2021 ESG REPORT - Arena Pharmaceuticals, Inc.
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2021 E SG RE PO RT
TAB LE O F CO NTE NTS
LETTER FROM OUR CEO 2
ABOUT US AND OUR APPROACH TO ESG 3
GOVERNANCE AND LEADERSHIP 4
GOVERNANCE OF ESG 4
BOARD DIVERSITY AND INDEPENDENCE 5
BUSINESS ETHICS AND COMPLIANCE 5
Ethical Research 6
Ethical Marketing 6
SUPPLY CHAIN MANAGEMENT AND HUMAN RIGHTS 7
Human Rights and Environmental Considerations 8
Oversight and Incident Response 8
THE ARENA TEAM 9
INCLUSION, DIVERSITY, AND EQUITY AT ARENA 10
EMPLOYEE TRAINING AND DEVELOPMENT 11
EMPLOYEE WELL-BEING, HEALTH, AND SAFETY 12
Benefits 12
Occupational Health and Safety 12
COVID-19 Response 12
SOCIAL RESPONSIBILITY 13
SAFETY OF CLINICAL TRIAL PARTICIPANTS 13
PATIENT ADVOCACY, ACCESS, AND AFFORDABILITY 14
Patient Advocacy 14
Access and Affordability 14
DRUG SAFETY 15
Counterfeit Drugs 16
CUSTOMER PRIVACY AND DATA SECURITY 16
CORPORATE PHILANTHROPY AND VOLUNTEERING 16
ENVIRONMENTAL MANAGEMENT 17
FRAMEWORKS AND STANDARDS 18
SUSTAINABILITY ACCOUNTING STANDARDS BOARD (SASB) 18
UNITED NATIONS SUSTAINABLE DEVELOPMENT GOALS (SDGS) 20
METHODOLOGY 21
FORWARD-LOOKING STATEMENTS 21
A R E N A P H A R M A C E U T I C A L S 2 0 21 E S G R E P O R T 1
LET TE R FRO M OU R CEO
Dear Stakeholders,
We are building a vibrant, sustainable enterprise with
the ultimate goal of delivering important medicines to
patients who need them. Ever mindful that this is not an
easy endeavor in an increasingly complex and challenging
external environment, our path requires a steadfast,
long-term commitment from our management team, our
employees, and our Board of Directors.
In building for the long term, we recognize that stewardship of resources;
measured management of risks and rewards; and a service-first approach to
our employees, patients, and the communities in which we operate are corner-
stones of our success. This updated ESG report, our second annual, outlines
our evolving approach to managing environmental and social risks and captur-
ing associated opportunities. It is another step in enhancing our disclosures
relative to the Environmental, Social, and Governance (ESG) factors most
relevant to the long-term growth and success of our business. We believe our
efforts here will result in a strategic advantage for Arena.
In late 2019, we articulated our corporate aspiration with the statement Care
More. Act Differently. This aspiration was designed to help guide our deci-
sion-making as we move from the clinical stage to the commercial stage as an
organization.
In 2020, I’m proud of how this mission was embodied in our response to the
global COVID-19 pandemic. We quickly acted to adapt our organization to the
impact; we continued to care and support each other and our communities;
and we are keeping an intense focus on the safety of the patients, nurses,
and physicians who participate in our ongoing clinical studies globally. As
an example, we established a support program to aid employees with chil-
dren learning from home. As we prepare for commercialization, we have also
engaged a broad range of stakeholders to understand how we might deliver
important medicines most effectively to the patients who need them.
Our Board of Directors and our whole team see our focus on ESG as a journey
of continuous improvement as we assess our approach, monitor our impact,
and build toward the future. We look forward to sharing our progress with you
in this report and over the years to come.
As we learn, we invite your feedback and ideas to ESG@arenapharm.com.
Amit D. Munshi
Director, President, and Chief Executive Officer
A R E N A P H A R M A C E U T I C A L S 2 0 21 E S G R E P O R T 2
ABOUT US AN D OU R APPROACH TO E SG
We are a biopharmaceutical company focused on delivering
novel, important medicines with optimized pharmacology
and pharmacokinetics to patients globally. Our internally
developed pipeline includes multiple potentially first- or
best-in-class assets with broad clinical utility. In a rapidly
changing global market, we work with a sense of urgency
every day to understand the needs of all our stakeholders,
identify bold and sometimes disruptive ideas to get medi-
cines to patients, and relentlessly execute until it’s done.
Our team has a singular purpose: to deliver important medicines to patients.
Our objective is to build a durable and sustainable global company to last for
generations through applying a multi-year horizon and delivering on our com-
mitment to our patients, community, environment, and shareholders.
We are committed to creating value for our shareholders through careful
management of resources against focused priorities. We strongly believe ESG
principles support long-term value creation, and throughout this report we
have laid out our approach to managing risks and taking advantage of oppor-
tunities in key ESG areas — the areas that are most relevant to the long-term
sustainability of our organization.
A R E N A P H A R M A C E U T I C A L S 2 0 21 E S G R E P O R T 3
G OVE RNAN CE AN D LE AD E RS H I P
GOVERNANCE OF ESG
We have clear oversight of ESG established at the Board level. The responsibilities of the
Corporate Governance and Nominating Committee include oversight and review of the
company’s ESG strategy, initiatives, and policies as well as communications about these
initiatives with employees, investors, and other stakeholders. The committee reports to the
Board on ESG matters.
We have also established the management-level ESG Working Group led by a member of our Investor Relations orga-
nization. This group is charged with developing, executing, and monitoring progress against ongoing strategies,
activities, and policies that advance our environmental and social capabilities.
Our 2021 annual corporate goals include ESG initiatives. These corporate goals will be used by the Compensation
Committee of our Board of Directors to evaluate executives’ performance and payments for 2021 under our Annual
Incentive Plan.
Board of Directors oversees all policies BOARD OF
and strategy. DIRECTORS
ESG oversight responsibility was
CORPORATE
added to the charter of the Corporate
AUDIT GOVERNANCE AND COMPENSATION
Governance and Nominating Committee;
COMMITTEE NOMINATING COMMITTEE
this committee oversees ESG initiatives
COMMITTEE
at the board level.
The Executive Team updates the
Corporate Governance and Nominating
Committee on the progress of the EXECUTIVE TEAM
ESG Working Group and oversees
their work.
