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OREXIGEN THERAPEUTICS, INC. filed this Form 8-K on 09/05/2018
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EX-99.1

Case 18-10518-KG     Doc 708     Filed 08/30/18     Page 1 of 11

 

Exhibit 99.1

Docket #0708 Date Filed: 08/30/2018

UNITED STATES BANKRUPTCY COURT

FOR THE DISTRICT OF DELAWARE

 

In re: Orexigen Therapeutics, Inc.

Debtor

  

Case No. 18-10518 (KG)

Reporting Period: July 1, 2018 - July 31, 2018

MONTHLY OPERATING REPORT

File with Court and submit copy to United States Trustee within 20 days after end of month.

Submit copy of report to any official committee appointed in the case.

 

REQUIRED DOCUMENTS

   Form No.      Document
Attached
     Explanation
Attached
     Affidavit/Supplement
Attached
 

Schedule of Cash Receipts and Disbursements

     MOR-1        X        

Schedule of Disbursements by Debtor Entity

     MOR-1a        X        

Schedule of Debtor Bank Account Balances

     MOR-1b        X        

Schedule of Professional Fees and Expenses Paid

     MOR-1c        X        

Copies of bank statements

              Certification Attached  

Cash disbursements journals

              Certification Attached  

Bank reconciliation

              Certification Attached  

Statement of Operations

     MOR-2        X        

Balance Sheet

     MOR-3        X        

Status of Postpetition Taxes

              Certification Attached  

Copies of IRS Form 6123 or payment receipt

              Certification Attached  

Copies of tax returns filed during reporting period

              Certification Attached  

Summary of Unpaid Postpetition Debts

           

Summary of Unpaid Post Petition Accounts Payables

     MOR-4        X        

Accounts Receivable Aging

     MOR-5        X        

Debtor Questionnaire

     MOR-5        X        

I declare under penalty of perjury (28 U.S.C. Section 1746) that this report and the attached documents are true and correct to the best of my knowledge and belief.

 

/s/ Thomas P. Lynch

   

29 August 2018

Signature of Authorized Individual*     Date

/s/ Thomas P. Lynch

   

Chief Administrative Officer & General Counsel

Printed Name of Authorized Individual     Title of Authorized Individual

 

*

Authorized individual must be an officer, director or shareholder if debtor is a corporation; a partner if debtor is a partnership; a manager or member if debtor is a limited liability company.

Notes:

 

The last four digits of Debtor’s federal tax identification number are (8822). The Debtor’s mailing address for purposes of this chapter 11 case is 3344 North Torrey Pines Court, Suite 200, La Jolla, CA, 92037.

 

LOGO

 


Case 18-10518-KG     Doc 708     Filed 08/30/18     Page 2 of 11

 

UNITED STATES BANKRUPTCY COURT

FOR THE DISTRICT OF DELAWARE

 

In re: Orexigen Therapeutics, Inc.    Case No. 18-10518 (KG)
Debtor    Reporting Period: July 1, 2018 - July 31, 2018

CERTIFICATION REGARDING POST-PETITION BANK ACCOUNT

RECONCILIATIONS, CASH DISBURSEMENT JOURNALS AND

COMPLIANCE AND PAYMENT OF POST-PETITION TAXES

I, Thomas Lynch, Chief Administrative Officer & General Counsel, of Orexigen Therapeutics, Inc. (the “Debtor”) hereby certify the following:

1. Attached to MOR-1 is a listing of the Debtor’s bank accounts, by account number, and the opening and closing balances. These accounts are reconciled monthly in accordance with the Debtor’s ordinary course accounting practices and are available to the United States Trustee upon request.

2. Cash disbursement journals are maintained in accordance with the Debtor’s ordinary course accounting practices and are available to the United States Trustee upon request.

3. To the best of my knowledge and belief, the Debtor is current on all post-petition taxes, and no post-petition tax amounts are past due.

