and Basis of Presentation
Orexigen Therapeutics, Inc. (the Company), a
Delaware corporation, is a biopharmaceutical company focused on
the development and commercialization of pharmaceutical products
for the treatment of central nervous system disorders, with an
initial focus on obesity. The Company was incorporated on
September 12, 2002 and commenced operations in 2003.
The Companys primary activities since incorporation have
been organizational activities, including recruiting personnel,
conducting research and development, including clinical trials,
and raising capital. Since the Company has not yet begun
principal operations of commercializing a product candidate, the
Company is considered to be in the development stage. In
addition, the Company has experienced losses since its
inception, and as of December 31, 2006, had an accumulated
deficit of $49,168,000. The Company expects to continue to incur
losses for at least the next several years. Successful
transition to attaining profitable operations is dependent upon
achieving a level of revenues adequate to support the
Companys cost structure, and until that time, the Company
will continue to raise additional debt or equity financing.
Management believes that it has sufficient capital to fund
operations through at least December 31, 2007.
of Significant Accounting Policies
Pro Forma Stockholders Equity
The unaudited pro forma stockholders equity information in
the accompanying balance sheet assumes the conversion of the
outstanding shares of redeemable convertible preferred stock at
December 31, 2006 into 32,924,474 shares of common
stock as though the completion of the initial public offering
contemplated by the filing of this prospectus had occurred on
December 31, 2006. Common shares issued in such initial
public offering and any related estimated net proceeds are
excluded from such pro forma information.
The preparation of financial statements in conformity with
accounting principles generally accepted in the United States
requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenue and
expenses during the reporting period. Actual results could
differ from those estimates.
and Cash Equivalents
The Company considers all highly liquid investments with
maturities of three months or less from the date of purchase to
be cash equivalents.
Securities, Available-for Sale
The Company classifies all investment securities as
as the sale of such securities may be required prior to maturity
to implement management strategies. These investment securities
are carried at fair value, with unrealized gains and losses
reported as accumulated other comprehensive income (loss) until
realized. The cost of debt securities is adjusted for
amortization of premiums and accretion of discounts to maturity.
Such amortization and accretion, as well as interest and
dividends, are included in interest income. Realized gains and
losses from the sale of
securities, if any, are determined on a specific identification
basis and are also included in interest income.