The ESG Working Group is responsible
ESG WORKING EXTERNAL
for execution of the strategy and
GROUP STAKEHOLDERS
recommendations on how to improve.
KEY INTERNAL
Subject-matter experts are responsible
STAKEHOLDERS /
for implementation of their respective
SUBJECT-MATTER
areas.
EXPERTS
A R E N A P H A R M A C E U T I C A L S 2 0 21 E S G R E P O R T 4
BOARD DIVERSITY AND INDEPENDENCE We operate in a heavily regulated industry and are subject
to a variety of legal and ethical standards. We are com-
Our Board of Directors currently mitted to operating in compliance with these laws and
consists of ten directors, with 40% standards, and our compliance program is built on appli-
identifying as female. cable regulations and guidelines from relevant governing
agencies in the countries and regions where we operate,
It is our policy that at least two-thirds including the US Department of Justice, the Office of
of our Board members be independent Inspector General Compliance Program Guidance for
directors and that all of the Compensation Committee Pharmaceutical Manufacturers, and the UK Ministry of
members be independent directors. We separate the roles Justice’s adequate procedures.
of Chairperson of the Board and Chief Executive Officer,
with one of the independent directors appointed as Chair. Our policy is to comply with all laws applicable to
Director tenure varies from less than one year to more our business, including but not limited to healthcare
than 15 years. regulatory, employment and workplace, securities, envi-
ronmental, and antitrust laws and laws relating to corrupt
For more information about our Board, please see our practices, such as the US Foreign Corrupt Practices Act
latest proxy statement. (FCPA).
Our Global Compliance Program is a partnership with
BUSINESS ETHICS AND COMPLIANCE
business units and consists of six elements: leadership;
standards and controls, policies, and procedures; risk
Our enterprise-wide Compliance Committee oversees
assessment and mitigation; oversight: investigations,
policy governance, standards, and controls. It has
auditing, and monitoring; support and guidance; and train-
cross-functional representation, including representatives
ing and communication.
from committees across the organization that have a
compliance function or responsibility, such as the Quality
Management Committee. The Compliance Committee
meets quarterly, is chaired by the chief compliance officer,
and reports to the Executive Team and the Audit Commit-
tee of the Board on a regular basis.
GLOBAL COMPLIANCE PROGRAM AT ARENA — KEY AREAS AND FOCUS
STANDARDS
AND CONTROLS,
LEADERSHIP
POLICIES AND
PROCEDURES
PARTNERSHIP RISK
TRAINING AND PREVENTION ASSESSMENT
COMMUNICATION MITIGATION AND MITIGATION
OVERSIGHT:
SUPPORT AND INVESTIGATIONS,
GUIDANCE AUDITING AND
MONITORING
A R E N A P H A R M A C E U T I C A L S 2 0 21 E S G R E P O R T 5
More than simply complying with laws and regulations, we also strive to conduct our business with high ethical stan-
dards. Our Code of Business Conduct and Ethics (code of conduct) reflects the business practices and principles of
behavior that support this commitment. We expect every employee, officer, and director to read and understand our
code of conduct and abide by it. In addition, we expect our suppliers, business partners, and other third parties with
whom we conduct business to adhere to behavior consistent with the spirit of the code of conduct and applicable laws
and regulations when working on behalf of Arena.
TOPICS COVERED IN OUR CODE OF CONDUCT INCLUDE:
• Honest and Ethical Conduct • Fair Dealing
• Conducting Research with Integrity • Gifts and Entertainment
• Workplace Environment • Confidentiality
• Insider Trading • Environmental Compliance
• Conflicts of Interest • Political Contributions
Each employee annually goes through web-based code of conduct training, including an assessment and written
acknowledgment as well as separate anti-bribery training.
To help facilitate the reporting of concerns, we have established a third-party whistleblower hotline that our employees,
customers, vendors, and other third parties may use. The hotline is operated on our behalf by an independent firm,
and employees can submit complaints without fear of dismissal or retaliation and may make their submission anony-
mously. We also encourage feedback through “open-door” policies by leadership as well as anonymous pulse surveys.
Please see our Policy on Filing, Receipt, and Treatment of Complaints for additional information on the receipt and
treatment of reported concerns.
In 2020, Arena had no monetary losses as a result of legal proceedings associated with clinical trials in developing
countries or as a result of legal proceedings associated with corruption and bribery.
Ethical Research
We must comply with all applicable laws and regulations governing the research, manufacturing, testing, review and
approval, shipment, storage, labeling, promotion, sales, marketing, and destruction of pharmaceutical products, includ-
ing as set forth by the US Food and Drug Administration (FDA), the Drug Enforcement Administration (DEA), the Federal
Trade Commission (FTC), state and local authorities, and, where appropriate, international laws.
In conducting studies and clinical trials of pharmaceutical products, we comply with rules governing human subject
protection, animal welfare, and public disclosure of clinical trials. Our commitment to develop and manufacture safe
and effective products and legally and ethically promote their benefits to patients and their providers requires full com-
pliance with all laws and regulations governing research, development, manufacturing, and sale of products. All clinical
trials are monitored and reviewed by institutional review boards (IRBs) or ethics committees, as appropriate.
Our research is primarily conducted on our behalf by third parties, and as part of our vendor management, we expect
compliance with applicable laws and regulations.
Ethical Marketing
The FDA regulates communication of information about prescription drugs in the United States, and it prohibits the
promotion of investigational drugs. Non-promotional communication about investigational drugs, such as presen-
tations at conferences and medical information letters, must comply with guidelines issued by the FDA for such
A R E N A P H A R M A C E U T I C A L S 2 0 21 E S G R E P O R T 6purposes. Employee requirements for interactions with healthcare providers and organizations are specified in our
policies and procedures. In addition, the US federal healthcare program Anti-Kickback Statute and other similar inter-
national laws prohibit offering or giving anything of value to healthcare professionals or other persons with the intent
to influence or encourage the recipient to purchase, prescribe, or recommend any of our products. We are committed
to complying with these laws.
We are currently focused on research and development (i.e., pre-approval) activities and do not commercialize or mar-
ket any prescription drugs. Accordingly, we have comprehensive guidelines regarding communications and activities
for investigational drugs and investigational uses of approved drug products, and will be proactive about compliance
as we approach commercialization.