 

/s/ Thomas P. Lynch

   

29 August 2018

Thomas Lynch     Date
Chief Administrative Officer & General Counsel    

 


Case 18-10518-KG     Doc 708     Filed 08/30/18     Page 3 of 11

 

UNITED STATES BANKRUPTCY COURT

FOR THE DISTRICT OF DELAWARE

 

In re: Orexigen Therapeutics, Inc.    Case No. 18-10518 (KG)
Debtor    Reporting Period: July 1, 2018 - July 31, 2018

Notes to Monthly Operating Report

Debtor in Possession Financial Statements

The financial statements and supplemental information presented in this Monthly Operating Report (“MOR”) have been prepared using the Debtor’s books and records solely to comply with the monthly reporting requirements under the United States Bankruptcy Code and those of the United States Trustee for Region Three.

The financial statements and supplemental information presented herein are unaudited, preliminary in nature, and may not comply with generally accepted accounting principles in the United States of America (“U.S. GAAP”) in all material respects. These preliminary unaudited financial statements and other information represent the Debtor’s good faith attempt to comply with the requirements of the United States Bankruptcy Code and those of the United States Trustee using the resources available. This information is limited in scope to the requirements of this report.

These preliminary unaudited financial statements have not been subject to procedures that would typically be applied to financial information presented in accordance with U.S. GAAP, and upon application of such procedures, the Debtor believes that the financial information could be subject to changes, which could be material. Certain totals may not sum due to rounding.

All related tax implications are not currently reflected in the preliminary unaudited financial statements herein. The financial impact of potential tax and other adjustments on the accompanying preliminary unaudited financial statements cannot be determined at this time.

There may be adjustments to the opening balance sheet as of March 12, 2018 that will impact these accompanying preliminary unaudited financial statements. ASC 805 permits a one-year measurement period in which the opening balance sheet can be adjusted if additional information becomes available.

Liabilities Subject to Compromise

As a result of the commencement of the Debtor’s chapter 11 case, the payment of certain prepetition indebtedness of the Debtor is subject to compromise or other treatment under a plan of reorganization.

Reorganization Items

ASC 852 requires expenses and income directly associated with the Debtor’s chapter 11 cases to be reported separately in the income statement as reorganization items. Reorganization items include expenses related to legal advisory and representation services, and other professional consulting and advisory services. Reorganization costs also include adjustment to record debt at the estimated amount of the claim and an estimate of the loss on sale of assets which is pending a valuation.

Litigation

The Debtor is subject to lawsuits and claims that arise out of its operations in the normal course of business.

Prior to the petition date, the Debtor was the defendant to various legal proceedings, described in detail in the most recent publicly filed financial statements, which are stayed during the course of the chapter 11 bankruptcy proceedings.

There are uncertainties inherent in any litigation and appeal and the Debtor cannot predict the outcome. At this time the Debtor is unable to estimate possible losses or ranges of losses that may result from such legal proceedings described in detail in the most recent publicly filed financial statements, and it has not accrued any amounts in connection with such legal proceedings in the financial statements herein, other than attorney’s fees accrued prior to the petition date.

Sale Transaction

On April 23, 2018, the Debtor entered into an asset purchase agreement with Nalpropion Pharmaceuticals, Inc. (the “Buyer”) for the sale of substantially all of its assets through section 363 of the Bankruptcy Code. This transaction was subsequently approved by the Bankruptcy Court on June 28, 2018. On July 27, 2018, the Debtor closed the sale and transferred substantially all of its assets to the Buyer. As part of the sale, the Debtor entered into a transition services agreement for the post-closing period through the effective date of a Plan of Liquidation. The Debtors are currently in discussions with their stakeholders to develop and file a Plan of Liquidation in the near term.

