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SEC Filings

S-1/A
OREXIGEN THERAPEUTICS, INC. filed this Form S-1/A on 04/09/2007
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Table of Contents

increased from $4.24 per share in April 2005 to $10.00 per share in September 2006 based on the estimated increase in valuation resulting from achieving the specific milestones outlined above.
 
We granted options in May 2005 at $0.60 per share, in May 2006 at $0.70 per share, in September 2006 at $2.00 per share and in November 2006 at $6.00 per share. Based upon the reassessment discussed above, we determined that the reassessed fair value of the options to purchase 1,113,396 shares of common stock granted to employees during May 2005 was $6.00 per share and the 262,944 options granted in May 2006 and 972,500 options granted to employees in September and November 2006 were at $7.00 and $10.00 per share, respectively.
 
In February 2007, based on additional clinical information, we increased the grant price for options granted in February 2007 to $10.72.
 
Equity instruments issued to non-employees are recorded at their fair value as determined in accordance with SFAS No. 123(R) and Emerging Issues Task Force 96-18, Accounting for Equity Instruments That are Issued to Other Than Employees for Acquiring, or in Conjunction with Selling Goods and Services, and are periodically revalued as the equity instruments vest and are recognized as expense over the related service period.
 
Results of Operations
 
Comparison of year ended December 31, 2006 to year ended December 31, 2005
 
Revenues.  Revenues for the year ended December 31, 2006 were $88,000 and were related to our sublicensed technology to Cypress. Revenues decreased $174,000 as a result of the completion of the collaborative agreement with Eli Lilly as of December 31, 2005. Cypress accounted for 34% and 100% of our revenue for the year ended December 31, 2005 and the year ended December 31, 2006, respectively. Eli Lilly accounted for 66% of our revenue for the year ended December 31, 2005.
 
Research and Development Expenses.  Research and development expenses increased to $22.6 million for the year ended December 31, 2006 from $9.7 million for the comparable period during 2005. This increase of $12.9 million was due primarily to increased expenses in connection with clinical trials and consulting expenses totaling approximately $12.5 million. The remaining increase is the result of increases in salaries and personnel related costs and stock-based compensation costs totaling approximately $1.1 million, offset by a decrease in licensing fees of approximately $560,000.
 
General and Administrative Expenses.  General and administrative expenses increased to $5.9 million for the year ended December 31, 2006 from $3.4 million for the comparable period during 2005. This increase of $2.5 million was primarily due to an increase in stock-based compensation costs of $751,000, and an increase in legal fees, salaries and personnel related costs, other professional fees, travel, and consulting fees totaling $1.3 million.
 
Interest and Other Income.  Interest income increased to $872,000 for the year ended December 2006 from $744,000 for the year ended December 31, 2005. This increase of $128,000 was due to the increase in average cash and investment balances as a result of investing the proceeds received from the sale of Series B preferred stock in May 2005 and higher interest rates in 2006.
 
Interest Expense.  Interest expense increased to $8,300 for the year ended December 31, 2006 primarily due to the amortization of debt issuance costs incurred in connection with the $17.0 million credit and security agreement with Merrill Lynch Capital.
 
Comparison of year ended December 31, 2005 to year ended December 31, 2004
 
Revenues.  Revenues for the year ended December 31, 2005 consisted of $88,000 resulting from a sublicensing of technology and $174,000 from amounts earned under a collaborative agreement. We received no revenues in prior years. During 2005, we sublicensed technology to Cypress for an upfront payment of $1.5 million and this amount is being recognized ratably over the estimated life of the patent. In addition, we recognized revenue of approximately $174,000 during the year ended December 31, 2005 related to a


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