The Arena Medical, Legal, and Regulatory (MLR) Review Committee is a cross-functional committee consisting of rep-
resentatives from our medical, legal, and regulatory functions.
THE PURPOSE OF THE MLR RE VIE W COMMIT TEE IS TO:
• Review all promotional and educational materials
• Provide guidance and assistance in ensuring compliance with applicable statutes, regulations, guidance
documents, industry standards, and codes
• Ensure compliance with our internal policies and procedures
• Ensure all materials are approved prior to use
We also have a Publications Approval Committee, which provides final approval of all scientific publications in accor-
dance with our Scientific Publications Policy. The policy follows widely accepted external principles, including ICMJE,
and describes our practices for developing and publishing technical, scientific, and medical data and information in a
manner that ensures accuracy and completeness as well as ethical, transparent, and timely delivery. The policy covers
all scientific publications coming from Arena’s data-generating functions (e.g., research, non-clinical/clinical pharma-
cology, clinical development, medical affairs, health economics and outcomes research, commercial analytics) and all
employees and contractors in R&D, legal, and commercial analytics and dictates that all other data-generating func-
tions receive policy training.
SUPPLY CHAIN MANAGEMENT AND HUMAN RIGHTS
Arena engages contract manufacturing organizations (CMOs) to manufacture our investigational drug candidates.
We develop requests for proposals (RFPs) that include specific criteria that we consider when evaluating respondents
as part of our selection process. Selection criteria include equipment and staff capabilities, commercial production
capability, licenses and regulatory compliance history, environmental awareness, and compatibility with Arena quality
systems and philosophy. We perform site visits of CMOs under consideration as well as formal quality audits wherein
we assess systems, certifications, and processes before selecting a CMO as a partner.
In addition to scoring prospective vendor candidates across a variety of selection criteria, we thoroughly assess
company fit. At Arena, we view our external partners as part of our team and therefore take overall compatibility into
account in our selection process.
Because CMOs are critical to our business, our cross-functional selection process involves representatives from many
departments, including technical operations, quality, regulatory, finance, and legal. Once a proposed CMO partner is
vetted, it must still receive final approval by the Executive Team.
A R E N A P H A R M A C E U T I C A L S 2 0 21 E S G R E P O R T 7As per our Code of Conduct, purchases of products and services may only be made on the basis of quality, price, and
service and never on the basis of giving or receiving payments, gifts, entertainment, or favors.
CMO SELECTION PROCESS
CANDIDATE ID
RFP AND SCREENING
NEEDS AND FINALIST SITE SCORE AND
PROPOSAL CAPABILITIES
ASSESSMENT PRELIMINARY VISITS SELECT
REVIEW PRESENTATIONS
SCREEN
Because we view our external vendors and stakeholders as an extension of our business, we take the vendor man-
agement process very seriously. Following approval, we work diligently to establish and maintain not just a working
relationship but a true partnership with our vendors.
Our CMO vendor management process includes developing relationships with our vendors built on two-way communi-
cation and trust. We conduct weekly meetings with CMO vendors to review and discuss program progress and resolve
any operational issues, deviations, or trends. To calibrate investigation standards and expectations, we coordinate joint
training sessions between us and our vendors.
Prior to conduct of current good manufacturing practices (cGMP) activities, formal quality agreements are instituted
to clearly specify the roles and responsibilities of both us and the CMO vendor. These living documents may be altered
as the relationship matures to ensure our ongoing commitment to quality and practice of current industry standards.
We conduct in-person or virtual site visits where operations occur to continue on-site collaboration, perform peri-
odic virtual or on-site audits of facilities, and create annual audit plans. CMO vendor performance is evaluated with a
cadence appropriate for the stage of product development or commercialization. Audit findings are presented using a
risk-based scorecard, with feedback provided to the vendor based on the scorecard results.
Human Rights and Environmental Considerations
Throughout our engagement with manufacturing and other supply chain vendors, we monitor their environmental
impact as well as their commitment to human rights.
Our primary manufacturers are located within the US, Europe, and Canada, where human rights regulation tends to be
mature and enforced. Our Human Rights Policy addresses our support for the principles outlined in the United Nations’
Universal Declaration of Human Rights (UDHR) and Guiding Principles on Business and Human Rights. We strive to
uphold responsible human rights practices in all our business activities, including our supply chain.
The environmental impact of drug substances is considered in the CMO selection process, and we aim to select
vendors that have environmentally responsible procedures in place for both handling waste solvents and the chemical
composition of the substance itself. For instance, when choosing among catalysts, we select the more environmen-
tally friendly option. Our external partners are often established companies that support initiatives to enhance the
local community and protect the environment.
Oversight and Incident Response
The quality and technical operations departments have collective oversight over manufacturing and supply chain
vendor management, which includes any potential incidents within the supply chain. In the event an incident occurs,
we put together a formal Material Review Board (MRB) that involves subject-matter experts across quality, technical
operations, and the respective CMO. When conducting a technical investigation into a specific incident, we identify the
source of the problem and assess both the level of severity and any potential impacts on future patients or the general
quality of the product. Depending on severity, the incident could be raised to first the Executive Team and then the
Board. We also comply with any legal and regulatory requirements regarding quality reporting.
A R E N A P H A R M A C E U T I C A L S 2 0 21 E S G R E P O R T 8TH E ARE NA TE AM
Our leadership and employees are guided by our purpose — to deliver important medicines
and live by a simple statement that defines how we approach everything we do: Care More.
Act Differently. We are guided both by our purpose and through the lens of our values: Put
People First, Be Curious, Think Disruptive, and Be Daring.
PUT PEOPLE FIRST. BE CURIOUS.
We are more than the sum of our parts — we Change is rapid — we dig deeper, understand
take care of each other and revel in the journey. more, and build critical connections with all our
stakeholders.
THINK DISRUPTIVE. BE DARING.
We think big; craft bold, audacious plans; and We are relentless in our execution. We take
change the game. calculated risks. Every minute matters.
