American drugmaker Orexigen Therapeutics Inc. has filed for a Chapter 11 bankruptcy protection, in an effort to settle its accounts, after its finances suffered from a massive debt payment.

The pharmaceutical company said on Monday that it will also file a proposal to perform an auction and a sale process of considerably all its assets.

Orexigen expects potential bids to be submitted by May 21, while they plan to complete the sale by July 2.

According to the filing, the California-based firm listed assets of around $50 million to $100 million as well as liabilities in the range of $100 million to $500 million.   

During the process, a number of its senior secured noteholders made a $35 million commitment, providing the company with enough liquidity to continue its business, finance its Chapter 11 case, including the sale of assets, and meet operational and financial obligations.

Shares of Orexigen were down by 68 percent to $0.43 in pre-market trading. The company’s stock has lost about 96 percent since its peak in 2015.  

Orexigen Struggling to Move towards Profitability


Orexigen already tried to recuperate its finances in October, when it announced that it was looking for potential bidders for its assets.

Sluggish sales performance from its weight-loss medicine Contrave resulted to the drugmaker’s huge debt payment.

The company was expected to generate $100 million in sales by the end of 2017, but revenue came in $25 million short to $75 million, resulting to a payment that Orexigen could not afford.

Orexigen chief executive Michael Narachi stated that their debt covenant requirements and near-term cash flow needs have called for the protection afforded by a court-driven process.

Even with Contrave being its best-seller, the company has been hit with a number of issues, including a legal battle to defend its patent rights and a bland market for weight-loss medicines overall.

Contrave, Orexigen’s main revenue driver, was introduced to the market in 2014. The drug quickly acquired the largest part of sales among branded diet pills, obtaining 52 percent and beating competitors, like Qsymia, Saxenda, and Belviq.

Moreover, Orexigen last year won a court ruling in its long patent fight against New Jersery-based Actavis Generics, giving Orexigen market exclusivity until 2030.

However, it still did not significantly help the company, as it saw its market cap dropped to $28 million.   

The pharmaceutical group has been moving gradually towards profitability for the past 15 years, but it seems that that was not enough, given its filing of the Chapter 11 bankruptcy protection.

Narachi was hoping a merger or a sale would help the firm recover, with the ability to share costs with another business.

Back in 2016, Japanese drugmaker Takeda Pharmaceutical Company Ltd. left Orexigen due to weak operations and expensive outcomes trial.  

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