Arena Pharmaceuticals, Inc has entered into an agreement with Deerfield Management, a leading healthcare investment organization and significant Arena stockholder, to provide Arena with $100 million in funding through a credit facility.

"We are pleased that Deerfield, a leader in healthcare investing, sees the potential of our business and that we have the opportunity to expand our relationship through this funding commitment," stated Jack Lief, Arena's president and chief executive officer. "This funding will put us in a stronger financial position as we complete the lorcaserin phase-3 pivotal programme and prepare its NDA submission while advancing our various partnering discussions for lorcaserin and our earlier-stage drug candidates."

Under the terms of the credit facility, Deerfield will provide Arena with $100 million within fifteen business days of signing. The closing is subject to customary closing conditions. Arena has agreed to pay Deerfield a transaction fee of 2.25 per cent at the time of funding. The outstanding principal accrues interest until maturity in June 2013 at a rate of 7.75 per cent per annum, payable quarterly, unless repaid earlier. The principal is required to be repaid as follows: 10 per cent at the end of the first year, 20 per cent at the end of the second year, 30 per cent at the end of the third year and the remainder at the end of the fourth year. At any time Arena may, at its option, redeem any or all of the notes at par and apply such redemption amount against this repayment schedule.

At the closing of the $100 million funding, Arena will issue Deerfield warrants for 28 million shares of its common stock with an exercise price of $5.42 per share.

During the next two years, Deerfield may elect to provide Arena with up to an additional $20 million under the same terms, with the additional funding also maturing in June 2013. For each additional $1 million in funding, Arena will issue Deerfield additional warrants for 280,000 shares of its common stock with an exercise price of $5.42 per share. All of the warrants issued pursuant to the credit facility expire on the facility's maturity date.

"We believe that safety is the single most important variable in the approval and broad usage of drugs for the diverse and growing overweight population. With thousands of patients studied chronically, lorcaserin appears unrivaled in this respect. The value of Arena, however, goes beyond this important drug candidate to the company's niacin receptor program with Merck, its diabetes program with Johnson & Johnson and its ability to discover, develop and partner additional compounds," commented Howard Furst, partner, Deerfield Management.

Piper Jaffray & Co served as the private placement agent to Arena on this transaction. Arena expects to file a Current Report on Form 8-K with the Securities and Exchange Commission that will contain a more detailed disclosure concerning this financing.

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.