We actively seek to inspire and cultivate a vibrant, thriv- As of December 31, 2020, we employ 363 full- and part-
ing, and resilient culture that engenders a sense of time employees located primarily in our three hubs — San
purpose, community, connection, and gratitude. This all Diego, California; Boston, Massachusetts; and Zug, Swit-
operates within a framework of strong governance and zerland — as well as home-based employees across the
risk management. US and Europe. In addition to our employees, we engage
consultants, independent contractors, and temporary
Our human capital practices and commitments are incor- employees to provide flexibility in support of our business
porated into our annual corporate goals and corporate execution and objectives.
performance metrics. In 2021, we added a specific cor-
porate objective related to diversity, equity, and inclusion
(DEI) to our ESG initiatives.
ARENA OFFICE LOCATIONS— NUMBER OF EMPLOYEES
LOCATION TOTAL
BOSTON, MA 29
ZUG
SAN DIEGO, CA 252 BOSTON
SAN DIEGO
US-REMOTE: HOME-BASED 43
ZUG SWITZERLAND 39
GRAND TOTAL 363
A R E N A P H A R M A C E U T I C A L S 2 0 21 E S G R E P O R T 9INCLUSION, DIVERSITY, AND EQUITY meaningful diversity, equity, and inclusion topics and
AT ARENA activities.
Care More. Act Differently. is more than To frame this work, we are leveraging industry and
a tagline. It encompasses who we are geographical benchmarking to guide and measure our
as an organization. We strive to make progress. We will drive awareness and accountability
Arena a place where differences are by prioritizing diversity as part of our company goals.
valued and embraced so that employ- Actions include examination of our internal policies
ees can bring their whole authentic and practices, development of new programs such as
selves to work, thereby enabling the highest levels of peer mentoring and learning sessions, broadening our
contribution. recruiting efforts to ensure diverse candidate pools for
open roles and internships. We named a dedicated lead
A new cross-functional employee action committee, to spearhead our strategy and provide oversight of the
IDE@A (Inclusion, Diversity, and Equity at Arena), was IDE@A program. Additionally, as part of our education
charged with developing and driving our enterprise and academia outreach, we launched partnerships with
diversity and inclusion strategy. We are committed to various universities and organizations such as Charles R.
strengthening our diversity and inclusion initiatives Drew University of Medicine and Science, MANA de San
by promoting sharing, learning, and engagement in Diego, and minority student organizations at predomi-
nately white institutions.
ARENA EMPLOYEES ARENA EMPLOYEES
GLOBAL GENDER DIVERSITY (12/31/20) US ETHNIC DIVERSITY (12/31/20*)
28%
35%
57%
65% 3%
8%
1%
3%
GENDER TOTAL ETHNICITY AND RACE TOTAL
FEMALE 234 ASIAN 58
MALE 129 BLACK OR AFRICAN AMERICAN 6
GRAND TOTAL 363 HISPANIC OR LATINO 16
NATIVE HAWAIIAN OR OTHER PACIFIC ISLANDER 2
TWO OR MORE RACES (NOT HISPANIC OR LATINO) 7
WHITE 116
GRAND TOTAL 205
*63% of US employees self-reporting
FOR VICE PRESIDENTS AND ABOVE OUR TEAM IS 38% FEMALE AND 23% SELF-REPORT AS NON-CAUCASIAN.
1
Data as of March 2021
1
A R E N A P H A R M A C E U T I C A L S 2 0 21 E S G R E P O R T 10Arena is committed to ensuring its total rewards policies platform. LinkedIn Learning provides our employees with
and practices are fair and equitable, regardless of an a user-friendly platform of thousands of courses on a vast
individual employee’s gender, ethnicity, or age. We believe range of topics. Employees can access courses on any
this fair and equitable approach is vital to building and topic of interest at any time, including courses that pro-
maintaining a culture of organizational confidence and vide them with continuing education units to support their
trust. We also believe it is an essential element in recruit- professional accreditations. The talent development team
ing a diverse workforce and the best talent in the industry. also curates themed content and learning paths for the
To that end, every compensation decision is reviewed entire organization based on the insights we have gath-
by various members of the human capital team to ensure ered from employees, leaders, and members of the human
that implicit bias is not a factor in making human resources capital team regarding development needs.
decisions and that similarly situated employees across the
organization are treated fairly & equitably. This approach LinkedIn Learning was launched in January 2021, and the
is primarily applied to actions involving base salary, annual talent development team is launching learner engage-
bonuses, promotions, and long-term incentive awards. ments on a monthly basis. Within the first two months,
we surpassed the best-in-class account activation rate by
Employee Engagement nearly 100%, and we continue to see growth in on-demand
learning consumption. The talent development team is
Being proactive and creating a safe place for our employ- working to keep our learners engaged on the platform
ees to share feedback is part of our culture. We use pulse with featured content and supporting materials such as
surveys to gather feedback and are diligent about sharing individual development plan templates.
the insights with employees at All Staff meetings in order
to create two-way communication. We want all team LinkedIn Learning provides an excellent supplement to
members to know we are listening and genuinely care our previously existing function-specific and onboard-
about providing the best possible work environment and ing training. When new employees join the organization,
culture. We also have regular, global all-staff sessions our onboarding process ensures that they are provided
with open anonymous Q&A sessions to address current with information and training on multiple topics such as
issues and updates within the organization. information technology, environmental health and safety,
company information, corporate compliance, quality
EMPLOYEE TRAINING AND DEVELOPMENT assurance, and learning and development.
We know our success is anchored in The broader talent and organizational effectiveness team
our ability to recruit and retain talented, has also invested in the Korn Ferry Competency Profile
highly skilled team members. We are Manager platform to introduce research-based success
committed to actively providing all profiles, job descriptions, and interview guides into our
employees with developmental oppor- employee lifecycle. We utilize success profiles to generate
tunities that will help them continue to job descriptions and interview guides and support the
grow their capabilities and feel engaged in their career at hiring process. The use of success profiles directly sup-
Arena. In 2020, we established a talent development team ports strategic employee development and succession
to prioritize learning and development. The talent devel- planning, establishing a platform with immense potential
opment team is actively focusing on a holistic employee to enhance our talent practices in the years to come.
development strategy and ensuring that we have the
infrastructure in place to support it. To measure our ability to effectively recruit, develop, and
retain our talent, one metric we track is our voluntary turn-
As one example, we have provided accessible and on-de- over rate. As our organization grows, we’re getting closer
mand learning to all employees via the LinkedIn Learning to the industry average for turnover.
