10-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-K

x ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2014

or

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File Number: 001-35614

HYPERION THERAPEUTICS, INC.

(Exact name of registrant as specified in its charter)

Delaware	61-1512713
(State or other jurisdiction of incorporation or organization)	(IRS Employer Identification No.)

2000 Sierra Point Parkway, Suite 400

Brisbane, California 94005

(650) 745-7802

(Address, including zip code, and telephone number, including area code, of registrant’s principal executive offices)

Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class	Name of Each Exchange on Which Registered
Common Stock, $0.0001 par value per share	The Nasdaq Stock Market LLC

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.    Yes  ¨    No  x

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act.    Yes  ¨    No  x

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  x    No  ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files):    Yes  x    No  ¨

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of the registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.    ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer	¨	Accelerated filer	x
Non-accelerated filer	¨  (Do not check if a smaller reporting company)	Smaller reporting company	¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).    Yes  ¨    No  x

The aggregate market value of the voting stock held by non-affiliates of the registrant on June 30, 2014, based upon the closing price of $26.10 of the registrant’s common stock as reported on the NASDAQ Global Market, was $420,544,733. Shares of the registrant’s common stock held by each officer and director and each person known to the registrant to own 10% or more of the outstanding voting power of the registrant have been excluded in that such persons may be deemed affiliates. This determination of affiliate status is not a determination for other purposes.

As of February 27, 2015, the registrant had 20,774,744 shares of common stock, $0.0001 par value, outstanding.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the definitive proxy statement (the “Proxy Statement”) for the 2014 Annual Meeting of Stockholders are incorporated by reference into Part III of this Annual Report on Form 10-K. The Proxy Statement will be filed with the Securities and Exchange Commission within 120 days of the registrant’s fiscal year ended December 31, 2014. Except with respect to information specifically incorporated by reference in this Form 10-K, the Proxy Statement is not deemed to be filed as part hereof.

TABLE OF CONTENTS

		Page
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS			ii
PART I
Item 1.	Business		1
Item 1A.	Risk Factors		34
Item 1B.	Unresolved Staff Comments		61
Item 2.	Properties		61
Item 3.	Legal Proceedings		61
Item 4.	Mine Safety Disclosures		62
PART II
Item 5.	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities		63
Item 6.	Selected Financial Data		65
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		67
Item 7A.	Quantitative and Qualitative Disclosures About Market Risk		87
Item 8.	Financial Statements and Supplementary Data		87
Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure		88
Item 9A.	Controls and Procedures		88
Item 9B.	Other Information		88
PART III
Item 10.	Directors, Executive Officers and Corporate Governance		89
Item 11.	Executive Compensation		89
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters		89
Item 13.	Certain Relationships and Related Transactions, and Director Independence		89
Item 14.	Principal Accountant Fees and Services		89
PART IV
Item 15.	Exhibits and Financial Statement Schedules		90

In this report, unless otherwise stated or the context otherwise indicates, references to “Hyperion,” “we,” “us,” “our” and similar references refer to Hyperion Therapeutics, Inc. and our wholly owned subsidiaries. The names Hyperion Therapeutics, Inc. ^TM RAVICTI^® ,DiaPep277^®, BUPHENYL^® and AMMONAPS^® are our trademarks. AMMONUL^® is a registered trademark of Ucyclyd Pharma, Inc., a wholly owned subsidiary of Medicis Pharmaceutical Corporation, which became a wholly owned subsidiary of Valeant Pharmaceuticals International, Inc. on December 11, 2012. All other trademarks, trade names and service marks appearing in this report are the property of their respective owners.

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SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Annual Report on Form 10-K contains forward-looking statements. In some cases you can identify these statements by forward-looking words such as “believe,” “may,” “will,” “estimate,” “continue,” “anticipate,” “intend,” “could,” “would,” “project,” “plan,” “expect,” or similar expressions, or the negative or plural of these words or expressions. These forward-looking statements include, but are not limited to, statements concerning the following:

• future sales of RAVICTI, BUPHENYL and AMMONAPS or any other future products or product candidates;

• our expectations regarding the commercial supply of our urea cycle disorders (“UCD”) products;

• our expectations regarding the level of competitive protection afforded by our intellectual property portfolio and orphan drug designation;

• the cost, timing or estimated completion of our post-marketing clinical studies;

• third-party payor reimbursement for RAVICTI and BUPHENYL;

• our estimates regarding anticipated capital requirements and our needs for additional financing;

• the UCD patient market size and market adoption of RAVICTI by physicians and patients;

• the hepatic encephalopathy (“HE”) patient market size and FDA approval and market adoption of glycerol phenylbutyrate (“GPB”) by physicians and patients;

• the timing or cost of a Phase III trial in HE;

• the development and approval of the use of GPB for additional indications or in combination therapy;

• our expectations regarding licensing, acquisitions and strategic relationships;

• whether Clal Biotechnology Industries, Ltd. exercises its option to purchase Andromeda Biotech Ltd (“Andromeda”) from us and whether Andromeda ever generates revenues resulting in royalty payment obligations to us;

• the ongoing litigation with Par Pharmaceutical, Inc.;

• whether we will receive approval to market and/or decide to commercialize RAVICTI in the European Union or in Canada;

• impact of accounting standards;

• repayment of notes payable; and

• our estimates of attaining sustained profitability

These statements are only current predictions and are subject to known and unknown risks, uncertainties, and other factors that may cause our or our industry’s actual results, levels of activity, performance or achievements to be materially different from those anticipated by the forward-looking statements. We discuss many of these risks in this report in greater detail under the heading “Risk Factors” and elsewhere in this report. You should not rely upon forward-looking statements as predictions of future events.

Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance, or achievements. Except as required by law, we are under no duty to update or revise any of the forward-looking statements, whether as a result of new information, future events or otherwise, after the date of this report.

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PART I

ITEM 1. BUSINESS

Overview

We are a commercial biopharmaceutical company focused on the development and commercialization of novel therapeutics to treat orphan diseases. Our products, RAVICTI^® (glycerol phenylbutyrate) Oral liquid, BUPHENYL^® and AMMONAPS^® (sodium phenylbutyrate) Tablets and Powder, are designed to lower ammonia in the blood. Ammonia is produced in the intestine after a person eats protein and is normally detoxified in the liver by conversion to urea. Elevated levels of ammonia are potentially toxic and can lead to severe medical complications which may include death. We have developed RAVICTI, which we launched during the first quarter of 2013, to treat most urea cycle disorders (“UCD”) including 7 of the 8 and the most prevalent UCD subtypes, and are developing glycerol phenylbutyrate (“GPB”), the active pharmaceutical ingredient in RAVICTI, to treat hepatic encephalopathy (“HE”). UCD and HE are diseases in which blood ammonia is elevated. UCD are inherited rare genetic diseases caused by a deficiency of one or more enzymes or transporters that constitute the urea cycle, which in a healthy individual removes ammonia through its conversion to urea. We estimate there are approximately 2,100 cases of UCD in the United States of which approximately 1,100 have been diagnosed. However, we estimate that only about 675 patients are currently treated with medication approved by the U.S. Food and Drug Administration (“FDA”). HE may develop in some patients with liver scarring, known as cirrhosis, or acute liver failure and is a chronic complication of cirrhosis which fluctuates in severity and may lead to serious neurological damage.

On February 1, 2013, the FDA granted approval of RAVICTI for chronic management of UCD in adult and pediatric patients greater than two years of age who cannot be managed by dietary protein restriction and/or amino acid supplementation alone. Limitations of use include treatment of patients with acute hyperammonemia (“HA”) crises for whom urgent intervention is typically necessary, patients with N-acetylglutamate synthetase (“NAGS”) deficiency for whom the safety and efficacy of RAVICTI has not been established, and UCD patients under two months of age for whom RAVICTI is contraindicated due to uncertainty as to whether newborns, who may have immature pancreatic function, can effectively digest RAVICTI.

In May 2013, we acquired BUPHENYL, an FDA-approved therapy for treatment of 3 of the most prevalent UCD subtypes, from Ucyclyd Pharma Inc. (“Ucyclyd”), a subsidiary of Valeant Pharmaceuticals International, Inc. (“Valeant”). In Europe and the Middle East, BUPHENYL is sold under the brand name AMMONAPS^®. The active pharmaceutical ingredient in BUPHENYL and AMMONAPS is sodium phenylbutyrate (“NaPBA”). References to BUPHENYL in this Form 10-K include AMMONAPS when referring to the product in the Middle East and Europe. Subsequent to the acquisition, we began selling BUPHENYL within the United States to patients who have not transitioned to RAVICTI. In addition, we sell BUPHENYL in Canada based on Special Access Requests from Health Canada and through our distributors in other select regions outside the United States. In 2011, an Abbreviated New Drug Application (“ANDA”) for a generic tablet form of NaPBA was approved in the U.S., and in 2013, an ANDA for generic powder was approved. In January 2015, Health Canada approved a taste-masked granule form of NaPBA. These forms of NaPBA are owned by companies other than Hyperion. References to NaPBA in this Form 10-K include the generically available tablet and powdered forms of the drug, as well as our branded products in both powdered and tablet forms.

Although the price of BUPHENYL per gram is approximately one fifth that of RAVICTI and the prices for both therapies vary among patients because doses are individualized based on a patient’s weight and disease severity, most patients cannot afford to pay for either medication themselves. We have engaged a dedicated team at a third party call center, which serves as an integrated resource for prescription intake and distribution, reimbursement adjudication, patient financial support, and ongoing compliance support for our UCD patients. Together with distribution via two specialty pharmacies, we believe these services provide important support to UCD patients and their physicians, and help them achieve more favorable outcomes in managing their disease.

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As part of our ongoing commitment to the patient community, we provide our UCD products at no cost to patients as we help them establish insurance coverage for our UCD products and donate to an independent foundation with an established track record of enabling patients to access medications affordably.

RAVICTI was granted orphan drug exclusivity in the United States for the maintenance treatment of patients with UCD shortly after its FDA approval in 2013. This exclusivity extends through February 1, 2020. RAVICTI has also received orphan drug designation in the European Union (“EU”), although the right to marketing exclusivity cannot be determined until we are authorized to market it in the EU. In March 2013, U.S. Patent No. 8,404,215 entitled “Methods of Therapeutic Monitoring of Nitrogen Scavenging Drugs” issued from U.S. Patent Appl. No. 13/417,137 with claims directed to methods of optimizing the dosage of nitrogen scavenging drugs based on target fasting ammonia levels. This patent will expire in March 2032, and is currently listed in the FDA publication “Approved Drug Products with Therapeutic Equivalence Evaluations,” known as the Orange Book. In February 2014, U.S. Patent 8,642,012 entitled “Methods of Treatment Using Ammonia Scavenging Drugs” issued from U.S. Patent Appl. No. 12/350,111 with claims directed to methods of treating patients with UCD using phenylacetic acid (“PAA”) prodrugs based in part on target urinary phenylacetylglutamine (“PAGN”) levels. This patent will expire in September 2030 with Patent Term Extension (“PTE”) and is listed in the Orange Book.

In March 2012, we entered into an amended and restated collaboration agreement (the “restated collaboration agreement”) with Ucyclyd pursuant to which we obtained an option to purchase all of Ucyclyd’s worldwide rights in BUPHENYL and AMMONUL, subject to Ucyclyd’s right to retain AMMONUL for an upfront payment of $32.0 million, plus subsequent milestone and royalty payments. We exercised this option on April 29, 2013 and Ucyclyd elected to retain AMMONUL, resulting in a net payment from Ucyclyd to us of $11.0 million upon close of the transaction. This net payment reflected the $32.0 million purchase price to retain AMMONUL due to us and the $19.0 million purchase price for BUPHENYL due to Ucyclyd, less costs of approximately $2.0 million for inventory we purchased from Ucyclyd.

We believe GPB has potential in other indications; and therefore in 2012 we completed a Phase II trial assessing the safety and efficacy of GPB in the treatment of episodic overt HE. Episodic overt HE can be diagnosed clinically through a set of signs and symptoms. The Phase II trial met its primary endpoint, which was to demonstrate that the proportion of patients experiencing an HE event was significantly lower on GPB versus placebo, both administered in addition to standard of care, which included lactulose and/or rifaximin. The FDA has granted orphan drug designation to GPB for this indication, but whether a compound receives exclusivity for an indication is not determined by the FDA until the drug has been approved for marketing. HE is a serious but potentially reversible neurological disorder that can occur in patients with cirrhosis or acute liver failure. It comprises a spectrum of neuropsychiatric abnormalities and motor disturbances that are associated with varying degrees of disability, ranging from subtle to lethal. HE is believed to occur when the brain is exposed to ammonia that is normally removed from the blood by a healthy liver. We believe that ammonia plays a central role in this disease, and the most commonly utilized therapies for the treatment of HE are believed to act by reducing ammonia. Published epidemiological data suggest that there are approximately 140,000 patients in the United States who have episodic HE. We believe GPB, if approved for HE, would treat HE through a systemic reduction of ammonia.

On June 12, 2014, the Company acquired Andromeda Biotech Ltd, (“Andromeda”) an Israeli company developing DiaPep277 for the treatment of recent onset Type 1 diabetes, from Clal Biotechnology Industries Ltd., (“CBI”). On September 8, 2014, we announced the termination of further development of DiaPep277^® beyond completion of the ongoing clinical trial as a result of evidence we uncovered that certain employees of Andromeda engaged in serious misconduct that compromised clinical trial results. We subsequently terminated the Andromeda employees involved in the misconduct. We had been involved in a legal dispute with CBI related to Andromeda since our announcement of the discovery of the Andromeda employee misconduct in September 2014. On February 16, 2015 we reached an agreement with CBI and Yeda Research and Development Company Ltd (“Yeda”), the company from which Andromeda licenses the underlying DiaPep277 technology, to resolve

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DiaPep277 related claims against one another, and we granted CBI an option to acquire all of the outstanding stock of Andromeda. In connection with the agreement, CBI will transfer to us $2.5 million in shares of our common stock it holds, valued at the average closing price of the Company’s common stock for the fifteen trading days ending on February 11, 2015. The parties have appointed a steering committee to oversee the completion of the clinical trial with representatives of CBI and Yeda and a non-voting member appointed by us. The Company’s estimated budget from October 1, 2014 through the completion of the trial remains unchanged at $10.5 million. Any increase to this budget beyond $2.25 million, if incurred as a result of the direction of the steering committee, shall require CBI to reimburse those expenses in shares of the Company’s common stock. Under the agreement, CBI’s option is exercisable through September 30, 2015 for $3.5 million payable in shares of the Company’s common stock. In addition, if the option is exercised, then Andromeda will be obligated to pay Hyperion future contingent payments if and to the extent it or its shareholders receive revenues or certain other proceeds, which are capped at $36.5 million. This amount, together with the option exercise price that Hyperion may receive, approximates the total amount Hyperion will have invested in Andromeda by the option exercise date. Under the agreement, in the event that CBI does not exercise its option, the underlying DiaPep277 technology will revert to Yeda under the license agreement between Andromeda and Yeda. Also on February 16, 2015, the Company entered into a release with Evotec International GmbH (“Evotec”) pursuant to which Evotec released its previously asserted claims that it was entitled to a milestone payment from us in connection with our acquisition of Andromeda and that it had suffered harm from recent incidents in relation to DiaPep277 in exchange for a payment of $500,000 from us.

Business Strategy

Our strategy is to commercialize a product portfolio, including RAVICTI, for the treatment of UCD and to develop GPB for the treatment of HE. The key elements of our strategy are to:

• Commercialize RAVICTI and enhance patient care in UCD. A cornerstone of our commercial strategy is to facilitate the transition of patients from NaPBA to RAVICTI and to grow the market through use in patients who are newly diagnosed or who have not previously been on a therapy approved by their relevant regulatory authority and whose UCD is not adequately controlled by dietary measures alone. In the U.S., we directly employ a small, scientifically-focused field team of six sales representatives and four payor account managers. We have also contracted a third-party call center focused on reimbursement adjudication and compliance support and two specialty pharmacies and one specialty distributor which distribute RAVICTI directly to patients and hospitals. If we receive approval for RAVICTI and launch in Canada, we will employ a small Canadian-based team which will work with our U.S. personnel to sell and support RAVICTI in Canada. Should we receive approval and decide to launch RAVICTI in Europe, we anticipate partnering with an EU-based company for sales and marketing support. We are currently assessing the commercial attractiveness of other ex-U.S. geographies.

• Sell BUPHENYL for appropriate patients. We are marketing BUPHENYL for use by UCD patients within the United States who have not transitioned to RAVICTI. We are also marketing BUPHENYL through our distributors outside the United States. We sell BUPHENYL in Canada based on approved Special Access Program Requests that we receive from Health Canada.

• Develop GPB for the treatment of HE. Based on the positive results of our Phase II trial assessing the safety and efficacy of GPB in the treatment of episodic HE, an end of Phase II meeting to discuss those trial results, and subsequent dialogue with the FDA, we are currently planning a Phase III clinical trial that we estimate will begin enrolling in the second half of 2015.

• Acquire additional products and product candidates. We intend to continue to identify and may license or acquire products or product candidates that fit with our development and commercial capabilities.

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UCD and HE: Diseases Related to Elevated Ammonia Levels

UCD and HE are generally characterized by elevated levels of ammonia in the bloodstream. Ammonia is a potent neurotoxin, primarily produced in the intestine as a byproduct of protein metabolism. Individuals with a healthy liver detoxify ammonia by converting it to urea, which is excreted in urine. In both UCD and HE, the liver’s ability to convert ammonia to urea is diminished. UCD patients have a genetic disability, and individuals with HE have an acquired disability related to a decline in liver function and/or shunting of blood around the liver that occurs in patients with more severe cases of cirrhosis.

In both UCD and HE patients, ammonia can build up to toxic levels which can lead to severe medical complications, including death. Both UCD and HE fluctuate in severity, and patients may experience crises, called HA crises for UCD patients or HE events for HE patients, which often require hospitalization and may result in irreversible neurological damage.

UCD Background

UCD are inherited genetic diseases caused by a deficiency of one of the enzymes or transporters that are necessary for the normal function of the urea cycle. The urea cycle involves a series of biochemical steps in which ammonia, a potent neurotoxin, is converted to urea, which is excreted in the urine. UCD patients may experience HA crises which may result in irreversible brain damage, coma or death. UCD symptoms may first occur at any age depending on the severity of the disorder, with more severe defects presenting earlier in life.

Diagnosis and Prevalence

UCD are diagnosed either through newborn screening or when symptoms occur and are recognized as related to a UCD. Current newborn screening typically only detects three of the UCD subtypes and does not detect the most prevalent subtype. Thus, screening is believed to identify only approximately one-third of newborns with UCD. Initial UCD symptoms range from catastrophic illness with coma occurring within a few days of birth to milder and non-specific symptoms such as difficulty sleeping, headache, nausea, vomiting, disorientation and seizures, particularly in patients who present later in life. Because these symptoms are common to a number of ailments, physicians often do not consider the possibility of UCD and therefore may not measure levels of blood ammonia. As a result, the most mildly affected patients can go undiagnosed for decades despite having symptoms. Because many cases of UCD remain undiagnosed and because infants born with severe UCD often die without a definitive diagnosis, the exact incidence and prevalence of UCD are unknown and, we believe, likely underestimated.

We believe UCD occur in approximately 1 in 35,000 births in the United States. We estimate that there are approximately 2,100 individuals in the United States that suffer from UCD. We estimate that only half, or approximately 1,100 patients with UCD in the United States, have been diagnosed. Based on demographic data for those patients enrolled in the National Institutes of Health sponsored UCD consortium (“UCDC”) longitudinal study, we estimate that of the diagnosed UCD patient population in the United States, 28% are under 6 years of age (somewhat more than half of whom are under 2 years of age), 32% are aged 6 through 17 years and 40% are 18 years of age or older. We estimate that the UCD population with NAGS deficiency is exceedingly small and as such is financially immaterial.

Current Treatment Options for UCD and Their Limitations

On February 1, 2013, the FDA granted approval of RAVICTI for use as a nitrogen-binding agent for the chronic management of 7 of the 8 subtypes of UCD in adult and pediatric patients greater than two years of age who cannot be managed by dietary protein restriction and/or amino acid supplementation alone. Limitations of use include treatment of patients with HA crises for whom urgent intervention is typically necessary, patients

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with NAGS deficiency for whom the safety and efficacy of RAVICTI has not been established and UCD patients under two months of age for whom RAVICTI is contraindicated due to uncertainty as to whether newborns, who may have immature pancreatic function, can effectively digest RAVICTI.

Management of UCD involves decreasing ammonia production through reduction of protein in the diet, supplementation with essential and/or branched chain amino acids, the use of dietary supplements such as arginine and citrulline, and, when dietary measure are inadequate, the use of ammonia lowering agents, including sodium benzoate and NaPBA or Carbaglu^® for NAGS deficiency. We believe that patients with mild to moderate UCD are typically treated with dietary management and that patients with more severe UCD are generally treated with FDA-approved medications, including RAVICTI or NaPBA. Liver transplantation is an option reserved for the most severely affected patients, typically those who present very early in life. Because liver transplantation is technically difficult in newborns, a company called Cytonet GmbH & Co. (“Cytonet”) is developing a therapy for severely affected newborns and recently filed a Marketing Authorization Application with the European Medicines Agency seeking approval for its liver cell therapy for treatment of UCD in children. This treatment involves the infusion of human liver cells with the aim of prolonging crisis-free survival until the patients are old enough to undergo a liver transplantation. In addition Promethera Biosciences S.A. (“Promethera”), a Belgian company has completed a 20 patient Phase I/II trial in Europe of its stem cell based therapy for treatment of UCD in the pediatric population and plans to conduct a phase IIb/III trial in UCD. Other potential therapies in early stage pre-clinical or clinical testing include gene therapy and mitochondrial enzyme replacement. For example, Aeglea Biotherapeutics has a degrading enzyme treatment in preclinical development for arginase 1 deficiency.

BUPHENYL, approved by the FDA in 1996, was the only branded FDA-approved therapy for the chronic management of 3 of the 8 subtypes of UCD, prior to RAVICTI’s approval for the same 3 subtypes, plus 4 more. BUPHENYL is available in powder and tablet forms. A generic of the tablet form of BUPHENYL was approved by the FDA in November 2011, and a generic powder form was approved by FDA in March 2013 and launched in April 2013. Similar to RAVICTI, NaPBA removes ammonia from the bloodstream and patients take the drug for the balance of their life to help maintain control of their blood ammonia. BUPHENYL is also available for the treatment of UCD in select countries throughout Europe, the Middle East, and the Asia-Pacific Region. In Europe and the Middle East the product is sold under the brand name AMMONAPS. Lucane Pharma SA obtained approval in Europe in July 2013 for its taste-masked granule formulation of NaPBA called Pheburane and in January 2015, obtained approval for Pheburane in Canada. When UCD are not well controlled or even in well-controlled patients who experience concurrent illness such as infection, or physiological stress such as pregnancy or surgery, HA crises may occur. In these acute situations, AMMONUL is often administered intravenously, and dialysis is sometimes used. AMMONUL is currently the only FDA-approved adjunctive therapy for the treatment of HA crises in patients with the most prevalent UCD. Currently, AMMONUL is not approved for use outside the United States, but is being prescribed by physicians in parts of Europe.

Limitations of Treatment Options for UCD

We believe that approximately 675 of the estimated 1,100 patients in the U.S. currently diagnosed with UCD are treated with an FDA-approved medication, including RAVICTI and NaPBA, and the remainder of UCD patients go untreated or elect to manage their disease through protein restriction and/or the use of dietary supplements. Although NaPBA is an effective treatment and in many cases is lifesaving, it has important limitations including a high pill burden or large quantity of powder that must be taken, unpleasant taste and smell, and frequent dosing (3-6 times per day), which make compliance for many UCD patients difficult. The amount of NaPBA prescribed is based on a patient’s weight or body surface area. The maximum daily dose of 20 grams requires patients to consume either 40 vitamin-sized uncoated tablets or 6.9 teaspoons of powder mixed with liquid or food. The powder form of NaPBA is often mixed with food, which can result in food aversion. Due to palatability issues with most formulations of NaPBA, gastrointestinal side effects associated with NaPBA and symptoms of their disease, we believe that up to 45% of pediatric patients have or have had a feeding tube. In addition, the sodium content of the maximum daily dose of NaPBA exceeds the FDA’s recommended daily allowance, which may lead to high blood pressure.

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Despite the life-threatening nature of UCD and the irreversible brain damage that can occur if a patient’s disease becomes uncontrolled and an acute HA crisis occurs, non-compliance with NaPBA is common. For example, a peer reviewed journal article discussing data from a 21-year, open-label, uncontrolled, multi-center study in 206 UCD patients, which was used to support FDA approval of AMMONUL, reports that approximately 10% of HA crises were attributed to non-compliance with NaPBA. This study was initiated originally under Brusilow Enterprises, LLC’s (“Brusilow”) Investigator New Drug (“IND”) application in 1982 and later was used to support the filing of Ucyclyd’s New Drug Application (“NDA”) that resulted in FDA approval in 2005. In addition, approximately 22% of HA crises reported by patients on BUPHENYL in the year before their enrollment in our pivotal study were attributed to non-compliance.

Many patients with mild to moderate disease manage their condition through protein restriction alone and risk long-term complications of mildly elevated ammonia if the underlying disease is not well controlled. Common neurological manifestations of patients with poorly controlled mild to moderate disease include hyperactive behavior, self-injurious behavior, stroke-like episodes, behavioral problems, cognitive dysfunction, and psychiatric symptoms. Recent clinical research suggests that even mildly symptomatic patients demonstrate cognitive deficits. Even mild to moderately affected patients risk an HA crisis if their disease is poorly controlled. According to data gathered by the UCDC, approximately 40% of patients not taking NaPBA who enrolled in the UCDC sponsored longitudinal study had reported at least one acute crisis prior to enrollment.

Key Advantages of RAVICTI

Our analysis of data from our Phase II and Phase III trials evaluated the non-inferiority of RAVICTI as compared to NaPBA in controlling blood ammonia levels in adult and pediatric UCD patients. A non-inferiority trial is undertaken when a placebo-controlled trial in a life threatening condition is unethical and compares a test drug to an established treatment with the goal of showing that the test drug is at least as effective, and therefore not inferior to the established treatment, and that the test drug is, therefore, also effective. We successfully demonstrated non-inferiority in each of our Phase II and Phase III trials. We believe RAVICTI provides incremental benefits in part due to its slow release profile, which results in slower intestinal absorption of phenylbutyrate (“PBA”), which appears to provide better late afternoon and nighttime control of ammonia levels. Although not included in the FDA-approved label for RAVICTI, the following summarizes what we believe to be the key advantages of RAVICTI as compared to NaPBA based on the totality of the RAVICTI dataset:

• Ammonia control: Four clinical trials have shown that blood ammonia is lower on RAVICTI and statistically as good as, or non-inferior, to NaPBA. A pooled analysis of the data from all patients in the Phase II and Phase III trials was performed in which all ammonia values obtained over 24 hours on RAVICTI were combined and compared with similar values obtained on NaPBA. This analysis was included in the NDA and included patients down to 2 months of age. Ammonia values as measured by 24-hour area-under-the-curve, which is a measure of the total systemic ammonia exposure experienced by patients over 24 hours, demonstrated that blood ammonia was approximately 21.9% lower after treatment with RAVICTI as compared to NaPBA (ųmol . h/L = 774.11 on RAVICTI and ųmol . h/L = 991.19 on NaPBA; p = 0.004).

• Improved palatability to drive compliance: RAVICTI is a nearly odorless and tasteless liquid and requires a smaller daily drug volume (e.g., approximately 1 tablespoon contains the same amount of PBA as 40 tablets of NaPBA), all of which we believe makes RAVICTI easier and more palatable to swallow than most formulations of NaPBA.

• Outcomes: In the 12-month safety extension to our pivotal Phase III trial and our studies in pediatric patients aged 6 through 17 years and 2 months through 5 years, patients on RAVICTI experienced approximately 50% fewer total HA crises than they reported having experienced in the prior year while on NaPBA. In addition, unlike RAVICTI, which contains no sodium, the sodium content of the maximum

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daily dose of NaPBA exceeds the FDA’s recommended daily allowance, which may lead to high blood pressure.

• Patient preference and tolerability: In our Phase II clinical trials studying daily ammonia control, of 36 patients who completed the trials, 34 expressed a preference for RAVICTI over NaPBA. Forty of the forty-four patients in our pivotal Phase III trial agreed to continue 12 months of treatment and monthly monitoring with RAVICTI beyond the initial four-week treatment period. Sixty-seven of sixty-nine patients who completed 12 months of treatment with RAVICTI elected to enroll in an expanded access protocol to continue receiving RAVICTI until it was commercially available. Moreover, of 100 pediatric and adult patients who participated in the 12 month treatment studies and completed a questionnaire pertaining to treatment and disease-related signs and symptoms, 80% reported a decrease in symptoms, 15% reported no change and 5% reported an increase in symptoms while treated with RAVICTI as compared with their prior experience on NaPBA.

• Improved executive function: In the 12-month safety extension studies, 22 pediatric patients aged 6 through 17 years who underwent testing both at the beginning and end of the 12-month open label study showed a clinically and statistically significant improvement in executive function as assessed by the Behavior Rating Inventory of Executive Function (“BRIEF”). However, these pediatric patients did not show improvements in other neurocognitive areas, including intelligence. Adult patients did not improve on tests of neurocognitive function.

RAVICTI Clinical Development in UCD Patients

The clinical efficacy of RAVICTI was evaluated in both adult and pediatric UCD patients across four short-term controlled- and three long-term open-label clinical trials (Table X).

The pivotal efficacy study, HPN-100-006, was a Phase 3, randomized, double-blind, active-controlled, crossover study to establish the non-inferiority of RAVICTI to NaPBA by comparing blood ammonia assessed as 24-hour (24-h) area under the concentration versus time curve (AUC0-24) in adult UCD patients. Scientific evidence confirming the efficacy demonstrated in the single Phase 3 study has been established in 3 open-label, controlled, fixed-sequence switchover studies (UP 1204-003, HPN-100-005, and HPN-100-012), each of which also compared ammonia control during steady-state treatment with NaPBA and RAVICTI.

In addition to these 4 comparatively short-term switch-over studies, persistent efficacy of RAVCTI in controlling blood ammonia levels and on clinical outcomes including neuropsychological function and hyperammonemic crises for up to 1 year, as well as safety, have been evaluated in both adults and children across three long-term open label studies (HPN-100-007, HPN-100-005SE, and HPN-100-012SE).

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TableX: Summary of Hyperion-Sponsored UCD Clinical Studies

Study Number	Phase		Study Design	Study Objective	Subject Status/Patient Diagnosis	Number Exposed to HPN-100/ Control(s)a
PIVOTAL
HPN-100-006		3	Randomized, double-blind, crossover	Efficacy and Safety	Adult UCD ³18 years		44/45	b
SHORT-TERM SUPPORTIVE STUDIES
UP 1204-003		2	Non-randomized, open-label, fixed-sequence, switch-over	Safety and efficacy	Adult UCD ³18 years		10/14	c
HPN-100-005		2	Non-randomized, open-label, fixed-sequence, switch-over followed by a long-term open-label phase	Safety and efficacy	Pediatric UCD ³6 years — <18 years		11/11
HPN-100-012f		2	Non-randomized, open-label, fixed-sequence, switch-over followed by a long-term open-label phase	Safety and efficacy	Pediatric UCD ³29 days — <6 years		15/15
LONG-TERM EFFICACY AND SAFETY STUDIES
HPN-100-007d		3	Uncontrolled	Safety	Adult and pediatric UCD		60/-
HPN-100-005 safety-extensione		2	Non-randomized, open-label, fixed-sequence, switch-over followed by a long-term open-label phase	Safety and efficacy	Pediatric UCD ³6 years — <18 years		17/-
HPN-100-012 safety-extensionf,g		2	Non-randomized, open-label, fixed-sequence, switch-over followed by a long-term open-label phase	Safety and efficacy	Pediatric UCD ³29 days — <6 years		23/-

HPN-100 = glycerol phenylbutyrate (RAVICTI); UCD = urea cycle disorder.

a Safety population. Control for all UCD efficacy studies was NaPBA.

b In the phase 3 study, HPN-100-006, active HPN-100 and control NaPBA were blinded with a matching placebo in a double-dummy design.

c Study UP 1204-003 enrolled 13 unique patients; however, two patients were enrolled, assigned a subject identification number (ID), discontinued from the study, and then later re-enrolled under a different ID. Therefore, the study accounts for 15 patient IDs, 14 IDs who received at least one dose of study treatment

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(NaPBA only) and are accounted for in the Safety Population. Ten of the 13 unique patients completed the study (received both NaPBA and HPN-100).

d Study HPN-100-007 includes 40 patients who participated in HPN-100-006 and 20 new patients. These 60 patients consisted of 51 adult and 9 pediatric patients.

e HPN-100-005SE is the 12-month extension phase of HPN-100-005 and includes 11 patients who participated in the switch-over phase of HPN-100-005 and 6 new patients who enrolled directly into the extension phase.

f HPN-100-012 allowed patients ³29 days to <5 years of age to be enrolled; however, the youngest age of patients at the time of enrollment was 2 months of age.

g HPN-100-012SE is the 12-month extension phase of HPN-100-012 and includes 15 patients who participated in the switch-over phase of HPN-100-012 and 7 new patients who enrolled directly into the extension phase.

Summary of Clinical Results to Date. The following is a bulleted summary of the short and long-term clinical trial findings to date:

Short term studies (Protocols UP-1204-003, HPN-100-005, HPN-100-006 and HPN-100-012)

• Non-inferiority of daily ammonia control assessed as 24-hour area under the curve during dosing with RAVICTI relative to NaPBA was achieved in each of these studies. Non-inferiority was pre-defined for protocols HPN-100-005, HPN-100-006 & HPN-100-012 and the same criteria were applied retrospectively to the results of protocol UP-1204-003.