 


Case 18-10518-KG     Doc 708     Filed 08/30/18     Page 4 of 11

 

In re: Orexigen Therapeutics, Inc.    Case No. 18-10518 (KG)
Debtor    Reporting Period: July 1, 2018 - July 31, 2018

MOR - 1

Consolidated Schedule of Cash Receipts and Disbursements (1)

For the Period: July 1, 2018 - July 31, 2018

(Unaudited)

 

           Cumulative  

$ USD ‘000s

   July 1, 2018 - July 31, 2018     Since Filing  

Beginning Cash Balance (Book)

   $ 15,618     $ 21,372  

Receipts

    

Operating Receipts

     15,690       64,422  

Miscellaneous Receipts

     68,809       69,062  
  

 

 

   

 

 

 

Total Receipts

     84,499       133,484  

Operating Disbursements

    

Payroll & Benefits / Contractors

     (6,754     (15,642

Inventory

     (995     (4,406

Manufacturing and Logistics

     (13     (133

Gross to Net Disbursements

     (6,921     (36,451

Marketing / Commercial Operations

     (502     (15,973

Ordinary Course Professionals

     (139     (637

Rent / Facilities / Equipment

     (139     (556

Insurance

     (51     (279

IT / Utilities

     (56     (298

Regulatory and Compliance

     (170     (555

Other G&A

     (241     (898
  

 

 

   

 

 

 

Total Operating Disbursements

     (15,980     (75,829

Operating Cash Flow

     68,519       57,656  

Reorganization Costs

    

DIP Loan Interest and Fees

     (43,754     (44,480

US Trustee Fees

     (250     (371

Restructuring Professional Fees

     (2,465     (3,564
  

 

 

   

 

 

 

Total Reorganization Costs

     (46,469     (48,415

Total Disbursements

   $ (62,448   $ (124,243
  

 

 

   

 

 

 

Lender Professional Fees

     (794     (1,339

Net Cash Flow

   $ 21,256     $ 7,902  

DIP Draw - Cash

     —         7,600  
  

 

 

   

 

 

 

Ending Cash Balance (Book)

   $ 36,874     $ 36,874  

Notes:

 

(1)

The Schedule of Cash Receipts and Disbursements is presented on a book basis.

 


Case 18-10518-KG     Doc 708     Filed 08/30/18     Page 5 of 11

 

In re: Orexigen Therapeutics, Inc.    Case No. 18-10518 (KG)
Debtor    Reporting Period: July 1, 2018 - July 31, 2018

MOR - 1a

Schedule of Disbursements by Debtor Entity (1)

For the Period: July 1, 2018 - July 31, 2018

(Unaudited)

 

$ USD ‘000s           Cumulative  

Debtor

   July 1, 2018 - July 31, 2018      Since Filing  

Orexigen Therapeutics, Inc.

   $ 63,242      $ 125,582  
  

 

 

    

 

 

 

Total

   $ 63,242      $ 125,582  

Notes:

 

(1) The Schedule of Disbursements is presented on a book basis.

 


Case 18-10518-KG     Doc 708     Filed 08/30/18     Page 6 of 11

 

In re: Orexigen Therapeutics, Inc.    Case No. 18-10518 (KG)
Debtor    Reporting Period: July 1, 2018 - July 31, 2018

MOR - 1b

Schedule of Debtor Bank Account Balances (1)

For the Period: July 1, 2018 - July 31, 2018

(Unaudited)

 

                      Beginning      Ending  
$ USD ‘000s         Last Four Digits           Balance      Balance  

Debtor

  

Bank

   Account No.     

Account Description

   7/1/2018      7/31/2018  

Orexigen Therapeutics, Inc.

   Silicon Valley Bank      6813      General checking    $ 190      $ —    

Orexigen Therapeutics, Inc.

   Silicon Valley Bank      1180      Zero-balance lockbox      —          —    

Orexigen Therapeutics, Inc.

   Silicon Valley Bank      3036      Sweep account      15,434        36,981  

Orexigen Therapeutics, Inc.

   Silicon Valley Bank      7307      Utility adequate assurance      10        10  

Orexigen Therapeutics, Inc.

   Silicon Valley Bank      5177      Collateral      100        100  

Orexigen Therapeutics, Inc.

   U.S. Bank      4219      Investment account(2)      —          —    

Orexigen Therapeutics, Inc.