YEAR TOTAL EMPLOYEES VOLUNTARY TURNOVER RATE
2018 159 7.9%
2019 194 5.6%
2020 363 11.4%
A R E N A P H A R M A C E U T I C A L S 2 0 21 E S G R E P O R T 11EMPLOYEE WELL-BEING, HEALTH, work-life balance, we offer wellness programs, flexible
AND SAFETY no-meeting Fridays, and a work-from-home stipend.
Benefits To read more about our benefits, see our careers website.
We believe our employees should have a financial stake Occupational Health and Safety
in our company’s success to align their interests with
our shareholders’ interests. In that vein, we provide We are committed to providing a healthy and safe work
equity awards to all employees when they are hired and environment for our employees, partners, and consul-
additional annual grants to attract and retain a talented tants. Our Occupational Health and Safety (OH&S) Policy
workforce. Our employee stock purchase plan (ESPP) covers our OH&S practices. We have also adopted an
allows eligible employees to acquire an ownership inter- emergency action plan (EAP) that follows the guidelines
est at a discount. outlined by the Occupational Safety and Health Adminis-
tration (OSHA).
We offer a robust benefits package that includes medical,
dental, vision, and prescription drug coverage; employee All employees are required to comply with our policies
assistance; PTO and other flexible time off; retirement and practices on health and safety, including those
savings; and other benefit programs to enhance our outlined in the injury and illness prevention plan (IIPP).
employees’ well-being. We provide sick time, company New employee safety orientations are held regularly to
holidays, and two week-long paid breaks during summer ensure that new employees are aware of and comply with
and the week between Christmas and New Year’s. Our our health and safety policies and practices, including
three-month Paid Family Leave (PFL) Policy allows time the IIPP and all other applicable laws and regulations.
for new parents to bond with their child or to be a care- We plan to align with the ISO 45001 standards for OH&S
giver for a seriously ill family member. To further promote management systems.
OCCUPATIONAL HEALTH & SAFETY (OH&S) IN 2018, 2019, 2020
0
Reports of
.00
Recordable
.00
Near-Miss Rate
0
Employee Time Lost
0
OH&S Deaths
OH&S Issues Incident Rate for OH&S Issues
COVID-19 Response
As the pandemic started to unfold in early February 2020, we assembled a COVID-19 response team that included
executive leadership. We quickly moved to a work-from-home mandate and adopted a flexible work schedule. To allow
employees to work from home seamlessly, we provided the necessary technology and developed an internal advisory
committee to identify support opportunities for employees working from home and homeschooling children. Through-
out the year, we engaged employees through regular pulse surveys. In response to employee feedback and as part of
our commitment to supporting our employees and families in meaningful ways throughout the pandemic, we put in
place the following programs:
• Work-from-home stipend: Provided $25 per month for all employees whose jobs are not regularly remote
• Caregiver resources: Implemented Helpr caregiver support app for subsidized virtual academic assistance with
tutors and teachers and backup childcare support for families
• Biometrics: Offered multiple choices for administering biometrics, including home test kits, and multiple places
to get flu shots
Thus far we have been able to navigate the pandemic with focus, purpose, and compassion, resulting in strong produc-
tivity, high spirits and commitment, and a deepening of our cultural currency.
A R E N A P H A R M A C E U T I C A L S 2 0 21 E S G R E P O R T 12SOCIAL RE S PO N S I B I LIT Y
Arena is committed to using safer, smarter, and more sustainable business practices. We
look for innovative methods to improve patient and participant health, operate responsibly
for our stakeholders, and place safety and quality above all else.
SAFETY OF CLINICAL TRIAL are shifting to a risk-based monitoring strategy in which
PARTICIPANTS data related to quality, efficacy, and safety are prioritized
in their review. We comply with all relevant registration
We rely on external third parties to and results posting obligations required by laws and/or
execute our clinical trials and preclini- regulations.
cal studies. These third parties include
laboratories, clinical research orga- Ethical Standards
nizations (CROs), specialty vendors,
and manufacturers. We also engage To ensure the implementation of ethical clinical trials,
clinical trial sites and investigators to recruit clinical trial Arena refers to all guidance put forth by the Declaration of
participants. Our third-party vendor management and Helsinki and the International Council for Harmonisation
our clinical trials follow a portfolio of scientifically sound of Technical Requirements for Pharmaceuticals for
standard operating procedures (SOPs) that protects par- Human Use (ICH). Our research is performed by part-
ticipant safety above all. ners, and we require them to operate in accordance with
standard research practices established by the National
The FDA and other state and country regulatory agencies Institutes of Health (NIH).
impose substantial requirements for the preclinical devel-
opment, clinical development, and pre-marketing approval Diversity, Equity, and Inclusion within Clinical
of pharmaceutical products. Our clinical trials must sat- Trials
isfy extensive good clinical practices (GCPs) as set forth
by the FDA and must adhere to regulations for informed We consider a wide-ranging population for participation
consent and privacy of individually identifiable informa- in our clinical studies, using recruitment vendors, digital
tion. As the sponsor, we are responsible for ensuring that media, and participant advocacy groups. We recognize
each of our clinical trials is conducted in compliance with the importance of diversity and inclusion within clinical
these regulations and quality standards. trials, including to ensure results are translatable to the
broad population who may be prescribed the drug. We
Risk-Based Monitoring have launched a taskforce called Building Trust in the
Medical Establishment as part of our larger DEI initiative,
In partnership with our CROs and CMOs, we monitor every IDE@A. Throughout 2021, we will explore several avenues
clinical study on an ongoing basis, tracking every partici- to expand on our commitment to diversity within the
pant from entry into the study, throughout the duration of clinical environment, including increasing the number of
participation, and until discontinuation. This is achieved participants from diverse backgrounds, engaging ven-
through reviewing participant profiles, monitoring par- dors with databases specifically looking at diversity for
ticipant visits, and tracking any major or minor protocol participant referrals, and expanding our work with patient
deviations. We ensure all clinical study-mandated assess- advocacy programs.