• Ammonia exposure was directionally lower in each of the four switchover studies (Figure III), and by pooled analyses, 24-hour ammonia exposure was significantly lower during dosing with RAVICTI as compared with NaPBA among all patients (Figure I) as well as among all pediatric patients (Figure II).

• Presumably because RAVICTI, unlike NaPBA, requires digestion by pancreatic lipases to which it is not exposed until it leaves the stomach, PBA delivered orally as RAVICTI is absorbed about 70-75% more slowly as compared to oral delivery with NaPBA.

• Pharmacokinetic Differences in PAA Production Between Adult and Pediatric UCD Patients. Data from our clinical studies as well as population pharmacokinetic modeling and dosing simulations to predict PAA exposure indicate that the rate of conversion of PAA to PAGN for both RAVICTI and NaPBA varies directly with body surface area. As a result, exposure to PAA during dosing with both drugs tends to be higher among pediatric patients versus adults. High levels of PAA have been associated with reversible toxicity in previously published studies involving cancer patients who received intravenously infused PAA. No relationship has been observed so far between adverse events and PAA levels in our clinical studies of RAVICTI in UCD patients, and PAA exposure among UCD patients administered RAVICTI has been below the range associated with toxicity in these previously published studies. As compared with NaPBA, systemic exposure to PAA during equivalent steady state dosing of RAVICTI among UCD patients is modestly, but significantly, lower among adults and similar among pediatric patients.

Long-term studies (Protocols HPN-100-005 SE, HPN-100-007 & HPN-100-012SE)

• Ammonia control was well maintained in both adult and pediatric patients over 12 months of dosing with average values within normal limits (Figure IV below).

• There was an approximately 50% decrease in the number of HA crises experienced by patients on RAVICTI as compared with the pre enrollment period of up to 12 months (shorter for the youngest children), during which most patients had been treated with NaPBA (Figure YY).

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• Children ages 6-17 show evidence of statistically and clinically significant improvements in executive function, including behavioral regulation (e.g., flexibility, inhibitory control) and metacognitive skills (e.g., goal setting, planning, self-monitoring).

SE = standard error; ULN = upper limit of normal, *p < 0.05

SE = standard error; ULN = upper limit of normal, *p < 0.05

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HAC were recorded retrospectively for 12 months prior to enrollment. 30 patients had 53 HAC over the previous year on NaPBA and 19 patients had 27 HAC over the year on GPB

RAVICTI Nonclinical Development

As part of the development program for RAVICTI for the treatment of UCD, we conducted nonclinical genotoxicity and carcinogenicity studies to assess the risk that RAVICTI causes tumors in animals and to assess the relevant risk in humans. In a 24-month carcinogenicity study in male and female rats, six different tumor types occurred at an incidence suggestive of a relationship to RAVICTI administration. The carcinogenicity study in transgenic mice was negative, as were in vitro studies including Ames testing of all metabolites. The FDA approved label includes a summary of the carcinogenicity findings under Nonclinical Toxicology. There is no boxed warning.

Thrive Registry

As part of its ongoing commitment to the UCD community, Hyperion is sponsoring a registry comprised of UCD patients, who are eligible to participate in the registry regardless of whether they are receiving treatment for their disorder. The registry is designed to assess the impact of RAVICTI treatment on long term outcomes including hyperammonemic crises and neurocognitive development.

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FDA Required Post-Marketing Requirements

As part of the FDA approval of RAVICTI to treat UCD, we agreed to the following post-marketing requirements:

• Clinical studies in pediatric patients with urea cycle disorders who are less than two months of age and also pediatric patients age 2 two months to two years. These requirements will be undertaken in the context of a single protocol, the design of which has been finalized in consultation with FDA as well as EMA in the context of a Pediatric Investigational Plan. This study began enrolling in February 2015 and will include patients under two years of age who are newly diagnosed through newborn screening or as a result of a hyperammonemic crisis as well as already diagnosed patients taking NaPBA or on dietary management alone. Ammonia levels and blood and urine metabolite (phenylacetic acid (“PAA”) and phenylacetylglutamine (“PAGN”)) levels will be checked on a fixed schedule and at the time of adverse events;

• A randomized controlled clinical trial to assess the safety and efficacy of RAVICTI in treatment naïve patients with UCD; We are finalizing this protocol in consultation with FDA and anticipate that clinically stable UCD patients ages 2 months and above will be first randomized to RAVICTI vs. NaPBA after which they will undergo extended dosing with RAVICTI. Data to be collected is expected to include patient demographics and relevant history, blood ammonia, safety and tolerability, standard clinical laboratory tests, dietary protein, clinical status, neurocognitive and psychomotor status, growth and development milestones, and adverse events including HA crises. This trial is expected to start enrolling in the second half of 2015.

• A drug interaction study in healthy volunteers to evaluate the effect of RAVICTI on the pharmacokinetics of a drug that is a substrate of cytochrome 3A4 has been completed. The results of the study suggest that RAVICTI administration is associated with modest induction of CYP3A4 using midazolam as a model substrate. This information is anticipated to be included in an updated RAVCTI label to be submitted this year for consideration by FDA.

HE

Background

HE is a serious but potentially reversible neurological disorder that can occur in patients with advanced cirrhosis or acute liver failure. HE is believed to occur when the brain is exposed to gut-derived toxins that are normally removed from the blood by a healthy liver. While a variety of gut-derived toxins may contribute to HE, we believe that ammonia plays a central role in this disease. The spectrum of symptoms which constitute HE is very similar to that for UCD, including neuropsychiatric abnormalities and motor disturbances that are associated with varying degrees of disability ranging from subtle to lethal. The manifestations of HE vary over time. Similar to UCD patients who may experience HA crises, patients with episodic HE often experience periods where their symptoms worsen (“HE events”). HE events are manifested by symptoms ranging from disorientation to coma, and frequently require hospitalization. Our HE development program is targeting patients with episodic HE who have experienced past HE events and is designed to determine whether treatment with GPB will decrease the number of HE events.

We believe that the importance of ammonia is supported by the results of our Phase II study in patients with cirrhosis complicated by episodic HE. This study demonstrated not only a reduction in HE events among patients treated with GPB and a significant reduction in ammonia among patients on GPB (45.7 vs. 58.2 umol/L, p = 0.036) as compared to placebo, but also demonstrated a strong correlation between the likelihood of HE events and ammonia measured at baseline or during the study (p < 0.01).

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Diagnosis and Prevalence

Symptoms in patients with episodic HE can range from subtle changes in personality to overt disorientation and impaired consciousness that can progress to coma or death, if untreated. Published epidemiological data suggest that there are approximately one million patients in the United States with cirrhosis of whom an estimated 140,000 have clinically recognizable episodic HE. HE is diagnosed based on the presence of compatible signs and symptoms in a patient with cirrhosis in whom other causes of brain dysfunction have been excluded. In contrast to patients with episodic HE in whom the manifestations are recognizable clinically, patients with minimal HE exhibit normal mental and neurological status upon clinical examination and need standardized neurological testing to establish a diagnosis.

The West Haven criteria, a widely used approach, grade the severity of episodic HE based upon a clinical assessment of a patient’s mental status, behavior, short-term memory, alteration of consciousness and neuromuscular function. The West Haven scale for HE ranges from Grade 1 to 4. Stable patients with Grade 1 or 2 HE are typically ambulatory and can usually be managed as outpatients. By contrast, Grade 3 and 4 patients are typically hospitalized and patients with Grade 4 HE or coma often require intensive support. Prevention of HE events is therefore important both from the standpoint of patient well-being and health care costs.

Current Therapies and Limitations

The most commonly utilized agents for the treatment of HE are poorly or non-absorbable sugars, such as lactulose or lactitol, and rifaximin, a poorly absorbed non-systemic oral antibiotic manufactured by Salix Pharmaceuticals, Ltd (“Salix”). These agents are believed to limit the local production of ammonia in the intestine. Other products currently in development include Ocera Therapeutics, Inc.’s (“Ocera”) OCR 002, or ornithine phenylacetate, which is believed to lower ammonia and is currently being studied in intravenous form in patients with acute HE events. NaPBA is not an appropriate treatment for most HE patients given the FDA warning regarding the use of the drug in patients with sodium retention and edema which is common for patients with HE.

Abdominal cramping, diarrhea and flatulence are common side effects with lactulose, making the drug difficult for many patients to tolerate. Moreover, a published review of clinical trials involving lactulose and lactitol in the treatment of HE concluded that those agents failed to demonstrate a statistically significant benefit.

Rifaximin 550 mg tablets were FDA approved in March 2010 for the reduction in risk of overt HE recurrence in patients 18 years of age or older. Although rifaximin represents the current standard of care, approximately 20% of patients experienced breakthrough HE events while taking rifaximin over a period of six months in a pivotal study. We believe the treatment and prevention of HE remains a major unmet medical need.

GPB for the Prevention of HE

Rationale for Use of GPB to Prevent HE

HE is widely assumed by clinicians to involve the systemic accumulation of ammonia resulting from impaired liver function. Therefore, we believe GPB, which lowers ammonia systemically and was shown to decrease the likelihood of HE events, can be beneficial in managing this disease. Moreover, given its mechanism of action of removing systemic ammonia from the body, GPB could be used as first line therapy. Additionally, GPB could be complementary to currently approved agents that limit the local production of ammonia.

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GPB Clinical Development in HE Patients

Our HE clinical program to date has been comprised of two trials which have enrolled patients with cirrhosis. Our Phase II clinical trial design was similar to that used to evaluate rifaximin, the only therapy approved by the FDA for episodic HE within the last 30 years. The rifaximin trial, conducted by Salix, was a single pivotal Phase III trial which enrolled 299 patients. The primary endpoint was time to the first HE event with the key secondary endpoint of time to hospitalization.

Phase I Trial. Ucyclyd conducted a Phase I safety and pharmacokinetic study in healthy adults and adults with cirrhosis. The trial was an open-label, single and multiple dose study of GPB in 24 cirrhotic and 8 healthy subjects GPB was generally well tolerated. There were no serious adverse events or withdrawals due to adverse events. The most common individual adverse events were increased body temperature and decreased platelet count. While patients with the most severely impaired liver function tended to metabolize GPB somewhat more slowly than healthy adults, even these patients were able to effectively metabolize GPB and thereby utilize the drug for waste removal.

Phase II Trial. In 2012, we completed a Phase II trial of GPB in patients with episodic HE. Part A of this study involved an open-label dose escalation to assess the safety and pharmacokinetics of GPB in 15 patients with cirrhosis and HE. We assessed doses of 6mL and 9mL taken twice per day. The 6mL dose lowered mean fasting ammonia levels to below the average upper limit of normal and exhibited superior tolerability compared to the 9mL dose, which showed little incremental ammonia effect. The 6mL dose was therefore selected as the dose for Part B of the study.

Part B was a multi-center, randomized, double-blind trial of GPB versus placebo in patients with episodic HE, the results of which were published in the peer reviewed scientific publication, Hepatology in March 2014. This study shared many of the essential features of Salix’s pivotal trial for rifaximin in HE. In the Salix pivotal study rifaximin reduced the risk of occurrence of an HE event and risk of hospitalization due to an HE event. We followed the general design of the Salix study, recruited similar patients and applied similar definitions of HE events as the primary outcome measure. However the duration of our study was four months in contrast to Salix’s study which was six months. Also, and in contrast to the Salix trial design whereby patients exited the study after experiencing an HE event, our trial allowed patients to remain on study after their first HE event such that total events were measured. In order to be included in our study, patients must have had at least two HE events in the previous six months. The primary efficacy measure was similar to the rifaximin trial and was defined as the proportion of patients that exhibited at least one HE event while on the study. Secondary and exploratory analyses included total HE events during the study, pharmacokinetics, hospitalizations due to HE, subjects with one or more symptomatic days, and impact on minimal HE, which involves mild neurological impairment as detected by standardized testing.

Patients were allowed to continue standard of care therapy (including lactulose and/or rifaximin) while enrolled in the trial. Unlike the rifaximin pivotal trial which required that patients exit after experiencing their first HE event, our trial allowed patients to remain in the trial at the physician’s discretion after experiencing an HE event. Patients’ standard of care therapy also could be modified by their physician during the trial after experiencing their first HE event. For example, a physician could introduce rifaximin to patients not taking rifaximin at study entry.

The trial enrolled 178 patients: 88 patients from 28 sites in the U.S., 50 patients from 9 sites in Russia, and 40 patients from 7 sites in the Ukraine. The ex-U.S. sites were included both to facilitate enrollment and diversify the background standard of care. All sites were pre-qualified and continuously monitored by us throughout the study to ensure adherence to the protocol and good clinical practices (“GCP”).

The trial met its primary endpoint: the proportion of patients experiencing at least one HE event was significantly lower on GPB versus placebo (21.1% vs. 36.4%, p = 0.0214). Patients receiving GPB also

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experienced fewer total HE events in the course of the study versus placebo (35 vs. 57; p = 0.0354 for total event rate). In addition, fewer patients on GPB experienced one or more symptomatic days (defined by a CHESS (clinical hepatic encephalopathy staging scale) score ³ 3) versus placebo (13 vs. 27; p = 0.0148).

While not statistically significant, there were trends favoring GPB in numbers of patients hospitalized for HE events, total HE-related hospitalizations and total hospital days for HE-related admissions, suggesting a potentially important pharmacoeconomic benefit to the treatment of HE with GPB. Among patients who received rifaximin at any time during the study (n=69), those receiving GPB as well experienced fewer total HE events, fewer patients hospitalized for HE events and fewer total HE hospitalizations. While the differences were not statistically significant, these trends may suggest a possible benefit of GPB in patients who have experienced HE events while taking rifaximin. However, the proportion of patients taking rifaximin at study entry that experienced at least one HE event while on study was similar for GPB and placebo (43.3% vs. 44.8%; non-significant). A summary of the results of patients on rifaximin at baseline and/or after their first HE event during the study is as follows:

Table 1: Hepatic Encephalopathy (HE) Events, Hepatic Encephalopathy-Related Hospitalizations and Blood Ammonia*

	GPB (%)			Placebo (%)			p value
All patients (n= 178)		n=90			n=88
Percent (#) of patients with an HE event (1° analysis)		21	(19)		36	(32)		0.02
Percent (#) of patients with an event (WH ³ 2)		18	(16)		31	(27)		0.04
Hazard ratio (± 95% CI) based on time-to-event analysis, GPB relative to placebo		0.56	(0.32, 0.99)					0.047
Total HE events		35			57			0.04	**
Patients reporting HE hospitalization		10			16			0.23
HE Hospitalizations		13			25			0.06	**
HE Hospital days		66			134			NS
Patients with CHESS score ³ 3		13			27			0.015
Ammonia (TNAUC; µmol/L x week)		46			58			0.04
Not on Rifaximin at Study Entry (N= 119)		60			59
Percent (#) of patients with an HE event		10	(6)		32	(19)		0.003
Patients with an HE event, WH ³ 2		5	(3)		25	(15)		0.002
Total HE events		7			31			<0.001	**
HE Hospitalizations		2			5			0.3	**
HE Hospital days		9			44			NS
Patients with CHESS score ³ 3		4	(7)		12	(20)		0.02
Ammonia (TNAUC; µmol/L x week)		36			43			0.08
Taking Rifaximin at Study Entry (N= 59)		30			29
Percent (#) of patients with an HE event		43	(13)		45	(13)		0.9
Percent (#) of patients with an event (WH ³ 2)		43	(13)		41	(12)		0.9
Total HE events		28			26			0.8	**
HE Hospitalizations		11			20			0.1	**
HE Hospital days		57			90			NS
Patients with CHESS score ³ 3		9	(30)		15	(52)		0.2
Ammonia (TNAUC; µmol/L x week)		67			91			0.1
Rifaximin at Study Entry or after 1st Event (N= 69)		31			38
Percent (#) of patients with an HE event		42	(13)		58	(22)		0.2
Total HE Events		28			42			0.6	**

* All analyses based on Intention to Treat Population

** Statistical analysis pertains to event rate

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Abbreviations: WH = West Haven, NS = not statistically significant, CHESS = Clinical Hepatic Encephalopathy Staging Scale, TNAUC = time-normalized area under the curve.

The population most similar to that enrolled in the rifaximin pivotal trial was the subgroup of patients on no rifaximin at study entry. Among these patients, there was a significant reduction in total HE events, which corresponds to an 82% reduction in the risk of experiencing a grade 2 HE event on GPB as compared with placebo.

The rate of adverse events was similar on GPB versus placebo. There were three deaths in the study, two on GPB and one on placebo, all of which were judged by the clinical investigators to be unrelated to the study drug. There were 20 subjects with serious adverse events (“SAEs”) on GPB, of which one was deemed possibly related to GPB by blinded assessment at the time of the study, and 12 subjects with SAEs on placebo, of which four were deemed possibly related to the placebo by blinded assessment at the time of the study. We believe the higher number of SAEs in the GPB group reflects the greater number of Child-Pugh C patients (i.e., the most severely ill patients) randomized to GPB versus placebo (21 vs. 8).

GPB Phase III Design Planning

We had an end of Phase II meeting with the FDA in the fourth quarter of 2012 to discuss these findings and gain the FDA’s input on our plans for a Phase III trial in HE. We have initiated an SPA process with the FDA. Based on our discussion to date with the FDA, we envision a single pivotal study, similar in design to the Phase II study with respect to study population and overall design that would enroll approximately 500 patients from both the United States and other geographical areas.

During the end of Phase II meeting, the FDA expressed concern regarding the use of the West Haven grading scale, similar to the concern the FDA raised at the time of the 2010 FDA Advisory Committee meeting for rifaximin. The West Haven is a grading scale used to determine the severity of HE. It has been used by clinicians for over three decades and was used by Salix in the pivotal study of rifaximin. However, it was not developed as an outcomes tool, has never been formally validated and includes criteria such as ‘subtle change in

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personality’ which are imprecise. At our End of Phase II meeting, the Division of Gastroenterology and Inborn Errors Products (“the review division”) indicated that we should seek consultation from the Study Endpoints and Label Development (“SEALD”), group prior to the initiation of the SPA process. The SEALD group was established by the FDA to facilitate decisions related to the approval of drugs, labels and promotional claims that are based on patient reported outcomes. Taking into account recommendations from the review division in consultation with SEALD, we developed an HE Grading Instrument, a clinician reported outcomes tool, which was received favorably by FDA. Because most HE events are anticipated to occur when patients are not at the study site, we have also developed a screening tool to be used by caregivers of the study patients which would prompt them to contact the study site in the event that the study subject exhibits manifestations which might represent an HE event. However, there is more work to be done, and we anticipate that continued discussions with the FDA regarding protocol design will result in the pivotal study commencing in the second half of 2015. Even if no formal agreement is reached with the FDA in the context of the SPA, we believe that the discussions with the FDA will be helpful and increase the probability of a successful Phase III study in HE and, ultimately, approval.

As currently designed, Part A of our Phase III pivotal study will consist of a 24 week randomized, double-blind, placebo controlled study in up to 500 adult patients who have experienced at least two documented overt HE events in the past six months, with at least one of the qualifying HE events having occurred while the subject was on stable management for HE (e.g. lactulose or rifaximin therapy). Part B of the study is a 28 week open label safety extension study. Our phase II trial indicated that 6 mL twice daily is the optimal dose. The primary endpoint is anticipated to be time to first overt HE episode of Grade 2 or above. Secondary endpoints include number of hospitalizations due to HE in all patients as well as those patients with ammonia levels above the upper limits of normal at screening, total number of HE episodes in all patients and the subgroup with ammonia levels above the upper limit of normal at screening, time to first hospitalization due to HE and time to all-cause hospitalizations.

The pivotal study is preceded by an observational study aimed at determining current standards of documentation of HE episodes at the sites targeted for the global Phase III study. Additional objectives of the observational study are to assess standard of care and health care burdens, as measured by rifaximin use and hospitalizations due to HE.

Sales, Marketing and Distribution

On February 1, 2013, the FDA granted approval of RAVICTI for use as a nitrogen-binding agent for chronic management of UCD in adult and pediatric patients greater than two years of age who cannot be managed by dietary protein restriction and/or amino acid supplementation alone. RAVICTI is not approved for use in treating patients with HA crises for whom urgent intervention is typically necessary, patients with NAGS deficiency for whom the safety and efficacy of RAVICTI has not been established, and UCD patients under two months of age for whom RAVICTI is contraindicated due to uncertainty as to whether newborns, who may have immature pancreatic function, can effectively digest RAVICTI. In February 2013, we began commercializing RAVICTI in the U.S. and in June 2013, we began commercializing BUPHENYL inside and outside the U.S. We directly employ a small, scientifically-focused field team of six sales representatives who call on approximately 90 clinics in the US that treat UCD patients and four payor account managers who work with our five medical science liaisons to educate payors and facilitate coverage for RAVICTI.

We distribute RAVICTI through two specialty pharmacies and coordinate commercial operations through a single third party call center responsible for interfacing with patients, physicians and payors. This strategy supports a case managed approach to getting patients on treatment quickly and supporting long-term compliance. As part of our ongoing commitment to the patient community, we have implemented a comprehensive set of patient financial support services. Our call center case managers assist un-insured or under-insured patients with identifying and securing insurance. In order to assist with public and private insurance and high out-of-pocket costs, we have also made a donation to an independent foundation with a strong track record of enabling patients

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to get affordable access to medications they seek. For uninsured patients who qualify and to assist new patients without coverage to convert to RAVICTI, we offer RAVICTI at no cost until we can help them establish coverage. As of the end of December 2014, commercial insurers responsible for approximately 95% of the covered lives in the U.S. and state Medicaid plans covering 95% of the Medicaid lives in the U.S. were reimbursing RAVICTI prescriptions.

A cornerstone of our U.S. strategy is to facilitate the transition of patients approved under FDA-labeling from NaPBA to RAVICTI. We began the transition in March 2013 concurrent with the commercial launch of RAVICTI. Based on our market research with physicians and patient preference data from our clinical trials, we anticipate that most NaPBA patients will transition to RAVICTI over time. We continue to sell BUPHENYL for any patients who are not included in the FDA-approved RAVICTI label or who have not transitioned from BUPHENYL.

As the transition of patients from NaPBA to RAVICTI is underway, we are devoting increasing efforts to expanding the number of diagnosed and treated patients through ongoing market education. As of December 31, 2014, approximately 23% of our new prescriptions (excluding clinical trial patients) were written for patients who had not previously been on NaPBA.

Outside the United States, we assumed and maintain the distribution agreements established by Ucyclyd for BUPHENYL. Swedish Orphan Biovitrum AB (“SOBI”), a related party, is the distributor of record in Europe and the Middle East and Orphan Pacific distributes BUPHENYL in Japan. We have an agreement with SOBI to support named patient sales of RAVICTI in the Middle East. If we receive approval for RAVICTI and launch in Canada, we will employ a small Canadian-based team that will work with our U.S. personnel to sell and support RAVICTI in Canada. Should we receive approval and decide to launch RAVICTI in Europe, we anticipate partnering with an EU-based company for sales and marketing support.

In the BUPHENYL market in the United States, we compete with a generic powder form of NaPBA. As of December 31, 2014, the generic powder has approximately 80% of the NaPBA powder volume. We believe there has been no impact of the generic powder sales on sales of RAVICTI or BUPHENYL tablets.

Third-Party Reimbursement in the United States

Sales of pharmaceutical products depend in significant part on the availability of coverage and adequate reimbursement by third-party payors, such as state and federal governments, including Medicare and Medicaid, managed care providers, and private insurance plans. Decisions regarding the extent of coverage and amount of reimbursement to be provided for RAVICTI and BUPHENYL are made on a plan by plan, and in some cases, patient by patient, basis. Particularly given the rarity of UCD, securing coverage and appropriate reimbursement from third-party payors requires targeted education. To that end, we employ a dedicated group of field-based payor account managers and engaging call-center based reimbursement experts focused on ensuring that clinically qualified patients have affordable access to therapy.

Within the Medicare program, as self-administered drugs, RAVICTI and BUPHENYL are reimbursed under the expanded prescription drug benefit, known as Medicare Part D. This program is a voluntary Medicare benefit administered by private plans that operate under contracts with the federal government. These Part D plans negotiate discounts with drug manufacturers, which are passed on to each of the plan’s enrollees. Historically, Part D beneficiaries have been exposed to significant out-of-pocket costs after they surpass an annual coverage limit and until they reach a catastrophic coverage threshold. However, changes in legislation will reduce this patient coverage gap, known as the donut hole, by transitioning patient responsibility in that coverage range from 100% in 2010 to only 25% in 2020. To help achieve this reduction, since 2011, pharmaceutical manufacturers have been required to pay quarterly discounts of 50% off the negotiated price of branded drugs issued to Medicare Part D patients in the donut hole.

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An ongoing trend has been for third-party payors, including the United States government, to apply downward pressure on the reimbursement of pharmaceutical products. Also, the trend towards managed health care in the United States and the concurrent growth of organizations such as health maintenance organizations may result in lower reimbursement for pharmaceutical products. We expect that these trends will continue as these payors implement various proposals or regulatory policies, including various provisions of the recent health reform legislation that affects reimbursement of these products. There are currently, and we expect that there will continue to be, a number of federal and state proposals to implement controls on reimbursement and pricing, directly and indirectly.

Research and Development

We are conducting development activities to expand the commercial potential of RAVICTI. We sponsor and conduct clinical research activities with investigators and institutions to measure key clinical outcomes that can influence market adoption of RAVICTI.

In the years ended December 31, 2014, 2013 and 2012, we incurred $20.7 million, $10.0 million and $17.0 million, respectively, of research and development expense.

Ucyclyd Asset Purchase Agreement and Amended and Restated Collaboration Agreement

On March 22, 2012, we entered into a purchase agreement with Ucyclyd under which we purchased the worldwide rights to RAVICTI and a restated collaboration agreement under which Ucyclyd granted us an option to purchase Ucyclyd’s worldwide rights to BUPHENYL and AMMONUL at a fixed price at a future defined date, plus subsequent milestone and royalty payments, subject to Ucyclyd’s right to retain AMMONUL for a predefined price. The restated collaboration agreement superseded the collaboration agreement with Ucyclyd, dated August 23, 2007, as amended.

Asset Purchase Agreement. Under the purchase agreement, we purchased all of the worldwide rights to RAVICTI for an initial upfront payment of $6.0 million. We will also pay tiered mid to high single digit royalties on global net sales of RAVICTI and may owe regulatory milestones of up to $15.8 million related to approval of GPB in HE, regulatory milestones of up to $7.3 million per indication for approval of GPB in indications other than UCD or HE, and net sales milestones of up to $38.8 million if GPB is approved for use in indications other than UCD (such as HE) and all annual sales targets are reached. In addition, the intellectual property license agreement executed between Ucyclyd and Brusilow and the research agreement executed between Ucyclyd and Dr. Marshall L. Summar (“Summar”) were assigned to us, and we have assumed the royalty obligation under the Brusilow agreement for sales of GPB in any indication, and the royalty obligations under the Summar agreement on sales of GPB to treat HE. The Brusilow and Summar agreements provide that royalty obligations will continue, without adjustment, even if generic versions of the licensed products are introduced and sold in the relevant country.

Subject to Ucyclyd’s right to commercialize AMMONUL for UCD for as long as it owns the product, the purchase agreement prohibits Ucyclyd from developing or commercializing any product for the treatment of UCD or HE that comprises, incorporates or contains glycerol phenylbutyrate, sodium phenylbutyrate or any other active pharmaceutical ingredient that converts to PAA. This restriction is in force until the later of (a) the expiration of the last patent covering GPB in the United States, or (b) the expiry of any other market exclusivity granted by the FDA for GPB. Thereafter, the restriction will remain in force on a country-by-country basis until the later of (a) the expiration of the last patent covering GPB in the applicable country, or (b) the expiration of any other market exclusivity granted for GPB by the governing regulatory agency in the applicable country. This restriction does not prevent Ucyclyd from developing or commercializing BUPHENYL or AMMONUL for indications other than UCD or HE, and Ucyclyd retains the right to develop or commercialize the active ingredient(s) of BUPHENYL or AMMONUL for indications other than UCD or HE.

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As part of our purchase of the worldwide rights to GPB, and in return for the payment of the royalties described above, we received a license to Ucyclyd’s manufacturing technology for use with respect to GPB. In addition, concurrent with our purchase of GPB, Ucyclyd granted us a royalty-bearing license to any developed Ucyclyd formulation technology that may be useful to our efforts with respect to GPB in UCD and HE, and we received a right to use and reference certain Ucyclyd-owned data relating to GPB.

The purchase agreement cannot be terminated by either party. However, we will have a license to certain Ucyclyd manufacturing technology, and Ucyclyd may have a license to certain of our technology, and the party granting a license will be permitted to terminate the license if the other party fails to comply with any payment obligations relating to the license and does not cure such failure within a defined time period. The license with Brusilow that was assigned to us may be terminated for any uncured breach, including of payment obligations and if we do not meet certain diligence obligations in our development and commercialization of GPB.

Amended and Restated Collaboration Agreement. On April 29, 2013, we exercised our option under the terms of the restated collaboration agreement to purchase all of Ucyclyd’s worldwide rights in BUPHENYL and Ucyclyd elected to retain AMMONUL for a purchase price of $32.0 million. Ucyclyd paid us a net payment of $11.0 million on closing of the purchase transaction, which reflected the purchase price for BUPHENYL being set-off against Ucyclyd’s retention payment for AMMONUL and our purchase of $2.0 million in inventory. We retained a right of first negotiation should Ucyclyd later decide to sell, exclusively license, or otherwise transfer the AMMONUL assets to a third party.

We pay Ucyclyd royalties on net sales in the United States of BUPHENYL to UCD patients outside of the FDA-approved labeled age range for RAVICTI. The royalties on BUPHENYL net sales are payable at the RAVICTI royalty rate. We assumed Ucyclyd’s rights in BUPHENYL subject to its obligations to certain third-party distributors and licensees. The restated collaboration agreement provides that royalty obligations continue, without adjustment, even if generic versions of BUPHENYL are introduced and sold in the relevant country.

Following our purchase of these rights, the restated collaboration agreement cannot be terminated by either party. However, we will have a license to specified Ucyclyd manufacturing technology, and Ucyclyd will be permitted to terminate this license if we fail to comply with any payment obligations relating to the license and we fail to cure this failure within a defined time period.

Manufacturing

We currently have no manufacturing facilities and rely on third-party manufacturers to produce the active pharmaceutical ingredient (“API”) and drug products required for commercial use and for our clinical trials.

We have clinical and commercial supplies of RAVICTI API manufactured for us by two alternate suppliers, Helsinn Advanced Synthesis SA (Switzerland) (“Helsinn”) and DSM Fine Chemicals Austria (now known as DPx Fine Chemicals GmbH & Co KG (“DPx”)) on a purchase order basis. We believe our commercial requirements of API can be satisfied by Helsinn and DSM without significant delay or material additional costs. We have finished RAVICTI drug product manufactured by Lyne Laboratories, Inc. under a commercial supply agreement. We have an agreement in place for a secondary fill/finish supplier, Halo Pharmaceuticals, Inc. (“Halo”) and have obtained FDA approval of Halo as a supplier of finished drug product.

Prior to our acquisition of the worldwide rights to RAVICTI from Ucyclyd, Ucyclyd owned all manufacturing technology related to GPB, the API in RAVICTI, developed by Helsinn, other than generally applicable confidential know-how. Pursuant to the purchase agreement with Ucyclyd, Ucyclyd continues to own all GPB manufacturing technology developed as of August 23, 2007, and we own all GPB manufacturing technology developed after that date. We have a license to the GPB manufacturing technology owned by Ucyclyd.

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When we purchased BUPHENYL under the restated collaboration agreement with Ucyclyd, we assumed all of Ucyclyd’s rights and obligations under its manufacturing agreements for the product. We obtain API for BUPHENYL on a purchase order basis from Chemie Uetikon and final manufacturing, testing and packaging of the product is provided by Pharmaceutics International Inc.

Our third-party manufacturers, their facilities and all lots of API and finished drug products are required to be in compliance with current Good Manufacturing Practices (“cGMP”). The cGMP regulations include requirements relating to organization of personnel, buildings and facilities, equipment, control of components and finished drug product containers and closures, production and process controls, packaging and labeling controls, holding and distribution, laboratory controls, records and reports, and returned or salvaged products. The manufacturing facilities for our API’s and finished drug products must meet cGMP requirements and FDA satisfaction before any product is approved and we can manufacture commercial products. Our third-party manufacturers and their facilities, procedures and operations used in the testing and manufacture of our API and finished drug product are subject to periodic inspections by the FDA and other regulatory authorities to assess compliance with applicable regulations. Failure to comply with statutory and regulatory requirements subjects a manufacturer to possible legal or regulatory action, including warning letters, the seizure or recall of products, injunctions, consent decrees placing significant restrictions on or suspending manufacturing operations and civil and criminal penalties. These actions could have a material impact on the availability of API and finished drug products. Contract manufacturers often encounter difficulties involving production yields, quality control and quality assurance, as well as shortages of qualified personnel. In addition, contract manufacturers may choose to discontinue providing contract manufacturing services which could also have a material impact on the availability of our API’s and finished drug product.

