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SEC Filings

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

 
OREXIGEN THERAPEUTICS, INC.
(a development stage company)

NOTES TO FINANCIAL STATEMENTS — (Continued)

interest and all amounts outstanding under the credit and security agreement will become due and payable on the earlier of June 30, 2010 or three years after the last funding of any amounts under the agreement. Interest accrues on amounts outstanding at a base rate set forth in the agreement plus an applicable margin, which ranges from 3.75% to 4.25% based on the date of borrowing. The loan is collateralized by substantially all of the Company’s assets other than, subject to certain limited exceptions, intellectual property. Subject to certain limited exceptions, amounts prepaid under the credit and security agreement are subject to a prepayment fee equal to 3% of the amount prepaid. In addition, upon repayment of the total amounts borrowed for any reason, the Company will be required to pay an exit fee equal to the greater of $500,000 or 5% of the total amounts borrowed under the credit facility. Under the terms of the agreement, the Company is subject to operational covenants, including limitations on the Company’s ability to incur liens or additional debt, pay dividends, redeem stock, make specified investments and engage in merger, consolidation or asset sale transactions, among other restrictions. As of December 31, 2006, no amounts have been drawn under this agreement (See Note 11).
 
Included in other assets at December 31, 2006 is $682,816 related to costs incurred in connection with this credit and security agreement. This amount includes $500,000 which was earned by the lender upon the closing of the loan agreement and can be used to offset up to $500,000 of the exit fee, which is payable upon the earlier of repayment of amounts borrowed or termination of the agreement. These costs are being amortized to interest expense over the term of the credit and security agreement and such amortization totaled approximately $8,000 for the year ended December 31, 2006 and for the period from September 12, 2002 (inception) to December 31, 2006.
 
Operating Lease
 
In September 2006, the Company entered into a five-year operating lease for office facilities commencing on November 1, 2006. Monthly rental payments are adjusted on an annual basis and the lease expires in October 2011, with one option to renew for a three-year term on the same terms and conditions. As security for the lease, the landlord required a letter of credit for $125,000 through April 2009, at which time the security can be reduced to $70,000. The letter of credit is collateralized by a certificate of deposit in the same amount, which is included in restricted cash in the accompanying balance sheet at December 31, 2006. The Company cannot withdraw from the certificate of deposit until all obligations have been paid and the bank’s obligation to provide the letter of credit terminates. Rent expense is being recorded on a straight-line basis over the life of the lease.
 
Future minimum payments under this operating lease and a small equipment lease as of December 31, 2006 are as follows:
 
         
Years Ending December 31,
   
 
2007
  $ 202,151  
2008
    209,151  
2009
    216,151  
2010
    222,459  
2011
    188,000  
         
    $ 1,037,912  
         
 
Total rent expense for the years ended December 31, 2004, 2005 and 2006 and for the period from September 12, 2002 (inception) to December 31, 2006 was $23,135, $1,900, $59,552 and $91,288, respectively.


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