   State Street Bank & Trust      2355      Investment account(2)      —          —    

Orexigen Therapeutics, Inc.

   Wells Fargo      3348      Foreign wire transfer account(2)      —          —    

Orexigen Therapeutics, Inc.

   JMP Securities LLC      0041      Investment account(2)      —          —    
           

 

 

    

 

 

 

Total Bank Account Balances

            $ 15,734      $ 37,091  
           

 

 

    

 

 

 

Notes:

 

(1)

The Consolidated Schedule of Cash Receipts and Disbursements (MOR-1) and Schedule of Disbursements by Debtor Entity (MOR-1a) represent book balances while MOR-1b represents bank balances. The balances differ primarily due to the bank’s delayed recording of intrabank activity between the general checking and sweep accounts.

(2)

Account was closed in April 2018.

 


Case 18-10518-KG     Doc 708     Filed 08/30/18     Page 7 of 11

 

In re: Orexigen Therapeutics, Inc.    Case No. 18-10518 (KG)
Debtor    Reporting Period: July 1, 2018 - July 31, 2018

MOR - 1c

Schedule of Professional Fees and Expenses Paid

For the Period: July 1, 2018 - July 31, 2018

(Unaudited)

 

                             Month Ended 7/31/18      Cumulative Since Filing  

Payee

  

Category

  

Payor

   Date      Period Covered      Fees      Expenses      Fees      Expenses  

Retained Professionals

                       

Hogan Lovells US LLP

   Debtor Counsel    Orexigen Therapeutics, Inc.      7/13/2018        3/12/2018 - 5/31/2018      $ 772,558      $ 5,727      $ 1,035,364      $ 5,834  

Morris, Nichols, Arsht & Tunnell LLP

   Debtor Local Counsel    Orexigen Therapeutics, Inc.      7/17/2018        3/12/2018 - 5/31/2018        249,988        9,802        342,651        14,812  

Ernst & Young, LLP

   Debtor Financial Advisor    Orexigen Therapeutics, Inc.      7/17/2018        3/12/2018 - 5/31/2018        876,132        113,520        876,132        113,520  

Perella Weinberg Partners

   Debtor Investment Banker    Orexigen Therapeutics, Inc.      7/6/2018        3/12/2018 - 5/31/2018        59,213        1,808        496,713        3,546  

Irell & Manella LLP

   Committee Counsel    Orexigen Therapeutics, Inc.      7/19/2018        3/27/2018 - 4/30/2018        326,130        337        326,130        337  

Elliott Greenleaf, P.C.

   Committee Local Counsel    Orexigen Therapeutics, Inc.      7/19/2018        3/27/2018 - 4/30/2018        49,332        466        49,332        466  

Kurtzman Carson Consultants LLC

   Claims Agent    Orexigen Therapeutics, Inc.      6/20/2018        3/12/2018 - 5/31/2018        —          —          143,705        155,188  

Other Restructuring Professionals

                       

Wilmington Trust, National Association

   DIP Administrative Agent    Orexigen Therapeutics, Inc.      7/5/2018        3/12/2018 - 7/31/2018      $ 1,600      $ —        $ 51,600      $ —    

Arnold & Porter Kaye Scholer LLP

   DIP Administrative Agent Counsel    Orexigen Therapeutics, Inc.      7/27/2018        3/12/2018 - 7/27/2018        64,672        935        131,889        1,034  

Quinn Emanuel Urquhart & Sullivan, LLP

   DIP Lenders Counsel    Orexigen Therapeutics, Inc.      7/27/2018        3/12/2018 - 7/27/2018        507,802        11,904        680,648        12,140  

Brown Rudnick LLP

   DIP Lender Counsel    Orexigen Therapeutics, Inc.      7/27/2018        2/15/2018 - 5/31/2018        12,168        —          147,048        1,497  

Whiteford Taylor Preston

   DIP Lenders Local Counsel    Orexigen Therapeutics, Inc.      7/27/2018        3/12/2018 - 7/27/2018        74,164        758        203,253        2,141  

U.S. Bank, N.A.