Competition

We face competition from established pharmaceutical and biotechnology companies, as well as from academic institutions, government agencies and private and public research institutions, among others, which may in the future develop products to treat UCD or HE. Our commercial opportunity may be reduced significantly if our competitors develop and commercialize products that are safer, more effective, more convenient, have fewer side effects or are less expensive than RAVICTI or BUPHENYL. Public announcements regarding the development of competing drugs could adversely affect the commercial potential of RAVICTI or BUPHENYL. Management of UCD involves decreasing ammonia levels through reduction of protein in the diet, amino acid supplementation and the use of ammonia lowering agents, including sodium benzoate, RAVICTI and NaPBA. Liver transplantation is an option reserved for the most severely affected patients, typically those who present very early in life. If a curative treatment for UCD is developed, RAVICTI and BUPHENYL may become obsolete for that indication.

BUPHENYL is the only branded therapy other than RAVICTI currently FDA-approved for the chronic management of patients with the most prevalent UCD. We are aware of one generic sodium phenylbutyrate tablet product manufactured by Ampolgen Pharmaceuticals, LLC, which received FDA approval in November 2011 under an ANDA and a powder form manufactured by SigmaPharm Laboratories, LLC which was approved by FDA in March 2013. Lucane Pharma SA (“Lucane”) received market authorization from the European Medicines Agency in July 2013. Lucane has announced a distribution partnership in Canada, and in January 2015 announced it had received approval from Health Canada to market its taste-masked NaPBA granules in Canada. It is our understanding that only the first phenylbutyrate-containing product approved for an indication in Canada is eligible for “data protection” which is similar to “orphan drug exclusivity” in the United States. We have been notified by Health Canada that RAVICTI is not eligible for data protection. If we cannot successfully appeal this decision to obtain data protection, we may withdraw our application for marketing approval in Canada.

We believe Lucane is also seeking approval via an Abbreviated New Drug Application (“ANDA”) in the United States. We are aware that other companies, including ForTe BV and Navinta LLC, have made efforts to develop taste masking technologies for NaPBA. We do not know whether these technologies will be introduced

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to the market and if so, the timing or success of such introduction. In addition, Orphan Europe is conducting a clinical trial of carglumic acid to treat some of the UCD enzyme deficiencies for which RAVICTI is approved. Carglumic acid is approved to treat HA crises resulting from a rare UCD subtype and is sold under the name Carbaglu. If the results of this trial are successful and Orphan Europe is able to complete development and obtain approval of Carbaglu to treat additional UCD enzyme deficiencies, we would face competition from this compound. AMMONUL is the only FDA-approved adjunctive therapy for HA crises in patients with the most prevalent UCD. In addition, a company called Cytonet is developing a therapy for severely affected newborns which involves the infusion of human liver cells with the aim of prolonging crisis-free survival until the patients are old enough to undergo a liver transplantation. Cytonet recently filed a Marketing Authorization Application with the European Medicines Agency seeking approval for its liver cell therapy for treatment of UCD in children. In addition, Promethera has successfully completed a 20 patient Phase I/II trial in Europe of its stem cell based therapy for treatment of UCD in the pediatric population and is planning to conduct a Phase IIb/III trial. We are also aware that Aeglea Biotherapeutics has a degrading enzyme treatment in preclinical development for arginase 1 deficiency.

Currently, there is no cure for HE other than liver transplantation, which is limited by donor availability and patient eligibility. Although lactulose has been commonly used, rifaximin is the only FDA-approved therapy for reduction in risk of episodic HE recurrence. In addition to currently marketed treatments for HE, Ocera is conducting a Phase II trial of OCR 002 in patients with cirrhosis who are experiencing an HE event. To be commercially viable in HE, we must demonstrate GPB is at least as safe and effective as competitive products or can be used safely in combination. If a curative treatment for HE is developed other than liver transplantation, GPB may become obsolete for that indication.

Intellectual Property

We continue to seek patent protection in the United States and internationally for our products and product candidates. Our policy is to pursue, maintain and defend patent rights developed internally and to protect the technology, inventions and improvements that are commercially important to the development of our business. We cannot be sure that patents will be granted with respect to any of our pending patent applications or with respect to any patent applications filed by us in the future, nor can we be sure that any of the existing patents upon which our product candidates rely or any patents granted to us in the future will be commercially useful in protecting our technology. We also rely on trade secrets to protect our product candidates. Our commercial success also depends in part on our non-infringement of the patents or proprietary rights of third parties. For a more comprehensive discussion of the risks related to our intellectual property, please see “Risk Factors — Risks Related to Our Intellectual Property.”

Our success depends in part on our ability to:

• obtain and maintain proprietary and marketing exclusivity rights for RAVICTI and BUPHENYL;

• preserve trade secrets;

• prevent third parties from infringing upon the proprietary rights; and

• operate our business without infringing the patents and proprietary rights of third parties, both in the United States and internationally.

RAVICTI was granted orphan drug exclusivity for the maintenance treatment of UCD, which will provide for seven years of market exclusivity from the date of the FDA approval, February 1, 2013. Additionally, we were granted orphan designation for GPB for the intermittent or chronic treatment of patients with cirrhosis and any grade HE. If we are awarded orphan drug exclusivity for HE, we would also receive seven years of orphan

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exclusivity from the date of the FDA approval in this indication. We have licensed the rights to the GPB composition of matter patents from Brusilow, in the United States, Great Britain, Ireland, Germany, Spain and France. We will continue to have payment obligations to Brusilow under the license through 2025. The United States composition of matter patent would have expired February 7, 2015 without any term extension. However, we have applied for an extension of approximately four years under the Drug Price Competition and Patent Term Restoration Act of 1984, known as Hatch-Waxman Amendments, which if granted in full, will extend the term of this patent to 2019. We recently received notice that we have been granted an interim extension of this patent’s term through February 7, 2016 while the United States Patent and Trademark Office makes a final determination as to the length of the extension. We cannot be certain that we will be granted the full four year term of extension for which we have applied, or that we will receive any extension beyond the one year interim extension.

We also received three-year Hatch-Waxman regulatory exclusivity based on the submission of new and essential clinical trials conducted or sponsored by us in support of RAVICTI. This exclusivity prevents the FDA from giving final approval to any generic forms of RAVICTI for a period of three years from the date of the approval of RAVICTI. It also prohibits the agency from approving any 505(b)(2) NDAs that seek to reference the FDA’s approval of RAVICTI for a period of three years. This three year period runs in parallel with RAVICTI’s award of orphan drug exclusivity.

We own a variety of pending patent applications in the United States and abroad pertaining to different aspects of treatment with both RAVICTI and BUPHENYL. These patent applications, which are summarized below, provide the potential for additional patent protection extending to 2029 and beyond. However, there is a significant risk that these pending applications will not issue, or that they may issue with substantially narrower claims than those that are currently sought. There is also a risk that issued claims will not directly relate to labeled usages of RAVICTI and BUPHENYL, and therefore may be ineffective in keeping competitors out of the market.

We own issued patents in the United States and Japan and pending patent applications in Europe, Japan and Canada directed to methods of using, administering, and adjusting the dosage of drugs that operate via the active chemical entity PAA, including RAVICTI and BUPHENYL, based in part on target urinary PAGN levels. In February 2014, U.S. Patent 8,642,012 entitled “Methods of Treatment Using Ammonia Scavenging Drugs” issued from U.S. Patent Appl. No. 12/350,111 with claims directed to methods of treating UCD using PAA prodrugs based in part on analysis of target urinary PAGN levels. This patent will expire in September 2030 with PTE and is listed in the Orange Book. Any additional patents issuing from this family of applications will expire in 2029.

We own pending patent applications in the United States and internationally pursuant to the Patent Cooperation Treaty (“PCT”) directed to methods of treating nitrogen retention disorders and determining dosage of nitrogen scavenging drugs, including RAVICTI and BUPHENYL, based in part on fasting ammonia level measurements. In March 2013, U.S. Patent No. 8,404,215 entitled “Methods of Therapeutic Monitoring of Nitrogen Scavenging Drugs,” issued from U.S. Patent Appl. No. 13/417,137 with claims directed to methods of adjusting and optimizing the dosage of nitrogen scavenging drugs based on analysis of target fasting ammonia levels. This patent will expire in March 2032, and is currently listed in the Orange Book. Any additional patents issuing from this family of applications will also expire in 2032.

We own an issued patent in the United States and pending patent applications in the United States and internationally pursuant to the PCT directed to methods of treating nitrogen retention disorders and determining dosage of nitrogen scavenging drugs, including RAVICTI and BUPHENYL, based in part on PAA metabolite levels. Any patents issuing from this family of applications will expire in 2032.

We own pending patent applications in the United States and internationally pursuant to the PCT that pertain to methods of treating patients with HE and optimizing dosage of nitrogen scavenging drugs, including RAVICTI and BUPHENYL, for treating HE based in part on fasting ammonia level measurements. Any patents issuing from this family of applications will expire in 2033.

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We own pending patent applications in the United States and internationally pursuant to the PCT that pertain to methods and systems for diagnosing, grading and treating HE episodes. Any patents issuing from this family of applications will expire in 2034.

We own pending patent applications in the United States and internationally pursuant to the PCT that pertain to methods for treating UCD and determining dosage of nitrogen scavenging drugs, including BUPHENYL and RAVICTI, based on body surface area, and methods of evaluating compliance with nitrogen scavenging drug treatment regimens based in part on analysis of urinary PAGN levels. Any patents issuing from this family of applications will expire in 2034.

We own a provisional patent application in the United States pertaining to methods of preventing hyperammonemic crises (HACs) and optimizing the dosage of nitrogen scavenging drugs, including BUPHENYL and RAVICTI, for preventings HACs, based in part on analysis of fasting ammonia levels. If nonprovisional applications are filed claiming priority to this provisional application, any patents issuing therefrom would expire in 2035. However, it is possible that no such nonprovisional applications will be filed.

We also protect our proprietary technology and processes, in part, by confidentiality and invention assignment agreements with our employees, consultants, scientific advisors and other contractors. These agreements may be breached, and we may not have adequate remedies for any breach. In addition, our trade secrets may otherwise become known or be independently discovered by competitors. To the extent that our employees, consultants, scientific advisors or other contractors use intellectual property owned by others in their work for us, disputes may arise as to the rights in related or resulting know-how and inventions.

Regulatory Matters

In the United States, the FDA regulates drugs under the Federal Food, Drug, and Cosmetic Act and related regulations. Drugs are also subject to other federal, state and local statutes and regulations. Failure to comply with the applicable United States regulatory requirements at any time during the product development process, approval process or after approval may subject an applicant to administrative or judicial sanctions. These sanctions could include the imposition by the FDA or an Institutional Review Board (“IRB”) of a clinical hold on trials, the FDA’s refusal to approve pending applications or supplements, withdrawal of an approval, warning letters, product recalls, product seizures, total or partial suspension of production or distribution, injunctions, fines, civil penalties or criminal prosecution. Any agency or judicial enforcement action could have a material adverse effect on us.

The FDA and comparable regulatory agencies in state and local jurisdictions and in foreign countries impose substantial requirements upon the clinical development, manufacture and marketing of pharmaceutical products. These agencies and other federal, state and local entities regulate research and development activities and the testing, manufacture, quality control, safety, effectiveness, labeling, storage, distribution, record keeping, approval, advertising and promotion of our products.

The FDA’s policies may change and additional laws or regulations may be enacted that could affect our regulatory approval of RAVICTI or prevent or delay any future product candidates’ regulatory approval or approval of our current products in new disease indications or labeling changes. We cannot predict the likelihood, nature or extent of adverse governmental regulation that might arise from future legislative or administrative action, either in the United States or abroad

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Marketing Approval

The process required by the FDA before drugs may be marketed in the United States generally involves the following:

• nonclinical laboratory and animal tests;

• submission of an IND application, which must become effective before clinical trials may begin;

• adequate and well-controlled human clinical trials to establish the safety and efficacy of the proposed drug for its intended use or uses;

• pre-approval inspection of manufacturing facilities and clinical trial sites; and

• FDA approval of an NDA, which must occur before a drug can be marketed or sold.

The testing and approval process requires substantial time and financial resources, and we cannot be certain that any new approvals for our product candidates will be granted on a timely basis if at all.

Our planned clinical trials for our product candidates may not begin or be completed on schedule, if at all. Clinical trials can be delayed for a variety of reasons, including delays in:

• obtaining regulatory approval to commence a study;

• reaching agreement with third-party clinical trial sites and their subsequent performance in conducting accurate and reliable studies on a timely basis;

• obtaining institutional review board approval to conduct a study at a prospective site;

• recruiting patients to participate in a study; and

• supply of the drug.

Prior to commencing the first clinical trial, an initial IND application must be submitted to the FDA. The IND application automatically becomes effective 30 days after receipt by the FDA unless the FDA within the 30-day time period raises concerns or questions about the conduct of the clinical trial and places it on hold. In such case, the IND application sponsor must resolve any outstanding concerns with the FDA before the clinical trial may begin. A separate submission to the existing IND application must be made for each successive clinical trial to be conducted during product development. Further, an independent IRB for each site proposing to conduct the clinical trial must review and approve the plan for any clinical trial before it commences at that site. Informed consent must also be obtained from each study subject. Regulatory authorities, an IRB, a data safety monitoring board or the sponsor, may suspend or terminate a clinical trial at any time on various grounds, including a finding that the participants are being exposed to an unacceptable health risk.

For purposes of NDA approval, human clinical trials are typically conducted in phases, which may overlap:

• Phase I — the drug is initially given to healthy human subjects or patients and tested for safety, dosage tolerance, absorption, metabolism, distribution and excretion. These studies may also gain early evidence on effectiveness. During Phase I clinical trials, sufficient information about the investigational drug’s pharmacokinetics and pharmacologic effects may be obtained to permit the design of well-controlled and scientifically valid Phase II clinical trials.

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• Phase II — studies are conducted in a limited number of patients in the target population to identify possible adverse effects and safety risks, determine the efficacy of the product for specific targeted diseases and determine dosage tolerance and optimal dosage. Multiple Phase II clinical trials may be conducted by the sponsor to obtain information prior to beginning larger and more expensive Phase III clinical trials.

• Phase III — when Phase II evaluations demonstrate that a dosage range of the product appears effective and has an acceptable safety profile, and provide sufficient information for the design of Phase III studies, Phase III trials are undertaken to provide statistically significant evidence of clinical efficacy and to further test for safety in an expanded patient population at multiple clinical study sites. They are performed after preliminary evidence suggesting effectiveness of the drug has been obtained, and are intended to further evaluate dosage, effectiveness and safety, to establish the overall benefit-risk relationship of the investigational drug, and to provide an adequate basis for product approval by the FDA.

• Phase IV — post-marketing studies, or Phase IV clinical trials, may be conducted after initial marketing approval. These studies may be required by the FDA as a condition of approval and are used to gain additional experience from the treatment of patients in the intended therapeutic indication. The FDA also now has express statutory authority to require post-market clinical studies to address safety issues.

All of these trials must be conducted in accordance with GCP, in order for the data to be considered reliable for regulatory purposes.

Government regulation may delay or prevent marketing of product candidates or new drugs for a considerable period of time and impose costly procedures upon our activities. We cannot be certain that the FDA or any other regulatory agency will grant approvals for any future product candidates on a timely basis, if at all. Success in early stage clinical trials does not ensure success in later stage clinical trials. Data obtained from clinical activities are not always conclusive and may be susceptible to varying interpretations, which could delay, limit or prevent regulatory approval.

The NDA Approval Process

In order to obtain approval to market a new drug in the United States, a marketing application must be submitted to the FDA that provides data establishing to the FDA’s satisfaction the safety and effectiveness of the investigational drug for the proposed indication. Each NDA submission requires a substantial user fee payment unless a waiver or exemption applies. The application includes all relevant data available from pertinent nonclinical studies and clinical trials, including negative or ambiguous results as well as positive findings, together with detailed information relating to the product’s chemistry, manufacturing, controls and proposed labeling, among other things. Data can come from company-sponsored clinical trials intended to test the safety and effectiveness of a use of a product, or from a number of alternative sources, including studies initiated by investigators.

The FDA will initially review the NDA for completeness before it accepts it for filing. The FDA has 60 days from its receipt of an NDA to determine whether the application will be accepted for filing based on the agency’s threshold determination that the application is sufficiently complete to permit substantive review. After the NDA submission is accepted for filing, the FDA reviews the NDA to determine, among other things, whether the proposed product is safe and effective for its intended use or uses, and whether the product is being manufactured in accordance with cGMP to assure and preserve the product’s identity, strength, quality and purity. The FDA may refer applications for novel drug products or drug products that present difficult questions of safety or efficacy to an advisory committee, typically a panel of outside experts that includes clinicians and other experts, for review, evaluation and a recommendation as to whether the application should be approved and, if so, under what conditions. The FDA is not bound by the recommendations of an advisory committee, but it considers such recommendations carefully when making decisions.

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Based on the clinical trial results submitted in an NDA, upon the request of an applicant, the FDA may grant a priority review designation to a product, which sets the target date for FDA action on the application at six months, rather than the standard ten months, in each case with an additional two months in the case of a new chemical entity. Priority review is given where preliminary estimates indicate that a product, if approved, has the potential to provide a significant improvement compared to marketed products or offers a therapy where no satisfactory alternative therapy exists. Priority review designation does not change the scientific/medical standard for approval or the quality of evidence necessary to support approval.

After the FDA completes its initial review of an NDA, it will communicate to the sponsor that the drug will either be approved, or it will issue a complete response letter to communicate that the NDA will not be approved in its current form and inform the sponsor of changes that must be made or additional clinical, nonclinical or manufacturing data that must be received before the application can be approved, with no implication regarding the ultimate approvability of the application.

Before approving an NDA, the FDA will inspect the facilities at which the product is manufactured. The FDA will not approve the product unless it determines that the manufacturing processes and facilities are in compliance with cGMP requirements and adequate to assure consistent production of the product within required specifications. Additionally, before approving an NDA, the FDA may inspect one or more clinical sites to assure compliance with GCP. If the FDA determines the application, manufacturing process or manufacturing facilities are not acceptable, it typically will outline the deficiencies and often will request additional testing or information. This may significantly delay further review of the application. If the FDA finds that a clinical site did not conduct the clinical trial in accordance with GCP, the FDA may determine the data generated by the clinical site should be excluded from the primary efficacy analyses provided in the NDA. Additionally, notwithstanding the submission of any requested additional information, the FDA ultimately may decide that the application does not satisfy the regulatory criteria for approval.

The testing and approval process for a drug requires substantial time, effort and financial resources and this process may take several years to complete. Data obtained from clinical activities are not always conclusive and may be susceptible to varying interpretations, which could delay, limit or prevent regulatory approval. The FDA may not grant approval on a timely basis, or at all. We may encounter difficulties or unanticipated costs in our efforts to secure necessary governmental approvals, which could delay or preclude us from marketing our products.

The FDA may require, or companies may pursue, additional clinical trials after a product is approved. These so-called Phase IV studies may be made a condition to be satisfied for continuing drug approval. The results of Phase IV studies can confirm the effectiveness of a product candidate and can provide important safety information. In addition, the FDA has express statutory authority to require sponsors to conduct post-market studies to specifically address safety issues identified by the agency.

Even if a product candidate receives regulatory approval, the approval may be limited to specific disease states, patient populations and dosages, or might contain significant limitations on use in the form of warnings, precautions or contraindications, or in the form of onerous risk management plans, restrictions on distribution, or post-marketing study requirements. Further, even after regulatory approval is obtained, later discovery of previously unknown problems with a product may result in restrictions on the product or even complete withdrawal of the product from the market. In addition, we cannot predict what adverse governmental requirements may arise from future U.S. or foreign governmental action.

FDA Post-Approval Requirements

Any products manufactured or distributed by us pursuant to FDA approvals are subject to continuing regulation by the FDA, including requirements for record-keeping and reporting of adverse experiences with the drug. Drug manufacturers are required to register their facilities with the FDA and certain state agencies, and are

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subject to periodic unannounced inspections by the FDA and certain state agencies for compliance with cGMPs, which impose certain quality processes, manufacturing controls and documentation requirements upon us and our third-party manufacturers in order to ensure that the product is safe, has the identity and strength, and meets the quality and purity characteristics that it purports to have. Certain states also impose requirements on manufacturers and distributors to establish the pedigree of product in the chain of distribution, including some states that require manufacturers and others to adopt new technology capable of tracking and tracing product as it moves through the distribution chain. We cannot be certain that we or our present or future suppliers will be able to comply with the cGMP and other FDA regulatory requirements. If our present or future suppliers are not able to comply with these requirements, the FDA may halt our clinical trials, fail to approve any NDA or other application, require us to recall a drug from distribution, shut down manufacturing operations or withdraw approval of the NDA for that drug. Noncompliance with cGMP or other requirements can result in issuance of warning letters, civil and criminal penalties, seizures and injunctive action.

Labeling, Marketing and Promotion

The FDA closely regulates the labeling, marketing and promotion of drugs. While doctors are free to prescribe any drug approved by the FDA for any use, a company can only make claims relating to safety and efficacy of a drug that are consistent with the FDA approval, and the company is allowed to market a drug only for the particular use and treatment approved by the FDA. In addition, any claims we make for our products in advertising or promotion must be appropriately balanced with important safety information and otherwise be adequately substantiated. Failure to comply with these requirements can result in adverse publicity, warning letters, corrective advertising, injunctions, costly government investigations, and potential civil and criminal penalties.

Orphan Designation and Exclusivity

RAVICTI received orphan designation for maintenance treatment of patients with deficiencies in enzymes of the urea cycle and subsequently received exclusivity in the United States upon approval by the FDA for the maintenance treatment of patients with UCD, and GPB has a separate orphan designation for intermittent or chronic management of patients with cirrhosis and episodic HE of any grade. However, GPB cannot be considered for exclusivity until it has been approved by FDA for the treatment of HE. Under the Orphan Drug Act, the FDA may grant orphan designation to drugs intended to treat a rare disease or condition, which is generally a disease or condition that affects fewer than 200,000 individuals in the United States. Orphan designation must be requested before submitting an NDA.

Orphan designation does not convey any advantage in, or shorten the duration of, the regulatory review and approval process. If a product that has orphan designation is the first such product to receive FDA approval for the disease for which it has such designation, the product is entitled to orphan product exclusivity, which means that subsequent to approval the FDA may not approve any other applications to market a drug with the same active moiety for the same disease, except in limited circumstances, for seven years. During orphan exclusivity, the FDA may only permit additional companies to market a drug with the same active chemical entity for the designated condition if such companies can demonstrate clinical superiority for the new drug, or if the company with the orphan drug exclusivity is not able to meet market demand. More than one product may also be approved by the FDA for the same orphan indication or disease as long as the products contain different active ingredients. As a result, even though RAVICTI has received orphan exclusivity, the FDA can still approve other drugs that have a different active chemical entity for use in treating the same indications or diseases covered by RAVICTI, which could create a more competitive market for us.

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Anti-Kickback and False Claims Laws

In the United States, the research, manufacturing, distribution, sale and promotion of drug products are potentially subject to regulation by various federal, state and local authorities in addition to the FDA, including the Centers for Medicare & Medicaid Services, other divisions of the U.S. Department of Health and Human Services (e.g., the Office of Inspector General), the U.S. Department of Justice, state Attorneys General, and other state and local government agencies. For example, sales, marketing and scientific/educational grant programs must comply with the Medicare-Medicaid Anti-Fraud and Abuse Act, (the “Anti-Kickback Statute”), the False Claims Act, the privacy regulations promulgated under the Health Insurance Portability and Accountability Act (“HIPAA”), and similar state laws. Pricing and rebate programs must comply with the Medicaid Drug Rebate Program requirements of the Omnibus Budget Reconciliation Act of 1990, and the Veterans Health Care Act of 1992. If products are made available to authorized users of the Federal Supply Schedule of the General Services Administration, additional laws and requirements apply. All of these activities are also potentially subject to federal and state consumer protection and unfair competition laws.

The Anti-Kickback Statute makes it illegal for any person, including a prescription drug manufacturer (or a party acting on its behalf) to knowingly and willfully solicit, receive, offer, or pay any remuneration that is intended to induce the referral of business, including the purchase, order, or prescription of a particular drug, for which payment may be made under a federal healthcare program, such as Medicare or Medicaid. Violations of this law are punishable by prison sentences, criminal fines, administrative civil money penalties, and exclusion from participation in federal healthcare programs. In addition, many states have adopted laws similar to the Anti-Kickback Statute. Some of these state prohibitions apply to the referral of patients for healthcare services reimbursed by any insurer, not just federal healthcare programs such as Medicare and Medicaid. Due to the breadth of these federal and state anti-kickback laws, the absence of guidance in the form of regulations or court decisions, and the potential for additional legal or regulatory change in this area, it is possible that our future sales and marketing practices and/or our future relationships with physicians might be challenged under anti-kickback laws, which could harm us.

The federal False Claims Act prohibits anyone from knowingly presenting, or causing to be presented, for payment to federal programs (including Medicare and Medicaid) claims for items or services, including drugs, that are false or fraudulent, claims for items or services not provided as claimed, or claims for medically unnecessary items or services. Although we would not submit claims directly to federal programs, manufacturers can be held liable under these laws if they are deemed to “cause” the submission of false or fraudulent claims by, for example, providing inaccurate billing or coding information to customers or promoting a product off-label. In addition, our activities relating to the reporting of wholesaler or estimated retail prices for our products, the reporting of prices used to calculate Medicaid rebate information and other information affecting federal, state, and third-party reimbursement for our products, and the sale and marketing of our products, are subject to scrutiny under this law. For example, pharmaceutical companies have been prosecuted under the federal False Claims Act in connection with their off-label promotion of drugs. Penalties for a False Claims Act violation include three times the actual damages sustained by the government, plus mandatory civil penalties for each separate false claim, the potential for exclusion from participation in federal healthcare programs, and, although the federal False Claims Act is a civil statute, conduct that results in a False Claims Act violation may also implicate various federal criminal statutes. If the government were to allege that we were, or if we were convicted of, violating these false claims laws, we could be subject to a substantial fine and may suffer a decline in our stock price. In addition, private individuals have the ability to bring actions under the federal False Claims Act as “whistleblowers” acting in the name of the federal government and may share in any recovery in the event the action is successful. Certain states have also enacted laws modeled after the federal False Claims Act.

There are also an increasing number of state laws that require manufacturers to make reports to states on pricing and marketing information or impose other special requirements on companies that sell and market drug products. In addition, as discussed below, as of 2013, a federal requirement requires manufacturers to track and report to the federal government certain payments made to physicians and teaching hospitals made in the previous

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calendar year. Many of these laws contain ambiguities as to what is required to comply with the laws. These laws may affect our sales, marketing, and other promotional activities by imposing administrative and compliance burdens on us. In addition, given the lack of clarity with respect to these laws and their implementation, our reporting actions could be subject to the penalty provisions of the pertinent state and federal authorities.

Patient Protection and Affordable Care Act

The 2010 federal health care reform law, commonly known as the “Affordable Care Act,” includes measures that have or will significantly change the way health care is financed by both governmental and private insurers. In addition to the federal transparency law discussed above, the provisions of the Affordable Care Act of greatest importance to the pharmaceutical industry are the following:

• The Medicaid Drug Rebate Program requires pharmaceutical manufacturers to enter into and have in effect a national rebate agreement with the Secretary of the Department of Health and Human Services as a condition for states to receive federal matching funds for the manufacturer’s outpatient drugs furnished to Medicaid patients. The Affordable Care Act made several changes to the Medicaid Drug Rebate Program, including increasing pharmaceutical manufacturers’ rebate liability by raising the minimum basic Medicaid rebate on most branded prescription drugs and biologic agents from 15.1% of average manufacturer price (“AMP”) to 23.1% of AMP, modifying the statutory definition of AMP, and adding a new rebate calculation for “line extensions” (i.e., certain new formulations, such as extended release formulations) of solid oral dosage forms of branded products. The Affordable Care Act also expanded the universe of Medicaid utilization subject to drug rebates by requiring pharmaceutical manufacturers to pay rebates on Medicaid managed care utilization and by expanding the population potentially eligible for Medicaid drug benefits. The Centers for Medicare and Medicaid Services (“CMS”) have proposed to expand Medicaid rebate liability to the territories of the United States as well. In addition, the Affordable Care Act provides for the public availability of retail survey prices and certain weighted average AMPs. The implementation of this requirement by the CMS may also provide for the public availability of pharmacy data on cost of acquisition of cost data, which could negatively impact our sales.

• In order for a pharmaceutical product to receive federal reimbursement under the Medicare Part B and Medicaid programs or to be sold directly to U.S. government agencies, the manufacturer must extend discounts to entities eligible to participate in the 340B drug pricing program. The required 340B discount on a given product is calculated based on the AMP and Medicaid rebate amounts reported by the manufacturer The Affordable Care Act expanded the types of entities eligible to receive discounted 340B pricing, although, under the current state of the law, with the exception of children’s hospitals, these newly eligible entities will not be eligible to receive discounted 340B pricing on orphan drugs when used for the orphan indication. In addition, as 340B drug pricing is determined based on AMP and Medicaid rebate data, the revisions to the Medicaid rebate formula and AMP definition described above could cause the required 340B discount to increase.

• The Affordable Care Act imposes a requirement on manufacturers of branded drugs and biologic agents to provide a 50% discount off the negotiated price of branded drugs dispensed to Medicare Part D patients in the coverage gap (i.e., “donut hole”).

• The Affordable Care Act imposes an annual, nondeductible fee on any entity that manufactures or imports certain branded prescription drugs and biologic agents, apportioned among these entities according to their market share in certain government healthcare programs, although this fee would not apply to sales of certain products approved exclusively for orphan indications. We qualify for exemption from payment of this fee as our products are approved only for orphan indications.

• The Affordable Care Act and implementing regulations require pharmaceutical manufacturers to track and report annually certain financial arrangements with physicians and teaching hospitals, including any

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“transfer of value” made or distributed to such entities, as well as any ownership or investment interests held by physicians and their immediate family members. Reports submitted under these requirements are placed in a public database.

• A Patient-Centered Outcomes Research Institute was established pursuant to the Affordable Care Act to oversee, identify priorities in, and fund comparative clinical effectiveness research. The research supported by the Patient-Centered Outcomes Research Institute may affect the market for certain pharmaceutical products.

• The Affordable Care Act created the Independent Payment Advisory Board which, as of 2014, has authority to recommend certain changes to the Medicare program to reduce expenditures by the program that could result in reduced payments for prescription drugs. Under certain circumstances, these recommendations will become law unless Congress enacts legislation that will achieve the same or greater Medicare cost savings.

• The Affordable Care Act established the Center for Medicare and Medicaid Innovation within CMS to test innovative payment and service delivery models to lower Medicare and Medicaid spending, potentially including prescription drug spending. Funding has been allocated to support the mission of the Center for Medicare and Medicaid Innovation from 2011 to 2019.

Many of the provisions implementing the Affordable Care Act have only recently become effective, and at this time, it remains unclear the full effect that the Act will have on our business.

Authorization Procedures in the European Union

There are two types of marketing authorization procedures for medicinal products in the EU; the centralized authorization procedure and national authorization procedures as described below. In June 2014, we submitted a Marketing Authorisation Application for RAVICTI under the centralized procedure.

• Centralized procedure. The centralized procedure gives rise to marketing authorizations that are valid throughout the European Union and, by extension, in three European Economic Area, or EEA member states, Norway, Iceland and Liechtenstein. Applicants file marketing authorizations with the EMA, where they are reviewed by a relevant scientific committee, which is most likely the Committee for Medicinal Products for Human Use, or CHMP. The EMA forwards CHMP positive opinions to the European Commission, which uses them as the basis for a decision granting a marketing authorization. The centralized procedure is compulsory for human medicines that are: derived from biotechnology processes, such as recombinant DNA technology, controlled expression of genes in prokaryotes and eukaryotes and hybridoma and monoclonal antibody methods. It is also mandatory for products containing a new active substance indicated for the treatment of certain diseases, such as HIV/AIDS, cancer, diabetes, neurodegenerative disorders, viral diseases or autoimmune diseases and other immune dysfunctions, and officially designated orphan medicines. For medicines that do not fall within these categories, an applicant has the option of submitting an application for a centralized marketing authorization to the EMA, as long as the CHMP accepts that the medicine concerned is a significant therapeutic, scientific or technical innovation, or if its authorization would be in the interest of public health.

• National authorization procedures. There are also two other possible routes to authorize medicinal products in more than one EU or EEA country, which are available for investigational drug products that fall outside the scope of the centralized procedure:

• Decentralized procedure. Using the decentralized procedure, an applicant may apply for simultaneous authorization in more than one EEA country of medicinal products that have not yet

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been authorized in any EEA country and that do not fall within the mandatory scope of the centralized procedure. The applicant selects a so-called reference member state, or RMS, to take the lead in the review of the application. Other member states are expected to recognize the RMS decision, unless they identify a serious risk to public health. If the member states cannot resolve any such concerns between themselves, the matter is referred to the CHMP for an opinion and ultimately a binding European Commission decision.

• Mutual recognition procedure. In the mutual recognition procedure, a medicine is first authorized in one EEA RMS, in accordance with the national procedures of that country. Following this, further marketing authorizations can be sought from other EEA countries in a procedure whereby the countries concerned agree to recognize the validity of the original, national marketing authorization. As in the decentralized procedure, these concerned member states must recognize the RMS approval unless they identify a serious risk to the public health. If the member states cannot reach a consensus between themselves, the matter can be referred to the CHMP.

Accelerated Review (European Union)

Under the centralized procedure in the EU, the maximum timeframe for the evaluation of a marketing authorization application is 210 days (excluding clock stops, when additional written or oral information is to be provided by the applicant in response to questions asked by the CHMP). Accelerated evaluation might be granted by the CHMP in exceptional cases, when a medicinal product is expected to be of a major public health interest, defined by three cumulative criteria: the seriousness of the disease (e.g. heavy disabling or life-threatening diseases) to be treated; the absence or insufficiency of an appropriate alternative therapeutic approach; and anticipation of high therapeutic benefit. In this circumstance, EMA ensures that the opinion of the CHMP is given within 150 days. Our application is being evaluated on the standard 210 day review basis, and we are in the midst of a “clock stop”.

