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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

 
OREXIGEN THERAPEUTICS, INC.
(a development stage company)

NOTES TO FINANCIAL STATEMENTS — (Continued)

of the Elan patent application, as well as damages and injunctive relief for copyright infringement, fraud, conversion, unjust enrichment, unfair and deceptive trade practices, and unfair competition. Duke also has filed a patent application on the invention at issue, which has been exclusively licensed to the Company. On January 30, 2006, without addressing the merits of the lawsuit, the court decided on jurisdictional grounds that it could not decide the inventorship issue and, therefore, dismissed the request for a declaratory judgment. The court stayed all other claims against Elan until the U.S. Patent and Trademark Office (“PTO”) resolves Duke’s request for interference between the Duke and Elan patent applications. The Company expects the PTO to decide the inventorship issue if an interference is declared.
 
On December 14, 2006, the Company, Elan, Eisai and the former Elan employee entered into a settlement agreement to settle the lawsuit. Upon execution of the settlement agreement, the lawsuit was dismissed with prejudice. Under the terms of the settlement agreement, the parties have, subject to limitations set forth in the settlement agreement, released each other from all claims and demands arising under the laws of the United States or any state within the United States existing as of the date of the settlement agreement that arise out of or relate to the lawsuit or the specified Duke and Eisai patent applications. The releases do not apply to the parties’ rights with respect to claims and demands outside the United States. In addition, each of Elan, Eisai and the former Elan employee have represented that they are not currently seeking and do not currently possess any patent rights in the United States relating to the use of zonisamide for the treatment of obesity or other weight-related disorders or conditions. In addition, Elan and the former Elan employee have agreed not to assert any such U.S. patent against the Company’s Empatic product, which contains zonisamide and bupropion to treat obesity, even if Eisai later obtains a U.S. patent containing a claim that encompasses the use of zonisamide as the sole active ingredient to treat obesity or other weight-related disorders or conditions that issues from or is based upon the Eisai patent application. Likewise, if Duke obtains a U.S. patent containing a claim that encompasses the use of zonisamide as the sole active ingredient to treat obesity or other weight-related disorders or conditions that issues from or is based upon the Duke patent application, the Company and Duke have agreed that the Company will not assert any such patent against Elan, Eisai or the former Elan employee for any conduct relating to Zonegran, which is a zonisamide product currently marketed by Eisai.
 
10.   Related Party Transactions
 
During the year ended December 31, 2003 and 2004, two of the Company’s stockholders, which are affiliated venture funds, loaned the Company $1,650,000 and $15,000, respectively. The notes were interest bearing at an annual rate of 6.25% and were due in January 2004. During January 2004, the notes, and accrued interest totaling $55,747, were converted into 1,458,259 shares of Series A Preferred Stock.
 
During the years ended December 31, 2004, 2005 and 2006 and for the period September 12, 2002 (inception) to December 31, 2006, the Company reimbursed a company, which is the general partner of the two venture fund stockholders, for expenses incurred on the Company’s behalf. These expenses, which included amounts for rent, totaled $27,535, $9,715, $28,454 and $193,649 for the years ended December 31, 2004, 2005 and 2006, and for the period September 12, 2002 (inception) to December 31, 2006, respectively. Rent expense paid under a month-to-month rental agreement to this company totaled $22,825, $1,900, $23,500 and $54,926 for the years ended December 31, 2004, 2005 and 2006 and for the period September 12, 2002 (inception) to December 31, 2006, respectively.
 
During August 2006, the Company entered into a sponsored research agreement with OHSU, one of the Company’s stockholders, for work conducted by the laboratory of Dr. Michael Cowley, an officer and employee of the Company. The agreement, which provides for payment by the Company to OHSU of up to approximately $847,500 over the 30 month term of the agreement, is primarily for the continuation of


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