By Kim Coghill

Washington Editor

Arena Pharmaceuticals Inc. filed with the Securities and Exchange Commission for a public offering of 5 million common shares, intending to sell 4 million shares on its own, with shareholders offering the rest.

At Monday¿s closing price (NASDAQ:ARNA) of $26.50, Arena¿s part of the offering would raise $106 million for the company, which gets nothing from the sale by shareholders, MPM Asset Management LLC, of San Francisco, and Tripos Inc., of St. Louis.

San Diego-based Arena said it will use the proceeds for general corporate purposes, including working capital, research and development and potential acquisitions, said Richard Burgoon, senior vice president, operations and general counsel. Burgoon said he is limited in the information he can release, due to SEC ¿quiet period¿ rules.

The offering is being handled by Thomas Weisel Partners, of San Francisco; Dain Rauscher Wessels, of San Francisco; and ABN Amro, of the Netherlands. The companies have an option to buy 750,000 more shares if the offering is over-subscribed, according to a statement released by the company.

Arena was incorporated in 1997 and currently employs 160. In its initial public offering last July, Arena raised $108 million through the sale of 6 million shares at $18 each. (See BioWorld Today, July 31, 2000.)

Arena¿s stock (NASDAQ:ARNA) closed Tuesday at $25.39, down $1.11 cents.

When this offering is complete, Arena will have 26.7 million outstanding shares. Arena¿s work centers on its proprietary constitutively activated receptor technology, which allows for ligand-independent identification of small-molecule regulators of G protein-coupled receptors, and seeks collaborations with other biotechnology or pharmaceutical companies to apply that technology.

In December, Arena acquired Dallas-based Bunsen Rush Laboratories Inc. for $15 million. Arena was interested in Bunsen¿s Melanophore technology, which identifies compounds that interact with cell-surface receptors, including known and orphan GPCRs and receptor tyrosine kinases, without fluorescent or radioactive screening techniques. (See BioWorld Today, Dec. 29, 2000.)

Arena also is involved in several collaborations, including one with Tokyo-based Taisho Pharmaceutical Ltd. This arrangement calls for Arena to license rights to its GPCR 18F, which Arena has evaluated in early animal studies, in return for an up-front payment, potential future milestone payments and full-time equivalent payments and royalties. Before its expansion, the deal had produced one GPCR accepted by Taisho and the milestone trigged an undisclosed payment to Arena. (See BioWorld Today, Feb. 1, 2001.)

Arena and Eli Lilly and Co., of Indianapolis, have a year-old research and license agreement under which Arena has already received milestone payments. The payments are based on acceptance of CART-activated versions of three G protein-coupled receptors by Lilly. The first receptors were selected by Lilly from the endocrine, cardiovascular and central nervous systems.

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