   Indenture Trustee    Orexigen Therapeutics, Inc.      7/13/2018        3/1/2018 - 5/31/2018        102,433        —          139,645        443  

Duane Morris

   DIP Administrative Agent Secondary Counsel    Orexigen Therapeutics, Inc.      7/27/2018        4/10/2018 - 7/27/2018        17,609        —          17,609        —    
              

 

 

    

 

 

    

 

 

    

 

 

 

Total

               $ 3,113,800      $ 145,257      $ 4,641,718      $ 310,956  

 


Case 18-10518-KG     Doc 708     Filed 08/30/18     Page 8 of 11

 

In re: Orexigen Therapeutics, Inc.    Case No. 18-10518 (KG)
Debtor    Reporting Period: July 1, 2018 - July 31, 2018

MOR - 2

Statement of Operations

For the Period: July 1, 2018 - July 31, 2018

(Unaudited)

 

$ USD ‘000s

   July 1, 2018 - July 31, 2018     March 12 - July 31, 2018  

Net product sales

   $ 2,894     $ 27,871  

Cost of product sales

     (729     (6,336

Operating expenses:

    

Research and development

     (300     (2,666

Selling, general and administrative

     (3,366     (32,189

Amortization expense of intangible assets

     (576     (2,987
  

 

 

   

 

 

 

Total operating expenses

     (4,242     (37,842
  

 

 

   

 

 

 

Loss from operations

     (2,078 )      (16,308 ) 

Other income/(expense):

    

Interest income

     142       683  

Refundable tax credit(2)

     —         1,300  

Interest expense

     (128     (728
  

 

 

   

 

 

 

Total other income (expenses)

     13       1,255  
  

 

 

   

 

 

 

Net loss

     (2,064     (15,053

Reorganization expenses (1)

     (134,527     (312,816
  

 

 

   

 

 

 

Net loss

   $ (136,591   $ (327,869
  

 

 

   

 

 

 

Notes:

 

(1)

Reorganization expenses include the loss on sale of assets as well as the write up of the notes to the principle balance, the elimination of the debt discount and debt costs related to the 2013 debt. The loss on sale of assets is not final and pending the completion of a valuation of the non-debtor subsidiaries.

(2)

Refundable tax credit includes refundable alternative minimum tax as created by the Tax Cuts and Jobs Act.

 


Case 18-10518-KG     Doc 708     Filed 08/30/18     Page 9 of 11

 

In re: Orexigen Therapeutics, Inc.    Case No. 18-10518 (KG)
Debtor    Reporting Period: July 1, 2018 - July 31, 2018

MOR - 3

Balance Sheet

(Unaudited)

 

     Orexigen Therapeutics, Inc.  

$ USD ‘000s

   As of March 11,
2018
     As of July 31,
2018
 

Assets

     

Current assets:

     

Cash and cash equivalents

   $ 21,372      $ 36,874  

Accounts receivable, net

     19,203        —    

Inventory

     8,857        —    

Prepaid expenses and other current assets

     6,868        9,441  

Intercompany receivable(1)

     93,353        —    
  

 

 

    

 

 

 

Total current assets

     149,653        46,315  

Non-current assets:

     

Property and equipment, net

     543        —    

Investment in Subsidiary(1)

     19,000        —    

Intangible assets

     66,566        —    

Other long-term assets

     588        1,643  

Restricted cash

     100        110  
  

 

 

    

 

 

 

Total assets

   $ 236,450      $ 48,069  
  

 

 

    

 

 

 

Liabilities and Stockholders’ Equity

     

Current liabilities:

     

Accounts payable (2)

     925        2,013  

DIP loan

     —          —    

Accrued expenses

     3,921        9,359  
  

 

 

    

 

 

 

Total current liabilities:

     4,846        11,372  
  

 

 

    

 

 

 

Total liabilities not subject to compromise

     4,846        11,372  

Total liabilities subject to compromise

     110,381        245,423  

Series Z preferred stock

     3,343        —    

Stockholders’ equity (deficit)

     117,880        (208,727
  

 

 

    

 

 

 

Total liabilities and stockholders’ equity (deficit)

   $ 236,450      $ 48,069  
  

 

 

    

 

 

 

Notes:

 

(1)

Investment in Subsidiary $19m reclassed from Intercompany Receivable at March 11, 2018 to properly align for reporting.