Other Regulations

We are also subject to numerous federal, state and local laws relating to such matters as safe working conditions, manufacturing practices, environmental protection, fire hazard control, and disposal of hazardous or potentially hazardous substances. We also offer our products for sale to federal government purchasers, which requires compliance with certain Federal Acquisition Regulation requirements and pricing requirements under the Veterans Health Care Act. We may incur significant costs to comply with such laws and regulations now or in the future.

Corporate Information and Employees

Our principal corporate offices are located at 2000 Sierra Point Parkway, Suite 400, Brisbane, California 94005 and our telephone number is (650) 745-7802. We were incorporated in Delaware on November 1, 2006 and completed our initial public offering in July 2012. We had 80 full-time employees as of December 31, 2014. None of our employees are represented by any collective bargaining unit. We believe that we maintain good relations with our employees.

Available Information

Our website address is www.hyperiontx.com. We make available on our website, free of charge, our Annual Report on Form 10-K, our Quarterly Reports on Form 10-Q and our Current Reports on Form 8-K and any amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), as soon as reasonably practicable after we electronically file such

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material with, or furnish it to, the Securities and Exchange Commission (the “SEC”). Our SEC reports can be accessed through the Investors section of our website. Further, a copy of this Annual Report on Form 10-K is located at the SEC’s Public Reference Room at 100 F Street, N.E., Washington, D. C. 20549. Information on the operation of the Public Reference Room can be obtained by calling the SEC at 1-800-SEC-0330. The SEC maintains a website that contains reports, proxy and information statements and other information regarding our filings at http://www.sec.gov. The information found on our website is not incorporated by reference into this Annual Report on Form 10-K or any other report we file with or furnish to the SEC.

ITEM 1A. RISK FACTORS

This Annual Report on Form 10-K contains forward-looking information based on our current expectations. Because our business is subject to many risks and our actual results may differ materially from any forward-looking statements made by or on behalf of us, this section includes a discussion of important factors that could affect our business, operating results, financial condition and the trading price of our common stock. You should carefully consider these risk factors, together with all of the other information included in this Annual Report on Form 10-K as well as our other publicly available filings with the SEC.

Risks Related to Our Intellectual Property

We are involved in litigation with respect to certain patents on our product RAVICTI, which we expect will be costly and time-consuming and the outcome of which is uncertain.

On March 17, 2014, we received notice from Par Pharmaceutical, Inc., the generic drug manufacturer that it had filed an ANDA with the FDA seeking approval for a generic version of our product RAVICTI. The ANDA contained what is known as a “Paragraph IV certification.” The Paragraph IV certification alleges that two of our patents covering RAVICTI, U.S. Patent No. 8,404,215, titled “Methods of therapeutic monitoring of nitrogen scavenging drugs,” which expires in March 2032, and U.S. Patent No. 8,642,012, titled “Methods of treatment using ammonia scavenging drugs,” which expires in September 2030, are invalid and/or will not be infringed by Par’s manufacture, use or sale of the product for which the ANDA was submitted. Par did not challenge the validity, enforceability, or infringement of our primary composition of matter patent for RAVICTI, U.S. Patent No. 5,968,979 titled “Triglycerides and ethyl esters of phenylalkanoic acid and phenylalkenoic acid useful in treatment of various disorders,” which would have expired on February 7, 2015, but as to which we have been granted an interim term of extension until February 7, 2016. Upon notice of the Paragraph IV certification, we had 45 days to file suit to protect our patents in order to obtain a stay of the FDA’s approval of PAR’s ANDA for 30 months, or as lengthened or shortened by the court.

We filed suit against Par on April 23, 2014 and intend to vigorously protect our patents. However, we cannot predict the outcome of this or any litigation. If Par were to prevail and its ANDA were to receive FDA approval, RAVICTI would face generic competition when its orphan exclusivity expires in February 2020, and its sales would likely materially decline. Should sales decline, our results of operations and cash flows could be materially and adversely affected. Even if we successfully defend our patents against Par’s challenge, the litigation will be costly and time consuming and will require substantial time and attention from our management team, which could materially and adversely affect our financial condition and results of operations.

In addition, we may be sued by others who hold intellectual property rights who claim that their issued patents are infringed by RAVICTI, BUPHENYL or any of our future products or product candidates. Our patents and patent applications, or those of our licensors, could also face other challenges, such as interference proceedings, opposition proceedings, and re-examination proceedings. Any of these lawsuits and challenges, if successful, could result in the invalidation of, or in a narrowing of the scope of, any of our patents and patent applications subject to the suit or challenge. Any of these, regardless of their success, would likely be time consuming and expensive to defend and resolve and would divert our management’s time and attention.

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Our intellectual property and regulatory exclusivity may not protect against competitors entering the market, including with generic versions of our products, and sales of affected products may decline materially.

We may not be successful in securing or maintaining proprietary patent protection for products we currently market or for products and technologies we develop or license or the patent protection we procure may not adequately protect our technology, as its scope may be limited.

Our composition of matter patent covering RAVICTI would have expired in the United States in February 2015 without term extension. However, we have applied for a term extension of approximately four years for this patent under the Drug Price Competition and Patent Term Restoration Act (the “Hatch-Waxman Act”). We recently received notice that we have been granted an interim extension of this patent’s term through February 7, 2016 while the United States Patent and Trademark Office makes a final determination as to the length of the extension. We cannot be certain that we will be granted the full four year term of extension for which we have applied, or that we will receive any extension beyond the one year interim extension.

We own a first family of patents and pending patent applications in the United States, Europe, Japan, and Canada directed to methods of using, administering, and adjusting the effective dosage of phenylacetic acid (“PAA”) prodrugs including RAVICTI based on urinary phenylacetylglutamine (“PAGN”) levels. This family includes one issued United States patent, U.S. Patent No. 8,642,012, which expires September 2030 due to a 623 day Patent Term Adjustment and which is a subject of our litigation with Par. Par challenges the validity and/or enforceability of this patent and asserts that the generic product for which it is seeking FDA approval does not infringe our patents. Any subsequent patents issued within this family may also be subject to challenge by competitors and invalidated or deemed not to be infringed by competing products. The base expiration date of any patents issuing from this family will be January 2029.

We own a second family of patents and pending patent applications in the United States, Europe, and 15 additional countries directed to methods of using, administering, and adjusting the effective dosage of PAA prodrugs, including RAVICTI, based on fasting ammonia levels. This family includes one issued United States patent, U.S. Patent No. 8,404,215, which is a subject of our litigation with Par. Par challenges the validity and/or enforceability of this patent and asserts that the generic product for which it is seeking FDA approval does not infringe our patents. Any subsequent patents issued within this family may also be subject to challenge by competitors and invalidated or deemed not to be infringed by competing products. The base expiration date of any patents issuing from this family will be March 2032.

We own a third family of pending patent applications in the United States, Europe, and ten additional countries directed to methods of using, administering, and adjusting the effective dosage of PAA prodrugs, including RAVICTI, based on PAA:PAGN ratio. The base expiration date of any patents issuing from this family will be September 2032.

We own a fourth family of pending patent applications in the United States and internationally pursuant to the PCT that pertain to methods for treating UCD and determining dosage of nitrogen scavenging drugs, including BUPHENYL and RAVICTI, based on body surface area, and methods of evaluating compliance with nitrogen scavenging drug treatment regimens based in part on analysis of urinary PAGN levels. Any patents issuing from this family of applications will expire in October 2034.

We own two additional families of pending patent applications in the United States and internationally pursuant to the Patent Cooperation Treaty (“PCT”) that pertain to methods of optimizing the dosage of a PAA prodrug, including RAVICTI, for the treatment of hepatic encephalopathy (“HE”), methods of diagnosing, grading, and treating HE, and methods of evaluating PAA prodrug treatment compliance. If granted, these applications could extend patent protection until November 2033 to September 2034. We also own a pending provisional patent application in the United States that pertains to methods of preventing hyperammonemic crises (HACs) and optimizing the dosage of nitrogen scavenging drugs, including BUPHENYL and RAVICTI, for

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preventing HACs, based in part on fasting ammonia levels. Any patents arising from a nonprovisional application claiming priority to this provisional would expire in 2035.

There is a significant risk that the pending patent applications in the seven families discussed above will not issue on a timely basis, or at all. In particular, claims directed to dosing and dose adjustment may be substantially less likely to issue in light of the Supreme Court decision in Mayo Collaborative Services v. Prometheus Laboratories, Inc. Further, any patents issuing from these applications could be vulnerable to future validity challenges based on Mayo and subsequent court decisions that further clarify the scope of Mayo. In Mayo, the Court held that claims directed to methods of determining whether to adjust drug dosing levels based on drug metabolite levels in the red blood cells were not patent eligible because they were directed to a law of nature. This decision may have wide-ranging implications on the validity and scope of pharmaceutical method claims and may affect the outcome of our litigation with Par, although its full impact will not be known for many years. Moreover, even if granted, these applications may not provide protection sufficient to protect against the introduction to the market of generic forms of RAVICTI. The entry of generic competitors to the market would likely result in a material decline in sales of RAVICTI.

Even if our patent applications do not issue or our patents are invalidated or become unenforceable, we still may have protection under two different forms of regulatory exclusivity. The first form, orphan drug exclusivity, prohibits the FDA from approving another product with the same active ingredient for the same use for seven years from the date of approval. RAVICTI has orphan drug exclusivity for the treatment of UCD until February 2020.

Orphan exclusivity will not, however, bar approval of another product under certain circumstances. One such circumstance is if a product with the same active ingredient is proven safe and effective for a different indication. Another circumstance is if a subsequent product with the same active ingredient for the same indication is shown to be clinically superior to the approved product on the basis of greater efficacy or safety, or providing a major contribution to patient care. FDA may also approve another product with the same active ingredient and the same indication if the company with orphan drug exclusivity is not able to meet market demand. Further, FDA may approve more than one product for the same orphan indication or disease as long as the products contain different active ingredients. As a result, even if one of our product candidates receives orphan exclusivity, the FDA can still approve other drugs that have a different active ingredient for use in treating the same indication or disease. All of the above circumstances could create a more competitive market for us.

Even if patent protection and orphan drug exclusivity become unavailable, our products may still have limited protection against generic competition under a second form of regulatory exclusivity, which derives from the Hatch-Waxman Act. Under the Hatch-Waxman Act, a pharmaceutical manufacturer may file an ANDA seeking approval of a generic copy of an approved innovator product once all patent protection for the approved product has expired or seeking immediate approval on the grounds that the applicable patents are invalid or unenforceable, as Par has done with respect to two of our patents on RAVICTI. Under the Hatch-Waxman Act, a manufacturer may also submit an NDA under section 505(b)(2) of the FDCA that references the FDA’s prior approval of the innovator product. A 505(b)(2) NDA product may be for a new or improved version of the original innovator product, but similarly is only available when no patent protection remains or the applicable patents are challenged or are not enforced. To maintain sufficient incentives for innovators to develop new drugs and to improve existing drugs, however, the Hatch-Waxman Act also provides for certain periods of regulatory exclusivity, which preclude FDA approval (or in some circumstances, FDA filing and reviewing) of an ANDA or 505(b)(2) NDA.

RAVICTI was granted a three-year period of regulatory exclusivity under the Hatch-Waxman Act, which expires on February 1, 2016. That exclusivity means that, even in the absence of any patent protection or orphan drug exclusivity, FDA could not grant final approval to an ANDA for a generic version of RAVICTI until February 1, 2016. The exclusivity also prohibits FDA from approving a 505(b)(2) NDA that references FDA’s approval of RAVICTI or includes the same active ingredient and uses as RAVICTI.

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BUPHENYL’s composition of matter patent protection and orphan drug exclusivity have expired. Because BUPHENYL has no regulatory exclusivity or listed patents, there is nothing to prevent a competitor from submitting an ANDA for a generic version of BUPHENYL and receiving FDA approval. For example, the FDA approved an ANDA for sodium phenylbutyrate, the active ingredient in BUPHENYL (“NaPBA”) powder in the first quarter of 2013, and the generic product was launched in April 2013. Lucane Pharma received marketing approval from the European Medicines Agency for taste-masked NaPBA and announced in January 2015 that it had also received marketing approval for taste-masked NaPBA granules in Canada. We believe Lucane is also seeking approval via an ANDA in the United States. We are also aware of an ANDA that was approved in November 2011 for NaPBA tablets. However, these tablets have not yet been made commercially available to UCD patients. Since the ANDA process is confidential if no Paragraph IV certifications are filed, there may be additional BUPHENYL ANDAs pending. Generic versions of BUPHENYL to date have been priced at a discount relative to BUPHENYL or RAVICTI, and physicians, patients, or payors may decide that this less expensive alternative is preferable to either of our drugs. If this occurs, our UCD product sales could be materially reduced, but we would nevertheless be required to make royalty payments to Ucyclyd and Brusilow at the same royalty rates.

We may not be able to enforce our intellectual property rights throughout the world.

The laws of some foreign countries do not protect intellectual property rights to the same extent as the laws of the United States. Many companies have encountered significant problems in protecting and defending intellectual property rights in certain foreign jurisdictions. The legal systems of some countries, particularly developing countries, do not favor the enforcement of patents and other intellectual property protection, especially those relating to life sciences. This could make it difficult for us to stop the infringement of our in-licensed patents or the misappropriation of our other intellectual property rights. For example, many foreign countries have compulsory licensing laws under which a patent owner must grant licenses to third parties. In addition, many countries limit the enforceability of patents against third parties, including government agencies or government contractors. In these countries, patents may provide limited or no benefit.

Proceedings to enforce our patent rights in foreign jurisdictions could result in substantial costs and divert our efforts and attention from other aspects of our business. Accordingly, our efforts to protect our intellectual property rights in such countries may be inadequate. In addition, changes in the law and legal decisions by courts in the United States and foreign countries may affect our ability to obtain adequate protection for our technology and the enforcement of intellectual property.

We may infringe the intellectual property rights of others, which may prevent or delay our product development efforts and stop us from commercializing or increase the costs of commercializing our products.

Our commercial success depends significantly on our ability to operate without infringing the patents and other intellectual property rights of third parties. For example, there could be issued patents of which we are not aware that our products infringe. There also could be patents that we believe we do not infringe, but that we may ultimately be found to infringe. Moreover, patent applications are in some cases maintained in secrecy until patents are issued. The publication of discoveries in the scientific or patent literature frequently occurs substantially later than the date on which the underlying discoveries were made and patent applications were filed. Because patents can take many years to issue, there may be currently pending applications of which we are unaware that may later result in issued patents that our products infringe. For example, pending applications may exist that provide support or can be amended to provide support for a claim that results in an issued patent that our product infringes.

Third parties may assert that we are employing their proprietary technology without authorization. If a court held that any third-party patents are valid, enforceable and cover our products or their use, the holders of any of these patents may be able to block our ability to commercialize our products unless we obtained a license under

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the applicable patents, or until the patents expire. We may not be able to enter into licensing arrangements or make other arrangements at a reasonable cost or on reasonable terms. Any inability to secure licenses or alternative technology could result in delays in the introduction of our products or lead to prohibition of the manufacture or sale of products by us.

We may be unable to adequately prevent disclosure of trade secrets and other proprietary information.

We rely on trade secrets to protect our proprietary know-how and technological advances, especially where we do not believe patent protection is appropriate or obtainable. However, trade secrets are difficult to protect. We rely in part on confidentiality agreements with our employees, consultants, outside scientific collaborators, sponsored researchers and other advisors to protect our trade secrets and other proprietary information. These agreements may not effectively prevent disclosure of confidential information and may not provide an adequate remedy in the event of unauthorized disclosure of confidential information. In addition, others may independently discover our trade secrets and proprietary information. Costly and time-consuming litigation could be necessary to enforce and determine the scope of our proprietary rights. Failure to obtain or maintain trade secret protection could enable competitors to use our proprietary information to develop products that compete with our products or cause additional, material adverse effects upon our competitive business position.

Risks Related to our UCD products including Commercialization of RAVICTI^® and Our Development Programs

We may never obtain approval for or commercialize RAVICTI outside of the United States, which would limit our ability to expand RAVICTI revenues and realize its full market potential.

We currently only have approval to market RAVICTI in the United States. In order to market RAVICTI outside of the United States, we must comply with regulatory requirements of and obtain required regulatory approvals in other countries. On June 25, 2014 the European Medicines Agency (“EMA”) accepted our Marketing Authorisation Application, commencing its review process which is expected to be completed in the fourth quarter of 2015 or the first quarter of 2016. In addition, we announced on June 3, 2014 that Health Canada (“HC”) had completed its validation process for our New Drug Submission (“NDS”) for approval to market RAVICTI in Canada. In January 2015, Lucane announced that it had received approval from HC to market its taste-masked NaPBA granules in Canada. It is our understanding that in Canada only the first phenylbutyrate-containing product approved for any indication receives “data protection” which is similar to “orphan drug exclusivity” in the United States. We have been notified by HC that RAVICTI is not eligible for data protection. If we cannot successfully appeal this decision to obtain data protection, we may withdraw our filing for marketing approval in Canada. Even if we do not withdraw our application to market RAVICTI in Canada, we cannot be assured that the EMA or HC will approve our applications to market RAVICTI in Europe and Canada, respectively, nor can we be certain of the timelines for these agencies to make their determinations. If we fail to obtain approval to market RAVICTI from the EMA prior to February 2016 when the RAVICTI composition of matter patent expires in European jurisdictions in which it is validated, we will not be eligible to apply to extend the patent’s term, and we will have to rely on maintaining orphan designation to ensure marketing exclusivity in Europe. If we fail to obtain and maintain required approvals or if regulatory approvals in international markets are delayed, our target market will be reduced and our ability to realize the full market potential of RAVICTI will be harmed. In addition to the regulatory approvals that we must obtain in Europe and Canada in order to market RAVICTI, we must obtain approvals for reimbursement on a country by country basis in Europe and on a province by province basis in Canada. If we cannot obtain adequate reimbursement for RAVICTI in these markets, even if we obtain marketing approvals, it may not be commercially viable for us to expand our sales outside the United States. Moreover, even if we obtain marketing approval in Europe, we cannot be assured that we can maintain orphan designation for RAVICTI in the EU as we must demonstrate that the product provides “significant benefit” in those UCD subtypes for which AMMONAPS is approved. In Europe, as in Canada, we would likely choose not to sell RAVICTI if we cannot be assured that we can obtain market exclusivity for our product in those jurisdictions.

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If we are unable to maintain agreements with, and effectively manage, third parties to distribute our UCD products to patients, our results of operations and business could be adversely affected.

We rely on third parties to distribute our UCD products to patients. We have contracted with a third-party logistics company to warehouse our UCD products. For RAVICTI, we contract with two specialty pharmacies and one specialty distributor to sell and distribute to patients and hospitals. A specialty pharmacy is a pharmacy that specializes in the dispensing of medications for complex or chronic conditions that require a high level of patient education and ongoing management. For BUPHENYL, which we acquired on May 31, 2013, we operate under a contract with a wholesaler which distributes and sells to retail pharmacies, hospitals and other dispensing organizations. We have also contracted with a third-party call center to coordinate prescription intake and distribution, reimbursement adjudication, patient financial support and ongoing compliance support for our UCD products. The distribution network in place requires significant coordination with our commercial operations, sales and marketing and finance organizations. Failure to coordinate financial systems could negatively impact our ability to accurately report product revenue from sales of our UCD products. If we are unable to effectively manage the distribution process, the sales of our UCD products, as well as any future products we may commercialize, will be delayed or severely compromised and our results of operations may be harmed.

In addition, since we use specialty pharmacies and heavily rely on our third-party call center to support our UCD products, we are subject to certain risks, including, but not limited to, risks that these organizations may:

• not provide us with accurate or timely information regarding inventories, the number of patients who are using our UCD products, or complaints and adverse events regarding those drugs;

• not effectively sell or support our UCD products; or

• be unable to satisfy financial obligations to us or others;

Any such events may result in decreased product sales and lower product revenue, which would harm our results of operations and business.

If we are unable to maintain orphan drug exclusivity for RAVICTI for the treatment of UCD in the United States, we may face increased competition.

Under the Orphan Drug Act of 1983, the FDA may designate a product as an orphan drug if it is a drug intended to treat a rare disease or condition affecting fewer than 200,000 people in the United States. A company that first obtains FDA approval for a designated orphan drug for the specified rare disease or condition receives orphan drug marketing exclusivity for that drug for a period of seven years from the date of its approval. This orphan drug exclusivity prevents the approval of another drug containing the same active ingredient and used for the same orphan indication except in very limited circumstances, based upon the FDA’s determination that a subsequent drug is safer, more effective or makes a major contribution to patient care, or if the orphan drug manufacturer is unable to assure that a sufficient quantity of the orphan drug is available to meet the needs of patients with the rare disease or condition. Orphan drug exclusivity may also be lost if the FDA later determines that the initial request for designation was materially defective. RAVICTI was granted orphan drug exclusivity by the FDA in May 2013, which we expect will provide the drug with orphan drug marketing exclusivity in the United States until February 2020, seven years from the date of its approval. However, such exclusivity may not effectively protect the product from competition if the FDA determines that a subsequent drug for the same indication is safer, more effective or makes a major contribution to patient care, or if we are unable to assure the FDA that sufficient quantities of RAVICTI are available to meet patient demand. In addition, orphan drug exclusivity does not prevent the FDA from approving competing drugs for the same or similar indication containing a different active ingredient. If a subsequent drug is approved for marketing for the same or a similar indication we may face increased competition, and our revenues from the sale of RAVICTI will be adversely affected. RAVICTI does not have orphan drug exclusivity in the EU or other regions of the world.

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If we fail to sustain an adequate level of reimbursement for our UCD products by third-party payors, sales would be adversely affected.

Although the price of BUPHENYL per gram is approximately one fifth that of RAVICTI, we expect UCD patients to need treatment throughout their lifetimes and most families of patients are not capable of paying for either of these medications themselves. There would be no commercially viable market for RAVICTI or BUPHENYL without reimbursement from third-party payors. If we cannot sustain the level of reimbursement from third party payors that we have been able to achieve, our revenue and gross margins will be adversely affected. In addition, we provide RAVICTI and BUPHENYL at no cost to qualified patients without insurance or without coverage for either product. If the number of patients that qualify for these programs rises, our revenues and gross margins will be adversely affected.

Third-party payors, such as government or private health care insurers, carefully review and increasingly question the coverage of, and challenge the prices charged for drugs. Reimbursement rates from private health insurance companies vary depending on the company, the insurance plan and other factors. A current trend in the United States health care industry is toward cost containment. Large public and private payors, managed care organizations, group purchasing organizations and similar organizations are exerting increasing influence on decisions regarding the use of, and reimbursement levels for particular treatments. Such third-party payors, including Medicare, are questioning the coverage of, and challenging the prices charged for medical products and services, and many third-party payors limit coverage of or reimbursement for newly approved health care products. In particular, third-party payors may limit the covered indications. Cost-control initiatives could decrease the price we might establish for products, which could result in product revenues being lower than anticipated. If the prices for our products decrease or if governmental and other third-party payors do not maintain adequate coverage and reimbursement levels, or if we are forced to provide additional discounts or rebates in order to maintain coverage, our revenue and prospects for operating profitability will suffer. Reimbursement systems in international markets, including the EU, vary significantly by country and by region, and reimbursement approvals must be obtained on a country-by-country basis. In many countries the product cannot be commercially launched until reimbursement is approved. The negotiation process in some countries can exceed 12 months.

We are required to complete post-marketing studies mandated by the FDA for RAVICTI and such studies may be costly and time consuming. If the results of these studies reveal unacceptable safety risks, we may be required to withdraw RAVICTI from the market.

The FDA imposed several post-marketing requirements and a post marketing commitment, which include remaining obligations to conduct:

• studies in UCD patients during the first two months of life and from 2 months to 2 years of age, including a study of the pharmacokinetics in both age groups; and

• a randomized study to determine the safety and efficacy in UCD patients who are treatment naïve to phenylbutyrate treatment.

If we are unable to complete these studies or the results of the studies reveal unacceptable safety risks, we may not be able to extend the label to include UCD patients less than two years of age and/or could be required to perform additional studies, which may be costly, and even lose marketing approval for RAVICTI. In addition to these studies, the FDA may also require us to conduct other lengthy post-marketing studies, for which we would have to expend significant additional resources, which could have an adverse effect on our operating results, financial condition and stock price.

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To obtain regulatory approval to market glycerol phenylbutyrate (“GPB”) in HE, costly and lengthy clinical trials will be required, and the results of the studies and trials are highly uncertain.

As part of the regulatory approval process, we must conduct, at our own expense, clinical trials on humans for each indication that we intend to pursue. We expect the number of nonclinical studies and clinical trials that the regulatory authorities will require will vary depending on the disease or condition the drug is being developed to address and regulations applicable to the particular drug. Generally, the number and size of clinical trials required for approval varies based on the nature of the disease and size of the expected patient population that may be treated with a drug, and we are still in discussions with the FDA as to the design of additional HE clinical trials required for approval. We must demonstrate that our drug products are safe and efficacious for use in the targeted human patients in order to receive regulatory approval for commercial sale, and it is possible future trials of GPB may not result in approval.

Serious adverse events or other safety risks could require us to abandon development and preclude or limit approval of GPB to treat HE.

We may voluntarily suspend or terminate our clinical trials if at any time we believe that they present an unacceptable risk to study participants or if preliminary data demonstrate that the product is unlikely to receive regulatory approval or unlikely to be successfully commercialized. In addition, regulatory agencies, institutional review boards and data safety monitoring boards may at any time order the temporary or permanent discontinuation of our clinical trials or request that we cease using investigators in the clinical trials if they believe that the clinical trials are not being conducted in accordance with applicable regulatory requirements, or that they present an unacceptable safety risk to participants. If we elect or are forced to suspend or terminate a clinical trial of GPB to treat HE, the commercial prospects for GPB will be harmed and our ability to generate product revenues from GPB may be delayed or eliminated.

If we obtain approval to commercialize RAVICTI outside of the United States, a variety of risks associated with international operations could materially adversely affect our business.

If RAVICTI is approved for commercialization outside the United States or Canada, we plan to enter into agreements with third parties to market RAVICTI in those international markets. On May 31, 2013, we acquired worldwide rights to BUPHENYL from Ucyclyd. As part of the acquisition of BUPHENYL, we assumed Ucyclyd’s rights and obligations under its existing agreements for distribution of BUPHENYL outside the United States, including Ucyclyd’s distribution agreement with Swedish Orphan Biovitrum AB. We have extended this distribution agreement through December 31, 2015. We expect that we will be subject to additional risks related to entering into or maintaining these international business relationships, including:

• different regulatory requirements for drug approvals in foreign countries;

• differing United States and foreign drug import and export rules;

• reduced protection for intellectual property rights in certain foreign countries;

• unexpected changes in tariffs, trade barriers and regulatory requirements or changes in the application of regulatory requirements;

• different reimbursement systems;

• economic weakness, including inflation, or political instability in particular foreign economies and markets;

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• compliance with tax, employment, immigration and labor laws for employees living or traveling abroad;

• foreign taxes, including withholding of payroll taxes;

• foreign currency fluctuations, which could result in increased operating expenses and reduced revenues, and other obligations incident to doing business in another country;

• workforce uncertainty in countries where labor unrest is more common than in the United States;

• production shortages resulting from any events affecting raw material supply or manufacturing capabilities abroad;

• potential liability resulting from development work conducted by these distributors; and

• business interruptions resulting from geopolitical actions, including war and terrorism, or natural disasters.

We continue to face extensive development and regulatory requirements with respect to our marketed products.

Even after a drug is FDA-approved, regulatory authorities may still impose significant restrictions on a product’s indicated uses or marketing or impose ongoing requirements for potentially costly post-marketing studies. Furthermore, any new legislation addressing drug safety or other issues could result in delays or increased costs to assure compliance.

BUPHENYL and RAVICTI are subject to ongoing regulatory requirements for labeling, packaging, storage, advertising, promotion, sampling, record-keeping and reporting of safety and other post-market information, including both federal and state requirements in the United States and with respect to BUPHENYL, requirements of the EU. In addition, manufacturers and manufacturers’ facilities are required to comply with extensive FDA requirements, including ensuring that quality control and manufacturing procedures conform to current Good Manufacturing Practices (“cGMP”). As such, we and our contract manufacturers are subject to continual review and periodic inspections to assess compliance with cGMP. Accordingly, we and others with whom we work must continue to expend time, money and effort in all areas of regulatory compliance, including manufacturing, production and quality control. We will also be required to report certain adverse reactions and production problems, if any, to the FDA and foreign regulatory authorities, when applicable, and to comply with requirements concerning advertising and promotion for our products. Promotional communications with respect to prescription drugs are subject to a variety of legal and regulatory restrictions and must be consistent with the information in the product’s approved labeling. For example, we may not promote our products for indications or uses for which they do not have FDA approval If a regulatory agency discovers problems with a product, such as adverse events of unanticipated severity or frequency, or problems with the facility or the manufacturing process at the facility where the product is manufactured, or problems with the quality of product manufactured, or disagrees with the promotion, marketing, or labeling of a product, a regulatory agency may impose restrictions on that product use, including requiring withdrawal of the product from the market. If we fail to comply with applicable regulatory requirements, a regulatory agency or enforcement authority may:

• issue warning letters;

• impose civil or criminal penalties;

• suspend regulatory approval;

• suspend any of our ongoing clinical trials;

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• refuse to approve pending applications or supplements to approved applications submitted by us;

• impose restrictions on our operations, including closing our contract manufacturers’ facilities; or

• seize or detain products or require a product recall.

Any government investigation of alleged violations of law could require us to expend significant time and resources in response and could generate negative publicity. Any failure to comply with ongoing regulatory requirements may significantly and adversely affect our ability to successfully commercialize and generate additional revenues from RAVICTI and BUPHENYL. We have recently engaged FDA in discussions related to a change we made to an analytical method for RAVICTI without obtaining FDA’s prior approval. If FDA determines that prior approval was required, we could face sanctions. If sanctions are applied or if regulatory approval is withdrawn, the value of our company and our operating results will be adversely affected. Additionally, if we are unable to continue to generate revenues from the sale of RAVICTI and BUPHENYL our potential for maintaining operating profitability will be diminished and the capital necessary to fund our operations will be increased.

If third-party manufacturers fail to comply with manufacturing regulations, our financial results and financial condition will be adversely affected.

Contract manufacturers must obtain and maintain regulatory approval of their manufacturing facilities, processes and quality systems. In addition, pharmaceutical manufacturing facilities are continuously subject to inspection by the FDA and foreign regulatory authorities, before and after product approval. Due to the complexity of the processes used to manufacture pharmaceutical products and product candidates, any potential third-party manufacturer may be unable to continue to pass or initially pass federal, state or international regulatory inspections in a cost effective manner.

If a third-party manufacturer with whom we contract is unable to comply with manufacturing regulations or is unable to consistently produce the product to meet specifications, we may be subject to fines, unanticipated compliance expenses, recall or seizure of our products, total or partial suspension of production and/or enforcement actions, including injunctions, and criminal or civil prosecution. These possible sanctions would adversely affect our financial results and financial condition.

If our competitors are able to develop and market products that are preferred over RAVICTI or BUPHENYL, our commercial opportunity will be reduced or eliminated.

We face competition from established pharmaceutical and biotechnology companies, as well as from academic institutions, government agencies and private and public research institutions, which may in the future develop products to treat UCD or HE. During the lifetime of the United States patents covering RAVICTI, and for any longer period of market exclusivity granted by the FDA for RAVICTI, Ucyclyd and its affiliates are contractually prohibited from developing or commercializing new products, anywhere in the world, for the treatment of UCD or HE that are chemically similar to RAVICTI, except for products delivered parenterally for the treatment of HE. In countries outside the United States, this contractual restriction will continue, on a country-by-basis, for the lifetime of patents covering RAVICTI in each such country and for any longer period of regulatory exclusivity granted for RAVICTI in each such country. Since this restriction only applies to specific indications and products that are chemically similar to RAVICTI, it may not prevent Ucyclyd or its affiliates from developing and commercializing products that compete with RAVICTI. Moreover, products approved for indications other than UCD and HE may compete with RAVICTI if physicians prescribe such products off-label for UCD or HE.

