BY Fraser Tennant
Following years of battling to bring its finances into the black, biopharmaceutical company Orexigen Therapeutics, well-known for its focus on the treatment of obesity, has filed a voluntary petition under Chapter 11 of the US Bankruptcy Code.
In addition to the Chapter 11 filing, Orexigen also intends to file a motion seeking authorisation to pursue an auction and sale process. The proposed bidding procedures, if approved by the court, would require interested parties to submit binding offers to acquire substantially all of Orexigen's assets, which would be purchased free and clear of the company's debt.
According to Orexigen, bids from strategic and financial buyers are expected to be submitted by 21 May 2018, with a structured auction targeted to commence no later than 24 May 2018 and a sale to be concluded by 2 July 2018.
"The board and management team have thoroughly assessed all of our strategic options and believe that this process represents the best possible solution for Orexigen, taking into account our financial needs," said Michael Narachi, president and chief executive of Orexigen. "While we have been working closely with our noteholders and have the support of a controlling number of senior secured noteholders, our debt covenant requirements and near-term cash flow needs have necessitated the protection afforded by a court-driven process."
Focused on the treatment of weight loss and obesity, Orexigen’s first product, Contrave, was approved in the US in September 2014 and has since become the number one prescribed weight loss brand in the US. However, Orexigen has struggled to market the obesity drug (known as Mysimba in Europe), resulting in weak sales and massive debt.
Orexigen is seeking to continue normal operations throughout the Chapter 11 process and has the support of a controlling number of its senior secured noteholders, who have made a $35m financing commitment in order to fund the process (including the sale of assets), and meet its operational and financial obligations.
Mr Narachi concluded: “Orexigen’s mission is to help improve the health and lives of patients struggling to lose weight. Since the launch of Contrave, nearly 800,000 patients in the US have benefited, and through a successful transaction process, we intend that this growing patient demand will continue to be served."