UNITED STATES

SECURITIES AND EXCHANGE
COMMISSION

Washington, D.C. 20549

SCHEDULE 13D

Item 4 is hereby amended to read in its entirety as follows:

Item 4.

Purpose of Transaction

The purposes of the transactions reported herein were (i) to reduce the Reporting Persons' holdings in Arena's Stock and (ii) to terminate the rights and standstill obligations of the Reporting Persons under the Stockholders Agreement with Arena entered into on January 17, 2003, as amended (the "Stockholders Agreement").

The Reporting Persons' sales of Arena Stock on July 8, 2004 reduced their holdings to less than 25% of what the Reporting Persons held on January 17, 2003, thereby terminating the Stockholders Agreement (except for a provision which prohibits the Reporting Persons from soliciting the employment of any officer or employee of Arena).  Accordingly, the Reporting Persons no longer have any rights or significant standstill obligations under the Stockholders Agreement.

The Stockholders Agreement required the Reporting Persons to adhere to certain time-limited standstill prohibitions, including a prohibition on any acquisitions of Stock or assets of Arena, a prohibition on the solicitation of proxies or the submission of shareholder proposals except as provided in the Stockholders Agreement, and a prohibition on engaging in any of the actions set forth in paragraphs (a) through (j) of Item 4 of Schedule 13D.  The Stockholders Agreement also required that the Stock beneficially owned by the Reporting Persons be voted in accordance with the recommendations of the Board of Directors with respect to nominees for election to the Board of Directors and certain stockholder proposals.  Pursuant to the Stockholders Agreement, the Reporting Persons were entitled to designate one representative to serve on Arena's Board of Directors and one representative to serve as a non-voting observer and participant in meetings of the Board of Directors.  As a result of the Reporting Persons' sales of Arena Stock on July 8, 2004, all of these provisions have been terminated.

The Reporting Persons review their investments on an ongoing basis.  Such continuing review may result in the Reporting Persons acquiring additional Stock, or selling all or a portion of their Stock, in the open market or in privately negotiated transactions with the Issuer or third parties or maintaining their holdings at current levels.  The Reporting Persons may provide constructive input regarding measures intended to maximize shareholder value and, consistent with the investment purpose, may engage in communications with one or more shareholders of the Issuer and/or one or more members of the board of directors, officers or representatives of the Issuer regarding the Issuer.  The Reporting Persons’ review of their investments and these activities may result in the Reporting Persons formulating plans or making proposals regarding actions set forth in Item 4 of Schedule 13D.  The Reporting Persons’ decision to acquire or dispose of Stock, hold Stock or take such other actions will depend on market, economic and other conditions, including an ongoing evaluation of the Issuer’s financial condition, operations and prospects, the actions of the Issuer’s management and the Board and other future developments, regulatory requirements and the relative attractiveness of alternative business and investment opportunities.  Such transactions or actions, if any, would be made at such times and in such manner as the Reporting Persons, in their discretion, deem advisable.

The Reporting Persons reserve the right to formulate plans or make proposals, and take such action with respect to their investment in the Issuer, including any or all of the items set forth in paragraphs (a) through (j) of Item 4 of Schedule 13D and any other actions, as they may determine. 

Item 5 is hereby amended to read in its entirety as follows:

Item 5.

Interest in Securities of the Issuer

(a)           BVF beneficially owns 554,889 shares of the Stock, BVF2 beneficially owns 361,884 shares of the Stock, Investments beneficially owns 994,851 shares of the Stock and each of Partners and BVF Inc. beneficially owns 1,911,624 shares of the Stock, representing approximately 2.2%, 1.4%, 3.9% and 7.5%, respectively, of the approximate aggregate number of shares of common stock outstanding as of April 30, 2004.

(b)           Each of BVF, BVF2 and Investments shares with Partners voting and dispositive power over the shares of the Stock each such entity beneficially owns. Partners and BVF Inc. share voting and dispositive power over the 1,911,624 shares of the Stock they beneficially own with, in addition to BVF, BVF2 and Investments, Investment 10, L.L.C., an Illinois limited liability company ("ILL10") and managed account on whose behalf Partners, as investment advisor, purchased such shares. ILL10 specializes in holding biotechnology stocks for investment purposes and its business address is 227 West Monroe Street, Suite 4800, Chicago, Illinois 60606.

