arna needham2010

Arena Pharmaceuticals, Inc.

9th Annual Needham Healthcare Conference

June 10, 2010

Arena Pharmaceuticals, Inc. 2

Obesity May Wipe Out Benefit of Anti-Smoking Effort, Study Says

Nearly 10% of Health Spending Due to Obesity

Obesity and the EconomyFrom Crisis to Opportunity

Ex-military leaders: Young adults 'too fat to fight'

Nature and Nachos: How Fat Happens

Science explains the factors that make us vulnerable; nutritional labels

explain the rest


Today’s Agenda

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• Today’s dissatisfied weight management market– Addressing the needs of patients and physicians

• Clinical overview of lorcaserin – Phase 3 program and results– October 22, 2010, PDUFA date

• Lorcaserin’s market opportunity– Market research– Building a foundation for launch– Global patent coverage

• Corporate snapshot– Pipeline: opportunities beyond lorcaserin– Financials as of March 31, 2010– Upcoming milestones


Forward-Looking Statements

This presentation includes forward-looking statements that involve a number of risks and uncertainties. Such forward-looking statements include statements about the potential of lorcaserin and other compounds and programs, including about lorcaserin’s approvability, regulatory guidance, commercialization opportunities, financing, whether, when and how we and our collaborators continue to develop compounds, patents, upcoming milestones and news, our strategy, technologies, future opportunities, potential achievements, goals and expectations, and other statements that are not historical facts, including statements which may be preceded by the words “potential,” “believe,” “expect,” “predict,” “continue,” “likely,” “unlikely,” “anticipate,”“estimate,” “optimistic,” “intend,” “plan,” “project,” “target,” “aim,” “will,” “may” and similar words. For such statements, we claim the protection of the Private Securities Litigation Reform Act of 1995. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the time they were made. Factors that could cause actual results to differ materially from the forward-looking statements include, but are not limited to, our ability to obtain adequate funds; regulatory authorities may not find our clinical or other data sufficient and may not approve lorcaserin or any of our other drug candidates to be marketed in the United States or elsewhere; our ability to enter into agreements with pharmaceutical companies to commercialize lorcaserin or partner other of our compounds or programs; the timing, success and cost of our clinical, research and development programs; results of clinical trials and other studies are subject to different interpretations and may not be predictive of future results; our ability to obtain and defend our patents; and the timing and receipt of payments and fees, if any, from our collaborators. Additional factors that could cause actual results to differ materially from those stated or implied by our forward-looking statements are disclosed in our SEC filings. We disclaimany intent or obligation to update these forward-looking statements, other than as may be required under applicable law.

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Today’s Dissatisfied Weight Management Market


Primary Care Physicians Write Most Obesity Prescriptions

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Source: Decision Resources © 2007 Obesity: New Treatments and Reimbursement Issues, November 2007


PCPs Are Dissatisfied With Available Agents

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Source: Decision Resources © 2007 Obesity: New Treatments and Reimbursement Issues, November 2007 (70 PCPs surveyed)


Phentermine Is The Most Prescribed Obesity Drug

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Source: Wolters Kluwer HealthNote: “Others” primarily consist of amphetamines

Oral Anti–Obesity Drugs TRx Share for Qtr 2, 2008

(261,782)

(54,883) (101,188)

(1,654,282)

Total Rx’s 2,072,135


• Physicians want new treatments with new mechanistic approaches– Improved risk/benefit profiles – Better, longer-term treatment

• Physicians want safe and effective drugs their patients can tolerate – Safety is of paramount importance– Treatment duration that enables patients to reduce weight and sustain loss

• Physicians want weight loss to translate into improved health– Improve quality of life – Avoid increased risk of depression or anxiety– Parameters such as blood pressure, cholesterol, triglycerides and heart rate

should move in the right direction

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Addressing the Needs of Physicians & Patients


Weight Loss Improves CV Risk Factors

1. R Wing et al. - Arch Intern Med. 1987;147:1749-17532. I Mertens, L Van Gaal - Obes Res 2000;8:270-2783. G Blackburn - Obes Res 1995;3 (Suppl 2):211S-216S Slide Source:www.obesityonline.org

4. H Ditschunheit et al. - Eur J Clin Nutr. 2002;56:264-2705. American Heart Association6. “Diabetes Prevention Program” - N Engl J Med. 2002;346:393-403

