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SEC Filings

S-1/A
OREXIGEN THERAPEUTICS, INC. filed this Form S-1/A on 02/16/2007
Entire Document
 
Table of Contents

 
OREXIGEN THERAPEUTICS, INC.
(a development stage company)

NOTES TO FINANCIAL STATEMENTS — (Continued)

ended December 31, 2006 was $2.38. The weighted average grant-date fair value of the options cancelled during the year ended December 31, 2006 was $0.30.
 
Common Stock Reserved for Future Issuance
 
Common stock reserved for future issuance consists of the following at December 31, 2006:
 
         
Conversion of preferred stock
    32,924,474  
Stock options issued and outstanding
    4,594,125  
Authorized for future option grants
    1,516,479  
         
      39,035,078  
         
 
8.   Income Taxes
 
Significant components of the Company’s deferred tax assets at December 31, 2005 and 2006 are shown below. A valuation allowance has been established as realization of such assets has not met the more likely than not threshold requirement under SFAS 109.
 
                 
    2005     2006  
 
Deferred tax assets:
               
Net operating loss carryforwards
  $ 7,406,360     $ 17,154,427  
Research and development credits
    1,277,163       3,325,800  
Deferred revenue
    575,238       539,285  
Other, net
    49,717       244,954  
                 
Total deferred tax assets
    9,308,478       21,264,466  
Less valuation allowance
    (9,308,478 )     (21,264,466 )
                 
    $     $  
                 
 
At December 31, 2006, the Company has federal and state net operating loss carryforwards of approximately $42,100,000 and $42,600,000, respectively. The federal and state loss carryforwards begin to expire in 2022 and 2012, respectively, unless previously utilized.
 
At December 31, 2006, the Company has federal and state research and development tax credit carryforwards of $2,200,000 and $1,700,000 respectively. The federal research and development tax credits begin to expire in 2023.
 
Utilization of the net operating loss carryforwards and credits may be subject to a substantial annual limitation due to the ownership change limitations provided by Section 382 of the Internal Revenue Code of 1986, as amended, and similar state provisions. The annual limitation may result in the expiration of net operating losses and credits before utilization.
 
9.   Litigation
 
On June 14, 2004, the Company and Duke jointly filed a lawsuit against Elan Corporation, plc, Elan Pharma International Ltd., Elan Pharmaceuticals, Inc. (collectively, “Elan”), Eisai, Inc., Eisai Co., Ltd. (together, “Eisai”) and a former employee of Elan to resolve a dispute over rights in an invention relating to the use of zonisamide to treat obesity. The Company and Duke allege that scientists at Duke made the invention, and that Elan improperly used information supplied by the scientists to file a patent application on the invention. The Company and Duke sought a declaratory judgment of correct inventorship and ownership


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