We are committed to maximizing the value of the promising drug candidates that have resulted from our novel drug discovery research. To that end, we carefully evaluate collaborative opportunities, seeking collaborations that have significant potential to build value and create returns for our investors.

Eisai Collaboration

In July 2010, our wholly owned subsidiary, Arena GmbH, entered into a marketing and supply agreement with Eisai Inc. Under this agreement, Arena GmbH granted Eisai exclusive rights to commercialize lorcaserin in the United States subject to FDA approval of the lorcaserin NDA. As part of the agreement, Arena GmbH will manufacture lorcaserin at our facility in Switzerland, and Eisai will purchase lorcaserin from Arena GmbH.

We received a non-refundable, upfront payment of $50.0 million from Eisai, and, following regulatory approval of lorcaserin and upon the delivery of product supply for launch, may receive up to an additional $60.0 million. We will sell lorcaserin to Eisai for a purchase price starting at 31.5% of Eisai’s annual net product sales, and the purchase price will increase on a tiered basis to 36.5% on the portion of annual net product sales exceeding $750.0 million. We are also eligible to receive up to an aggregate of approximately $1.2 billion in purchase price adjustment payments based on Eisai’s annual net sales of lorcaserin, with the first and last amounts payable with annual net sales of $250.0 million and $2.5 billion, respectively. Of these purchase price adjustment payments, Eisai is obligated to pay us a total of $330.0 million for annual net sales of up to $1.0 billion. We are also eligible to receive up to an additional $70.0 million in regulatory and development milestone payments.

Eisai and we will share equally the development expenses for the additional development work required by the FDA prior to approval of our NDA for lorcaserin. If the FDA requires development work following approval of lorcaserin, Eisai will bear 90% and we will bear 10% of such expenses, except that Eisai and we will share equally the costs of certain pediatric or adolescent studies.

Our drug candidates have not been approved by the U.S. Food and Drug Administration or any international regulatory agency.