ments are performed according to the highest levels of
safety protocols. Additionally, some of our clinical teams
A R E N A P H A R M A C E U T I C A L S 2 0 21 E S G R E P O R T 13PATIENT ADVOCACY, ACCESS, AND Access and Affordability
AFFORDABILITY
Although we are still in the clinical development stage for
Patient Advocacy all of our therapies, Arena believes patients need better
access to high-quality and affordable medicines. We
Arena supports strive to improve health outcomes globally with goals of
patient advocacy at delivering important and affordable medicines to those
all levels. Our advo- in need. For more details on this policy, please see our
cacy platform, Arena Commitment to Access to Medicines Policy.
of Care, launched in early 2020 and is focused on collabo-
rating with external organizations to create vibrant futures As a pharmaceutical company with lots of growth ahead
for patients around the world through programming and of us, we are proud of our innovative thinking in influenc-
educational opportunities. Our Arena of Care Patient ing the quality of care patients receive. We have launched
Council in Inflammatory Bowel Disease (IBD) represents several key projects and partnerships with health sys-
a diverse group of people who live with IBD. Diversity is tems, pharmacy benefit managers (PBMs), and large
a critical component we consider when assessing mem- organizations supporting both physician and patient
bership to the council. We recognize the lack of equity in advocacy in the ulcerative colitis community. These
access to healthcare and do our best to involve a range of partnerships will help us identify high-risk or undertreated
patients in the conversation, especially those who may be patient populations, design risk-sharing agreements, and
underserved. Our inaugural Arena of Care Patient Council reduce total cost of care. As a core foundation, we are
builds on this idea, with members expressing their desire building a platform that is value-based and incorporates
to work collaboratively and across advocacy groups to the impact of a drug in an innovative way.
identify and develop outreach for under-represented, vul-
nerable populations with unique cultural considerations. As we look to the future, we plan on utilizing artificial
As community leaders, they are facilitators and con- intelligence (AI) to deepen the understanding of the
nectors to patient populations and can be leveraged to causal relationships with risk factors and cost drivers in
provide and share insightful peer information to execute ulcerative colitis patients. Understanding this relationship
actionable initiatives. will allow us to build value-based pricing and contracting
strategies.
Lyfebulb Partnership
We’ve also launched a multi-stakeholder consortium
We are especially proud of our work with an organization to address concerns and challenges facing innovative
called Lyfebulb, which hosts an Innovation Challenge that treatments for inflammatory bowel disease (IBD). Our
is open to patient entrepreneurs with a goal of creating framework for advance payment and risk sharing models
solutions beyond therapy to help address challenges and is positioning us as a thought leader in this space. We will
improve experiences for people affected by a particu- address how to assess the efficacy, value, cost, benefit,
lar disease. Through the Innovation Challenge, patients and sustainability of technologies in the health system
themselves provide ideas for innovation within the care to develop a shared value framework for IBD across
and treatment of their own disease. Arena helps fund stakeholders.
the innovations that result from the Lyfebulb Innovation
Challenge, demonstrating our commitment to and support We are also involved with integrated delivery net-
of our patients and their ideas. We are reimagining how to works (IDNs) and actively participate in market access
work in service of our patients, which starts with listening conferences.
and learning from those whose lives are most affected.
A R E N A P H A R M A C E U T I C A L S 2 0 21 E S G R E P O R T 14DRUG SAFETY
We are currently focused on research and development activities and do not commercialize or market any prescription
drug products. We follow the guidelines for communications about investigational drugs, which prohibit the promotion
of an investigational drug prior to FDA approval.
We and our collaborators are subject to significant governmental regulation. We have a quality department and a
quality management system along with mandatory training on SOPs across the company to help us meet extensive US
and foreign regulations focused on quality and safety. More specifically, the processes set forth by the International
Council for Harmonisation of Technical Requirements for Pharmaceuticals for Human Use (ICH) and the FDA guide
everything we do, including safety monitoring for any adverse events and complying with reporting requirements.
The quality department’s role is first and foremost patient safety. We protect patients by assuring compliance and
oversight in three areas of good practice (GxP) governed by various regulations:
1. 2. 3.
GOOD L ABOR ATORY GOOD CLINICAL CURRENT GOOD
PR ACTICE (GLP) PR ACTICE (GCP) MANUFACTURING
PR ACTICE (CGMP)
A quality system intended to A standard for the design,
assure the quality and integrity of conduct, performance, monitoring, The quality system that ensures
non-clinical laboratory studies. auditing, recording, analyses, and products are consistently produced
GLP guidelines regulate the reporting of clinical studies that and controlled in accordance with
organization, workflow, and provides assurance that the data the quality standards appropriate to
conditions under which non-clinical and reported results are credible their intended use.
health and environmental safety and accurate and that the rights,
studies are planned, performed, integrity, and confidentiality of
monitored, recorded, reported, study participants are protected.
and archived. The aim of GLP is to
improve the quality and reliability of
test data.
While we do not currently commercialize or market any prescription drug products, we are building out capabilities
and processes to do so in the near term, continuing to place quality and product safety at the forefront. Our intent is
compliance with both national and international regulatory requirements and ensuring robust product recall, product
complaint, and customer request capabilities.
Our quality department manages oversight of GxPs and is organized in four distinct teams:
QA LEADERSHIP TEAM
VICE PRESIDENT
OF
QUALITY
ASSURANCE
COMPUTER
GCP/GLP QUALITY GMP
SYSTEMS
COMPLIANCE SYSTEMS COMPLIANCE
VALIDATION (CSV)
A R E N A P H A R M A C E U T I C A L S 2 0 21 E S G R E P O R T 15Counterfeit Drugs We have mandatory cybersecurity training for all new
employees as well as a quarterly training program for all
Although Arena is not currently at the commercializa- employees. We have also implemented phishing testing
tion stage, we are already taking steps to implement across the organization to further increase employee
anti-counterfeiting measures throughout our operations. cybersecurity awareness.
The contract manufacturing organizations (CMOs) we
work with are equipped to provide globally compliant seri- In 2021, we are moving forward with our plan to align with
alization codes to track commercial product and protect the HITRUST framework, which has established controls
against counterfeiting activity. We recognize that industry that align to the globally recognized frameworks men-
standards and trends in this area are constantly evolving tioned above. We will work with an external vendor to
and will continue to monitor best practices. evaluate our security posture with respect to the HITRUST
framework.