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In November 2011, Ampolgen Pharmaceuticals, LLC received FDA approval for a generic version of NaPBA tablets, which may compete with RAVICTI and BUPHENYL in treating UCD. In March 2013, SigmaPharm Laboratories, LLC received FDA approval for a generic version of NaPBA powder, which competes with BUPHENYL and may compete with RAVICTI in treating UCD. In July 2013, Lucane received marketing approval from the European Medicines Agency for taste-masked NaPBA and has announced a distribution partnership in Canada. In January 2015, Lucane announced it had received marketing approval for its taste masked NaPBA in Canada. It is our understanding that only the first phenylbutyrate-containing product approved for an indication in Canada is eligible for “data protection” which is similar to “orphan drug exclusivity” in the United States. We have been notified by HC that RAVICTI is not eligible for data protection. If we cannot successfully appeal this decision to obtain data protection, we may withdraw our filing to market RAVICTI in Canada. We believe Lucane is also seeking approval via an abbreviated new drug application (“ANDA”) in the United States. If this ANDA is approved, this formulation may compete with RAVICTI and BUPHENYL in treating UCD in the United States. We are also aware that Orphan Europe is conducting a clinical trial of carglumic acid to treat some of the UCD enzyme deficiencies for which RAVICTI was approved. Promethera has successfully completed Phase I/II trials of its cell-based therapy for the treatment of UCD and plans to conduct a Phase IIb/III clinical trial. Aeglea Biotherapeutics has a degrading enzyme treatment in preclinical development for arginase 1 deficiency. Carglumic acid is approved for maintenance therapy for chronic hyperammonemia and to treat HA crises in N-acetylglutamate synthase deficiency, a rare UCD subtype, and is sold under the name Carbaglu. If the results of this trial are successful and Orphan Europe is able to complete development and obtain approval of Carbaglu to treat additional UCD enzyme deficiencies, we would face competition from this compound. In addition, if we complete development, obtain regulatory approval and commercialize GPB to treat HE, we will face competition from Salix Pharmaceuticals, Inc., the manufacturer of rifaximin, as well as generic manufacturers of lactulose. In addition to currently marketed treatments for HE, Ocera Therapeutics, Inc. is conducting a Phase II trial of a compound delivered intravenously to patients with cirrhosis in which they are assessing ammonia control versus placebo and has disclosed it is working to develop an oral formulation for chronic use. In addition, researchers are continually learning more about UCD and HE and new discoveries may lead to new therapies. As a result, RAVICTI and BUPHENYL may be rendered less competitive at any time, or even obsolete. Other early-stage companies may also prove to be significant competitors, particularly through collaborative arrangements with large and established companies.

Our commercial opportunity will be reduced or eliminated if our competitors develop and commercialize products that are safer, more effective, have fewer side effects, are more convenient or are less expensive than RAVICTI and BUPHENYL. We expect that our ability to compete effectively will depend upon, among other things, our ability to:

• successfully and rapidly complete clinical trials and obtain all requisite regulatory approvals in a timely and cost-effective manner;

• extend patent protection for RAVICTI or otherwise prevent the introduction of generics of RAVICTI;

• attract and retain key personnel;

• maintain an adequate sales and marketing infrastructure;

• identify patients able and willing to adopt RAVICTI as a replacement for NaPBA or any other UCD treatment options;

• obtain adequate reimbursement from third-party payors; and

• maintain positive relationships with the patient community.

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If GPB is approved and marketed to treat HE in the future, the cost of RAVICTI to treat UCD may decline significantly, which could materially affect our UCD revenues.

The same active ingredient underlies RAVICTI to treat UCD and GPB which we have in trials for HE. Given the relative differences in the size of the affected patient populations in UCD and HE, respectively, the number of requests third-party payors receive to reimburse drugs for the treatment of HE is significantly greater than the number of requests for UCD. As a result, and given the common active ingredient we will likely experience greater pricing pressure for RAVICTI if GPB is approved by the FDA to treat HE. We do not currently have a plan to differentiate the formulations for UCD and HE, nor can we guarantee success if we attempt to differentiate the formulation. We expect the required dosing volume for HE to be similar to the average required dosing for UCD. If GPB is approved by the FDA for HE, and we decide to make it commercially available , we may need to significantly decrease the price for RAVICTI from that established with respect to UCD or offer discounts to third party payors for HE prescriptions in order to gain third-party reimbursement for broad use in HE patients. This would result in a significant decrease in revenues generated by the UCD patient population. We believe GPB revenue potential for HE is much larger than RAVICTI is for UCD; however, if the market for GPB in HE is significantly smaller than we anticipate, if the required commercial operations are more expensive than we anticipate, or if we are unsuccessful in any commercial launch of GPB for the treatment of HE, total RAVICTI revenues may decrease significantly and we may be unable to achieve or maintain operating profitability. If the RAVICTI price is decreased with the introduction of the drug for HE, we may need to decrease our UCD specialty pharmacy and patient support service offerings. This may result in lower UCD revenues due to fewer UCD patients electing to begin use of RAVICTI and/or remain compliant.

Budget constraints may require us to limit our expenditure of resources and bypass opportunities to develop particular product candidates or indications.

Because we have limited financial and human resources and drug development is an expensive process, we must regularly assess the most efficient allocation of our resources, focusing on development programs and product candidates for the specific indications that we believe are the most scientifically and commercially promising. Accordingly, we may choose to delay our development efforts for a promising product candidate or we may elect to terminate our programs for and, in certain cases, our licenses to, such product candidates or programs in order to allocate resources to other programs, which could cause us to alter near-term development and/or commercialization objectives. As a result, we may not be able to fully realize the value of some of our product candidates in a timely manner, since those products will be delayed in reaching the market, or may not reach the market at all. If we terminate a clinical program in which we have invested significant resources, we will have expended resources on a program that will not provide a return on our investment.

Furthermore, our resource allocation decisions, and our decisions about whether and how to develop or commercialize any particular product candidate may be based on evaluations of the scientific and commercial potential or target market for the product candidate that later prove to be inaccurate. If we enter into collaborations, licensing or other royalty arrangements to develop or commercialize a particular product candidate, we may relinquish valuable rights to that product candidate in situations where it would have been more advantageous for us to retain rights to development and commercialization. For example, we continue to evaluate the available commercial data on HE as we move forward with our clinical program in GPB for that indication and will be continually assessing all relevant scientific and commercial factors in determining whether to continue our development of GPB as a treatment for HE.

If we are unable to maintain an effective sales force or expand it as needed as our operations grow, our business may be harmed.

We market RAVICTI and BUPHENYL directly to physicians in the United States through our own sales force and plan to market through our own sales force if we receive marketing approval and data protection for

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RAVICTI and launch in Canada. We will need to continue to incur significant expenses and commit significant management resources to train our sales force to market and sell RAVICTI and BUPHENYL. We may not be able to effectively maintain these capabilities and expand them into Canada, if needed, despite these expenditures. We will also have to compete with other pharmaceutical and life sciences companies to recruit, hire, train and retain sales and marketing personnel. In the event we are unable to successfully maintain and expand our marketing and promotion of RAVICTI and BUPHENYL, our business may be harmed.

If we are found to be in violation of federal or state “fraud and abuse” laws, we may be required to pay a penalty and/or be suspended from participation in federal or state health care programs, which may adversely affect our business, financial condition and results of operation.

In the United States, we are subject to various federal and state health care “fraud and abuse” laws, including anti-kickback laws, false claims laws and other laws intended to reduce fraud and abuse in federal and state health care programs. The federal Medicare-Medicaid Anti-Fraud and Abuse Act (the “Anti-Kickback Statute”), makes it illegal for any person, including a prescription drug manufacturer (or a party acting on its behalf), to knowingly and willfully solicit, receive, offer or pay any remuneration that is intended to induce the referral of business, including the purchase, order or prescription of a particular drug for which payment may be made under a federal health care program, such as Medicare or Medicaid. Under federal government regulations, some arrangements, known as safe harbors, are deemed not to violate the federal Anti-Kickback Statute. Although we seek to structure our business arrangements in compliance with all applicable requirements, these laws are broadly written, and it is often difficult to determine precisely how the law will be applied in specific circumstances. Accordingly, it is possible that our practices may be challenged under the federal Anti-Kickback Statute. False claims laws prohibit anyone from knowingly and willfully presenting or causing to be presented for payment to third-party payors, including government purchasers, claims for reimbursed drugs or services that are false or fraudulent, claims for items or services that were not provided as claimed, or claims for medically unnecessary items or services. Cases have been brought under false claims laws alleging that off-label promotion and other forms of improper promotion of pharmaceutical products or the provision of kickbacks has resulted in the submission of false claims to governmental health care programs. Under the Health Insurance Portability and Accountability Act of 1996, we are prohibited from knowingly and willfully executing a scheme to defraud any health care benefit program, including private payors, or knowingly and willfully falsifying, concealing or covering up a material fact or making any materially false, fictitious or fraudulent statement in connection with the delivery of or payment for health care benefits, items or services. Violations of fraud and abuse laws may be punishable by criminal and/or civil sanctions, including fines and/or exclusion or suspension from federal and state health care programs such as Medicare and Medicaid and debarment from contracting with the U.S. government. In addition, private individuals have the ability to bring actions on behalf of the government under the federal False Claims Act as well as under the false claims laws of several states.

Many states have adopted laws similar to the federal anti-kickback statute, some of which apply to the referral of patients for health care services reimbursed by any source, not just governmental purchasers. In addition, California and a few other states have passed laws that require pharmaceutical companies to comply with the May 2003 Office of Inspector General Compliance Program Guidance for Pharmaceutical Manufacturers and/or the Pharmaceutical Research and Manufacturers of America Code on Interactions with Healthcare Professionals. In addition, several states impose other marketing restrictions or require pharmaceutical companies to make marketing or price disclosures to the state. There are ambiguities as to what is required to comply with these state requirements and if we fail to comply with an applicable state law requirement we could be subject to penalties.

Neither the government nor the courts have provided definitive guidance on the application of fraud and abuse laws to our business. Law enforcement authorities are increasingly focused on enforcing these laws, and it is possible that some of our practices may be challenged under these laws. While we believe we have structured our business arrangements to comply with these laws, it is possible that the government could allege violations of

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these laws, engage in burdensome investigations, or convict us of violations. If we are found in violation of one of these laws, we could be required to pay a penalty and could be suspended or excluded from participation in federal or state health care programs, and our business, financial condition and results of operations may be adversely affected.

Recently enacted and future legislation may increase the difficulty and cost for us to obtain marketing approval of and commercialize our product candidates and may affect the prices we may obtain.

The United States and many foreign jurisdictions have enacted or proposed legislative and regulatory changes affecting the healthcare system that could prevent or delay marketing approval of our product candidates, restrict or regulate post-marketing activities and affect our ability to profitably sell our products for which we obtain marketing approval.

In the United States, the Affordable Care Act is intended to broaden access to health insurance, reduce or constrain the growth of healthcare spending, enhance remedies against healthcare fraud and abuse, add new transparency requirements for healthcare and health insurance industries, impose new taxes and fees on the health industry and impose additional health policy reforms. Among other things, the Affordable Care Act expanded manufacturers’ rebate liability under the Medicaid Drug Rebate Program by increasing the minimum rebate for both branded and generic drugs and revising the definition of “average manufacturer price,” (“AMP”), for reporting purposes, which could increase the amount of Medicaid drug rebates manufacturers are required to pay to states. The legislation also expanded the scope of the Medicaid drug rebate program;-rebates previously had been payable only on fee-for-service utilization, but are now also payable on Medicaid managed care utilization. It also created an alternative rebate formula for certain innovator products that qualify as line extensions of certain existing products, which is likely to increase the rebates due on those drugs. CMS, which administers the Medicaid Drug Rebate Program, has issued proposed regulations to implement the changes to the Medicaid Drug Rebate program under the Affordable Care Act and subsequent legislation but has not yet issued final regulations. CMS has proposed to expand Medicaid rebates to the utilization that occurs in the territories of the United States, such as Puerto Rico and the Virgin Islands. Federal law requires that any company that participates in the Medicaid rebate program also participate in the Public Health Service’s 340B drug pricing discount program in order for federal funds to be available for the manufacturer’s drugs under Medicaid and Medicare Part B. The Affordable Care Act also expanded the types of entities eligible to receive discounted 340B pricing, although, with the exception of children’s hospitals, these newly eligible entities will not be eligible to receive discounted 340B pricing on orphan drugs when those products are used for their orphan indication. In addition, as 340B drug pricing is determined based on AMP and Medicaid rebate data, the revisions to the Medicaid rebate formula and AMP definition described above will cause the required 340B discount to increase.

Further the Affordable Care Act imposed a significant annual branded prescription drug fee on companies that manufacture or import branded prescription drug products and requires manufacturers to provide a 50% discount off the negotiated price of prescriptions filled by beneficiaries in the Medicare Part D coverage gap, referred to as the “donut hole.” Substantial new provisions affecting compliance have also been enacted, which may require us to modify our business practices related to interactions with healthcare providers. Also under the Affordable Care Act pharmaceutical manufacturers are subject to new federal reporting and disclosure requirements with regard to payments or other transfers of value made to certain healthcare providers. Reports submitted under these federal requirements are placed in a public database.

Notably, a significant number of provisions are not yet, or have only recently become effective. Although it is too early to determine the full effect of the Affordable Care Act, the law appears likely to continue the downward pressure on pharmaceutical pricing, especially under the Medicaid program, and may also increase our regulatory burdens and operating costs.

In addition, other legislative changes have been proposed and adopted since the Affordable Care Act was enacted. For example, the Budget Control Act of 2011, among other things, created the Joint Select Committee

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on Deficit Reduction to recommend to Congress proposals in spending reductions. The Joint Select Committee on Deficit Reduction did not achieve a targeted deficit reduction of at least $1.2 trillion for fiscal years 2012 through 2021, triggering the legislation’s automatic reduction to several government programs. This includes aggregate reductions to Medicare payments to providers of up to 2% per fiscal year, which started in 2013.

We expect that the Affordable Care Act, as well as other healthcare reform measures that have and may be adopted in the future, may result in more rigorous coverage criteria and in additional downward pressure on the price that we receive for any approved product, and could seriously harm our future revenues. Any reduction in reimbursement from Medicare or other government programs may result in a similar reduction in payments from private payors. The implementation of cost containment measures or other healthcare reforms may prevent us from being able to generate revenue, attain profitability or commercialize our products. In addition, increased scrutiny by the United States Congress of the FDA’s approval process may significantly delay or prevent marketing approval, as well as subject us to more stringent product labeling and post-marketing testing and other requirements. Furthermore, the concerns raised by patients, patient advocacy groups and congressional representatives about the recent pricing of orphan drugs, could result in changes to the Orphan Drug Act or limitations in the approval pathway or pricing and reimbursement of orphan drugs.

Risks Related to Our Financial Position and Need for Additional Capital

We currently have a limited source of revenue and may not sustain operating profitability.

We started generating product revenue during 2013. Our ability to generate continued product revenue depends on a number of factors, including our ability to:

• maintain an acceptable price for our UCD products;

• maintain market acceptance for RAVICTI as an alternative to BUPHENYL;

• obtain commercial quantities of our UCD products at acceptable cost levels;

• maintain adequate reimbursement from third-party payors;

• successfully continue marketing and selling our UCD products in the United States and expand to markets outside the United States;

• delay the introduction of additional generics and new therapies and the impact of new therapies to treat UCD and HE and generic versions of our UCD products;

• maintain our licenses or sublicenses to intellectual property rights to RAVICTI; and

• maintain existing distribution agreements for BUPHENYL outside the United States.

In addition, because of the numerous risks and uncertainties associated with product development and commercialization, we are unable to predict the timing or amount of increased expenses, or when, or if, we will be able to achieve or sustain operating profitability.

Even as we are able to generate revenues from the sale of our products, we may not achieve sustainable operating profitability and may need to obtain additional funding to continue operations. If we are unable to achieve and sustain operating profitability on a continuing basis, then we may be unable to continue our operations at planned levels and be forced to reduce our operations.

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We have incurred net operating losses on an annual basis since inception and anticipate that we may continue to incur operating losses for the foreseeable future.

We have incurred losses from operations in each year since our inception on November 1, 2006. As of December 31, 2014, we had an accumulated deficit of $128.6 million. We have devoted most of our financial resources to research and development, including our nonclinical development activities and clinical trials. To date, we have financed our operations primarily through the sale of equity securities and debt. Although RAVICTI is now providing us with sustained revenues in the U.S., it will require significant ongoing marketing efforts and substantial investment before it can provide us with revenues outside the U.S. We expect our research and development expenses to continue to be significant in connection with our ongoing and planned clinical trials for RAVICTI in UCD and GPB in HE and any other clinical trials or nonclinical testing that we may initiate. In addition, we expect to incur increased sales and marketing expenses. Further, we will continue to incur significant legal expenses related to the Par litigation until the case has settled or been fully adjudicated. In addition, we may continue to incur DiaPep277-related expenses. As a result, we may continue to incur significant operating losses for the foreseeable future. These losses have had and will continue to have an adverse effect on our stockholders’ equity and working capital.

We may need to obtain additional financing to fund our operations.

We may need to obtain additional financing to have sufficient resources to fund current or future programs. Our future funding requirements will depend on many factors, including, but not limited to:

• our ability to successfully maintain sales of RAVICTI and BUPHENYL for the treatment of UCD including selling prices for those products and the maintenance of adequate third party reimbursement;

• the costs of filing, prosecuting, defending and enforcing any patent claims and other intellectual property rights;;

• the costs of litigation relating to Par, Andromeda or other disputes that we may become a party to;

• the costs of integrating acquired businesses or technologies; the amount of sales or other revenues from product candidates, including GPB for the treatment of HE, that we may develop or acquire, including the selling prices for such products and the availability of adequate third-party reimbursement;

• selling and marketing costs associated with our UCD products, including the cost and timing of expanding our marketing and sales capabilities;

• the progress, timing, scope and costs of our nonclinical studies and clinical trials, including the ability to timely enroll patients in our planned and potential future clinical trials;

• the time and cost necessary to obtain regulatory approvals and the costs of post-marketing studies that may be required by regulatory authorities;

• the costs of obtaining clinical and commercial supplies of RAVICTI and BUPHENYL;

• payments of milestones and royalties to third parties, including Ucyclyd;

• cash requirements of any future acquisitions of products or product candidates;

• the time and cost necessary to respond to technological and market developments;

• changes to the design of our clinical trials; and

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• Any new collaborative, licensing, acquisition and other commercial relationships that we may establish.

If we need to obtain additional financing to fund our operations, we expect to finance such future cash needs through public or private equity offerings or debt financings. Additional funds may not be available when we need them on terms that are acceptable to us, or at all. If adequate funds are not available, we may be required to delay or reduce the scope of or eliminate one or more of our research or development programs or our commercialization efforts. We may seek to access the public or private capital markets whenever conditions are favorable, even if we do not have an immediate need for additional capital at that time. Our inability to obtain additional funding when we need it could seriously harm our business.

We may sell additional equity or debt securities to fund our operations, which may result in dilution to our stockholders and impose restrictions on our business.

In order to raise additional funds to support our operations, we may sell additional equity or debt securities, including convertible debt, which would result in dilution to all of our stockholders or impose restrictive covenants that adversely impact our business. The incurrence of additional indebtedness would result in increased fixed payment obligations and could also result in more restrictive covenants than those contained in our loan with Silicon Valley Bank, such as limitations on our ability to incur additional debt, limitations on our ability to acquire, sell or license intellectual property rights and other operating restrictions that could adversely impact our ability to conduct our business. If we are unable to expand our operations or otherwise capitalize on our business opportunities, our business, financial condition and results of operations could be materially adversely affected.

Risks Related to Our Reliance on Third Parties

We have no manufacturing capacity and anticipate continued reliance on third-party manufacturers for the development and commercialization of our products.

We do not currently operate manufacturing facilities for clinical or commercial production of RAVICTI or BUPHENYL. We lack the resources and the capabilities to manufacture RAVICTI or BUPHENYL in our own facilities on a clinical or commercial scale. We do not intend to develop facilities for the manufacture of products for clinical trials or commercial purposes in the foreseeable future. We rely on third-party manufacturers to produce bulk drug substance and finished drug products required for our clinical trials and commercial sale. We plan to continue to rely upon contract manufacturers to manufacture clinical and commercial quantities of RAVICTI and BUPHENYL and the related bulk drug substances. We have bulk drug substance for the production of clinical and commercial supplies of RAVICTI manufactured for us by Helsinn Advanced Synthesis SA (Switzerland) and DPx Fine Chemicals Austria GmbH on a purchase order basis. We have bulk drug substance for the production of clinical and commercial supplies of BUPHENYL manufactured for us by CU Chemie Uetikon GmbH (Germany). We have clinical and commercial supplies of BUPHENYL finished product manufactured for us by Pharmaceutics International, Inc. on a purchase order basis. We have clinical and commercial supplies of RAVICTI finished drug product manufactured by Lyne Laboratories, Inc. under a commercial supply agreement and have an agreement in place at Halo Pharmaceutical, Inc., with Halo to serve as a secondary finished drug product supplier for RAVICTI. If we need to identify an additional fill/finish manufacturer, we would not be able to do so without significant delay and likely significant additional cost.

Our contract manufacturers’ failure to achieve and maintain high manufacturing standards, in accordance with applicable regulatory requirements, or the incidence of manufacturing errors, could result in patient injury or death, product shortages, product recalls or withdrawals, delays or failures in product testing or delivery, cost overruns or other problems that could seriously harm our business. Contract manufacturers often encounter difficulties involving production yields, quality control and quality assurance, as well as shortages of qualified

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personnel. Our existing manufacturers and any future contract manufacturers may not perform as agreed or may not remain in the contract manufacturing business. In the event of a natural disaster, business failure, strike or other difficulty, we may be unable to replace a third-party manufacturer in a timely manner and the production of our UCD products would be interrupted, resulting in delays, additional costs and lost revenues which could be material.

In addition, because our contract manufacturers of the RAVICTI and BUPHENYL bulk drug substance are located outside of the United States, we may face difficulties in importing bulk product into the United States as a result of, among other things, FDA import inspections or bans, incomplete or inaccurate import documentation, product loss or diversion, or defective packaging.

Some of the intellectual property necessary for the commercialization of our UCD products is or will be licensed from third parties, which will require us to pay milestones and royalties.

Ucyclyd has granted us a license to use some of the technology developed by Ucyclyd in connection with the manufacturing of RAVICTI. The purchase agreement under which we purchased the worldwide rights to RAVICTI further obligates us to pay Ucyclyd regulatory and sales milestone payments relating to RAVICTI, as well as royalties on the net sales of RAVICTI. On May 31, 2013, when we acquired BUPHENYL, under the restated collaboration agreement with Ucyclyd, we received a license to use some of the manufacturing technology developed by Ucyclyd in connection with the manufacturing of BUPHENYL. The restated collaboration agreement further obligates us to pay Ucyclyd regulatory and sales milestone payments, as well as royalties on net sales of BUPHENYL.

We may become obligated to make a milestone or royalty payments when we do not have the cash on hand to make these payments, or have budgeted cash for our development efforts. This could cause us to delay our development efforts, curtail our operations, scale back our commercialization and marketing efforts or seek additional capital to meet these obligations, which could be on terms unfavorable to us. Additionally, if we fail to make a required payment to Ucyclyd and do not cure the failure with the required time period, Ucyclyd may be able to terminate our license to use its manufacturing technology for our UCD products.

We also license intellectual property necessary for commercialization of RAVICTI from Brusilow Enterprises, LLC (“Brusilow”). Brusilow may be entitled to terminate our license if we breach that agreement or do not meet specified diligence obligations in our development and commercialization of RAVICTI and do not cure the failure within the required time period. If our license from Brusilow is terminated, it may be difficult or impossible for us to continue to commercialize RAVICTI.

Any collaboration arrangements that we may enter into in the future may not be successful, which could adversely affect our ability to develop and commercialize our current and potential future product candidates.

We may seek collaboration arrangements with pharmaceutical or biotechnology companies for the development or commercialization of our current and potential future product candidates. We may enter into these arrangements on a selective basis depending on the merits of retaining commercialization rights for ourselves as compared to entering into selective collaboration arrangements with leading pharmaceutical or biotechnology companies for each product candidate, both in the United States and internationally. We will face, to the extent that we decide to enter into collaboration agreements, significant competition in seeking appropriate collaborators. Moreover, collaboration arrangements are complex and time consuming to negotiate, document and implement. We may not be successful in our efforts to establish and implement collaborations or other alternative arrangements should we so chose to enter into such arrangements. The terms of any collaboration or other arrangements that we may establish may not be favorable to us.

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Any future collaboration that we enter into may not be successful. The success of our collaboration arrangements will depend heavily on the efforts and activities of our collaborators. Collaborators generally have significant discretion in determining the efforts and resources that they will apply to these collaborations.

Disagreements between parties to a collaboration arrangement regarding clinical development and commercialization matters, can lead to delays in the development process or commercializing the applicable product candidate and, in some cases, termination of the collaboration arrangement. These disagreements can be difficult to resolve if neither of the parties has final decision making authority.

Collaborations with pharmaceutical or biotechnology companies and other third parties often are terminated or allowed to expire by the other party. Any such termination or expiration would adversely affect us financially and could harm our business reputation.

We currently depend on third parties to conduct some of the operations of our clinical trials.

We rely on third parties, such as contract research organizations, medical institutions, clinical investigators and contract laboratories to conduct and/or oversee many of the operations of our clinical trials and to perform data collection and analysis. As a result, we may face additional delays outside of our control if these parties do not perform their obligations in a timely fashion or in accordance with regulatory requirements. If these third parties do not successfully carry out their contractual duties or obligations and meet expected deadlines, if they need to be replaced, or if the quality or accuracy of the clinical data they obtain is compromised due to the failure to adhere to our clinical protocols or for other reasons, our financial results and the commercial prospects for RAVICTI in UCD or GPB in HE or our potential future product candidates could be harmed, our costs could increase and our ability to obtain regulatory approval and commence product sales could be delayed

Risks Related to Our Business Operations and Industry

We may experience diversion of management attention in the implementation of our agreement with CBI to complete the DiaPep277 clinical trial under the oversight of a Steering Committee

On February 16, 2015 we entered into a Completion of Phase III Clinical Trial, Option and Mutual Release Agreement ( the “Release Agreement”) with CBI and Yeda Research and Development Company Ltd (“Yeda”) to resolve our disputes with those parties after we determined certain employees at Andromeda had engaged in serious misconduct, including collusion with a third party biostatistics firm to improperly receive un-blinded trial data from DiaPep277’s initial Phase 3 trial and to use the data to manipulate the analyses to obtain a favorable result. Hyperion further determined that the involved employees and the biostatistics firm continued the improper practice of sharing un-blinded data from DiaPep’s second Phase III trial, the (“1001 trial”). Under the terms of the Release Agreement, we will complete the ongoing 1001 clinical trial, as previously announced, and CBI will have an option to repurchase all of the outstanding stock of Andromeda exercisable through September 30, 2015. If CBI does not exercise its option, DiaPep277 and all related intellectual property will revert to Yeda under Yeda’s license agreement with Andromeda. Prior to the exercise or termination of CBI’s purchase option, oversight of the 1001 trial’s completion will be handled by a Steering Committee comprised of one member from each of CBI, Yeda and us. Although we will not have a vote on the Steering Committee, as the 1001 trial sponsor we will be responsible for all operational aspects of completing the trial. Our obligations include complying with clinical and regulatory obligations, such as preparation and filing of the final Clinical Study Report related to the 1001 trial. As a result, our clinical and regulatory personnel may have their time diverted from our UCD and HE programs to attend to the completion of the DiaPep277 program, and our appointee to the Steering Committee may also be diverted from his or her primary responsibilities in order to manage decisions and processes related to the completion of the 1001 trial and the orderly transition of the DiaPep 277 program to CBI should CBI exercise its option or to Yeda should the technology revert to Yeda.

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We retained certain liabilities under the Release Agreement with Yeda and CBI and cannot be certain that new disputes will not arise among the parties to the Release Agreement

Although the Release Agreement resolves the disputes among the parties relating to DiaPep277, we cannot be certain that additional legal disputes will not arise among the parties during the term of CBI’s option or after. Further, under the terms of the Release Agreement, the Company agreed to retain certain liabilities relating to its ownership of Andromeda, including any liability related to or based on the misconduct of certain former Andromeda employees that led to its decision to terminate further development of DiaPep277. For example, in February 2015, one of the former employees of Andromeda sued us in Israeli labor court for wrongful dismissal and related employment causes of action. In addition to these potential liabilities, we may incur currently unknown liabilities related to our acquisition of Andromeda. Any such potential legal dispute could lead to costly litigation, divert management’s attention from our core business and harm our business.

We depend upon our key personnel and our ability to attract and retain employees.

Our future growth and success depend on our ability to recruit, retain, manage and motivate our employees. The loss of the services of any member of our senior management or the inability to hire or retain experienced management personnel could adversely affect our ability to execute our business plan and harm our operating results.

Because of the specialized scientific and managerial nature of our business, we rely heavily on our ability to attract and retain qualified scientific, technical and managerial personnel. In particular, the loss of one or more of our senior executive officers could be detrimental to us if we cannot recruit suitable replacements in a timely manner. We do not currently carry “key person” insurance on the lives of members of senior management. The competition for qualified personnel in the pharmaceutical field is intense. Due to this intense competition, we may be unable to continue to attract and retain qualified personnel necessary for the development of our business or to recruit suitable replacement personnel.

Forecasting sales of our products is difficult and revenue recognition may be deferred. If our revenue projections are inaccurate or revenue is deferred and our business forecasting and planning decisions are not reflected in our actual results, our business may be harmed and our future prospects may be adversely affected.

Our management must make forecasting decisions regarding future revenue in the course of business planning despite uncertainty, and actual results of operations may deviate materially from projected results. For example, payor mix estimates are made for RAVICTI and BUPHENYL patients and are difficult to forecast. Further, because RAVICTI is an oral liquid distributed in 25 mL bottles and because dosing is individualized, patients may receive more medication than they are prescribed each month and may not refill in a subsequent month. Finally, we switched our method of revenue recognition for RAVICTI from the “sell through” method in which revenue is booked when product is shipped to the patient to the “sell in” method in which revenue is recognized when product is shipped to the distributor, only in the second quarter of 2014. Accordingly, we may not be able to accurately predict demand for our products by our customers. A shortfall in our revenue would have a direct impact on our cash flow and on our business in general. In addition, fluctuations in our quarterly revenue results can adversely and significantly affect the market price of our common stock. If our revenue or operating results fall below the expectations of analysts or investors or below any forecasts we may provide to the market, or if the forecasts we provide to the market are below the expectations of analysts or investors, the price of our common stock could decline substantially.

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There are inherent uncertainties involved in the estimates, judgments and assumptions used in the preparation of our financial statements, and any changes in those estimates, judgments and assumptions could have a material adverse effect on our financial condition and results of operations.

The consolidated financial statements that we file with the SEC are prepared in accordance with U.S. GAAP. The preparation of financial statements in accordance with U.S. GAAP involves making estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and the related disclosure of contingent assets and liabilities. A summary of our significant accounting practices is included in Note 2—“Summary of Significant Accounting Policies” of the notes to the consolidated financial statements included elsewhere in this report. We periodically evaluate estimates used in the preparation of the consolidated financial statements for reasonableness, including estimates provided by third parties. Appropriate adjustments to the estimates will be made prospectively, as necessary, based on such periodic evaluations. We base our estimates on, among other things, currently available information, market conditions, historical experience and various assumptions, which together form the basis of making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Although we believe that our assumptions are reasonable under the circumstances, estimates would differ if different assumptions were utilized and these estimates may prove in the future to have been inaccurate.

Our financial results depend on management’s selection of accounting methods and certain assumptions and estimates.

Our accounting policies and methods are fundamental to how we record and report our financial condition and results of operations. Our management must exercise judgment in selecting and applying many of these accounting policies and methods so they comply with generally accepted accounting principles and reflect management’s judgment of the most appropriate manner to report our financial condition and results. In some cases, management must select the accounting policy or method to apply from two or more alternatives, any of which may be reasonable under the circumstances, yet may result in our reporting materially different results than would have been reported under a different alternative.

Certain accounting policies are critical to presenting our financial condition and results. The preparation of our financial statements require us to make significant estimates, assumptions and judgments that affect the amounts of assets, liabilities, revenues and expenses and related disclosures. Significant estimates made by us include assumptions used in the determination of revenue recognition and the calculation of reserves, the fair value of marketable securities and notes payable, fair value measurement of tangible and intangible assets, stock-based compensation and the provision for income taxes. Although we base our estimates and judgments on historical experience, our interpretation of existing accounting literature and on various other assumptions that we believe to be reasonable under the circumstances, if our interpretation or application of existing accounting literature is deemed to be materially incorrect, actual results may differ materially from these estimates.

A failure to maintain optimal inventory levels to meet commercial demand for our products could harm our reputation and subject us to financial losses.

Because accurate product planning is necessary to ensure that we maintain optimal inventory levels, significant differences between our current estimates and judgments and future estimated demand for our products and the useful life of inventory may result in significant charges for excess inventory or purchase commitments in the future. If we are required to recognize charges for excess inventories, such charges could have a material adverse effect on our financial condition and results of operations. Our ability to maintain optimal inventory levels also depends on the performance of third-party contract manufacturers. If our manufacturers are unsuccessful in either obtaining raw materials or manufacture, if we are unable to release inventory on a timely and consistent basis, if we fail to maintain an adequate level of product inventory, if inventory is destroyed or damaged, or if our inventory reaches its expiration date, patients might not have access

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to our products, our reputation and brands could be harmed, and physicians may be less likely to prescribe our products in the future, each of which could have a material adverse effect on our business, financial condition, results of operations, and cash flows.

We may need to increase the size of our organization, and we may experience difficulties in managing growth.

We are a small company with 80 full-time employees as of December 31, 2014. In order to commercialize our products and continue planned clinical development, we need to maintain our employee base of managerial, operational and financial personnel. Future growth will impose significant added responsibilities on members of management, including the need to identify, recruit, maintain and integrate additional employees. Our future financial performance and our ability to commercialize our products and to compete effectively will depend, in part, on our ability to manage any future growth effectively. To that end, we must be able to:

• manage our clinical trials and the regulatory process effectively;

• manage the manufacturing and distribution of products for commercial and clinical use;

• integrate current and additional management, administrative, financial and sales and marketing personnel;

• hire new personnel necessary to effectively commercialize product and/or product candidates we in-license or acquire;

• develop our administrative, accounting and management information systems and controls; and

• hire and train additional qualified personnel.

Product candidates that we may acquire in the future may be intended for patient populations that are significantly larger than those for UCD and HE. In order to continue development and marketing of these products, if approved, we would need to significantly expand our operations. Our staff, financial resources, systems, procedures or controls may be inadequate to support our operations and our management may be unable to manage successfully future market opportunities or our relationships with customers and other third parties.

