Important recent 8k
Item 2.04. Triggering Events That Accelerate or Increase a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement.
On March 16, 2011, we received a notice of default, or the Notice, from Lighthouse Capital Partners V, L.P., or Lighthouse, indicating that an event of default occurred under that certain Loan and Security Agreement No. 4512, dated as of March 28, 2005, as amended, by and between Lighthouse and us, or the Loan Agreement.
The Notice was the result of our failure to make scheduled payments due under the Loan Agreement for the period from December 1, 2010 through March 1, 2011 and the winding down of our operations, each of which constitutes a material breach of our obligations under the Loan Agreement. Accordingly, as set forth in the Notice, an event of default has occurred under Sections 8.1 and 8.2 of the Loan Agreement.
In connection with the Loan Agreement, we granted Lighthouse a security interest in our assets, including our intellectual property, or the Collateral. In accordance with Section 9.1 of the Loan Agreement, the Notice demands we turn over all Collateral covered by the Loan Agreement to Lighthouse, including cash Collateral, and cease any future use of cash Collateral. We may not be able to make the payments required under the Loan Agreement, and, as previously disclosed, are currently in discussions with Lighthouse and our other secured creditors to facilitate an orderly disposition of our assets. However, there is no assurance we will reach any agreement with Lighthouse and, in such event, our assets may be subject to foreclosure and seizure by Lighthouse under the terms of the Loan Agreement. We are also considering other alternatives, including filing a bankruptcy petition under Chapter 7 of the U.S. Bankruptcy Code.
ARYx Therapeutics, Inc., a biopharmaceutical company, focuses on developing a portfolio of product candidates designed to eliminate known safety issues associated with commercial drugs using its RetroMetabolic Drug Design technology. The company's products in Phase II clinical trials include ATI-7505 for the treatment of various gastrointestinal disorders, ATI-5923 for the treatment of patients at risk for the formation of dangerous blood clots, and ATI-2042 for the treatment of patients with atrial fibrillation. Its preclinical development stage product comprises ATI-9242 for the treatment of schizophrenia and other psychiatric disorders. In addition, the company's late stage discovery programs consist of ATI-20,000 and ATI-24,000, which focuses on metabolic and gastrointestinal disorders. ARYx Therapeutics has collaboration agreement with Procter & Gamble Pharmaceuticals, Inc. for the development and commercialization of ATI-7505. The company was incorporated in 1997 and is based in Fremont, California.
ARYx Therapeutics Clarifies Current Status of Operations
ARYx Therapeutics, Inc. (NASDAQ:ARYX) today provided further clarification of its status as an operating company, including the on-going appointment of its officers on behalf of the Company. The NASDAQ Staff has requested additional clarification about the Company’s operations in conjunction with their on-going consideration of the Company’s eligibility for continued listing on The NASDAQ Capital market. ARYx remains operational, with specific activities underway, which are designed to further the development and approval of naronapride, and to enhance the value of the Company’s assets. In addition, four officers of ARYx remain in their respective roles as officers, appointed by the board of directors to operate the company in good standing. The officers’ duties, as specified in the ARYx Charter, remain unchanged by the recent reorganization, including the change in their compensation methodology.
As previously announced, ARYx has substantially reduced its operating expenses as the Company awaits guidance from the Food and Drug Administration (“FDA”) on the continued development of its product candidate for various gastrointestinal disorders, naronapride (see press releases of December 15, 2010 and December 21, 2010). Notwithstanding this reduction in operating costs, important functions remain operational and are performed by the Company’s officers and by those former employees of ARYx who, as of December 15, 2010, are now providing needed services under executed consulting agreements. These activities include: regular, current communications with the FDA on matters related to the continued development of naronapride; maintenance of drug product necessary to execute the planned Phase 3 clinical trials on naronapride; maintenance of the 44,000 square foot facility housing ARYx, including the substantial equipment; active consultation with leading physicians and others about the continued development of naronapride in anticipation of FDA guidance; management of due diligence for those current and potential investors involved in the potential continued funding of the ARYx operations; and, the functioning of the Finance group.
While the Company is working toward regaining compliance with all applicable NASDAQ listing requirements, there can be no assurance that it will be able to do so or that its securities will continue to remain listed on The NASDAQ Stock Market. In addition, there is no assurance ARYx will be able to obtain necessary agreements from its secured creditors and the additional funding from investors needed to continue operations beyond 2010 and through to the receipt of the anticipated FDA guidance.