CUSTOMER PRIVACY AND DATA
SECURITY CORPORATE PHILANTHROPY AND
VOLUNTEERING
We are committed to maintaining the highest levels of
data security within our operational systems. To help We focus our philanthropic and employee volunteer pro-
manage our risk profile, we have placed oversight of gram primarily on partnerships with local stakeholders to
cybersecurity and data protection with the full Board of promote disease awareness.
Directors.
For several years we have collaborated with the Crohn’s
In our approach to IT risk management, we leverage a & Colitis Foundation to host Crohn’s & Colitis Awareness
combination of leading industry frameworks such as the Week and participate in the Take Steps campaign in
International Organization for Standardization (ISO), the support of combating Crohn’s and ulcerative colitis. In
National Institute of Standards and Technology (NIST), 2020, Team Arena had more than 50 employee partici-
and Control Objectives for Information and Related pants across two virtual events and raised over $17,000 in
Technologies (COBIT). We have established policies and donations. On the national level, we participate in Crohn’s
procedural approaches based on these frameworks to & Colitis Foundation meetings and discussions on how to
maintain the security, confidentiality, and integrity of our improve the patient experience.
information assets. Specifically, we employ a combina-
tion of anti-malware threat prevention, device encryption, In 2020, we announced the launch of the annual Arena of
multi-factor authentication, vulnerability scans, regular CareTM Award in Inflammatory Bowel Disease (IBD) —a
penetration testing, annual reviews, and continuous pro- global competitive grant opportunity offered to 501(c)
cess improvement to mitigate IT risk. (3) or similarly credentialed non-profit organizations to
fund novel programs addressing unmet need in the IBD
We have in place a Global IT Security and Compliance community.
Policy and have also adopted a European Data Protection
Policy that complies with the European Union’s General We have a charitable matching program where, several
Data Protection Regulation (GDPR). times each year, we highlight and endorse up to three
charities nominated by our employees for special spon-
Our vice president of information technology updates sorship and match employee donations of up to $150,
the Board and the Audit Committee on the organization’s in addition to our regular employee-matching program.
cybersecurity risk profile on an annual basis. We con- In 2020, we specifically supported organizations that
tinue to make improvements to our data security posture, focused on COVID-19 relief efforts.
including optimizing security incident and event manage-
ment tools and overall detection processes. Our Incident
Response Policy includes an escalation process up to and
including the board.
A R E N A P H A R M A C E U T I C A L S 2 0 21 E S G R E P O R T 16E NVI RO N M E NTAL MANAG E M E NT
Our mindset is “think globally, act locally” when it comes to promoting environmental sus-
tainability within our own operations. We recognize the environmental risks associated with
our operations both locally and globally and are in the process of implementing environmen-
tal management programs to mitigate such risks in the key areas of energy, water, waste, and
pharmaceuticals in the environment.
Energy Facilities
Our main San Diego, California, building features a roof- Arena performed major improvements to its facilities in
top solar array with expected monthly energy production the last 18 months, including:
of 25,000 kWh. We utilize a building automation system
(BAS) to reduce cooling and heating, which decreases • Efficient systems furniture, with more ergonomic task
energy usage by up to 30%. We have also implemented seating
LED lighting throughout the facility, reducing energy con- • LowVOC paint and high-performance flooring (LVP, tile,
sumption by about 20%. carpeting)
• Motion-controlled lighting sensors and improved HVAC
Water controls
• Better AV solutions (low energy-emitting LCD screens
In 2020, our total water consumption at the San Diego versus plasma screens)
location was 97,240 gallons, representing a 95% decrease • MERV 14 filters to help minimize airborne transmission
from 2019, primarily driven by the work-from-home pol- of particulates in our air transmission systems
icy implemented in March at the start of the COVID-19 (recommended by the EPA and CDC)
pandemic.
As our team and our offices expand, we will continue to
Waste incorporate environmental considerations within our site
selection process. These include locations near ameni-
We do not generate or handle any biowaste, with the ties, lower operating costs for better energy management,
exception of a small lab on our San Diego campus oper- certified green or LEED buildings, access to open space,
ated by a tenant. For this facility, we carry and are in and shorter commute times for staff.
compliance with the requisite California hazardous waste
permit.
PERFORMANCE METRICS 2018 2019 2020
Natural Gas (Therms) 16,462 21,155 13,800
Electricity (MWh) 1,144 1,328 726
Scope 1 Emissions (MtCO2e) 87 275 53
Scope 2 Emissions (MtCO2e) 275 319 160
Total Emissions (MtCO2e) 362 594 213
Our 2021 goals include devising a comprehensive plan for our facilities organization, which will include decommission-
ing equipment and improving building performance, establishing a design standard for all our campuses incorporating
sustainable design and environmentally safe practices, and installing electric vehicle chargers at our San Diego
location.
A R E N A P H A R M A C E U T I C A L S 2 0 21 E S G R E P O R T 17FR AM E WO RK S AN D STAN DARDS
SUSTAINABILITY ACCOUNTING STANDARDS BOARD (SASB)
We leveraged the accounting standards for the biotechnology and pharmaceuticals industry
from the Sustainability Accounting Standards Board (SASB) to help develop and prioritize
areas for inclusion in our ESG report. The table of SASB accounting metrics below includes
references to sections within this report where specific topics are discussed.
