Orexigen Therapeutics Inc. (OREX) filed Quarterly Report for the period ended 2009-09-30.
OREXIGEN THERAPEUTICS INC. is a biopharmaceutical company focused on the development of pharmaceutical product candidates for the treatment of central nervous system disorders including obesity. The Company's lead combination product candidates targeted for obesity are Contrave which is in Phase III clinical trials and Empatic which is in the later stages of Phase II clinical development. Both product candidates are designed to take advantage of the Company's understanding of how the brain appears to regulate appetite and energy expenditure as well as the mechanisms that come into play to limit weight loss over time. Each product candidate is designed to act on a specific group of neurons in the central nervous system with the goal of achieving appetite suppression and sustained weight loss. Orexigen Therapeutics Inc. has a market cap of $309.3 million; its shares were traded at around $6.66 with and P/S ratio of 3514.1.
Highlight of Business Operations:
As of December 31, 2008, we had federal and state net operating loss carryforwards of approximately $172.5 million and $175.3 million, respectively. If not utilized, the net operating loss carryforwards will begin expiring in 2022 for federal purposes and 2012 for state purposes. As of December 31, 2008, we had federal and state research and development tax credit carryforwards of approximately $10.4 million and $7.9 million, respectively. The federal tax credits will begin expiring in 2023 unless previously utilized and the state tax credits carry forward indefinitely. Under Section 382 of the Internal Revenue Code of 1986, as amended, or the Internal Revenue Code, substantial changes in our ownership may limit the amount of net operating loss carryforwards that could be utilized annually in the future to offset taxable income. An analysis was performed which indicated that multiple ownership changes have occurred in previous years which created annual limitations on our ability to utilize our net operating loss and tax credit carryovers. Such limitations will result in approximately $900,000 of tax benefits related to net operating loss and tax credit carryforwards that will expire unused. Accordingly, the related net operating loss and research and development tax credit carryforwards have been removed from deferred tax assets accompanied by a corresponding reduction of the valuation allowance. Due to the existence of the valuation allowance, limitations created by future ownership changes, if any, will not impact our effective tax rate as long as we have a full valuation allowance on our deferred tax assets.
Research and Development Expenses. Research and development expenses decreased to $9.6 million for the three months ended September 30, 2009 from $21.5 million for the comparable period during 2008. This decrease of approximately $11.9 million was due primarily to a decrease in expenses in connection with our Contrave Phase 3 clinical trials, related proprietary product formulation work and consulting activities totaling approximately $12.9 million. The decrease in research and development expenses was partly offset by an increase in costs incurred in connection with the preparation for our NDA for Contrave of $600,000 and an increase in salaries and personnel related costs totaling approximately $345,000.
primarily to an increase in salaries and personnel related costs of approximately $581,000, an increase in legal and accounting fees of $226,000, an increase in recruiting expense of $150,000, an increase in facilities expenses of $89,000 and an increase in public relations costs of $83,000. The increase in general and administrative expenses was partly offset by a decrease in stock-based compensation expense of approximately $200,000.
Research and Development Expenses. Research and development expenses decreased to $38.6 million for the nine months ended September 30, 2009 from $61.7 million for the comparable period during 2008. This decrease of $23.1 million was due primarily to a decrease in expenses in connection with our Contrave Phase 3 clinical trials, related proprietary product formulation work and consulting activities totaling $28.7 million. The decrease in research and development expenses was partly offset by an increase in license fees of $2.5 million, an increase in salaries and personnel related costs totaling approximately $1.4 million and an increase in costs incurred in connection with the preparation for our NDA for Contrave of $1.4 million.
General and Administrative Expenses. General and administrative expenses increased to approximately $12.3 million for the nine months ended September 30, 2009 from approximately $11.0 million for the comparable period during 2008. This increase of approximately $1.3 million was due primarily to an increase in salaries and personnel related costs of approximately $1.3 million, an increase in recruiting expense of $387,000, an increase in public relations costs of $212,000, an increase in facilities expenses of $181,000, and an increase in depreciation expense of $113,000. The increase in general and administrative expenses was partly offset by a decrease in stock-based compensation expense of approximately $687,000 and a decrease in legal and accounting fees of approximately $252,000.
We have entered into license agreements to acquire the rights to develop and commercialize Contrave and Empatic. Pursuant to these agreements, we obtained exclusive and non-exclusive licenses to the patent rights and know-how for selected indications and territories. Under our license agreement with Duke University, we issued 442,624 shares of our common stock in March 2004 and may be required to make future milestone payments totaling up to $1.7 million upon the achievement of various milestones related to regulatory or commercial events. Under our license agreement with Lee Dante, M.D., we issued an option to purchase 73,448 shares of our common stock in April 2004 at an exercise price of $0.10 per share, which expires in April 2014. We also paid Dr. Dante an upfront fee of $100,000 and may be required to make future milestone payments totaling up to $1.0 million upon the achievement of a milestone related to a regulatory event. Under our license agreement with Oregon Health & Science University, we issued 76,315 shares of our common stock in December 2003 and paid an upfront fee of $65,000. Under these three agreements, we are also obligated to pay royalties on any net sales of the licensed products. Under our license agreement with SmithKline Beecham Corporation and Glaxo Group Limited, we paid an upfront payment and may be required to make a future milestone payment upon the earliest achievement of certain milestones primarily relating to regulatory or commercial events.
Rate This Article: |
  |