If we engage in acquisitions or acquire additional products or technologies, we will incur a variety of costs, may have integration difficulties and may experience numerous other risks that could adversely affect our business.

We may decide to acquire businesses, additional products or technologies that we believe will maximize shareholder value. Although we acquired BUPHENYL in May 2013, we have limited experience in successfully acquiring and integrating products into our current infrastructure. We may not be able to successfully integrate technologies or products without a significant expenditure of operating, financial and management resources. In addition, other acquisitions of products or technologies could require significant capital infusions and could involve many risks, including, but not limited to the following:

• acquisitions may negatively impact our results of operations because they may require us to: incur large one-time charges to earnings, amortize or write down amounts related to goodwill and other intangible assets, as occurred in our acquisition of Andromeda, incur or assume substantial debt or liabilities, or may cause adverse tax consequences or substantial depreciation;

• we may encounter difficulties in assimilating and integrating the business, technologies or products that we acquire;

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• acquisitions may require significant expected and unanticipated capital infusions, and the acquired products or technologies may not generate sufficient revenue to offset acquisition costs;

• acquisitions may disrupt our ongoing business, divert resources, increase our expenses and distract our management; and

• acquisitions may involve the entry into a geographic or business market in which we have little or no prior experience.

Any of the foregoing risks could have a significant adverse effect on our business, financial condition and results of operations.

Our failure to adequately address the financial, operational or legal risks of any acquisitions could harm our business. In addition to the financial and operational risks associated with acquisitions enumerated above that could adversely affect our business, the legal risks associated with business acquisitions include the assumption of known and unknown liabilities of the acquired company, including potential intellectual property claims, contract, tort and employment claims. For example, in connection with the misconduct we discovered in the DiaPep277 clinical program, we face a variety of potential liabilities, including in connection with the termination of Andromeda employees engaged in the misconduct. For example, in February 2015, one of the former employees of Andromeda sued us in Israeli labor court for wrongful dismissal and related employment causes of action.

Our business is affected by macroeconomic conditions.

Various macroeconomic factors could adversely affect our business and the results of our operations and financial condition, including changes in inflation, interest rates and foreign currency exchange rates as well as overall economic conditions and uncertainties resulting from current and future conditions in the global financial markets. For instance, if inflation or other factors were to significantly increase our business costs, it may not be feasible to pass through price increases to patients. Interest rates, the liquidity of the credit markets and the volatility of the capital markets could also affect the value of our investments and our ability to liquidate our investments in order to fund our operations.

Interest rates and the ability to access credit markets could also adversely affect the ability of patients and distributors to purchase, pay for and effectively distribute our products. Similarly, these macroeconomic factors could affect the ability of our contract manufacturers, sole-source or single-source suppliers to remain in business or otherwise manufacture or supply product. Failure by any of them to remain a going concern could affect our ability to manufacture and/or supply products.

If product liability lawsuits are successfully brought against us, we will incur substantial liabilities and may be required to limit the commercialization of RAVICTI, BUPHENYL or other products.

We face potential product liability exposure related to marketing and distributing our products commercially as well as testing of our product candidates in human clinical trials. An individual may bring a liability claim against us alleging that one of our products or product candidates caused an injury. If we cannot successfully defend ourselves against product liability claims, we will incur substantial liabilities. Regardless of merit or eventual outcome, liability claims may result in:

• decreased demand for our products;

• injury to our reputation;

• withdrawal of clinical trial participants;

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• costs of related litigation;

• substantial monetary awards to patients and others;

• loss of revenues; and

• the inability to commercialize our products.

In addition, while we continue to take what we believe are appropriate precautions, we may be unable to avoid significant liability if any product liability lawsuit is brought against us.

If product liability lawsuits are successfully brought against us our insurance may be inadequate.

We are exposed to the potential product liability risks inherent in the testing, manufacturing and marketing of human pharmaceuticals. We maintain insurance against product liability lawsuits for commercial sale of RAVICTI and BUPHENYL. We currently maintain insurance for the clinical trials and commercial sale of RAVICTI and BUPHENYL. Biopharmaceutical companies must balance the cost of insurance with the level of coverage based on estimates of potential liability. Historically, the potential liability associated with product liability lawsuits for pharmaceutical products has been unpredictable. Although we believe that our current insurance is a reasonable estimate of our potential liability and represents a commercially reasonable balancing of the level of coverage as compared to the cost of the insurance, we may be subject to claims for which our insurance coverage may not be adequate. If we are the subject of a successful product liability claim that exceeds the limits of any insurance coverage we obtain, we may incur substantial charges that would adversely affect our earnings and require the commitment of capital resources that might otherwise be available for the development and commercial launch of our product programs.

Business interruptions could delay us in the process of developing our products and could disrupt our sales.

Our headquarters is located in the San Francisco Bay area near known earthquake fault zones and is vulnerable to significant damage from earthquakes. We are also vulnerable to other types of natural disasters and other events that could disrupt our operations. We do not carry insurance for earthquakes or other natural disasters and we may not carry sufficient business interruption insurance to compensate us for losses that may occur. Any losses or damages we incur could have a material adverse effect on our business operations.

Risks Related to Ownership of Our Common Stock

The market price of our common stock has been and will likely continue to be highly volatile.

The trading price of our common stock has been and is likely to continue to be volatile. Since our initial public offering, our closing stock price as reported on the NASDAQ Global Stock Market has ranged from $10.04 to $31.87 as of February 25, 2015. The following factors, in addition to other risk factors described in this section, may have a significant impact on the market price of our common stock:

• announcements of therapeutic innovations or new products by us or our competitors;

• announcements with respect to CBI’s decision to exercise or not exercise its option to acquire Andromeda;

• adverse actions taken by regulatory agencies with respect to our clinical trials, manufacturing supply chain or sales and marketing activities;

• changes or developments in laws or regulations applicable to RAVICTI and BUPHENYL;

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• any adverse changes to our relationship with Ucyclyd or other licensors, manufacturers or suppliers;

• the success of our testing and clinical trials;

• the success of our efforts to acquire or in-license additional products or product candidates;

• any action in the Par litigation or any other intellectual property actions in which we may become involved;

• announcements concerning our competitors or the pharmaceutical industry in general;

• achievement of expected product sales and profitability;

• manufacture, supply or distribution shortages;

• actual or anticipated fluctuations in our operating results;

• changes in financial estimates or recommendations by securities analysts;

• trading volume of our common stock;

• sales of our common stock by us, our executive officers and directors or our stockholders in the future;

• general global economic and market conditions and overall fluctuations in the United States equity markets;

• changes in accounting principles; and

• the loss of any of our key scientific or management personnel.

In addition, the stock market in general, and The NASDAQ Stock Market in particular, have experienced extreme price and volume fluctuations that have often been unrelated or disproportionate to the operating performance of these companies. Broad market and industry factors may negatively affect the market price of our common stock, regardless of our actual operating performance. Further, the decline in the financial markets and related factors beyond our control, including the credit and mortgage crisis in the United States and worldwide, may cause our stock price to decline rapidly and unexpectedly.

We may be subject to securities litigation, which is expensive and could divert management attention.

Our share price may be volatile, and in the past companies that have experienced volatility in the market price of their stock have been subject to securities class action litigation. We may be the target of this type of litigation in the future. Litigation of this type could result in substantial costs and diversion of management’s attention and resources, which could seriously hurt our business. Any adverse determination in litigation could also subject us to significant liabilities.

Our principal stockholders, executive officers and directors own a significant percentage of our common stock and will be able to exert a significant control over matters submitted to our stockholders for approval.

Our officers and directors, and stockholders who own more than 5% of our outstanding common stock, own approximately 60% of our common stock. This significant concentration of share ownership may adversely affect the trading price for our common stock because investors often perceive disadvantages in owning stock in

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companies with controlling stockholders. As a result, these stockholders, if they acted together, could significantly influence all matters requiring approval by our stockholders, including the election of directors and the approval of mergers or other business combination transactions. The interests of these stockholders may not always coincide with our interests or the interests of other stockholders.

Sales of a substantial number of shares of our common stock in the public market by our existing stockholders could cause our stock price to fall.

Sales of a substantial number of shares of our common stock in the public market or the perception that these sales might occur could depress the market price of our common stock. We are unable to predict the effect that sales may have on the prevailing market price of our common stock.

Some of the holders of our securities are entitled to rights with respect to the registration of their shares under the Securities Act of 1933, as amended (the “Securities Act”). Registration of these shares under the Securities Act would result in the shares becoming freely tradable without restriction under the Securities Act, except for shares held by our affiliates as defined in Rule 144 under the Securities Act. Any sales of securities by these stockholders could have a material adverse effect on the trading price of our common stock.

If securities or industry analysts do not publish or cease publishing research or reports about us, our business or our market, or if they adversely change their recommendations or publish negative reports regarding our business or our stock, our stock price and trading volume could decline.

The trading market for our common stock will be influenced by the research and reports that industry or securities analysts may publish about us, our business, our market or our competitors. We do not have any control over these analysts and we cannot provide any assurance that analysts will cover us or provide favorable coverage. If any of the analysts who may cover us adversely change their recommendation regarding our stock, or provide more favorable relative recommendations about our competitors, our stock price would likely decline. If any analyst who may cover us were to cease coverage of our company or fail to regularly publish reports on us, we could lose visibility in the financial markets, which in turn could cause our stock price or trading volume to decline.

Because we do not intend to declare cash dividends on our shares of common stock in the foreseeable future, stockholders must rely on appreciation of the value of our common stock for any return on their investment.

We have never declared or paid cash dividends on our common stock. We currently anticipate that we will retain future earnings for the development, operation and expansion of our business and do not anticipate declaring or paying any cash dividends in the foreseeable future. As a result, only appreciation of the price of our common stock, if any, will provide a return to investors.

Our ability to use our net operating loss carryforwards may be limited.

As of December 31, 2014, we had net operating losses of approximately $36.4 million and $107.8 million for both U.S. federal and California income tax purposes, respectively, for which carryforwards begin to expire in 2031 for U.S. federal income tax purposes and 2028 for California income tax purposes. If we experience an “ownership change” for purposes Section 382 of the Internal Revenue Code of 1986, as amended (the “Code”), we may be subject to annual limits on our ability to utilize net operating loss carryforwards. An ownership change is, as a general matter, triggered by sales or acquisitions of our stock in excess of 50% on a cumulative basis during a three-year period by persons owning 5% or more of our total equity value. We underwent a change in control during the year ended December 31, 2014, and as a result our ability to utilize net operating loss carryforwards is subject to an annual limitation of approximately $50.0 million.

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The JOBS Act allows us to postpone the date by which we must comply with some of the laws and regulations intended to protect investors and to reduce the amount of information we provide in our reports filed with the SEC, which could undermine investor confidence in our company and adversely affect the market price of our common stock.

For so long as we remain an “emerging growth company” as defined in the JOBS Act, we may take advantage of certain exemptions from various requirements that are applicable to public companies that are not “emerging growth companies” including:

• the provisions of Section 404(b) of the Sarbanes-Oxley Act requiring that our independent registered public accounting firm provide an attestation report on the effectiveness of our internal control over financial reporting;

• the “say on pay” provisions (requiring a non-binding shareholder vote to approve compensation of certain executive officers) and the “say on golden parachute” provisions (requiring a non-binding shareholder vote to approve golden parachute arrangements for certain executive officers in connection with mergers and certain other business combinations) of the Dodd-Frank Act and some of the disclosure requirements of the Dodd-Frank Act relating to compensation of its chief executive officer;

• the requirement to provide detailed compensation discussion and analysis in proxy statements and reports filed under the Exchange Act, and instead provide a reduced level of disclosure concerning executive compensation; and

• any rules that may be adopted by the Public Company Accounting Oversight Board requiring mandatory audit firm rotation or a supplement to the auditor’s report on the financial statements.

We may take advantage of these exemptions until we are no longer an “emerging growth company.” We would cease to be an “emerging growth company” upon the earliest of: (i) the first fiscal year following the fifth anniversary of our IPO; (ii) the first fiscal year after our annual gross revenues are $1 billion or more; (iii) the date on which we have, during the previous three-year period, issued more than $1 billion in non-convertible debt securities; or (iv) as of the end of any fiscal year in which the market value of our common stock held by non-affiliates exceeded $700 million as of the end of the second quarter of that fiscal year.

We currently take advantage of some, but not all, of the reduced regulatory and reporting requirements that are available to us so long as we qualify as an “emerging growth company.” For example, we have irrevocably elected not to take advantage of the extension of time to comply with new or revised financial accounting standards available under Section 102(b) of the JOBS Act. Our independent registered public accounting firm will not be required to provide an attestation report on the effectiveness of our internal control over financial reporting so long as we qualify as an “emerging growth company,” which may increase the risk that weaknesses or deficiencies in our internal control over financial reporting go undetected. Likewise, so long as we qualify as an “emerging growth company,” we may elect not to provide you with certain information, including certain financial information and certain information regarding compensation of our executive officers, that we would otherwise have been required to provide in filings we make with the SEC, which may make it more difficult for investors and securities analysts to evaluate our company. We cannot predict if investors will find our common stock less attractive because we may rely on these exemptions. If some investors find our common stock less attractive as a result, there may be a less active trading market for our common stock, and our stock price may be more volatile and may decline.

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Some provisions of our charter documents and Delaware law may have anti-takeover effects that could discourage an acquisition of us by others, even if an acquisition would be beneficial to our stockholders, and may prevent attempts by our stockholders to replace or remove our current management.

Provisions in our restated certificate of incorporation and our bylaws, as well as provisions of the Delaware General Corporation Law (“DGCL”), could make it more difficult for a third party to acquire us or increase the cost of acquiring us, even if doing so would benefit our stockholders, including transactions in which stockholders might otherwise receive a premium for their shares. These provisions include:

• authorizing the issuance of “blank check” preferred stock, the terms of which may be established and shares of which may be issued without stockholder approval;

• prohibiting stockholder action by written consent, thereby requiring all stockholder actions to be taken at a meeting of our stockholders;

• limiting the removal of directors by the stockholders;

• eliminating the ability of stockholders to call a special meeting of stockholders; and

• establishing advance notice requirements for nominations for election to the board of directors or for proposing matters that can be acted upon at stockholder meetings.

These provisions may frustrate or prevent any attempts by our stockholders to replace or remove our current management by making it more difficult for stockholders to replace members of our board of directors, which is responsible for appointing the members of our management. In addition, we are subject to Section 203 of the DGCL, which generally prohibits a Delaware corporation from engaging in any of a broad range of business combinations with an interested stockholder for a period of three years following the date on which the stockholder became an interested stockholder, unless such transactions are approved by our board of directors. This provision could have the effect of delaying or preventing a change of control, whether or not it is desired by or beneficial to our stockholders.

ITEM 1B. UNRESOLVED STAFF COMMENTS

None.

ITEM 2. PROPERTIES

Our headquarters is currently located in Brisbane, California, and consists of approximately 20,468 square feet of leased office space under a lease that expires on November  18, 2019. We may require additional space and facilities as our business expands.

ITEM 3. LEGAL PROCEEDINGS

On March 17, 2014, we received notification of the Paragraph IV certification from Par Pharmaceutical, Inc. (“Par”) advising us that it had filed an Abbreviated New Drug Application (an “ANDA”) with the FDA for a generic version of 1.1 gm/ml RAVICTI oral liquid. The Paragraph IV certification, filed on November 19, 2013, alleges that our U.S. Patent No. 8,404,215, titled “Methods of therapeutic monitoring of nitrogen scavenging drugs,” which expires in March 2032, and U.S. Patent No. 8,642,012, titled “Methods of treatment using ammonia scavenging drugs,” which expires in September 2030, are invalid and/or will not be infringed by Par’s manufacture, use or sale of the product for which the ANDA was submitted. Par did not challenge the validity,

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enforceablility, or infringement of U.S. Patent No. 5,968,979, our primary composition of matter patent for RAVICTI titled “Triglycerides and ethyl esters of phenylalkanoic acid and phenylalkenoic acid useful in treatment of various disorders,” which patent has received an interim term extension through February 7, 2016 as the United States Patent and Trademark Office determines the ultimate length of the patent’s term extension. We filed suit against Par on April 23, 2014 in Federal district court in the Eastern District of Texas in order to protect our patents. On July 22, 2014, Par filed a motion to dismiss for lack of personal jurisdiction, or in the alternative, a motion to transfer the case to the Southern District of New York. We will oppose the motion.

On September 22, 2014, Clal Biotechnology Industries, Ltd., (“CBI”) filed suit against us in Superior Court of the state of Delaware for New Castle County (Case No. N14C-09-198 PRW) alleging breach of contract and breach of the implied covenant of good faith and fair dealing under our Share Purchase Agreement with CBI relating to our acquisition of Andromeda Biotech Ltd. (“Andromeda”), alleging $200.0 million in damages arising from our announcement on September 8, 2014 of our decision to terminate further development of DiaPep277 beyond completion of the ongoing clinical trial as a result of evidence we uncovered that certain employees of Andromeda engaged in serious misconduct that compromised clinical trial results. On January 16, 2015, CBI dismissed its claim against us without prejudice. On February 16, 2015 we reached an agreement with CBI and Yeda, the company from which Andromeda licenses the underlying DiaPep277 technology, to resolve DiaPep277 related claims against one another, and we granted CBI an option to acquire all of the outstanding stock of Andromeda. In connection with the agreement, CBI will transfer to us $2.5 million in shares of our common stock it holds, valued at the average closing price of the Company’s common stock for the fifteen trading days ending on February 11, 2015. The parties have appointed a steering committee to oversee the completion of the clinical trial with representatives of CBI and Yeda and a non-voting member appointed by us. The Company’s estimated budget from October 1, 2014 through the completion of the trial remains unchanged at $10.5 million. Any increase to this budget beyond $2.25 million, if incurred as a result of the direction of the steering committee, shall require CBI to reimburse those expenses in shares of the Company’s common stock. Under the agreement, CBI’s option is exercisable through September 30, 2015 for $3.5 million payable in shares of the Company’s common stock. In addition, if the option is exercised, then Andromeda will be obligated to pay Hyperion future contingent payments if and to the extent it or its shareholders receive revenues or certain other proceeds, which are capped at $36.5 million. This amount, together with the option exercise price that Hyperion may receive, approximates the total amount Hyperion will have invested in Andromeda by the option exercise date. Under the agreement, in the event that CBI does not exercise its option, the underlying DiaPep277 technology will revert to Yeda under the license agreement between Andromeda and Yeda. Also on February 16, 2015, we entered into a release with Evotec pursuant to which Evotec released its previously asserted claims to a milestone payment from us in connection with our acquisition of Andromeda and that it had suffered harm from recent incidents in relation to Diapep277in exchange for a payment of $500,000 from us.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

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PART II

ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

Market Information

Our common stock has been trading on The NASDAQ Global Market under the symbol “HPTX” since our IPO on July 26, 2012. Prior to this date, there was no public market for our common stock. The following table sets forth the high and low intraday sale prices per share of our common stock for the periods indicated as reported by The NASDAQ Global Market.

	High		Low
2014
Fourth Quarter	$	25.97	$	20.23
Third Quarter		28.00		21.94
Second Quarter		30.21		22.79
First Quarter		32.98		19.59
2013
Fourth Quarter		29.50		18.97
Third Quarter		28.34		21.29
Second Quarter		25.94		15.92
First Quarter	$	26.50	$	10.84

As of February 20, 2015, we had 20,774,744 shares of common stock outstanding held by approximately 25 stockholders of record. The actual number of stockholders is greater than this number of record holders, and includes stockholders who are beneficial owners, but whose shares are held in street name by brokers and other nominees. This number of holders of record also does not include stockholders whose shares may be held in trust by other entities.

Dividend Policy

We have never declared or paid any cash dividends on our capital stock and do not anticipate paying any cash dividends in the foreseeable future. Payment of cash dividends, if any, in the future will be at the discretion of our board of directors and will depend on then-existing conditions, including our financial condition, operating results, contractual restrictions, capital requirements, business prospects and other factors our board of directors may deem relevant.

Recent Sales of Unregistered Securities

None

Initial Public Offering

Use of Proceeds

On July 31, 2012, we completed our IPO and issued 5,000,000 shares of our common stock at an initial offering price of $10.00 per share. We sold an additional 750,000 shares of common stock directly to our underwriters when they exercised their over-allotment option in full at the initial offering price of $10.00 per share. We received net proceeds from the IPO of $51.3 million, after deducting underwriting discounts and commissions of $4.0 million and expenses of $2.2 million. None of the expenses associated with the IPO were paid to directors, officers, persons owning 10% or more of any class of equity securities, or to their associates, or

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to our affiliates. Leerink Swann LLC and Cowen and Company, LLC acted as joint book-running managers and Needham & Company, LLC acted as co-manager for the offering.

The shares were registered under the Securities Act on a Registration Statement on Form S-1 (Registration No. 333-180694). The SEC declared the registration statement effective on July 25, 2012. On July 31, 2012, following the sale of 5,750,000 shares of common stock, the offering terminated.

As of December 31, 2014, we have used approximately $44.4 million of the proceeds from our IPO to fund operations, capital expenditures, working capital and other general corporate purposes. There has been no material change in the planned use of proceeds from our IPO as described in our final prospectus filed with the SEC pursuant to Rule 424(b).

Issuer Purchases of Equity Securities

None.

Stock Performance Graph

The following graph illustrates a comparison of the total cumulative stockholder return on our common stock since July 26, 2012, which is the date our common stock first began trading on the NASDAQ Global Market, to two indices: the NASDAQ Composite Index and the NASDAQ Biotechnology Index. The stockholder return shown in the graph below is not necessarily indicative of future performance, and we do not make or endorse any predictions as to future stockholder returns. This graph shall not be deemed “soliciting material” or be deemed “filed” for purposes of Section 18 of the Exchange Act, or otherwise subject to the liabilities under that Section, and shall not

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be deemed to be incorporated by reference into any of our filings under the Securities Act, whether made before or after the date hereof and irrespective of any general incorporation language in any such filing.

	7/26/12		9/30/12		12/31/12		3/31/13		6/30/13		9/30/13		12/31/13		3/31/14		6/30/14		9/30/14		12/31/14
Hyperion Therapeutics, Inc.		100.00		105.14		111.57		255.39		217.61		258.46		200.00		255.19		258.16		249.46		237.39
NASDAQ Composite		100.00		106.83		103.73		113.11		118.42		132.22		146.88		148.10		155.35		158.47		166.96
NASDAQ Biotechnology		100.00		113.22		112.82		137.07		146.40		177.62		193.91		200.27		218.85		240.72		256.94

ITEM 6. SELECTED FINANCIAL DATA

You should read the following selected consolidated financial data together with the “Management’s Discussion and Analysis of Financial Condition and Results of Operations” sections of this report and our consolidated financial statements and the accompanying notes included elsewhere in this report. We have derived the consolidated statements of operations data for the years ended December 31, 2014, 2013 and 2012 and the consolidated balance sheet data as of December 31, 2014 and 2013 from our audited consolidated financial statements appearing in this report. We have derived the consolidated statements of operations data for the years ended December 31, 2011 and 2010 and the consolidated balance sheet data as of December 31, 2012, 2011 and

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2010 from our audited consolidated financial statements not included in this report. Our historical results for any prior period are not necessarily indicative of results to be expected in any future period.

	Year Ended December 31,
(in thousands, except share and per share amounts)	2014			2013			2012			2011			2010
Consolidated Statements of Operations Data:
Net product revenue	$	113,584		$	42,204		$	—		$	—		$	—
Costs and expenses:
Cost of sales		13,727			6,740			—			—			—
Research and development		20,715			9,984			17,046			17,236			23,111
Selling, general and administrative		48,522			35,839			11,487			8,923			3,490
Impairment of goodwill(1)		30,201			—			—			—			—
Amortization of intangible asset		4,626			3,058			—			—			—
Total costs and expenses		117,791			55,621			28,533			26,159			26,601
Loss from operations		(4,207	)		(13,417	)		(28,533	)		(26,159	)		(26,601	)
Interest income		555			27			12			28			43
Interest expense		(1,601	)		(1,539	)		(3,703	)		(2,554	)		(1	)
Gain from settlement of retention option(2)		—			31,079			—			—			—
Other income (expense), net		(699	)		526			(39	)		(731	)		1,106
Income (loss) before income taxes	$	(5,952	)	$	16,676		$	(32,263	)	$	(29,416	)	$	(25,453	)
Income tax expense (benefit)		303			49			—			—			—
Net income (loss)	$	(6,255	)	$	16,627		$	(32,263	)	$	(29,416	)	$	(25,453	)
Net income (loss) per share attributable to common stockholders(3)
Basic	$	(0.31	)	$	0.86		$	(4.45	)	$	(62.68	)	$	(61.70	)
Diluted	$	(0.31	)	$	0.80		$	(4.45	)	$	(62.68	)	$	(61.70	)
Weighted average shares of common stock outstanding used in computing net income (loss) per share attributable to common stockholders(3)
Basic		20,470,025			19,415,822			7,256,537			469,319			412,532
Diluted		20,470,025			20,730,913			7,256,537			469,319			412,532

(1) The amount relates to the impairment loss recognized with regards to our acquisition of Andromeda. For additional information, see Notes 4 and 8 to our consolidated financial statements appearing elsewhere in this report.

(2) The amount of gain is comprised of (i) fair value of BUPHENYL of $20.4 million and (ii) net cash received from Ucyclyd of $11.0 million off-set by (iii) the $0.3 million carrying value of the option to purchase the rights to BUPHENYL and AMMONUL. Accordingly, we recorded the resulting net settlement of $31.1 million as gain from our settlement of the retention option on our consolidated statements of operations. For additional information, see Note 4 to our consolidated financial statements appearing elsewhere in this report.

(3) See Note 19 to our consolidated financial statements appearing elsewhere in the report for an explanation of the method used to calculate basic and diluted net income (loss) per share of common stock and the weighted average number of shares used in computation of the per share amounts.

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	As of December 31,
(in thousands)	2014		2013		2012		2011			2010
Consolidated Balance Sheet Data:
Cash and cash equivalents	$	102,796	$	74,232	$	49,853	$	7,018		$	6,579
Short-term investments		34,487		28,045		—		—			—
Working capital (deficit)		128,998		91,481		41,943		(21,282	)		3,650
Long-term investments		9,226		15,780		—		—			—
Intangible asset, net		8,816		13,442		—		—			—
Total assets		180,416		142,519		51,204		8,142			7,387
Long-term debt		18,124		2,621		7,750		—			—
Warrants liability		—		—		—		2,574			—
Convertible preferred stock		—		—		—		58,326			58,326
Total stockholders’ equity (deficit)		131,552		119,686		34,389		(82,104	)		(54,176	)

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following management’s discussion and analysis should be read in conjunction with our audited consolidated financial statements and related notes that appear elsewhere in this Annual Report on Form 10-K. This Management’s Discussion and Analysis contains forward-looking statements that involve risks and uncertainties. Please see “Special Note Regarding Forward-Looking Statements” for additional factors relating to such statements, and see “Risk Factors” in Item 1 of this report for a discussion of certain risk factors applicable to our business, financial condition, and results of operations. Operating results are not necessarily indicative of results that may occur in future periods.

Overview

We are a commercial biopharmaceutical company focused on the development and commercialization of novel therapeutics to treat orphan diseases. Our products, RAVICTI ^® (glycerol phenylbutyrate) Oral Liquid, BUPHENYL^® and AMMONAPS^® (sodium phenylbutyrate) Tablets and Powder, are designed to lower ammonia in the blood. Ammonia is produced in the intestine after a person eats protein and is normally detoxified in the liver by conversion to urea. Elevated levels of ammonia are potentially toxic and can lead to severe medical complications which may include death. We have developed RAVICTI, which we launched during the first quarter of 2013, to treat most urea cycle disorders (“UCD”) including 7 of the 8 and the most prevalent UCD subtypes, and are developing glycerol phenylbutyrate (“GPB”), the active pharmaceutical ingredient in RAVICTI, to treat hepatic encephalopathy (“HE”). UCD and HE are diseases in which blood ammonia is elevated. UCD are inherited rare genetic diseases caused by a deficiency of one or more enzymes or transporters that constitute the urea cycle, which in a healthy individual removes ammonia through its conversion to urea. We estimate there are approximately 2,100 cases of UCD in the United States of which approximately 1,100 have been diagnosed. However, we estimate that only about 675 patients are currently treated with an FDA approved medication. HE may develop in some patients with liver scarring, known as cirrhosis, or acute liver failure and is a chronic complication of cirrhosis which fluctuates in severity and may lead to serious neurological damage.

On February 1, 2013, the U.S. Food and Drug Administration (“FDA”) granted approval of RAVICTI for chronic management of UCD in adult and pediatric patients greater than two years of age who cannot be managed by dietary protein restriction and/or amino acid supplementation alone. Limitations of use include treatment of patients with acute hyperammonemia (“HA”) crises for whom urgent intervention is typically necessary, patients with N-acetylglutamate synthetase (“NAGS”) deficiency for whom the safety and efficacy of RAVICTI has not been established, and UCD patients under two months of age for whom RAVICTI is contraindicated due to uncertainty as to whether newborns, who may have immature pancreatic function, can effectively digest RAVICTI.

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We originally obtained rights to develop RAVICTI in 2007 pursuant to a collaboration agreement with Ucyclyd Pharma, Inc. (“Ucyclyd”), a subsidiary of Valeant Pharmaceuticals International, Inc. In March 2012, we purchased the worldwide rights to RAVICTI for an upfront payment of $6.0 million, future payments based upon the achievement of regulatory milestones in indications other than UCD, sales milestones, and mid to high single digit royalties on global net sales of RAVICTI. Pursuant to an amended and restated collaboration agreement (the “restated collaboration agreement”), with Ucyclyd entered into in March 2012, we had an option to purchase all of Ucyclyd’s worldwide rights to BUPHENYL ^® (sodium phenylbutyrate) Tablets and Powder, an FDA approved therapy for treatment of the most prevalent UCD and AMMONUL ^® (sodium phenylacetate and sodium benzoate) injection 10%/10%, the only adjunctive therapy currently FDA-approved for the treatment of HA crises in UCD patients, for an upfront payment of $22.0 million, plus subsequent milestone and royalty payments. On April 29, 2013, we exercised our option to acquire BUPHENYL and AMMONUL from Ucyclyd and subsequently, Ucyclyd exercised its option to retain AMMONUL. On May 31, 2013, we completed the acquisition of BUPHENYL and we received a net payment of $11.0 million which reflected the $32.0 million contractual purchase price for AMMONUL due to us less the $19.0 million contractual purchase price for BUPHENYL due to Ucyclyd and $2.0 million payment due to Ucyclyd for inventory we purchased from Ucyclyd.

Although the price of BUPHENYL per gram is approximately one fifth that of RAVICTI and prices for both therapies vary among patients because doses are individualized based on a patient’s weight and disease severity, most patients cannot afford to pay for either medication themselves. We have engaged a dedicated team at a third party call center, which serves as an integrated resource for prescription intake and distribution, reimbursement adjudication, patient financial support, and ongoing compliance support for our UCD patients. Together with distribution via two specialty pharmacies, we believe these services provide important support to UCD patients and their physicians, and help them achieve more favorable outcomes in managing their disease. As part of our ongoing commitment to the patient community, we provide our UCD products at no cost to patients as we help them establish insurance coverage for our UCD products and donate to an independent foundation with an established track record of enabling patients to access medications affordably.

RAVICTI was granted orphan drug exclusivity in the United States for the maintenance treatment of patients with UCD shortly after its FDA approval in 2013. This exclusivity extends through February 1, 2020. RAVICTI has also received orphan drug designation in the European Union (“EU”), although the right to marketing exclusivity cannot be determined until we are authorized to market it in the EU. In March 2013, U.S. Patent No. 8,404,215 entitled “Methods of Therapeutic Monitoring of Nitrogen Scavenging Drugs” issued from U.S. Patent Appl. No. 13/417,137 with claims directed to methods of optimizing the dosage of nitrogen scavenging drugs based on target fasting ammonia levels. This patent will expire in March 2032, and is currently listed in the FDA publication “Approved Drug Products with Therapeutic Equivalence Evaluations,” known as the Orange Book. In February 2014, U.S. Patent 8,642,012 entitled “Methods of Treatment Using Ammonia Scavenging Drugs” issued from U.S. Patent Appl. No. 12/350,111 with claims directed to methods of treating patients with UCD using phenylacetic acid (“PAA”) prodrugs based in part on target urinary phenylacetylglutamine (“PAGN”) levels. This patent will expire in September 2030 with Patent Term Extension (“PTE”) and is listed in the Orange Book.

On July 31, 2012, we completed our initial public offering (“IPO”) and issued 5,000,000 shares of our common stock at an initial offering price of $10.00 per share. We sold an additional 750,000 shares of common stock directly to our underwriters when they exercised their over-allotment option in full at the initial offering price of $10.00 per share. Our shares began trading on the NASDAQ Global Market on July 26, 2012. We received net proceeds from the IPO of $51.3 million, after deducting underwriting discounts and commissions of $4.0 million and expenses of $2.2 million.

As of December 31, 2014, we had an accumulated deficit of $128.6 million. We had net loss of $6.3 million for the year ended December 31, 2014. We had a net income of $16.6 million and a net loss $32.3 million for the years ended December 31, 2013 and 2012, respectively. We anticipate that a substantial portion of our capital

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resources and efforts in the foreseeable future will be focused on completing the development and obtaining regulatory approval of GPB in HE and the identification and potential development of additional new product candidate.

On March 13, 2013, we completed a follow-on offering and issued 2,875,000 shares of our common stock at an offering price of $20.75 per share. In addition, we sold an additional 431,250 shares of common stock directly to our underwriters when they exercised their over-allotment option in full at an offering price of $20.75 per share. We received net proceeds from the offering of $63.7 million, after deducting underwriting discounts and commissions of $4.1 million and expenses of $0.8 million.

