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					Latino Legislative Caucus Foundation
Economic Development Summit
Opportunities for the Future           November 7, 2008



                                 Terese Ghio (Terry)
                                 Vice President Govt Relations




                                                             1
 BIO


         Terry serves as Vice President Government Relations for Arena
    Pharmaceuticals, a late stage biopharmaceutical company located in San
 Diego. She is a biotech executive with over 25 yrs experience with a unique
 combination of environmental and biopharmaceutical operational experience
paired with government relations and compliance expertise. She co-chairs the
   BIOCOM legislative committee and is a very active member of the biotech
    community. Prior to Arena, Terry served the biotechnology industry as a
    government relations consultant during 2007 and in various positions at
 Ligand Pharmaceuticals, a San Diego based drug discovery and development
company with five commercial products where she worked for 14 years. Prior
  to moving to California in 1991, Terry was Superintendent of environmental
   operations at a chemical manufacturing division of a major pharmaceutical
     company in NJ. Ms. Ghio is currently an appointee of California State
Governor Arnold Schwarzenegger to the California Colorado River Board and a
 prior appointee of Governor Davis’ administration to the San Diego Regional
                          Water Quality Control Board.


                                                                               2
Biotechnology was founded in
    California and is one of
   California's most valuable
             assets.




                                3
Southern California Life Science Community Facts

•   There are approximately 40,000 employees in the life science community in San
    Diego County at more than 700 companies, including traditional biotech, medical
    device, diagnostic and technology companies and institutes (Rich’s California
    BioScience Directories, 2008).
•   There are four major academic institutions (UCSD, Scripps, Salk, Burnham)
    and many smaller ones in San Diego County.
•   In 2007, Southern California received more than $1.79 billion in research
    funding from the National Institutes of Health, over half of California’s total
    ($3.1B) and third to the entire states of Massachusetts ($2.2B) and New York
    ($1.9B), respectively, in overall funding (Source: NIH).
•   Southern California healthcare venture capital was $1.68 billion in 2007, with VC
    investment in the region exceeding Boston’s in 2007. San Diego alone took in
    $1.22 billion in 2007 (Source: Dow Jones Venture One).
•   Annual economic impact in San Diego (direct and indirect): $8.5 billion (Source:
    San Diego Associationof Governments).




                                                                                        4
California’s Opportunity

•   Nearly 2,700 biotechnology companies and more than 100 universities
    and research organizations employ 260,000 Californians — more than
    the telecommunications, aerospace or motion picture industry.
•   Average salary for biotechnology employees is $70,000 — 60 percent
    higher than the average wage across California.
•   Manufacturing jobs start around $40,000 per year plus full family health
    benefits. Growth in this sector is expected to be 20 percent over the next
    five years.
•   About three-quarters of biotechnology companies plan to expand their
    California-based research and development and manufacturing activities
    over the next two years.
•   California universities receive over $3 billion in National Institutes of
    Health funding, more than any other state.
•   California biotechnology attracts more life science venture capital than all
    other states combined, nearly billion.




                                                                                   5
• California biotechnology companies generated billion in revenues
  and more than billion in total salaries in 2005.
• Almost half of California biotechnology companies have 50 or
  fewer employees; 57 percent have fewer than 100 employees.
• California biotechnology re-invests an average of 42 percent of its
  revenues back into research on life-saving therapies.
• Biotechnology is California's third largest exporter, selling goods
  to other countries worth more than billion a year.

    California's continued support of biotech will
     provide life-saving advances to reduce long
   term health care costs as well as individual pain
                      and suffering.



                                                                        6
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 our
 compounds, including lorcaserin, APD125, APD791 and our partnered compounds; when, whether
 and how we and our partners expect to continue developing our compounds; upcoming
 milestones and news; our strategy, technologies and research, preclinical and clinical programs;
 our 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,‖ ―promising,‖ ―believe,‖ ―expect,‖ ―predict,‖ ―continue,‖ ―likely,‖ ―unlikely,‖ ―anticipate,‖
 ―estimate,‖ ―optimistic,‖ ―sustainable,‖ ―intend,‖ ―plan,‖ ―project,‖ ―target,‖ ―aim,‖ ―will,‖ ―may,‖
 ―unlikely to be,‖ 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.