Risk of T2 Diabetes(6)

T2 Diabetes(5)

Triglycerides(4)

HDL Cholesterol(3)

Total Cholesterol(3)

Blood Pressure(2)

HbA1c(1)

5% - 10% Weight Loss


Clinical Overview of Lorcaserin


Lorcaserin for Weight Management

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• Novel single agent discovered and developed internally

• Selective drug candidate with the right combination of Phase 3 efficacy, safety and tolerability to be potential first-line therapy

• First in a new class of serotonin 2C receptor agonists– Stimulation of 2C receptor strongly associated with feeding behavior and satiety

• Global composition of matter patent coverage of NCE


Completed Pivotal Program: BLOOM & BLOSSOM trials

Lorcaserin: Robust Phase 3 Program

Primary endpoint for all trials: % of patients ≥ 5% weight loss at 52 weeks

Trial BLOOM

Status Complete Complete

Patients 3,182 4,008

Daily dosing vs. placebo

10 mg BID 10 mg QD & BID

Echo monitoring

Screening, 6, 12, 18, 24 months

Entry, 6, 12 months

Treatment duration

Two years One year

BLOSSOM BLOOM-DM

Fully enrolled

604

10 mg QD & BID

Entry, 6, 12 months

One year

Efficacy endpoints

Weight loss at 1 yrWt loss maintenance in yr 2 Weight loss at 1 yr Weight loss at 1 yr

Echo exclusions

FDA valvulopathy None None


BLOOM & BLOSSOM Baseline Demographics

Baseline Demographics

Age 44 years

Gender Men

Women16-22%78-84%

Weight 100 kg

BMI 36

EthnicityCaucasian

African AmericanHispanic/Latino

66-68%19-20%11-13%

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Categorical Weight Loss at Week 52 (MITT-LOCF)

Lorcaserin 10 mg BID

Placebo*p < 0.0001

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>5% Weight Loss >10% Weight Loss

0

10

20

30

40

50 *

*

% o

f P

atie

nts

47.5%

20.3%22.6%

7.7%

BLOOM


*

*

47.2%

25.0% 22.6%

9.7%

BLOSSOM

Approvable Categorical Weight Loss (MITT)


Benefit of Long-Term Treatment (Per Protocol)

Categorical Weight Loss at Week 52 (Per Protocol)

Lorcaserin 10 mg BID

Placebo*p < 0.0001

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BLOOM66.4%

32.1%36.2%

13.6%

0

20

40

60

80

*

*

% o

f P

atie

nts


BLOSSOM

*

*34.9%

63.2%

35.1%

16.1%



Pivotal Program Efficacy Highlights: Lorcaserin Patients Completing 1 Year of Treatment

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35 lbs

17 lbs

8%

>5%

31%

Average weight loss for top quartile of BLOSSOM patients

Average patient weight loss

Weight loss achieved by over one-third of patients

Weight loss achieved by about two-thirds of patients

Average patient weight loss

Average excess body weight lost by BLOOM patients*

* Based on normal BMI of 25 kg/m2

>10%


Secondary Endpoints Improve: Combined Pivotal Trial Data

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YesTriglycerides

YesLDL cholesterol

YesTotal Cholesterol

YesHDL cholesterol

YesWaist Circumference

Yes BMI

Measurement Improved

YesQuality of Life

YesDiastolic BP

YesHbA1c

YesFasting glucose

YesSystolic BP

Measurement Improved

Heart Rate Yes

MITT-LOCF vs. placebo

Importantly, blood pressure and heart rate decreased


BLOOM Year OneLorcaserin Placebo

Headache 18.0% 11.0%Upper respiratory infection 14.8% 11.9%Nasopharyngitis 13.4% 12.0%Dizziness 8.2% 3.8%Nausea 7.5% 5.4%

Lorcaserin was Very Well Tolerated

12.6%14.6%12.7%Upper respiratory infection

BLOSSOM Lorcaserin 10 mg BID

Lorcaserin 10 mg QD Placebo

Headache 15.6% 15.6% 9.2%

Nasopharyngitis 12.5% 11.9% 12.0%

Nausea 9.1% 7.6% 5.3%

Dizziness 8.7% 6.2% 3.9%

Most Frequent Adverse Events in BLOOM and BLOSSOM

Headache was the only AE that exceeded placebo by >5%


Pivotal Program Safety And Tolerability

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2-year data supporting long-term safety profile

