21.9 million in the first nine months of 2008.
This decrease is primarily attributable to lower salary and other personnel
costs resulting from the workforce reduction. General and administrative
expenses in the first nine months of 2009 included $2.2 million in non-cash,
share-based compensation expense, compared to $2.8 million in the first nine
months of 2008.

At September 30, 2009, cash, cash equivalents and short-term investments
totaled $143.5 million and approximately 92.7 million shares of common stock
were outstanding.

Arena's Recent and Third Quarter Developments

-- Announced positive, highly significant top-line results from the
BLOSSOM
trial. Lorcaserin patients achieved highly significant categorical and
absolute weight loss over 52 weeks of treatment. About two-thirds
(63.2%) of lorcaserin patients dosed twice daily who completed the
trial
according to protocol lost at least 5% of their weight, compared to
34.9% of patients on placebo, and more than one-third (35.1%) of these
lorcaserin patients lost at least 10% of their weight, compared to
16.1%
for placebo. The average weight loss for lorcaserin patients dosed
twice
daily was 17.0 pounds, compared to 8.7 pounds for placebo. The top
quartile of lorcaserin patients who completed the trial according to
protocol and had their Week 52 weight recorded lost an average of 35.1
pounds. Lorcaserin was very well tolerated and no excess depression or
suicidal ideation was observed with lorcaserin treatment. The
incidence
of new FDA-defined valvulopathy from the integrated echocardiographic
data set from BLOSSOM and BLOOM did not differ from placebo.
-- Announced a late-breaking oral presentation from the pivotal BLOSSOM
trial and additional positive data from the pivotal BLOOM trial at the
27th Annual Scientific Meeting of The Obesity Society. The new BLOSSOM
data demonstrate improvements in patients' body composition,
cardiovascular risk factors and quality of life. The new BLOOM data
demonstrate that lorcaserin significantly improved markers of
cardiovascular risk and glycemic parameters and was not associated
with
depression or suicidal ideation. Lorcaserin patients who completed the
BLOOM trial according to protocol lost 31% of their excess body
weight,
compared to 12% for the placebo group.
-- Completed dosing in all lorcaserin clinical trials Arena expects to be
included in the NDA it plans to submit to the FDA by the end of 2009.
-- Completed a public offering of 12.5 million shares of common stock,
resulting in net proceeds to Arena of $49.7 million.

-- Received net proceeds of $95.6 million from a $100.0 million loan
provided by Deerfield Management. The outstanding principal accrues
interest until maturity in June 2013 at a rate of 7.75% per annum. In
connection with the loan, Arena issued Deerfield warrants for 28
million
shares of its common stock at an exercise price of $5.42 per share. On
or before June 17, 2011, Deerfield may make a one-time election to
provide Arena with up to an additional $20.0 million under similar
terms, with the additional loan also maturing in June 2013. For each
additional $1.0 million in funding, Arena will issue Deerfield
additional warrants for 280,000 shares of its common stock at an
exercise price of $5.42 per share. Arena repaid Deerfield the first
scheduled principal repayment of $10.0 million upon completion of its
public offering in July.

Scheduled Earnings Call

Arena will host both a conference call and webcast to discuss the third
quarter 2009 financial results and to provide a business and financial update
tomorrow, Tuesday, November 10, 2009, at 8:30 a.m. Eastern Time (5:30 a.m.
Pacific Time). Jack Lief, President and Chief Executive Officer, and Robert E.
Hoffman, Vice President, Finance and Chief Financial Officer, will host the
conference call.

The conference call may be accessed by dialing 888.452.4024 for domestic
callers and 719.325.2385 for international callers. Please specify to the
operator that you would like to join the "Arena Pharmaceuticals' Third Quarter
2009 Financial Results Call." The conference call will be webcast live under
the investor relations section of Arena's website at www.arenapharm.com, and
will be archived there for 30 days following the call. Please connect to
Arena's website several minutes prior to the start of the broadcast to ensure
adequate time for any software download that may be necessary.

Upcoming Corporate Presentations

Arena is planning to present at upcoming investment and industry conferences,
including:

-- Piper Jaffray 21st Annual Health Care Conference, December 1-2, 2009,
New York, New York

-- 28th Annual J.P. Morgan Healthcare Conference, January 11-14, 2010,
San
Francisco, California

About Arena Pharmaceuticals

Arena is a clinical-stage biopharmaceutical company focused on discovering,
developing and commercializing oral drugs in four major therapeutic areas:
cardiovascular, central nervous system, inflammatory and metabolic diseases.
Arena's most advanced drug candidate, lorcaserin, is being investigated in a
Phase 3 clinical trial program for weight management. Arena has a broad
pipeline of novel compounds targeting G protein-coupled receptors, an
important class of validated drug targets, which includes compounds being
evaluated independently and with partners, including Merck & Co., Inc., and
Ortho-McNeil-Janssen Pharmaceuticals, Inc.

Arena Pharmaceuticals® and Arena® are registered service marks of the company.
"APD" is an abbreviation for Arena Pharmaceuticals Development.