 Actual events or results may differ materially from our forward-looking statements due to, among
 other reasons, clinical trials and studies may not proceed at the time or in the manner we expect
 or at all; the results of clinical trials or preclinical studies may not be predictive of future results;
 our ability to receive regulatory approval for drug candidates; our ability to partner our
 compounds or programs; the timing, success and cost of our research, out-licensing endeavors
 and clinical trials; our ability to obtain additional financing; our ability to obtain and defend our
 patents; and whether we redeem outstanding shares of our Series B Convertible Preferred Stock
 with common stock or cash. 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.
 These forward-looking statements represent our judgment as of the time of this presentation. We
 disclaim any intent or obligation to update these forward-looking statements, other than as may
 be required under applicable law.
                                                                                                             7
              Arena Pharmaceuticals:
              the new San Diego Biotech Story

• Clinical Stage Biopharmaceutical company
   – Founded in 1997 – 3 employees
   – GPCR drug discovery and development
   – Commercialize Innovative and cost effective oral therapies for serious diseases

• Initial Public Offering (NASDAQ: ARNA)
   – July 2000

• Headquarters
   –   San Diego, CA
   –   8 buildings
   –   1997 (5000 sq ft)
   –   2008 (350,000 sq ft)

• Employees
   – Today >500
   – July 2002 ~85

• Europe and Asia

                                                                                       8
 Arena’s Core Values

   Fostering a culture that attracts & retains the best employees


        Integrity                           Excellence
 A high standard of behavior         Being the best at everything
 characterized by a personal                    we do
commitment to do what is right


        Teamwork                           Innovation
Cooperative effort to achieve a      Discovering & implementing
      common purpose                    cutting edge solutions


                                                                    9
    Pipeline: Sustaining Innovation

        Program / Indication                          Preclinical      Phase 1           Phase 2   Phase 3   NDA

         Lorcaserin
         Obesity

         APD125
         Insomnia

         APD791
         Arterial Thrombosis

         APD916
         Wakefulness Promoter

         Niacin Receptor
         Agonist                                                                   Merck
         Atherosclerosis

         GDIR Agonists
         Type 2 Diabetes
                                                                    Ortho-McNeil


         Cardioprotection
         Cytokine & immune cell modulators

         Pulmonary Arterial Hypertension                            Research Programs*
         Type 2 diabetes & obesity


* The table above does not list all of our research programs.


                                                                                                                   10
Over $1Billion Invested in Arena

  Date        Type                                          Amount raised
  07/97       Seed round                                    1.0M
  03/98       Seed round                                    2.2M
  12/98       Partner investment                            0.2M
  01/99       Venture round                                 17.0M
  01/00       Venture round                                 8.0M

  03/00       Venture round                                 12.8M
  04/00       Venture round                                 9.7M
  06/00       IPO                                           124.2M
  06/01       Follow-on                                     130.6M
  12/03       Preferred stock                               35.0M
  10/04       Partner investment                            7.5M
  02/05       Follow-on                                     51.8M
  04/05       Preferred stock                               11.5M
  01/06       Follow-on                                     179.8M
  03/06       Warrant exercise                              8.3M
  12/06       Follow-on                                     174.1M

  11/07       Follow-on                                     $109.0M


                                                     –   $65 million sale/leaseback of real estate
          –      $67.5 million from collaborations       (and other real estate transactions)
                 (as of 12/31/06)

                                                                                                     11
Arena Finances

For the Year Ended December 31, 2007
                                                         (in millions)

  Total Revenues                                          $19.3
  Expenses:
   Research and development                               149.5
   General and administrative                              26.6
   Amortization of acquired technology                      1.5
   Total operating expenses                               177.6
  Interest and other income, net                            15.1
  Dividends on redeemable convertible preferred stock      (2.1)
  Net loss allocable to common stockholders             $(145.3)


  Balance Sheet Data:
  Cash, cash equivalents and short-term investments      $398.2
  Total assets                                           $487.5
  Total stockholders’ equity                             $336.4


                                                                         12
Arena Finances

For the Six Months Ended June 30, 2008
                                                         (in millions)

  Total Revenues                                            $5.3
  Expenses:
   Cost of contract manufacturing                            4.6
   Research and development                                104.0
   General and administrative                               16.0
   Amortization of acquired technology                       0.8
   Total operating expenses                                125.4
  Interest and other income, net                              0.4
  Dividends on redeemable convertible preferred stock       (1.1)
  Net loss allocable to common stockholders             $(120.8)


  Balance Sheet Data:
  Cash, cash equivalents and short-term investments      $272.2
  Total assets                                           $407.2
  Total stockholders’ equity                             $231.2

                                                                         13
Reducing Our Environmental Footprint

•   Mandatory recycling
•   Minimization of all waste on all levels
     –   Water, energy, supplies, travel, furniture, hazardous materials use, everything!