(c)           On July 7, 2004, BVF sold 232,500 shares of the Stock, BVF2 sold 147,000 shares of the Stock, Investments sold 356,500 shares of the Stock and ILL10 sold 39,000 shares of the Stock.  Each such sale was made on the open market at a price of $5.10 per share.  Also on July 7, 2004, BVF sold 8,288 shares of the Stock, BVF2 sold 5,000 shares of the Stock, Investments sold 12,000 shares of the Stock and ILL10 sold 1,000 shares of the Stock.  Each such sale was made on the open market at a price of $5.20 per share.  On July 8, 2004, BVF sold 21,800 shares of the Stock, BVF2 sold 13,000 shares of the Stock, Investments sold 32,000 shares of the Stock and ILL10 sold 3,200 shares of the Stock.  Each such sale was made on the open market at a price of $5.00 per share.

(d)           ILL10 is entitled to receive dividends and any sale proceeds with respect to shares of the Stock in proportion to its respective ownership interest therein.

Item 6 is hereby amended to read in its entirety as follows:

Item 6.

Contracts, Arrangements, Understandings or Relationships with Respect to Securities of the Issuer

The Reporting Persons' sales of Arena Stock on July 8, 2004 reduced their holdings to less than 25% of what the Reporting Persons held on January 17, 2003, thereby terminating the Stockholders Agreement (except for a provision which prohibits the Reporting Persons from soliciting the employment of any officer or employee of Arena).  Accordingly, the Reporting Persons no longer have any rights or significant standstill obligations under the Stockholders Agreement.

The Stockholders Agreement required the Reporting Persons to adhere to certain time-limited standstill prohibitions, including a prohibition on any acquisitions of Stock or assets of Arena, a prohibition on the solicitation of proxies or the submission of shareholder proposals except as provided in the Stockholders Agreement, and a prohibition on engaging in any of the actions set forth in paragraphs (a) through (j) of Item 4 of Schedule 13D.  The Stockholders Agreement also required that the Stock beneficially owned by the Reporting Persons be voted in accordance with the recommendations of the Board of Directors with respect to nominees for election to the Board of Directors and certain stockholder proposals.  Pursuant to the Stockholders Agreement, the Reporting Persons were entitled to designate one representative to serve on Arena's Board of Directors and one representative to serve as a non-voting observer and participant in meetings of the Board of Directors.  As a result of the Reporting Persons' sales of Arena Stock on July 8, 2004, all of these provisions have been terminated.

Partners is the general partner of each of BVF and BVF2 pursuant to limited partnership agreements which authorize Partners, among other things, to invest the funds of BVF and BVF2 in shares of the Stock and to vote, exercise or convert and dispose of such shares. Pursuant to such limited partnership agreements, Partners is entitled to receive fees based on assets under management and allocations based on realized and unrealized gains on such assets. Pursuant to the operating agreement of Investments, Partners is authorized, among other things, to invest the

funds of Ziff Asset Management, L.P., the majority member of Investments, in shares of the Stock and to vote, exercise or convert and dispose of such shares and is entitled to receive fees based on assets under management and allocations based on realized and unrealized gains on such assets. Pursuant to an investment management agreement with ILL10, Partners and BVF Inc. have authority, among other things, to invest funds of ILL10 in shares of the Stock and to vote, exercise or convert and dispose of such shares. Pursuant to such investment management agreement, Partners and BVF Inc. receive fees based on assets under management and realized and unrealized gains thereon. BVF Inc. is the general partner of Partners and may be deemed to own beneficially securities over which Partners exercises voting and dispositive power.

Item 7.

Material to Be Filed as Exhibits

Exhibit 1 – Agreement Regarding Joint Filing

BIOTECHNOLOGY VALUE FUND, L.P.

By:

BVF Partners L.P., its general partner

By:

BVF Inc., its general partner

By:

/s/ Mark N. Lampert

Mark N. Lampert

President

BIOTECHNOLOGY VALUE FUND II, L.P.

By:

BVF Partners L.P., its general partner

By:

BVF Inc., its general partner

By:

/s/ Mark N. Lampert

Mark N. Lampert

President

BVF INVESTMENTS, L.L.C.

By:

BVF Partners L.P., its manager

By:

BVF Inc., its general partner

By:

/s/ Mark N. Lampert

Mark N. Lampert

President

BVF PARTNERS L.P.

By:

BVF Inc., its general partner

By:

/s/ Mark N. Lampert

Mark N. Lampert

President

BVF INC.

By:

/s/ Mark N. Lampert

Mark N. Lampert

President