Forward-Looking Statements

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 development, advancement, therapeutic indication
and use, tolerability, safety, selectivity, efficacy, and regulatory approval
of lorcaserin; the protocol, design, scope and other aspects of the lorcaserin
trials; lorcaserin's commercial and other potential, including as a first-line
therapy; the significance of the lorcaserin trial results and the completion
of the lorcaserin Phase 3 pivotal registration program; the need for new
treatments and the importance of safety in treating overweight and obese
patients; the FDA's approval process and requirements; the potential of the
lorcaserin Phase 3 program and its results to satisfy the FDA's approval
requirements; financial guidance, including expected cost savings and decline
in research and development expenses; Arena's agreements with Deerfield and
rights and future activities thereunder; future activities, results and
announcements relating to lorcaserin, including submitting an NDA for
lorcaserin and commercializing lorcaserin; the impact of weight loss on
health; Arena's strategy, plans, internal and partnered programs, and ability
to develop compounds and commercialize drugs. 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.
Factors that could cause actual results to differ materially from the
forward-looking statements include, but are not limited to, the timing,
success and cost of Arena's lorcaserin program and other of its research and
development programs; regulatory authorities may not find data from Arena's
clinical trials and studies sufficient for regulatory approval; the timing and
ability of Arena to receive regulatory approval for its drug candidates;
results of clinical trials or preclinical studies may not be predictive of
future results; clinical trials and studies may not proceed at the time or in
the manner Arena expects or at all; Arena's ability to partner or
commercialize lorcaserin or other of its compounds or programs; Arena's
ability to obtain additional funds; Arena's ability to obtain and defend its
patents; and the timing and receipt of payments and fees, if any, from Arena's
collaborators. Additional factors that could cause actual results to differ
materially from those stated or implied by Arena's forward-looking statements
are disclosed in Arena's filings with the Securities and Exchange Commission.
These forward-looking statements represent Arena's judgment as of the time of
this release. Arena disclaims any intent or obligation to update these
forward-looking statements, other than as may be required under applicable
law.

Arena Pharmaceuticals, Inc.
Condensed Consolidated Statements of Operations
(In thousands, except per share amounts)

Three months ended Nine months ended
September 30, September 30,
------------------ -----------------
2009 2008 2009 2008
---- ---- ---- ----
(unaudited) (unaudited)
Revenues
Manufacturing services $1,737 $1,442 $4,663 $5,461
Collaborative agreements 882 415 3,042 1,650
--- --- ----- -----
Total revenues 2,619 1,857 7,705 7,111

Operating Expenses
Cost of manufacturing services 1,705 1,743 4,702 6,362
Research and development 22,147 47,475 88,972 151,050
General and administrative 5,423 5,924 18,725 21,938
Restructuring charges - - 3,324 -
Amortization of acquired
technology & other
intangibles 582 580 1,721 1,748
--- --- ----- -----
Total operating expenses 29,857 55,722 117,444 181,098

Interest and Other Income
(Expense)
Interest income 75 1,332 291 6,529
Interest expense (7,339) (1,399) (10,991) (4,367)
Gain from valuation of
derivative liabilities 2,472 - 345 -
Warrant settlement expense - (242) - (2,236)
Loss on extinguishment of debt (2,479) - (2,479) -
Other (326) (1,453) (859) (1,299)
---- ------ ---- ------
Total interest and other
expense, net (7,597) (1,762) (13,693) (1,373)
------ ------ ------- ------
Net loss (34,835) (55,627) (123,432) (175,360)
Dividends on redeemable
convertible preferred stock - (557) - (1,644)
--- ---- --- ------
Net loss allocable to common
stockholders $(34,835) $(56,184) $(123,432) $(177,004)
======== ======== ========= =========

Net loss per share allocable
to common stockholders,
basic & diluted $(0.38) $(0.76) $(1.51) $(2.40)
====== ====== ====== ======

Shares used in calculating
net loss per share
allocable to common
stockholders, basic &
diluted 90,995 73,923 81,518 73,782
====== ====== ====== ======

Arena Pharmaceuticals, Inc.
Condensed Consolidated Balance Sheet Data
(In thousands)

September 30, December 31,
2009 2008
------------- ------------
(unaudited) (Note)
Assets
Cash, cash equivalents & short-term
investments $143,481 $110,129
Accounts receivable 1,628 1,823
Other current assets 4,037 5,031
Land, property & equipment, net 96,700 102,740
Acquired technology & other
non-current assets 21,499 21,608
------ ------
Total assets $267,345 $241,331
======== ========

Liabilities and Stockholders' Equity
Accounts payable and accrued
liabilities $16,893 $46,789
Total deferred revenues 4,049 4,049
Derivative liabilities 11,715 -
Notes payable 52,974 8,567
Total lease financing obligations &
other long-term liabilities 79,154 64,294
Total stockholders' equity 102,560 117,632
------- -------
Total liabilities & stockholders'
equity $267,345 $241,331
======== ========

Note: The Condensed Consolidated Balance Sheet Data has been derived from
the audited financial statements as of that date.

Contact: Arena Pharmaceuticals, Inc. Media Contact: Russo Partners

Jack Lief David Schull, President
President and CEO david.schull@russopartnersllc.com
858.717.2310
Cindy McGee
Manager, IR and Corporate Communications Anthony J. Russo, Ph.D., CEO
858.453.7200, ext. 1479 tony.russo@russopartnersllc.com
212.845.4251
www.arenapharm.com

SOURCE Arena Pharmaceuticals, Inc.

Jack Lief, President and CEO, or Cindy McGee, Manager, IR and Corporate
Communications, +1-858-453-7200, ext. 1479, both of Arena Pharmaceuticals,
Inc.; or David Schull, President, +1-858-717-2310,
david.schull@russopartnersllc.com, or Anthony J. Russo, Ph.D., CEO,
+1-212-845-4251, tony.russo@russopartnersllc.com, both of Russo Partners, for
Arena Pharmaceuticals, Inc.