•   Investment in rooftop solar array
•   Green Chemistry training
•   New 75,000 sq ft building
     –   Primarily office to free up space in other bldgs for R&D expansion and to ad capability for
         commercial and regulatory resource expansions – capacity for 200 employees
     –   New SDG&E standard for energy efficiency
            − Exceeds Title 24 energy efficiency standard by 30.9%
     –   LEED Gold Certification expected
     –   Permitting challenges overcome in unacceptable timeframe
     –   Waterless urinals and drought tolerant plantings
     –   Etc…

•   What’s next??




                                                                                                       14
15
Unintended Consequences of Good Intentions

• Land Use planning
• Water availability and reliability – mandatory cutbacks, how do
  we define process water??
• Environmental programs
    – ie/ bench top treatment to minimize risk

• Disproportionate regulatory burden vs other states and countries
• Duplicative and sometimes conflicting programs (federal, state,
  county, city)
• Healthcare Policy
    – Defining and measuring success
    – i.e. Obesity




                                                                     16
Obesity is a Serious Medical Threat


    >33%                       Percent of U.S. adults that are obese                                        (1)




    ~90%                       Percent of people with Type 2 diabetes that are overweight                                                                (2)




      300K                     U.S. annual deaths that may be attributable to obesity                                                              (3)




    ~18%                       Percent of cancer attributable to obesity                                           (4)




1. U.S. Department of Health and Human Services/CDC/NCHS, November 2007 Data Brief
(35.3% women, 33.3% men; 2005-2006)
2. The Obesity Society, 2008 Fact Sheet
3. United States Department of Health & Human Services, Office of the Surgeon General, Overweight and Obesity: Health Consequences, January 2007
4. Trust for America’s Health, F as in Fat: How Obesity Policies are Failing in America, 2008 (Approximately 20% in women and 15% in men)

                                                                                                                                                               17
    Obesity is a Major Economic Burden


           $123
                                    The annual economic cost of obesity in the U.S.                              (1)


           billion

            $50
                                    U.S. OTC market for weight-loss remedies and diets                                 (2)


           billion

             $4                     Obesity’s annual cost to U.S. employers due to absenteeism                               (3)


           billion

                                    Percent increase in medical costs accounted for by obesity
             27%                    from 1987-2001                      (4)




1. International Diabetes Federation, Diabetes Atlas 2005 (cost re-assessed in 2001)
2. I Melnikova, D Wages - Nature Reviews May 2006, Volume 5 (market estimated to be as much as $50 billion)
3. Wolf AM, Colditz GA - Obes Res 1998, Current estimates of the economic cost of obesity in the United States
4. K Thorpe et al. - Health Affairs 2005

                                                                                                                                   18
   Obesity: Limited Treatment Options

               “Among obese adults, just over 65% were ever told by a
                  health care provider that they were „overweight‟.”                      (1)




          • Lifestyle modification (nutrition, physical activity, behavior)
                  – Recommended for all obese patients
                  – Most are not able to sustain adequate changes

          • Pharmacotherapy
                  – Two currently approved drugs for chronic treatment
                  – Limited use - <3% obese population treated
                  – Low refill rates for currently approved drugs (3)
                      − Concerns regarding risk/benefit profile

          • Surgery
                  – Last resort: significant cost and medical risk
                  – Effective


1. CDC/NCHS, National Health & Nutrition Examination Survey 2005-2006 (American adults)

                                                                                                19
    Weight Loss Improves CV Risk Factors

                                                                                          5% - 10% Weight Loss
                              HbA1c           (1)
                                                                                                                  
                              Blood Pressure                          (2)
                                                                                                                  
                              Total Cholesterol                               (3)
                                                                                                                  
                              HDL Cholesterol                               (3)
                                                                                                                  
                              Triglycerides                     (4)
                                                                                                                  
                              T2 Diabetes                 (5)
                                                                                                                  
                              Risk of T2 Diabetes                                   (6)
                                                                                                                  
1. R Wing et al. - Arch Intern Med. 1987;147:1749-1753   4. H Ditschunheit et al. - Eur J Clin Nutr. 2002;56:264-270
2. I Mertens, L Van Gaal - Obes Res 2000;8:270-278       5. American Heart Association
                                                                                                                             Slide Source:www.obesityonline.org
3. G Blackburn - Obes Res 1995;3 (Suppl 2):211S-216S     6. “Diabetes Prevention Program” - N Engl J Med. 2002;346:393-403

                                                                                                                                                             20
Biotechnology was founded in
    California and is one of
   California's most valuable
             assets.




                                21

				
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