TOPIC ACCOUNTING METRIC SASB CODE SECTION
Discussion, by world region, of management process for
HC-BP-210a.1
ensuring quality and patient safety during clinical trials
Number of FDA sponsor inspections related to clinical
Safety of Clinical
trial management and pharmacovigilance that resulted
Safety of Clinical HC-BP-210a.2 Trial Participants;
in Voluntary Action Indicated (VAI) and Official Action
Trial Participants Business Ethics and
Indicated (OAI)
Compliance
Total amount of monetary losses as a result of legal
proceedings associated with clinical trials in developing HC-BP-210a.3
countries
Description of actions and initiatives to promote access
to healthcare products for priority diseases and in priority HC-BP-240a.1
countries as defined by the Access to Medicine Index Patient Advocacy,
Access to Medicines Access, and
List of products on the WHO List of Prequalified Medicinal Affordability
Products as part of its Prequalification of Medicines HC-BP-240a.2
Programme (PQP)
Number of settlements of abbreviated new drug
application (ANDA) litigation that involved payments and/
HC-BP-240b.1
or provisions to delay bringing an authorized generic
product to market for a defined time period
Patient Advocacy,
Affordability and
Percentage change in average list price and average net Access, and
Pricing
price across US product portfolio compared to previous HC-BP-240b.2 Affordability
year
Percentage change in list price and net price of product
HC-BP-240b.3
with largest increase compared to previous year
List of products in the FDA’s MedWatch Safety Alerts for
HC-BP-250a.1
Human Medical Products database
Number of fatalities associated with products as reported
HC-BP-250a.2
in the FDA Adverse Event Reporting System
Number of recalls issued and total units recalled HC-BP-250a.3
Drug Safety Drug Safety
Total amount of product accepted for take-back, reuse, or
HC-BP-250a.4
disposal
Number of FDA enforcement actions taken in response
to violations of current good manufacturing practices HC-BP-250a.5
(cGMPs), by type
A R E N A P H A R M A C E U T I C A L S 2 0 21 E S G R E P O R T 18TOPIC ACCOUNTING METRIC SASB CODE SECTION
Description of methods and technologies used to maintain
traceability of products throughout the supply chain and HC-BP-260a.1
prevent counterfeiting
Discussion of process for alerting customers and business
Counterfeit Drugs Counterfeit Drugs
partners of potential or known risks associated with HC-BP-260a.2
counterfeit products
Number of actions that led to raids, seizure, arrests, and/or
HC-BP-260a.3
filing of criminal charges related to counterfeit products
Total amount of monetary losses as a result of legal
HC-BP-270a.1
proceedings associated with false marketing claims
Ethical Marketing Ethical Marketing
Description of code of ethics governing promotion of off-
HC-BP-270a.2
label use of products
Discussion of talent recruitment and retention efforts for
Employee HC-BP-330a.1
scientists and research and development personnel
Recruitment, Employee Training
Development, and Voluntary and involuntary turnover rate for executives and and Development
Retention senior managers, mid-level managers, professionals, and HC-BP-330a.2
all others
Percentage of (1) entity's facilities and (2) Tier I suppliers'
facilities participating in the Rx-360 International Supply Chain
Supply Chain
Pharmaceutical Supply Chain Consortium audit program HC-BP-430a.1 Management and
Management
or equivalent third-party audit programs for integrity of Human Rights
supply chain and ingredients
Total amount of monetary losses as a result of legal
HC-BP-510a.1
proceedings associated with corruption and bribery Business Ethics and
Business Ethics
Description of code of ethics governing interactions with Compliance
HC-BP-510a.2
health care professionals
A R E N A P H A R M A C E U T I C A L S 2 0 21 E S G R E P O R T 19UNITED NATIONS SUSTAINABLE DEVELOPMENT GOALS (SDGS)
We are aligning our activities with the United Nations Sustainable Development Goals (SDGs). The goals were estab-
lished in 2015 by world leaders to end poverty, protect the planet, and seek to ensure prosperity for all. As a result of
our review, we have determined that our current activities most closely align with the following SDGs:
RELEVANT SDG ARENA RATIONALE/ALIGNMENT LOCATION IN ESG REPORT
Goal 3: Good Health and Our purpose is simple — deliver important Patient Advocacy, Access,
Well-Being medicines to patients who need them. We and Affordability
embody the essence of this SDG to ensure
Full Description:
healthy lives through our patient advocacy
Ensure healthy lives and
platform and partnerships that help us identify
promote well-being for all at
high-risk or undertreated patient populations.
all ages
Goal 5: Gender Equality At Arena, we value diverse perspectives at Board Diversity and
all levels of our organization and ensure that Independence; Inclusion,
Full description:
starts with our leadership. There are four Diversity, and Equity at
Achieve gender equality and
female members on our Board of Directors, Arena
empower all women and girls
and over 60% of our total workforce is
female. We continue to take steps to advance
equity and foster a culture of inclusion and
belonging.
Goal 8: Decent Work and We are committed to investing in the Employee Training and
Economic Growth leadership and growth of all members of the Development
Arena family. Our talent development team
Full description:
specifically focuses on delivering learning
Promote sustained, inclusive,
and developmental opportunities such as an
and sustainable economic
extensive online learning platform that helps
growth; full and productive
employees feel engaged in their career at
employment; and decent work
Arena.
for all
Goal 9: Industry, Innovation, Enhancing scientific research and Patient Advocacy, Access,
and Infrastructure encouraging innovation is central to our and Affordability; Safety of
mission. Our innovative thinking is notably Clinical Trial Participants
Full description:
demonstrated in the execution of our
Build resilient infrastructure,
clinical trials and in several key projects and
promote inclusive and
partnerships that influence the quality of care
sustainable industrialization,
patients receive. We also plan on utilizing
and foster innovation
artificial intelligence (AI) in our ongoing work
with ulcerative colitis.
A R E N A P H A R M A C E U T I C A L S 2 0 21 E S G R E P O R T 20M ETH O D O LOGY In preparation of publishing this report, we engaged a third-party consultant to conduct a thorough ESG disclosure audit and peer benchmarking assessment to expand disclosure beyond our 2020 inaugural ESG report. We relied upon the SASB to help us understand the areas that may be of most relevance to our US investors, and we also engaged with shareholders to identify their key ESG priorities. We referred broadly to the Global Reporting Initiative (GRI) and aligned our impact with the United Nations Sustainable Development Goals (SDGs). FORWARD-LOOKING STATEMENTS This ESG report includes forward-looking statements that involve a number of risks and uncertainties — including statements about our investigative-stage drug candidates, plans, focus, goals, strategy, timelines, suppliers, partners, collaborators, and licensees and other statements that are not historical facts, which may include words such as “can,” “may,” “will,” “intend,” “plan,” “expect,” “believe,” “potential,” “opportunity,” “strive to,” or other similar words. For such statements, we claim the protection of the Private Securities Litigation Reform Act of 1995. Actual events or results may differ materially from expectations, and you are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the time they were made. Factors that could cause actual results to differ materi- ally from such statements are disclosed in our Securities and Exchange Commission (SEC) filings, including under the heading “Risk Factors.” We disclaim any intent or obligation to update these forward-looking statements other than as may be required under applicable law. A R E N A P H A R M A C E U T I C A L S 2 0 21 E S G R E P O R T 21
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