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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

Risks Relating to Securities Markets and Investment in Our Stock
 
There may not be a viable public market for our common stock.
 
Prior to this offering, there has been no public market for our common stock, and there can be no assurance that a regular trading market will develop and continue after this offering or that the market price of our common stock will not decline below the initial public offering price. The initial public offering price will be determined through negotiations between us and the representatives of the underwriters and may not be indicative of the market price of our common stock following this offering. Among the factors considered in such negotiations are prevailing market conditions, certain of our financial information, market valuations of other companies that we and the representatives of the underwriters believe to be comparable to us, estimates of our business potential, the present state of our development and other factors deemed relevant. See “Underwriting” for additional information.
 
As a new investor, you will experience immediate and substantial dilution in the net tangible book value of your shares.
 
The initial public offering price of our common stock in this offering is considerably more than the net tangible book value per share of our outstanding common stock. Investors purchasing shares of common stock in this offering will pay a price that substantially exceeds the value of our tangible assets after subtracting liabilities. As a result, investors will:
 
  •      incur immediate dilution of $8.17 per share, based on an assumed initial public offering price of $12.00 per share, the mid-point of the price range set forth on the cover page of this prospectus; and
 
  •      contribute 48.6% of the total amount invested to date to fund our company based on an assumed initial offering price to the public of $12.00 per share, the mid-point of the price range set forth on the cover page of this prospectus, but will own only 24.1% of the shares of common stock outstanding after the offering.
 
To the extent outstanding stock options are exercised, there will be further dilution to new investors.
 
We believe that our existing cash, cash equivalents and short-term investments, together with the borrowing capacity under our $17.0 million credit and security agreement with Merrill Lynch Capital, will be sufficient to meet our projected operating requirements through at least March 31, 2008. However, because we will need to raise additional capital to fund our clinical development programs, among other things, we may conduct substantial additional equity offerings. These future equity issuances, together with the exercise of outstanding options and any additional shares issued in connection with acquisitions, will result in further dilution to investors.
 
We expect that the price of our common stock will fluctuate substantially.
 
The initial public offering price for the shares of our common stock sold in this offering has been determined by negotiation between the representatives of the underwriters and us. This price may not reflect the market price of our common stock following this offering. The price of our common stock may decline. In addition, the market price of our common stock is likely to be highly volatile and may fluctuate substantially due to many factors, including:
 
  •      the results from our clinical trials, including our current and planned Phase III clinical trials for Contrave and our ongoing Phase II clinical trial for Empatic;
 
  •      FDA or international regulatory actions, including failure to receive regulatory approval for any of our product candidates;
 
  •      failure of any of our product candidates, if approved, to achieve commercial success;
 
  •      announcements of the introduction of new products by us or our competitors;


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