(2)

Accounts payable excludes all liabilities assumed by the purchaser under the terms of the Asset Purchase Agreement.

 


Case 18-10518-KG     Doc 708     Filed 08/30/18     Page 10 of 11

 

In re: Orexigen Therapeutics, Inc.    Case No. 18-10518 (KG)
Debtor    Reporting Period: July 1, 2018 - July 31, 2018

MOR-4

Summary of Unpaid Post Petition Accounts Payables

As of July 31, 2018

(Unaudited)

 

$ USD ‘000s                                          
     Number of Days Past Due  
Post Petition Accounts Payable Aging    Current      0-30      31-60      61-90      Over 90      Total  

Post-Petition Accounts Payable (1)

   $ 1,775      $ 238      $ —        $ —        $ —        $ 2,013  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 
   $ 1,775      $ 238      $ —        $ —        $ —        $ 2,013  

Notes:

 

(1)

The above figures represent post petition trade payables recorded in the Debtors’ subledger.

 


Case 18-10518-KG     Doc 708     Filed 08/30/18     Page 11 of 11

 

In re: Orexigen Therapeutics, Inc.    Case No. 18-10518 (KG)
Debtor    Reporting Period: July 1, 2018 - July 31, 2018

MOR-5

Accounts Receivable Aging

As of July 31, 2018

(Unaudited)

 

$ USD ‘000s                                          
Accounts Receivable Aging    Current      0-30 Days      31-60 Days      61-90 Days      91 Days +      Total  

Accounts Receivable, net

   $ —        $ —        $ —        $ —        $ —        $ —    
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 
   $ —        $ —        $ —        $ —        $ —        $ —    

Debtor Questionnaire

 

Must be completed each month

   Yes      No  

1.

   Have any assets been sold or transferred outside the normal course of business this reporting period? If yes, provide an explanation below.(1)      X     

2.

   Have any funds been disbursed from any account other than a debtor in possession account this reporting period? If yes, provide an explanation below.         X  

3.

   Have all post petition tax returns been timely filed? If no, provide an explanation below.      X     

4.

   Are workers compensation, general liability and other necessary insurance coverages in effect? If no, provide an explanation below.(2)      X     

5.

   Has any bank account been opened during the reporting period? If yes, provide documentation identifying the opened account(s). If an investment account has been opened provide the required documentation pursuant to the Delaware Local Rule 4001-3.         X  

Notes:

 

(1)

The 363 sales transaction of substantially all Debtor assets closed on July 27, 2018. See Docket #0438 for the Order approving the sale to Nalpropion Pharmaceuticals, Inc.

(2)

The Debtor received a notice from the Workers’ Compensation Board for the State of New York regarding a failure to maintain disability and paid family leave insurance. This notice is being looked into by the Debtor, but the Debtor believes that all applicable coverages are still in effect.

 


Case 18-10518-KG     Doc 708-1      Filed 08/30/18     Page 1 of 1

 

CERTIFICATE OF SERVICE

I, Tamara K. Mann, certify that I am not less than 18 years of age, and that service of the foregoing Monthly Operating Report for the reporting period July 1, 2018 – July 31, 2018, was caused to be made on August 30, 2018, in the manner indicated upon the party identified below.

VIA HAND DELIVERY

Attn: Timothy Fox, Esq.

Office of the United States Trustee

J. Caleb Boggs Federal Building

844 North King Street, Suite 2207

Wilmington, DE 19801

 

Dated: August 30, 2018    

/s/ Tamara K. Mann

    Tamara K. Mann (No. 5643)