On August 14, 2013, we filed a shelf registration statement on Form S-3, which was declared effective by the SEC on September 13, 2013. The shelf registration statement permits: (a) the offering, issuance and sale of up to a maximum aggregate offering price of $150.0 million of our common stock, preferred stock, debt securities, warrants and/or units; (b) the sale of up to 8,727,000 shares of common stock by certain selling stockholders; and (c) the offering, issuance and sale of up to a maximum aggregate offering price of $50.0 million of our common stock that may be issued and sold under a sales agreement with Cantor Fitzgerald & Co. As of December 31, 2014, there were no sales of any securities registered pursuant to the shelf registration statement.

Financial Overview

Revenue

Our product revenues consist of the following:

• Revenues from the sale of RAVICTI which was approved by the FDA on February 1, 2013 and was commercially launched in the U.S. during the period ended March 31, 2013; and

• Revenues from the sale of BUPHENYL which we acquired from Ucyclyd on May 31, 2013, pursuant to the restated collaboration agreement. We currently distribute BUPHENYL in the U.S. and through third party distributors in certain countries outside the U.S.

See “Results of Operations” below for a more detailed discussion on revenues.

Cost of Sales

Our cost of sales includes third-party manufacturing costs, royalty fees payable under our restated collaboration agreement with Ucyclyd and other indirect costs including compensation cost of personnel, shipping and supplies.

We recorded costs incurred prior to the FDA approval of RAVICTI as research and development expenses in our consolidated statements of operations. We expect that cost of sales relating to RAVICTI as a percentage of revenue will increase in future periods as product manufactured prior to FDA approval, and therefore fully expensed, has been utilized. The cost of BUPHENYL sales as a percentage of revenue was higher prior to the second quarter of 2014, due to the recording of the step-value on BUPHENYL inventories acquired from Ucyclyd which was expensed to cost of sales as the inventory was sold.

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Research and Development Expenses

We recognize research and development expenses as they are incurred. Our research and development expenses consist primarily of:

• salaries and related expenses for personnel, including expenses related to stock options or other stock-based compensation granted to personnel in development functions;

• fees paid to clinical consultants, clinical trial sites and vendors, including clinical research organizations (“CROs”), in conjunction with implementing and monitoring our clinical trials and acquiring and evaluating clinical trial data, including all related fees, such as for investigator grants, patient screening fees, laboratory work and statistical compilation and analysis;

• other consulting fees paid to third parties;

• expenses related to production of clinical supplies, including fees paid to contract manufacturers;

• expenses related to license fees and milestone payments under in-licensing agreements;

• expenses related to compliance with drug development regulatory requirements in the United States, the European Union and other foreign jurisdictions;

• depreciation and other allocated expenses; and

• expenses incurred to manufacture RAVICTI prior to FDA approval.

We expense both internal and external research and development expenses as they are incurred. We developed RAVICTI in UCD and GPB for HE in parallel, and we typically use our employees, consultants and infrastructure resources across our three programs. Thus, some of our research and development expenses are not attributable to an individual program, but rather are allocated across our three clinical stage programs and these costs were included in unallocated costs as detailed below. In 2012, unallocated costs included $5.7 million incurred in connection with the purchase of RAVICTI from Ucyclyd. Allocated expenses include salaries, stock-based compensation and related benefit expenses for our employees, consulting fees and fees paid to clinical suppliers. The following table shows our research and development expenses for the years ended December 31, 2014, 2013 and 2012 (in thousands):

	Year Ended December 31,
(in thousands)	2014		2013		2012
UCD Program	$	10,588	$	8,127	$	3,463
HE Program		3,786		1,228		2,233
DiaPep 277 Program		5,411		—		—
Unallocated		930		629		11,350
Total	$	20,715	$	9,984	$	17,046

We expect our research and development expenses to increase for the initiation of our Phase 3 trial of GPB for the treatment of patients with episodic HE and the completion of the DIA AID 2 clinical trial of DiaPep 277 and costs associated with the termination of this clinical program. Due to the inherently unpredictable nature of product development, we are currently unable to exactly predict the expenses we will incur or the duration of the HE trial. Based on our current discussions with FDA, our estimate of the cost of our Phase 3 trial of GPB in HE will be between $50.0 million to $55.0 million from initiation of the trial until submission of data to FDA. Our estimated cost for the completion of the DIA AID 2 Phase 3 clinical trial from January 2015 forward is between $4.0 million and $6.0 million.

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Our research and development expenditures are subject to numerous uncertainties in timing and cost to completion. Development timelines, the probability of success and development expenses can differ materially from expectations. Clinical trials in orphan diseases, such as UCD and HE, may be difficult to enroll given the small number of patients with these diseases. Completion of clinical trials may take several years or more, but the length of time generally varies according to the type, complexity, novelty and intended use of a product candidate. The cost of clinical trials may vary significantly over the life of a project as a result of differences arising during clinical development, including, among others:

• the number of trials required for approval;

• the number of sites included in the trials;

• the length of time required to enroll suitable patients;

• the number of patients that participate in the trials;

• the drop-out or discontinuation rates of patients;

• the duration of patient follow-up;

• the number and complexity of analyses and tests performed during the trial;

• the phase of development of the product candidate; and

• the efficacy and safety profile of the product candidate.

Our expenses related to clinical trials are based on estimates of patient enrollment and related expenses at clinical investigator sites as well as estimates for the services received and efforts expended pursuant to contracts with multiple research institutions and contract research organizations that conduct and manage clinical trials on our behalf. We generally accrue expenses related to clinical trials based on contracted amounts applied to the level of patient enrollment and activity according to the protocol. If timelines or contracts are modified based upon changes in the clinical trial protocol or scope of work to be performed, we modify our estimates of accrued expenses accordingly on a prospective basis.

Selling, General and Administrative Expenses

Selling, general and administrative expenses consist primarily of salaries, benefits and stock-based compensation for employees in administration, finance and business development, legal, investor relations, marketing, commercial and sales functions, including fees to third party vendors providing customer support services. Other significant expenses include consulting fees, allocated facilities expenses and professional fees for accounting and legal services, including legal services associated with obtaining and maintaining patents. We expect that our selling, general and administrative expenses will increase due to the continued expansion of the commercialization of RAVICTI and marketing of BUPHENYL. We expect these increases will likely include increased expenses for insurance, expenses related to the hiring of additional personnel and payments to outside consultants, lawyers and accountants.

On March 17, 2014, we received notification of a Paragraph IV certification from the generic drug manufacturer Par Pharmaceutical, Inc. (“Par”) that it had filed an Abbreviated New Drug Application with the FDA seeking approval for a generic version of RAVICTI Oral Liquid. The Paragraph IV certification alleges that certain our patents are invalid and/or will not be infringed by Par’s manufacture, use or sale of the product for

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which the ANDA was submitted. We filed suit against Par on April 23, 2014 to protect our patents and to obtain a stay of the FDA’s approval of Par’s ANDA. On July 22, 2014, Par filed a motion to dismiss for lack of personal jurisdiction, or in the alternative, a motion to transfer the case to the Southern District of New York. We will oppose this motion.

In 2014 we were also involved in a legal dispute with CBI, the former owner of Andromeda. On September 22, 2014, CBI filed a complaint against us in Superior Court of the state of Delaware in New Castle County alleging breach of the share purchase agreement related to the Andromeda acquisition. In the complaint, CBI raised breach of contract and breach of the implied covenant of good faith and fair dealing claims and sought damages of $200.0 million. On January 16, 2015, CBI dismissed its claim against us without prejudice. On February 16, 2015 we reached an agreement with CBI and Yeda, the company from which Andromeda licenses the underlying DiaPep277 technology, to settle DiaPep277 related claims against one another, and we granted CBI an option to acquire all of the outstanding stock of Andromeda. In connection with the agreement, CBI will transfer to us $2.5 million in shares of our common stock it holds, valued at the average closing price of the Company’s common stock for the fifteen trading days ending on February 11, 2015. The parties have appointed a steering committee to oversee the completion of the clinical trial with representatives of CBI and Yeda and a non-voting member appointed by us. The Company’s estimated budget from October 1, 2014 through the completion of the trial remains unchanged at $10.5 million. Any increase to this budget beyond $2.25 million, if incurred as a result of the direction of the steering committee, shall require CBI to reimburse those expenses in shares of the Company’s common stock. Under the agreement, CBI’s option is exercisable through September 30, 2015 for $3.5 million payable in shares of the Company’s common stock. In addition, if the option is exercised, then Andromeda will be obligated to pay Hyperion future contingent payments if and to the extent it or its shareholders receive revenues or certain other proceeds, which are capped at $36.5 million. This amount, together with the option exercise price that Hyperion may receive, approximates the total amount Hyperion will have invested in Andromeda by the option exercise date. Under the agreement, in the event that CBI does not exercise its option, the underlying DiaPep277 technology will revert to Yeda under the license agreement between Andromeda and Yeda. Also on February16, 2015, we entered into a release with Evotec pursuant to which Evotec released its previously asserted claims to a milestone payment from us in connection with our acquisition of Andromeda and that it had suffered harm from recent incidents in relation to Diapep277 in exchange for a payment of $500,000 from us.

Amortization of Intangible Asset

Amortization of intangible asset pertains to the amortization expense of BUPHENYL product rights acquired on May 31, 2013. For additional information, see Note 8 to our consolidated financial statements appearing elsewhere in this report.

Impairment of goodwill

In 2014, we recognized an impairment loss of $30.2 million relating to our acquisition of Andromeda. For additional information, see Notes 4 and 8 to our consolidated financial statements appearing elsewhere in this report.

Interest Income

Interest income consists of interest earned on our cash and cash equivalents and investments.

Interest Expense

Interest expense consists primarily of non-cash and cash interest costs related to our borrowings.

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Gain from Settlement of Retention Option

The amount of gain from the settlement of the retention option relates to our acquisition of BUPHENYL in 2013 and is comprised of (i) fair value of BUPHENYL of $20.4 million and (ii) net cash received from Ucyclyd of $11.0 million off-set by (iii) the $0.3 million carrying value of the option to purchase the rights to BUPHENYL and AMMONUL. Accordingly, we recorded the resulting net settlement of $31.1 million as gain from our settlement of the retention option on our consolidated statements of operations in the second quarter of 2013. For additional information, see Note 4 to our consolidated financial statements appearing elsewhere in this report.

Other Income (Expense), net

For the year ended December 31, 2014, other income (expense), net was $0.7 million expense and primarily includes amortization of the discount on available-for-sale investments partially offset by the gain on foreign currency transactions. For the year ended December 31, 2013, other income (expense), net primarily includes a $0.5 million payment received from Ucyclyd in accordance with the restated collaboration agreement. For the years ended December 31, 2012, other income (expense), net consisted primarily of the changes in the fair value of the common and preferred stock warrants liability and call option liability associated with the issuance of approximately $32.5 million of convertible notes. We account for the common stock warrants issued in 2011 and preferred stock warrants issued in 2012 and 2011 at fair value and recorded as liabilities on the date of each issuance. The fair value was determined and subsequently re-measured using the Black-Scholes option-pricing model on each reporting date. On July 31, 2012, upon closing of the IPO, we performed a final re-measurement of the common stock warrants issued in 2011 and preferred stock warrants issued in 2012 and 2011, and recorded the impact of the re-measurement to other income (expense), net. On July 31, 2012, immediately prior to the closing of the IPO, the common stock warrants and the preferred stock warrants automatically net exercised into 340,361 shares of common stock.

Income Taxes

We have been granted orphan drug designation by the FDA for our products currently under development. The orphan drug designation allowed us to claim increased federal tax credits for its research and development activities. We have $22.6 million of federal credit carryforwards of which $21.1 million relates to Orphan Drug Credit claims for 2009 through 2014.

We remeasured the preliminary determination of the fair values of assets acquired and liabilities assumed in the Andromeda acquisition and subsequently impaired the goodwill. The corresponding deferred tax liabilities associated with the acquisition were written off. Given the history of operating losses in Israel, we are recording a full valuation allowance on our net deferred tax assets in Israel. This also results in the reversal of a tax benefit recorded during the second quarter of 2014 amounting to $2.9 million.

We intend to continue maintaining a valuation allowance on our deferred tax assets until there is sufficient evidence to support the reversal of all or some portion of these allowances. However, considering our current assessment of income from potential future sales, there is a reasonable possibility that, within the next year, sufficient positive evidence may become available to reach a conclusion that a significant portion of the U.S. valuation allowance will no longer be needed. As such, we may release a significant portion of our U.S. valuation allowance against our U.S. deferred tax assets within the next 12 months. This release would result in the recognition of certain deferred tax assets and a decrease to income tax expense for the period such release is recorded.

For the year ended December 31, 2014 and 2013 our income tax expense was $0.3 million and $49,000 respectively. There was no income tax expense recorded for the year ended

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December 31, 2012. Our expected taxable income in 2015 will primarily be offset by federal and state net operating losses and credits for which a full valuation allowance has been provided.

Critical Accounting Policies and Estimates

Our consolidated financial statements are prepared in accordance with United States generally accepted accounting principles. Application of these principles requires management to make estimates, assumptions, and judgments that affect the amounts reported in the financial statements and accompanying notes. These estimates, assumptions, and judgments are based on information available as of the date of the financial statements; accordingly, as this information changes, the financial statements could reflect different estimates, assumptions, and judgments. Actual results could differ from those estimates.

Critical accounting estimates are necessary in the application of certain accounting policies and procedures, and are particularly susceptible to significant change. Critical accounting policies are defined as those that are reflective of significant judgments and uncertainties, and could potentially result in materially different results under different assumptions and conditions. For additional information on our critical accounting policies, please refer to the information contained in Note 2 of the consolidated financial statements appearing elsewhere in the report.

Business Combinations

We allocate the purchase price of an acquired business to the tangible and intangible assets acquired and liabilities assumed based upon their estimated fair values on the acquisition date. Any excess of the purchase price over the fair value of the net assets acquired is recorded as goodwill. The purchase price allocation process requires us to make significant estimates and assumptions, especially at the acquisition date with respect to intangible assets. Direct transaction costs associated with the business combination are expensed as incurred.

Valuation of Acquisition-Related Contingencies Resulting from the Andromeda Business Combination

In conjunction with the acquisition of Andromeda, we have recorded acquisition-related contingencies upon the achievement of specified development, regulatory approval or sales-based milestone events. The acquisition-related contingencies are measured at their respective fair values as of the acquisition date. The models used in valuing these acquisition-related contingencies require the use of significant estimates and assumptions including but not limited to:

• estimates of revenues and operating profits related to the product candidate;

• the probability of success for unapproved product candidate considering their stage of development;

• the time and resources needed to complete the development and approval of product candidate;

• the life of the potential commercialized products and associated risks, including the inherent difficulties and uncertainties in developing a product candidate such as obtaining FDA and other regulatory approvals; and

• risks related to the viability of and potential alternative treatments in any future target markets.

We revalue contingent consideration obligations each quarter following the acquisition and record increases or decreases in their fair value in our condensed consolidated statements of operations.

Increases or decreases in the fair value of our contingent consideration liabilities are recorded in our consolidated statements of operations and can result from updates to assumptions such as the expected timing or

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probability of achieving the specified milestones, changes in projected revenues or changes in discount rates. Significant judgment is employed in determining these assumptions as of the acquisition date and for each subsequent period. Updates to assumptions could have a significant impact on our results of operations in any given period. Actual results may differ from estimates.

As discussed in Note 4, to our consolidated financial statements appearing elsewhere in this report we re-measured the preliminary determination of the fair values of assets acquired and liabilities assumed as of the acquisition date and we had determined that the contingent consideration milestones and contingent liability milestones will not be achieved.

Valuation of Acquisition-Related Contingent Liability

Acquisition-related contingent liability, which consists primarily of potential milestone payments and royalty obligations, and potential payments to certain employees of Andromeda is recorded in the consolidated balance sheets at its acquisition date estimated fair value. We reassess the probability and estimates associated with the contingent liability at each reporting period. For liability payable to third parties, any increase in the liability is recorded in the consolidated statements of operations. For liabilities payable to employees, we account for the liability in accordance with ASC 450 Contingencies.

As discussed in Note 4, to our consolidated financial statements appearing elsewhere in this report, we re-measured the preliminary determination of the fair values of assets acquired and liabilities assumed as of the acquisition date and we determined that the contingent consideration milestones and contingent liability milestones will not be achieved.

Accounts Receivable

Our trade accounts receivable are recorded net of product sales allowances for prompt-payment discounts, chargebacks and doubtful accounts. We estimate chargebacks and prompt-payment discounts based on contractual terms, historical trends and our expectations regarding the utilization rates for these programs.

Inventories

Our inventories are valued at the lower of cost or market, with cost computed at standard cost (which approximates actual cost) on a first-in-first-out (FIFO) cost method and consists of raw materials, work in process and finished goods. Subsequent to the FDA approval of RAVICTI on February 1, 2013, we began capitalizing inventories as the related costs were expected to be recoverable through the commercialization of the product. Prior to the FDA approval of RAVICTI, we recorded the costs incurred as research and development expenses in the consolidated statements of operations. If information becomes available that suggest that our inventories may not be realizable, we may be required to expense a portion or all of the previously capitalized inventories.

The costs of our inventories consists mainly of third party manufacturing costs, associated compensation related costs of personnel indirectly involved in the manufacturing process and other overhead costs attributable to the manufacture of inventories.

Products that have been approved by the FDA or other regulatory authorities, such as RAVICTI are also used in clinical programs, to assess the safety and efficacy of the products for usage in diseases that have not been approved by the FDA or other regulatory authorities. The form of RAVICTI utilized for both commercial and clinical programs is identical and, as a result, the inventory has an “alternative future use”. Raw materials and purchased drug product associated with clinical development programs are included in inventory and charged to research and development expense when the product enters the research and development process and no longer can be used for commercial purposes and, therefore, does not have an “alternative future use”.

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On May 31, 2013, we acquired BUPHENYL including inventory from Ucyclyd (see Note 4 to our consolidated financial statements appearing elsewhere in this report). We recorded these inventories at fair value in the amount of $3.9 million on the acquisition date. As of March 31, 2014, we sold the entire inventory acquired from the acquisition of BUPHENYL.

We evaluate for potential excess inventory by analyzing current and future product demand relative to the remaining product shelf life. We develop demand forecasts by considering factors such as, but not limited to, overall market potential, market share, market acceptance and patient usage. During the year ended December 31, 2014, we recorded a provision for inventory obsolescence of $0.3 million which was recorded into cost of sales in our consolidated statements of operations.

Goodwill and Intangible Assets

We record intangible assets at acquisition cost less accumulated amortization and impairment. Intangible asset with finite lives are amortized over their estimated useful life using the economic use method, which reflects the pattern that the economic benefits of the intangible asset are consumed as revenue is generated. The pattern of consumption of the economic benefits is estimated using the future projected cash flows of the intangible asset.

Goodwill and indefinite-lived intangible assets, including acquired IPR&D, are tested for impairment annually or more frequently if events or changes in circumstances between annual tests indicate that the asset may be impaired. Impairment losses on goodwill and indefinite-lived intangible assets are recognized based on a comparison of the fair value of the asset to its carrying value, without consideration of any recoverability.

The impairment test for goodwill is a two-step process. Step one consists of a comparison of the fair value of a reporting unit against its carrying amount, including the goodwill allocated to each reporting unit. We determine the fair value of the reporting unit based on the present value of estimated future cash flows as well as various price or market multiples applied to the reporting unit’s operating results, which are classified as level 3 within the fair value hierarchy (as described in Note 6 to our consolidated financial statements appearing elsewhere in this report). If the carrying amount of the reporting unit is in excess of its fair value, step two requires the comparison of the implied fair value of the reporting unit’s goodwill against the carrying amount of the reporting unit’s goodwill. Any excess of the carrying value of the reporting unit’s goodwill over the implied fair value of the reporting unit’s goodwill is recorded as an impairment loss.

Impairment of Long-lived Assets

We review our property and equipment and long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset class may not be recoverable. Recoverability is measured by comparing the carrying amount to the future net undiscounted cash flows that the assets are expected to generate. If such assets are considered impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value determined using projected discounted future net cash flows arising from the assets.

Fair Value of Financial Instruments

We measure our financial assets and liabilities at fair value based on the exchange price that would be received for an asset or paid for to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants. The carrying amounts of our financial instruments, including cash equivalents, short-term investments, accounts payable, and accrued liabilities, approximate fair value due to their short maturities. The carrying amounts of long-term investments and the acquisition-related contingent consideration represent their estimated fair values.

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Income Taxes

We are subject to income taxes in the U.S. and we use estimates in determining our provision for income taxes. We use the liability method of accounting for income taxes, whereby deferred income tax assets or liability account balances are calculated at the balance sheet date using current tax laws and rates in effect for the year in which the differences are expected to affect taxable income.

Recognition of deferred income tax assets is appropriate when based on the weight of positive and negative evidence realization of such assets is more likely than not. We recognize a valuation allowance against our net deferred income tax assets if it is more likely than not that some portion of the deferred income tax assets will not be fully realizable. This assessment requires judgment as to the likelihood and amounts of future taxable income by tax jurisdiction.

We apply the provisions of FASB’s guidance on accounting for uncertainty in income taxes. We assess all material positions taken in any income tax return, including all significant uncertain positions, in all tax years that are still subject to assessment or challenge by relevant taxing authorities. Assessing an uncertain tax position begins with the initial determination of the position’s sustainability and the tax benefit to be recognized is measured at the largest amount of benefit that is greater than 50 percent likely of being realized upon ultimate settlement. As of each balance sheet date, unresolved uncertain tax positions must be reassessed, and we will determine whether (i) the factors underlying the sustainability assertion have changed and (ii) the amount of the recognized tax benefit is still appropriate. The recognition and measurement of tax benefits requires significant judgment. Judgments concerning the recognition and measurement of a tax benefit might change as new information becomes available.

Revenue Recognition

We recognize revenue in accordance with the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 605, Revenue Recognition, when the following criteria have been met: persuasive evidence of an arrangement exists; delivery has occurred and risk of loss has passed; and the seller’s price to the buyer is fixed or determinable and collectability is reasonably assured. We determine that persuasive evidence of an arrangement exists based on written contracts that define the terms of our arrangements. In addition, we determine that services have been delivered in accordance with the arrangement. We assesses whether the fee is fixed or determinable based on the payment terms associated with the transaction and whether the sales price is subject to refund or adjustment. We assess collectability based primarily on the customer’s payment history and on the creditworthiness of the customer.

Product Revenue

Our product revenues represent sales of RAVICTI and BUPHENYL in the U. S. and outside the U.S. We recognize revenue once all four revenue recognition criteria described above are met.

In 2013, we began distributing RAVICTI to two specialty pharmacies through a specialty distributor. The specialty pharmacies then in turn dispense RAVICTI to patients in fulfillment of prescriptions. As RAVICTI was our first commercial product, we could not reasonably assess potential product sales allowances at the time of sale to the specialty distributor. As a result, the price of RAVICTI was not deemed fixed or determinable. We deferred the recognition of revenues on product shipments of RAVICTI to the specialty distributor until the product was shipped to patients by the specialty pharmacies at which time our related product sales allowances could be reasonably estimated. Starting June 2014, we could reasonably estimate and determine sales allowances, therefore we began recognizing RAVICTI revenue at the point of sale to the specialty distributor, which resulted in the one-time non- recurring recognition of an additional $8.6 million in net revenues. The impact of this change resulted in a decrease in net loss of $7.9 million for year ended December 31, 2014, or $0.39 per basic and diluted share.

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We sell BUPHENYL in the United States to a specialty distributor, who in turn sells this product to retail pharmacies, hospitals and other dispensing organizations. We recognize revenue from BUPHENYL sales upon receipt by the specialty distributor as we can reasonably assess potential product sales allowances at the time of sale. For product sales of BUPHENYL outside the United States, revenue is recognized once the product is accepted by the customer or once their acceptance period has expired whichever comes first.

We recognize revenue net of product sales allowances, including estimated rebates, chargebacks, prompt-payment discounts, returns, distribution service fees and Medicare Part D coverage gap reimbursements. Product shipping and handling costs are included in cost of sales.

Product Sales Allowances

We establish reserves for prompt-payment discounts, government and commercial rebates, product returns and chargebacks. Allowances relating to prompt-payment discounts and chargebacks are recorded at the time of revenue recognition, resulting in a reduction in product sales revenue and a decrease in trade accounts receivables. Allowances related to government rebates, product returns and other applicable allowances such as distributor fees are recognized at the time of revenue recognition, resulting in a reduction in product sales and an increase in accrued expenses or a reduction in the related accounts receivable depending on the nature of the sales deduction.

Co-payment assistance

We provide cash donation to a non-profit third party organization which supports UCD patients, who have commercial insurance and meet certain financial eligibility requirements, with co-payment assistance and travel costs. We account for the amount of co-payment assistance as a reduction of product revenues.

The following table summarizes the provisions, and credits/payments, for the gross to net sales deductions:

(in thousands)	Rebates & Chargebacks			Prompt pay discounts			Other Sales- Related Deductions			Total
Balance as of December 31, 2013	$	5,051		$	—		$	184		$	5,235
Provision related to current period sales		17,846			4,786			1,966			24,598
Credits/payments		(13,285	)		(4,786	)		(1,620	)		(19,691	)
Balance as of December 31, 2014	$	9,612		$	—		$	530		$	10,142

Stock-Based Compensation

We recognize as compensation expense the fair value of stock options and other stock-based compensation issued to employees over the requisite service periods, which are typically the vesting periods. We determine the fair value of restricted stock units using the closing price of our common stock on the date of grant. We estimate the fair value of stock options using the Black-Scholes option valuation model. The fair value of employee stock options and restricted stock units is amortized on a straight-line basis over the requisite service period of the awards.

For the year ended December 31, 2014 and 2013, stock-based compensation of $0.1 million each was capitalized into inventories. Capitalized stock-based compensation is recognized as cost of sales when the related product is sold. Allocations to research and development, general and administrative and selling and marketing expense are based upon the department to which the associated employee reported.

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Total stock-based compensation expense related to options and awards granted was allocated as follows:

	Years Ended December 31,
(in thousands)	2014		2013		2012
Cost of sales	$	70	$	27	$	—
Research and development		1,384		585		374
Selling, general and administrative		6,184		3,709		619
Total	$	7,638	$	4,321	$	993

Results of Operations

Comparison of the Years Ended December 31, 2014, 2013 and 2012

	Year Ended December 31,					Increase/ (Decrease)			% Increase/ (Decrease)			Year Ended December 31,					Increase/ (Decrease)			% Increase/ (Decrease)
(in thousands, except for percentages)	2014			2013								2013		2012
Product revenue, net	$	113,584		$	42,204	$	71,380			169	%	$	42,204	$	—		$	42,204			100	%
Cost of sales		13,727			6,740		6,987			104			6,740		—			6,740			100
Research and development		20,715			9,984		10,731			107			9,984		17,046			(7,062	)		(41	)
Selling, general and administrative		48,522			35,839		12,683			35			35,839		11,487			24,352			212
Impairment of goodwill		30,201			—		30,201			100			—		—			—			—
Amortization of intangible asset		4,626			3,058		1,568			51			3,058		—			3,058			100
Interest income		555			27		528			1,956			27		12			15			125
Interest expense		1,601			1,539		62			4			1,539		3,703			(2,164	)		(58	)
Gain from settlement of retention option		—			31,079		(31,079	)		(100	)		31,079		—			31,079			100
Other income (expense), net		(699	)		526		(1,225	)		(233	)		526		(39	)		565			1,449
Income tax expense		303			49		254			518			49		—			49			100

Revenues

During the years ended December 31, 2014 and 2013, we generated $113.6 million and $42.2 million, respectively, of net product revenues. Product revenues from the sale of RAVICTI and BUPHENYL are recorded net of sales returns, co-pay assistance and estimated product sales allowances including government rebates, chargebacks, prompt -payment discounts and distributor fees.

For the year ended December 31, 2014 and 2013, net product revenues consisted of the following:

• net sales from RAVICTI in the amount of $95.4 million (of which $95.3 million relates to sales in the U.S. and $0.1 million relates to sales outside the U.S.) and $31.2 million, respectively; and

• net sales from BUPHENYL in the amount of $18.6 million and $11.5 million, respectively (of which $10.2 million and $5.1 million, respectively, relates to sales outside the U.S. and $8.4 million and $6.4 million, respectively, of sales in the U.S.)

The above amounts were partially offset by $0.4 million and $0.5 million, respectively, of co-payment assistance. We expect in future periods our sales from BUPHENYL to decrease in part due to increase in the usage of RAVICTI and competition from generic product sales.

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For the year ended December 31, 2012 we did not generate any revenues from the sale of any products.

Cost of Sales

Our cost of sales includes third-party manufacturing costs, royalty fees payable under our restated collaboration agreement with Ucyclyd, and other indirect costs including compensation cost of personnel, shipping and supplies. For the year ended December 31, 2014 and 2013 total costs of sales were $13.7 million and $6.7 million, respectively. For the year ended December 31, 2014 and 2013, cost of sales consisted of BUPHENYL product costs of $5.1 million and $3.6 million, respectively and RAVICTI product costs of $8.6 million and $3.1 million, respectively. For the year ended December 31, 2014 and 2013, RAVICTI product costs included $7.6 million and $2.5 million, respectively, for royalty expenses payable under our restated collaboration agreement with Ucyclyd.

We began capitalizing inventory costs after FDA approval of RAVICTI as the related costs were expected to be recoverable through the commercialization of the product. We recorded costs incurred prior to FDA approval of RAVICTI as research and development expenses in our 2012 consolidated statement of operations. As a result, cost of sales for RAVICTI for the previous several quarters reflected a lower average per unit cost of materials as we sold product inventory that was previously expensed as research and development.

For BUPHENYL, cost of sales per unit sale was higher in 2013 due to the recording of the step-up fair value of the BUPHENYL inventories acquired from Ucyclyd which was expensed to cost of sales as of March 31, 2014 as the inventory had sold through. Accordingly, cost of sales is not indicative of expected cost of sales in future periods. Since the inventories were purchased as part of a business combination, they were recorded at fair value on the acquisition date. For additional information, see Note 4 to our consolidated financial statements appearing elsewhere in this report.

Research and Development Expenses

Research and development expenses increased by $10.7 million, or 107%, to $20.7 million for the year ended December 31, 2014, from $10.0 million for the year ended December 31, 2013. This increase was primarily due to increases of $2.3 million in compensation related expenses, $0.6 million increase in consulting costs, $1.0 million increase in regulatory related expenses, $1.4 million increase due to initiation of HE observational study costs and the initiation of the study in pediatric subjects under two years of age with UCD, and $5.4 million due to expenses incurred for the DiaPep277 Program.

Research and development expenses decreased by $7.1 million, or 41%, to $10.0 million for the year ended December 31, 2013, from $17.1 million for the year ended December 31, 2012. This decrease in research and development expenses in 2013 as compared to 2012 was primarily due to decreases of $1.4 million in clinical development costs due to completion of our HE Phase II trial in 2012 and a $5.7 million expense recognized pertaining to purchase of RAVICTI which occurred in the first quarter of 2012.

Selling, General and Administrative Expenses

Selling, general and administrative expenses increased by $12.7 million, or 35%, to $48.5 million for the year ended December 31, 2014, from $35.8 million for the year ended December 31, 2013. This increase was primarily due to a $5.6 million in compensation expense including stock-based compensation expense as a result of hiring additional employees, $3.5 million related to legal costs and professional and consulting costs, $1.7 million related to office, administrative and information technology infrastructure expenses and $1.0 million increased commercial operations expenses, and $0.7 million due to expenses incurred by Andromeda from the date of acquisition to December 31, 2014.

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Selling, general and administrative expenses increased by $24.4 million, or 212%, to $35.8 million for the year ended December 31, 2013, from $11.5 million for the year ended December 31, 2012 primarily as a result of our commercial launch of RAVICTI and the acquisition of BUPHENYL as well as the costs associated with operating as a public company for a full year. This increase was primarily due to increases of $13.0 million in compensation expense, including stock-based compensation expense, as a result of hiring additional employees to support our commercial launch, $2.2 million in insurance and other office and administrative related expenses, $5.0 million in selling and marketing expenses pertaining to the product launch and commercialization of RAVICTI, $0.9 million in travel and related costs and $3.3 million increase in consulting costs.

Impairment of goodwill

The impairment of goodwill of $30.2 million relates to the impairment loss recognized with regards to our acquisition of Andromeda. For additional information, see Notes 4 and 8 to our consolidated financial statements appearing elsewhere in this report.

Amortization of intangible asset

The amortization of intangible asset expense pertains to the amortization expense for the BUPHENYL product rights acquired as part of the BUPHENYL acquisition on May 31, 2013. For the year ended December 31, 2014 and 2013, we recorded $4.6 million and $3.1 million, respectively in amortization expenses.

Interest Income

Interest income increased by $0.5 million for the year ended December 31, 2014 primarily due to the interest income earned from our investments portfolio. Interest income primarily included interest and dividend income from our cash and cash equivalents and investments. For the year ended December 31, 2013, the interest income was $27,000.

The changes in interest income were not significant for the years ended December 31, 2013 and 2012.

Interest Expense

Interest expense increased by $0.1 million, or 4%, to $1.6 million for the year ended December 31, 2014, from $1.5 million for the year ended December 31, 2013. Interest expense increased primarily due to the loss on extinguishment of our notes payable partially offset by reduction in interest expense due to lower rate of interest of our new loan obtained in 2014.

