Arena Pharmaceuticals Inc. will eliminate about a quarter of
its U.S.
jobs as it tries to win approval for its obesity drug candidate lorcaserin.

Arena said it plans to cut 66 jobs by March 28. It expects
$3.8 million in one-time costs from the move, with most of the expenses coming
in the first quarter of 2011. The company said it will save $13.5 million a
year by eliminating the jobs.

The Food and Drug Administration refused to approve
lorcaserin in October, citing its limited effectiveness and concerns about
tumors when the drug was studied on rats. Arena said it met with the FDA in
December and is discussing the agency’s concerns. The company said it proposed
that five independent pathologists review the diagnosis of mammary masses in
female rats. It said the FDA accepted that proposal and work has started.

Arena said it is also trying to prove that the mammary
adenocarcinomas that were seen in rats are not relevant to any risk of tumors
in humans. The company said it believes lorcaserin elevates levels of the
hormone prolactin in rats, which led to the tumors. The FDA has recommended
that Arena run a yearlong study to determine if lorcaserin can cause mammary
tumors in rats by raising prolactin levels.

The third issue is the link between lorcaserin and a type of
brain tumor called astrocytomas, which was also observed in rats. Arena said it
hopes to prove that the drug is safe.

The company said the FDA is also concerned about the
potential that patients could abuse lorcaserin. It is planning two non-human
trials to provide additional safety information. Arena said it hopes to make a
new filing for marketing approval by the end of 2011.

Arena is a development stage company with no products on the
market. After eliminating the 66 jobs, Arena said it will focus its resources
on getting lorcaserin approved, finding marketing partners to sell the drug
outside the U.S.,
and advancing some of its other drug candidates. Those products include a
treatment for pulmonary arterial hypertension that is currently in early-stage
human trials, and a potential multiple sclerosis drug that is being tested on
animals. It plans to seek partners for other compounds.

Japanese drugmaker Eisai Co. has agreed to market lorcaserin
in the U.S.
if it is approved.

In aftermarket trading, Arena stock fell 19 cents, or 9.5
percent, to $1.81. The stock declined 3 cents to $2 during the day.