Low incidence of withdrawals due to AEs

Improved quality of life

Rates of depression, anxiety and suicidal ideation similar to placebo

Lorcaserin

No increased risk of cardiac valvulopathy

Very well tolerated

Patients started on full dose, without a titration period


Creating Value in 2010

Lorcaserin NDA accepted for filing

Upcoming Lorcaserin Milestones

Peer-reviewed publications

Assigned October 22, 2010, PDUFA date

Tentatively scheduled September 16, 2010, Advisory Committee meeting

Lorcaserin Advisory Committee meeting

BLOOM-DM Phase 3 results

FDA approval


Market Opportunity


Potential to Re-Energize Weight Management

Market research indicates that surveyed physicians expect to:

• Replace currently available agents with lorcaserin as first-line therapy

• Expand the weight management category to patients not currently receiving pharmacotherapy

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If approved, lorcaserin has the potential to serve as first-line therapy for the majority of overweight* and obese patients

* BMI ≥27 with at least one co-morbidity


Building a Foundation for Launch

Goal: Establish an agreement with a pharmaceutical company to commercialize lorcaserin

Building a foundation for the anticipated launch:

• Swiss manufacturing facility

• Weight management market research

• Commercial readiness

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Global Patent Coverage

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Percent of Global Pharmaceutical Sales Covered by Lorcaserin Patents*

• Composition of matter patent issued in major jurisdictions, including US, Europe, Japan, Canada and China

• First expiration is 2023 in most jurisdictions - does not include any patent term extensions

* IMS Health, 2008 sales

Issued93.5%

Pending3.0%

Lorcaserin represents a significant global commercial opportunity


Pipeline & Financials


Pipeline: Sustaining Innovation

Program / Indication NDAPhase 2Phase 1Preclinical

LorcaserinWeight Management

Phase 3

Metabolic Diseases

Central Nervous System

Cardiovascular

Inflammatory Diseases Research Programs

APD916Narcolepsy and Cataplexy

APD597Type 2 Diabetes

Ortho-McNeil-Janssen

APD791*Arterial Thrombosis

APD811Pulmonary Arterial Hypertension

* Not currently in active development


APD916 for Narcolepsy & Cataplexy

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• Market– Narcolepsy is not rare, but is underrecognized and underdiagnosed(1)

– Narcolepsy affects about one in every 2,000 Americans(1)

• Current treatment– Treatments are limited and consist of:

− Stimulant drugs to suppress daytime sleepiness − Antidepressants for cataplexy

• APD916– Potent and selective inverse agonist of histamine H3 receptor – Potential to treat narcolepsy and cataplexy by increasing central

histamine activity

• Status– Entered Phase 1 March 2010

1. National Institutes of Health


Ortho-McNeil-Janssen Collaboration

• Developing orally-active compounds for type 2 diabetes by targeting GPR119

• Lead compound APD597 in Phase 1

• GPR119 agonists are first-in-class therapeutics targeting a novel pancreatic beta cell receptor

• Eligible to receive $295M per compound + double-digit royalties

• As of 3/31/10, we have received total payments of $52.5M

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Total Revenues

Expenses:Cost of manufacturing servicesResearch and developmentGeneral and administrativeAmortization of acquired technology

Total operating expenses

Total interest and other expense, net

Net loss

$2.5

1.918.37.00.5

27.7

(6.1)

$(31.3)

Arena Finances

For the Quarter Ended March 31, 2010

(in millions)

Balance Sheet Data as of March 31, 2010:Cash, cash equivalents and short-term investmentsTotal assetsTotal stockholders’ equity

$107.6$227.3$68.7


Creating Value in 2010

Upcoming Milestones

BLOOM-DM Phase 3 results

Peer-reviewed publications

APD916 Phase 1 results

Collaboration updates

Lorcaserin Advisory Committee meeting

FDA approval of lorcaserin


9th Annual Needham Healthcare Conference

June 10, 2010

arna needham2010

Health & Medicine

forwardlooking statements

andother statements

fightarena pharmaceuticals

loss physicians

weight losshba1c

obesity prescriptions

new treatments

lorcaserin financials