Interest expense decreased by $2.2 million, or 58%, to $1.5 million for the year ended December 31, 2013, from $3.7 million for the year ended December 31, 2012. Interest expense decreased primarily due to the conversion of our April 2011 Notes and October 2011 Notes to common stock upon the closing of our IPO in July 2012.

Gain from settlement of retention option

The amount of gain from the settlement of the retention option relates to our acquisition of BUPHENYL in 2013 and is comprised of (i) the fair value of BUPHENYL of $20.4 million and (ii) net cash received from Ucyclyd of $11.0 million off-set by (iii) the $0.3 million carrying value of the option to purchase the rights to BUPHENYL and AMMONUL. Accordingly, we recorded the resulting net settlement of $31.1 million as gain from our settlement of the retention option in our consolidated statements of operations. For additional information, see Note 4 to our consolidated financial statements appearing elsewhere in this report.

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Other Income (Expense), net

For the year ended December 31, 2014, other income (expense), net was $0.7 million expense and primarily includes amortization of discount on available-for-sale investments partially offset by the gain on foreign currency transactions.

For the year ended December 31, 2013, we recorded $0.5 million in income related to Ucyclyd’s payment to us in relation to our restated collaboration agreement. For the year ended December 31, 2012, other income (expenses), net, was $39,000 of expense for the year ended December 31, 2012 primarily recording a change in fair value of approximately $43,000 of expense related to the common stock warrants and the preferred stock warrants and call option liability.

Income tax expense

For the year ended December 31, 2014 and 2013, income tax expense was $0.3 million and $49,000, respectively. There was no income tax expense recorded for the year ended December 31, 2012.

The 2014 effective tax rate differed from the U.S. federal statutory rate of 35% primarily due to the utilization of net operating loss carryforwards and tax credits for which a valuation allowance is recorded on our federal and California deferred tax assets and the tax impact of our acquisition of Andromeda. The remaining tax expense is related to other state taxes.

Our expected taxable income in 2015 will primarily be offset by federal and state net operating losses and credits for which a full valuation allowance has been provided.

Liquidity and Capital Resources

During the year ended December 31, 2014, we generated net revenues of $113.6 million. As of December 31, 2014 and December 31, 2013, our principal sources of liquidity were our cash provided by operating activities and our cash and cash equivalents and investments.

Prior to our commercialization of RAVICTI our principal source of liquidity was debt and sales of our equity securities.

In April 2012, we borrowed $10.0 million pursuant to a loan and security agreement with Silicon Valley Bank and Leader Lending, LLC — Series B (the “Lenders”). The loan carried an interest rate of 8.88%, with interest only payments for the period of 9 months from May 1, 2012. The loan was then payable in equal monthly principal payments plus interest over a period of 27 months from February 1, 2013. We issued warrants to the Lenders to purchase a total of 75,974 shares of common stock at an exercise price of $4.08 per share. These warrants have been fully exercised.

On July 31, 2012, we completed our IPO and issued 5,000,000 shares of our common stock at an initial offering price of $10.00 per share. We sold an additional 750,000 shares of common stock directly to our underwriters when they exercised their over-allotment option in full at the initial offering price of $10.00 per share. We received net proceeds from the IPO of $51.3 million, after deducting underwriting discounts and commissions of $4.0 million and expenses of $2.2 million.

In September 2012, we borrowed an additional $2.5 million from Silicon Valley Bank pursuant to the loan and security agreement. We issued an additional warrant to Silicon Valley Bank to purchase a total of 8,408 shares of common stock at an exercise price of $5.05 per share. These warrants have been fully exercised.

On March 13, 2013, we completed our follow-on offering and issued 2,875,000 shares of our common stock at an offering price of $20.75 per share. In addition, we sold an additional 431,250 shares of common stock

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directly to underwriters when they exercised their over-allotment option in full at the offering price of $20.75 per share. We received net proceeds from the offering of $63.7 million, after deducting underwriting discounts and commissions of $4.1 million and expenses of $0.8 million.

On August 14, 2013, we filed a shelf registration statement on Form S-3, which was declared effective by the SEC on September 13, 2013. The shelf registration statement permits: (a) the offering, issuance and sale of up to a maximum aggregate offering price of $150.0 million of our common stock, preferred stock, debt securities, warrants and/or units; (b) the sale of up to 8,727,000 shares of common stock by certain selling stockholders; and (c) the offering, issuance and sale of up to a maximum aggregate offering price of $50.0 million of our common stock that may be issued and sold under a sales agreement with Cantor Fitzgerald & Co. As of December 31, 2014, there were no sales of any securities registered pursuant to the shelf registration statement.

On July 18, 2014, we entered into a new Loan and Security Agreement with Silicon Valley Bank, providing for two tranches of term loans of up to $16.0 million and a revolving credit line of up to $5.0 million. In July 2014, we drew down both tranches of the Term Loans, of which approximately $5.8 million was used to pre-pay the Company’s existing April and September 2012 notes payable. In addition, we drew down $2.0 million from the revolving line of credit facility. The actual amount of the Revolving Loans that are available from time to time under the Loan Agreement is limited to a borrowing base amount that is determined according to, among other things, a percentage of the value of eligible accounts.

At December 31, 2014, we had an accumulated deficit of $128.6 million. We expect to incur increased research and development expenses from the Phase 3 trial of GPB for the treatment of patients with episodic HE. We expect to continue to incur research and development expenses relating to the completion of the DiaPep277 Phase 3 trial and the termination of the DiaPep277 development program through mid to late 2015. In addition, we expect to continue to incur significant commercial, sales and marketing, and outsourced manufacturing expenses in connection with commercialization of RAVICTI and marketing of BUPHENYL in UCD. These increased expenses as compared to prior years include compensation expenses due to hiring additional employees, costs related to operation of our distribution network and marketing costs and general infrastructure expenses as we expand our organization. Our plans with respect to these matters include utilizing a substantial portion of our capital resources and efforts in completing the development and obtaining regulatory approval of GPB in HE and the identification and potential development of additional new product candidates. Further, as a result of our legal investigation of the serious misconduct at Andromeda, the legal disputes in which we are involved and the significant legal costs associated with the expansion of our business, our legal expenses increased significantly, and they may continue to increase in the future.

We believe that our existing cash and cash equivalents and investments as of December 31, 2014, and our future forecasted product revenues will be sufficient to fund our operations for at least the next 12 months.

Cash Flows

The following table sets forth the major sources and uses of cash for the periods set forth below (in thousands):

	Year Ended December 31,
(in thousands)	2014			2013			2012
Net cash (used in) provided by:
Operating activities	$	30,998		$	(1,212	)	$	(28,531	)
Investing activities		(14,973	)		(34,054	)		2
Financing activities		12,539			59,645			71,364
Net increase in cash and cash equivalents	$	28,564		$	24,379		$	42,835

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Net cash provided by operating activities of $31.0 million for the year ended December 31, 2014, primarily included our net loss of $6.3 million, adjusted for non-cash items such as $30.2 million of impairment of goodwill, $0.6 million of amortization of debt discount and debt issuance cost, $4.6 million of amortization of intangible asset, $7.6 million of stock-based compensation expense, $0.4 million of amortization of discount on available-for-sale investments, $0.5 million of depreciation expense, $0.3 million of provision for inventory obsolescence, a net cash inflow of $6.6 million related to changes in operating liabilities partially offset by a net cash outflow of $13.5 million related to changes in operating assets. Cash used in operating activities of $1.2 million for the year ended December 31, 2013, primarily related to our net income of $16.6 million, adjusted for non-cash items such as $31.1 million of gain from the settlement of retention option, $0.6 million of amortization of debt discount and debt issuance costs, $3.1 million of amortization of intangible asset, $4.3 million of stock-based compensation expense, $0.3 million of other non –cash items, a net cash inflow of $9.8 million related to changes in operating liabilities partially offset by a net cash inflow of $4.8 million related to changes in operating assets. The primary use of cash in operating activities for the year ended December 31, 2012 was to fund our operations related to the development of RAVICTI in UCD and GPB in HE. Cash used in operating activities of $28.5 million for the twelve months ended December 31, 2012, primarily related to our net loss of $32.3 million, adjusted for non-cash items such as $1.3 million of amortization of debt discount, $0.8 million of re-measurement of warrants liability, $0.7 million re-measurement of call option liability and $1.0 million of stock-based compensation expense. For the twelve months ended December 31, 2012, cash used in operating activities included the $5.7 million incurred for the purchase of RAVICTI.

Net cash used in investing activities for the year ended December 31, 2014 was $15.0 million and primarily consisted of $14.0 million paid to acquire Andromeda, additions made to property, plant and equipment of $0.7 million, purchase of available-for-sale investments of $29.0 million partially offset by maturities of available-for-sale investments of $28.7 million. Net cash used in investing activities of $34.1 million for the year ended December 31, 2013 includes $43.9 million for purchases of investments and $1.1 million for additions made to property and equipment partially offset by a net payment of $11.0 million received from Ucyclyd. For the year ended December 31, 2012, net cash provided by investing activities consisted of a decrease in restricted cash of $0.3 million, partially offset by the purchase of the option to purchase rights to BUPHENYL and AMMONUL of $0.3 million and property and equipment purchases of $45,000.

Net cash provided by financing activities amounted to $12.5 million, $59.6 million and $71.4 million for the years ended December 31, 2014, 2013, and 2012, respectively. Net cash provided by financing activities for year ended December 31, 2014 primarily consisted of proceeds from the term loan and revolving credit line of $18.0 million, proceeds from issuance of common stock due to exercise of stock options of $2.6 million partially offset by payments of notes payable of $8.2 million. Net cash provided by financing activities for year ended December 31, 2013, related primarily to the proceeds from our follow-on offering $64.5 million (net of underwriting discounts and commissions), proceeds from the issuance of the common stock from stock option exercises of $0.6 million partially offset by our payments of notes payable of $4.3 million and payments of offering costs of $ 1.1 million. Net cash provided by financing activities for year ended December 31, 2012, related primarily to the proceeds from our IPO of $51.3 million (net of underwriting discounts and commissions and offering costs), proceeds from the issuance of the February 2012 Notes in the amount of $7.5 million and net proceeds from the issuance of our April 2012 Notes and September 2012 Notes totaling $12.4 million.

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Contractual Obligations and Commitments

The following table summarizes our contractual obligations and commitments as of December 31, 2014 (in thousands):

	Payments Due By Period
Contractual Obligations	Total		Less than 1 Year		1-3 Years		3-5 Years		More than 5 Years
Principal obligations on the loan and security agreement(1)	$	18,000	$	—	$	14,669	$	3,331	$	—
Interest obligations on the loan and security agreement(1)		2,788		730		939		1,119		—
Operating leases(2)		4,049		797		1,641		1,611		—
Total(3)(4)	$	24,837	$	1,527	$	17,249	$	6,061	$	—

(1) On July 18, 2014, we entered into a new Loan and Security Agreement (the “Loan Agreement”) with Silicon Valley Bank, providing for two tranches of term loans of up to $16.0 million (the “Term Loans”) and a revolving credit line of up to $5.0 million (the “Revolving Loans”). The Loan Agreement provides for an interest rate of 4.0% per year on the Term Loans and the prime rate plus 0.75% per year on the Revolving Loans, with a minimum interest requirement on the Revolving Loans. Upon the maturity date of the Term Loans, a final payment fee of 6.75% of the original principal amount of such Term Loans (the “Final Payment”) will be due. In addition, the Company drew down $2.0 million from the revolving line of credit facility.

(2) Operating lease obligations consist primarily of lease payments for our Brisbane facility and office equipment.

(3) This table does not include (a) any milestone payments, which may become payable to third parties under license agreements, as the timing and likelihood of such payments are not known, and (b) any royalty payments to third parties as the amounts, timing and likelihood of such payments are not known.

(4) This table does not include a liability for unrecognized tax benefits related to various federal and state income tax matters of $4.2 million at December 31, 2014. The timing of the settlement of these amounts was not reasonably estimable at December 31, 2014. We do not expect payment of amounts related to the unrecognized tax benefits within the next twelve months.

Future Funding Requirements

We may need to obtain additional financing to fund our future operations, including supporting sales and marketing activities related to RAVICTI and BUPHENYL, funding a Phase 3 trial in HE, as well as the costs related to termination of the clinical development of DiaPep277 and the development and commercialization of any additional product candidates we might acquire or develop on our own. Our future funding requirements will depend on many factors, including, but not limited to:

• our revenues from RAVICTI and BUPHENYL;

• costs relating to the discontinuation of the DiaPep277 program, including potential liabilities from related litigation;

• the amount of sales and other revenues from other products and product candidates that we may commercialize, if any, including the selling prices for such products and the availability of adequate third-party reimbursement;

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• selling and marketing costs associated with our UCD products, including the cost and timing of expanding our marketing and sales capabilities;

• the progress, timing, scope and costs of our nonclinical studies and clinical trials, including the ability to timely enroll patients in our planned and potential future clinical trials;

• the time and cost necessary to obtain regulatory approvals and the costs of post-marketing studies that may be required by regulatory authorities;

• the costs of obtaining clinical and commercial supplies of RAVICTI, BUPHENYL and GPB;

• payments of milestones and royalties to third parties;

• cash requirements of any future acquisitions of product candidates;

• the time and cost necessary to respond to technological and market developments;

• the costs of filing, prosecuting, defending and enforcing any patent claims and other intellectual property rights; and

• any new collaborative, licensing and other commercial relationships that we may establish.

We believe that our current cash and cash equivalents will be sufficient to fund our operations for at least the next 12 months.

We have based these estimates on a number of assumptions that may prove to be wrong, and changing circumstances beyond our control may cause us to consume capital more rapidly than we currently anticipate. For example, we may not achieve or sustain the revenues we anticipated and our HE Phase 3 clinical trial may cost more than we expect. Because of the numerous risks and uncertainties associated with the development and commercialization of GPB or any other product candidates, we are unable to estimate with any certainty the amounts of increased capital outlays and operating expenditures associated with our current and anticipated clinical trials.

Additional financing may not be available when we need it or may not be available on terms that are favorable to us. We may seek to raise additional capital through a combination of private and public equity offerings and debt financings. To the extent that we raise additional capital through the sale of equity or convertible debt securities, the ownership interest of existing stockholders will be diluted, and the terms may include liquidation or other preferences that adversely affect the rights of existing stockholders. Debt financing, if available, would result in increased fixed payment obligations and may involve agreements that include covenants limiting or restricting our ability to take specific actions such as incurring debt, making capital expenditures or declaring dividends.

If adequate funds are not available to us on a timely basis, or at all, we may be required to terminate or delay clinical trials or other development activities for RAVICTI and GPB, or delay our establishment of sales and marketing capabilities or other activities that may be necessary to successfully market BUPHENYL. We may elect to raise additional funds even before we need them if the conditions for raising capital are favorable.

Off-Balance Sheet Arrangements

We do not currently have, nor have we ever had, any relationships with unconsolidated entities or financial partnerships, such as entities often referred to as structured finance or special purpose entities, which would have been established for the purpose of facilitating off-balance sheet arrangements or other contractually narrow or limited purposes. In addition, we do not engage in trading activities involving non-exchange traded contracts.

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ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We are exposed to market risks in the ordinary course of our business. These risks primarily include risk related to interest rate sensitivities and foreign currency exchange rate movements.

Interest Rate Market Risk

Our exposure to market risk for changes in interest rates relates primarily to our investment portfolio and our outstanding debt obligations.

By policy, we place our investments with highly rated credit issuers and limit the amount of credit exposure to any one issuer. As stated in our investment policy, we seek to improve the safety and likelihood of preservation of our invested funds by limiting default risk and market risk.

We mitigate default risk by investing in high credit quality securities and by positioning our portfolio to respond appropriately to a significant reduction in a credit rating of any investment issuer or guarantor. The portfolio includes only marketable securities with active secondary or resale markets to ensure portfolio liquidity.

Our cash and cash equivalents as of December 31, 2014, totaled $102.8 million and consisted primarily of cash and money market funds with original maturities of three months or less from the date of purchase. Our short-term and long-term investments totaled $43.7 million and consisted primarily of certificates of deposit, commercial paper, corporate notes and U.S. government agency securities. Our primary exposure to market risk is interest income sensitivity, which is affected by changes in the general level of the interest rates in the United States. However, because of the short-term nature of the instruments in our portfolio, a sudden change in market interest rates would not be expected to have a material impact on our financial condition or our results of operations.

As of December 31, 2014, we had debt obligations outstanding relating to our outstanding obligations under a loan and security agreement with Silicon Valley Bank and Leader Lending, LLC totaling $16.0 million of term loans and $2.0 million of revolving credit line. Our obligations under the loan and security agreement carry an interest rate that is fixed and is not subject to fluctuations. However, to the extent in the future we enter into other long-term debt arrangements, we could be subject to fluctuations in interest rates, which could have a material impact on our future financial condition and results of operations.

We do not have any foreign currency or other derivative financial instruments.

Foreign Currency Exchange Rate Risk

We transact business in Canadian Dollars. Accordingly, we are subject to exposure from movements in foreign currency exchange rates of Canadian dollars from sales of our products and some operating expenses incurred in Canada.

At December 31, 2014, we had accounts receivable of $0.5 million denominated in foreign currencies which represented approximately 3% of our total accounts receivable.

At December 31, 2014, we had cash of $0.5 million denominated in foreign currencies which represented approximately 1% of our total cash and cash equivalents.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

The financial statements required by this item are set forth beginning at page F-1 of this report and are incorporated herein by reference.

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ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

None.

ITEM 9A. CONTROLS AND PROCEDURES

Evaluation of disclosure controls and procedures.

Management, including our Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of our disclosure controls and procedures (as defined in Exchange Act Rules 13a-15e and 15d-15(e)), as of the end of the period covered by this report. Based upon the evaluation, our Chief Executive Officer and Chief Financial Officer concluded that the disclosure controls and procedures were effective to ensure that information required to be disclosed in the reports we file and submit under the Securities Exchange is (i) recorded, processed, summarized and reported as and when required and (ii) accumulated and communicated to our management, including the Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely discussion regarding required disclosure.

Management’s Report on Internal Control Over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Rules 13a-15(f) and 15d-15(f) of the Securities Exchange Act of 1934, as amended. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with policies or procedures may deteriorate. Our internal control over financial reporting is a process designed under the supervision of our principal executive officer and principal financial officer to provide reasonable assurance regarding the reliability of financial reporting and the preparation of our financial statements for external reporting purposes in accordance with U.S. generally accepted accounting principles.

Under the supervision and with the participation of management, including our principal executive officer and principal financial officer, we conducted an evaluation of the effectiveness of our internal control over financial reporting based on the framework in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on our evaluation under that framework, management concluded that our internal control over financial reporting was effective as of December 31, 2014.

Attestation Report of the Registered Public Accounting Firm

This report does not include an attestation report of our independent registered public accounting firm regarding internal control over financial reporting.

Changes in internal control over financial reporting.

There have been no changes in our internal control over financial reporting during our most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

ITEM 9B. OTHER INFORMATION

None.

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PART III

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

The information required by this item is incorporated by reference to the information set forth in the sections titled “Information About Our Board of Directors” and “Information About Our Executive Officers,” “Information about the Board of Directors and Corporate Governance,” “Code of Ethics,” “Section 16(a) Beneficial Ownership Reporting Compliance,” “Committees of the Board of Directors — Nominating and Corporate Governance Committee,” “Committees of the Board of Directors — Audit Committee” and “Report of the Audit Committee of the Board of Directors” in our Proxy Statement.

ITEM 11. EXECUTIVE COMPENSATION

The information required by this item is incorporated by reference to the information set forth in the sections titled “Executive and Director Compensation” and “Committees of the Board of Directors — Compensation Committee” in our Proxy Statement.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

The information required by this item is incorporated by reference to the information set forth in the sections titled “Securities Authorized For Issuance Under Equity Compensation Plans” and “Security Ownership of Certain Beneficial Owners and Management” in our Proxy Statement.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

The information required by this item is incorporated by reference to the information set forth in the sections titled “Board of Directors Independence” and “Transactions With Related Persons” in our Proxy Statement.

ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES

The information required by this item is incorporated by reference to the information set forth in the sections titled “Independent Registered Public Accounting Firm Fees and Services” in our Proxy Statement.

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PART IV

ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

The financial statement schedules and exhibits filed as part of this form 10-K are as follows:

(a)(1) Financial Statements

Reference is made to the consolidated financial statements included in Item 8 of Part II hereof.

(a)(2) Financial Statement Schedules

Financial statement schedules have been omitted because the required information is not present, or not present in amounts sufficient to require submission of the schedules, or because the required information is provided in the consolidated financial statements or notes thereto.

(a)(3) Exhibits

The exhibits required to be filed as part of this report are listed in the Exhibit Index attached hereto and are incorporated herein by reference.

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SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report on Form 10-K to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Brisbane, State of California, on the 4^th day of March 2015.

Hyperion Therapeutics, Inc.
By:	/s/    Donald J. Santel
	Donald J. Santel Chief Executive Officer and President
By:	/s/    Jeffrey S. Farrow
	Jeffrey S. Farrow Chief Financial Officer

POWER OF ATTORNEY

Each person whose individual signature appears below hereby authorizes and appoints Donald J. Santel and Jeffrey S. Farrow, and each of them, with full power of substitution and resubstitution and full power to act without the other, as his or her true and lawful attorney-in-fact and agent to act in his or her name, place and stead and to execute in the name and on behalf of each person, individually and in each capacity stated below, and to file any and all amendments to this report on Form 10-K, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing, ratifying and confirming all that said attorneys-in-fact and agents or any of them or their or his substitute or substitutes may lawfully do or cause to be done by virtue thereof.

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, this report on Form 10-K has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

Signature	Title	Date
/s/    Donald J. Santel         Donald J. Santel	Chief Executive Officer, President and Director (Principal Executive Officer)	March 4, 2015
/s/    Jeffrey S. Farrow         Jeffrey S. Farrow	Chief Financial Officer (Principal Financial and Accounting Officer)	March 4, 2015
/s/    James I. Healy         James I. Healy, M.D., Ph.D.	Chairman of the Board	March 4, 2015
/s/    Theodore R. Schroeder         Theodore R. Schroeder	Director	March 4, 2015
/s/    Bo Jesper Hansen         Bo Jesper Hansen, M.D., Ph.D.	Director	March 4, 2015

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Signature	Title	Date
/s/    Jake R. Nunn         Jake R. Nunn	Director	March 4, 2015
/s/    Bijan Salehizadeh         Bijan Salehizadeh, M.D.	Director	March 4, 2015
/s/    Daniel G. Welch         Daniel G. Welch	Director	March 4, 2015
/s/    Lota S. Zoth         Lota S. Zoth	Director	March 4, 2015

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Hyperion Therapeutics, Inc.

Years Ended December 31, 2014, 2013 and 2012

Index

	Page
Report of Independent Registered Public Accounting Firm		F-2
Consolidated Financial Statements
Consolidated Balance Sheets		F-3
Consolidated Statements of Operations		F-4
Consolidated Statements of Comprehensive Income (Loss)		F-5
Consolidated Statements of Stockholders’ Equity (Deficit)		F-6
Consolidated Statements of Cash Flows		F-7
Notes to Consolidated Financial Statements		F-8

F-1

Report of Independent Registered Public Accounting Firm

To the Board of Directors and Stockholders of

Hyperion Therapeutics, Inc.

In our opinion, the accompanying consolidated balance sheets and the related consolidated statements of operations, of comprehensive income (loss), of stockholders’ equity (deficit) and of cash flows present fairly, in all material respects, the financial position of Hyperion Therapeutics, Inc. and its subsidiaries at December 31, 2014 and December 31, 2013 and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2014 in conformity with accounting principles generally accepted in the United States of America. These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We conducted our audits of these statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

/s/ PricewaterhouseCoopers LLP

San Jose, California

March 4, 2015

F-2

Hyperion Therapeutics, Inc.

Consolidated Balance Sheets

(In thousands, except share and per share amounts)

	December 31,
	2014			2013
Assets
Current assets
Cash and cash equivalents	$	102,796		$	74,232
Short-term investments		34,487			28,045
Accounts receivable, net		14,864			4,419
Inventories, net		4,621			3,513
Prepaid expenses and other current assets		2,632			1,403
Total current assets		159,400			111,612
Long-term investments		9,226			15,780
Property and equipment, net		1,116			936
Intangible asset, net		8,816			13,442
Other non-current assets		1,858			749
Total assets	$	180,416		$	142,519
Liabilities and Stockholders’ Equity
Current liabilities
Accounts payable	$	4,669		$	2,292
Accrued liabilities		25,509			12,187
Deferred revenue		224			—
Notes payable, current portion		—			5,652
Total current liabilities		30,402			20,131
Notes payable, net of current portion		18,124			2,621
Deferred rent		338			81
Total liabilities		48,864			22,833
Commitments and contingencies (Note 13)
Stockholders’ equity
Preferred stock, par value $0.0001 — 10,000,000 shares authorized at December 31, 2014 and 2013; none issued and outstanding		—			—
Common stock, par value $0.0001 — 100,000,000 shares authorized at December 31, 2014 and 2013; 20,747,013 and 20,137,145 shares issued and outstanding at December 31, 2014 and 2013, respectively		2			2
Additional paid-in capital		260,225			242,109
Accumulated other comprehensive loss		(50	)		(55	)
Accumulated deficit		(128,625	)		(122,370	)
Total stockholders’ equity		131,552			119,686
Total liabilities and stockholders’ equity	$	180,416		$	142,519

The accompanying notes are an integral part of these consolidated financial statements.

F-3

Hyperion Therapeutics, Inc.

Consolidated Statements of Operations

(In thousands, except share and per share amounts)

	Years Ended December 31,
	2014			2013			2012
Net product revenue	$	113,584		$	42,204		$	—
Costs and expenses:
Cost of sales		13,727			6,740			—
Research and development		20,715			9,984			17,046
Selling, general and administrative		48,522			35,839			11,487
Impairment of goodwill (Notes 4 and 8)		30,201			—			—
Amortization of intangible asset		4,626			3,058			—
Total costs and expenses		117,791			55,621			28,533
Loss from operations		(4,207	)		(13,417	)		(28,533	)
Interest income		555			27			12
Interest expense		(1,601	)		(1,539	)		(3,703	)
Gain from settlement of retention option (Note 4)		—			31,079			—
Other income (expense), net		(699	)		526			(39	)
Income (loss) before income taxes		(5,952	)		16,676			(32,263	)
Income tax expense		303			49			—
Net income (loss)		(6,255	)		16,627			(32,263	)
Net income (loss) per share:
Basic	$	(0.31	)	$	0.86		$	(4.45	)
Diluted	$	(0.31	)	$	0.80		$	(4.45	)
Weighted average number of shares used to compute net income (loss) per share of common stock:
Basic		20,470,025			19,415,822			7,256,537
Diluted		20,470,025			20,730,913			7,256,537

The accompanying notes are an integral part of these consolidated financial statements.

F-4

Hyperion Therapeutics, Inc.

Consolidated Statements of Comprehensive Income (Loss)

(In thousands)

	Years Ended December 31,
	2014			2013			2012
Net income (loss)	$	(6,255	)	$	16,627		$	(32,263	)
Other comprehensive income (loss):
Unrealized gain (loss) on investments arising during the year		5			(55	)		—
Other comprehensive income (loss)		5			(55	)		—
Comprehensive income (loss)	$	(6,250	)	$	16,572		$	(32,263	)

The accompanying notes are an integral part of these consolidated financial statements.

F-5

Hyperion Therapeutics, Inc.

Consolidated Statements of Stockholders’ Equity (Deficit)

(In thousands, except share and per share amounts)

	Convertible Preferred Stock						Common Stock				Additional Paid-in Capital		Accumulated Other Comprehensive Loss			Accumulated Deficit			Total Stockholders’ Equity (Deficit)
	Shares			Amount			Shares		Amount
Balances as of December 31, 2011		6,575,637			58,326			469,319		—		24,630		—			(106,734	)		(82,104	)
Conversion of Series C-1 and C-2 convertible preferred stock to common stock		(6,575,637	)		(58,326	)		6,575,637		1		58,325		—			—			58,326
Conversion of convertible notes payable and accrued interest to common stock		—			—			3,444,870		—		33,322		—			—			33,322
Issuance of common stock upon automatic net exercise of warrants		—			—			340,361		—		3,901		—			—			3,901
Proceeds from issuance of common stock in initial public offering, net of underwriting discounts and commissions of $4,025 and offering costs of $2,163		—			—			5,750,000		1		51,311		—			—			51,312
Issuance of common stock warrants in connection with notes payable		—			—			—		—		755		—			—			755
Issuance of common stock upon exercise of stock options		—			—			66,082		—		147		—			—			147
Stock-based compensation expense		—			—			—		—		993		—			—			993
Net loss		—			—			—		—		—		—			(32,263	)		(32,263	)
Balances as of December 31, 2012		—			—			16,646,269		2		173,384		—			(138,997	)		34,389
Proceeds from issuance of common stock in follow-on offering, net of underwriting discounts and commissions of $4,116 and offering costs of $776		—			—			3,306,250		—		63,712		—			—			63,712
Exercise of common stock warrants in connection with notes payable		—			—			67,503		—		—		—			—			—
Issuance of common stock upon exercise of stock options		—			—			117,123		—		637		—			—			637
Stock-based compensation expense		—			—			—		—		4,376		—			—			4,376
Other comprehensive income (loss)		—			—			—		—		—		(55	)		—			(55	)
Net income		—			—			—		—		—		—			16,627			16,627
Balances as of December 31, 2013		—			—			20,137,145		2		242,109		(55	)		(122,370	)		119,686
Issuance of common stock upon exercise of stock options		—			—			291,999		—		2,583		—			—			2,583
Issuance of common stock upon release of restricted stock units		—			—			5,000		—		—		—			—			—
Issuance of common stock upon acquisition of Andromeda Biotech Ltd (Note 4)		—			—			312,869		—		7,778		—			—			7,778
Stock-based compensation expense		—			—			—		—		7,647		—			—			7,647
Excess tax benefit from stock-based compensation		—			—			—		—		108		—			—			108
Other comprehensive income (loss)		—			—			—		—		—		5			—			5
Net loss		—			—			—		—		—		—			(6,255	)		(6,255	)
Balances as of December 31, 2014		—		$	—			20,747,013	$	2	$	260,225	$	(50	)	$	(128,625	)	$	131,552

The accompanying notes are an integral part of these consolidated financial statements

F-6

Hyperion Therapeutics, Inc.

Consolidated Statements of Cash Flows (In thousands)

	Year Ended December 31,
	2014			2013			2012
Cash flows from operating activities
Net income (loss)	$	(6,255	)	$	16,627		$	(32,263	)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities
Depreciation		496			198			15
Amortization of debt discount and debt issuance costs		627			556			1,381
Re-measurement of warrants liability		—			—			780
Re-measurement of call option liability and preferred stock liability		—			—			(737	)
Stock-based compensation expense		7,568			4,294			993
Amortization of intangible asset		4,626			3,058			—
Impairment of goodwill (Notes 4 and 8)		30,201			—			—
Gain from settlement of retention option (Note 4)		—			(31,079	)		—
Unrealized loss on foreign currency translation adjustments		7			14			—
Provision of inventory obsolescence		346			—			—
Amortization of discount on available-for-sale investments		397			51			—
Excess tax benefit from stock-based compensation		(108	)		—			—
Changes in assets and liabilities, net of impact of acquisition of Andromeda Biotech Ltd. (“Andromeda”)
Accounts receivable		(10,452	)		(4,433	)		—
Inventories		(1,376	)		468			—
Prepaid expenses and other assets		(1,705	)		(809	)		(249	)
Accounts payable		(1,857	)		115			290
Accrued liabilities and other		7,978			9,647			1,259
Deferred revenue		224			—			—
Deferred rent		281			81			—
Net cash provided by (used in) operating activities		30,998			(1,212	)		(28,531	)
Cash flows from investing activities
Acquisition of property and equipment		(654	)		(1,085	)		(45	)
Purchase of available-for-sale investments		(29,023	)		(43,931	)		—
Maturity of available-for-sale investments		28,743			—			—
Acquisition of Andromeda, net of cash acquired		(14,039	)		—			—
Option to purchase BUPHENYL and AMMONUL (Note 4)		—			—			(283	)
Acquisition of rights to BUPHENYL, net of AMMONUL option (Note 4)		—			10,962			—
Change in restricted cash		—			—			330
Net cash provided by (used in) investing activities		(14,973	)		(34,054	)		2
Cash flows from financing activities
Proceeds from issuance of common stock in initial public offering, net of underwriting discounts		—			—			53,475
Proceeds from issuance of common stock in follow-on offering, net of underwriting discounts		—			64,488			—
Proceeds from issuance of common stock from stock option exercises		2,584			637			147
Proceeds from term loans		16,000			—			—
Proceeds from revolving credit line		2,000			—			—
Excess tax benefit from stock-based compensation		108			—			—
Proceeds from issuance of convertible notes payable		—			—			7,504
Proceeds from issuance of notes payable, net of issuance costs		—			—			12,401
Payments of offering costs		—			(1,132	)		(2,163	)
Principal payments under notes payable		(8,153	)		(4,348	)		—
Net cash provided by financing activities		12,539			59,645			71,364
Net increase in cash and cash equivalents		28,564			24,379			42,835
Cash and cash equivalents, beginning of period		74,232			49,853			7,018
Cash and cash equivalents, end of period	$	102,796		$	74,232		$	49,853
Supplemental cash flow information
Cash paid for interest	$	1,526		$	966		$	593
Cash paid for income tax		1,099			—			—
Stock-based compensation capitalized into inventories		79			82			—
Supplemental disclosure of noncash investing and financing activities
Warrants issued in connection with notes payable		—			—			1,302
Option to purchase rights to BUPHENYL and AMMONUL (Note 4)		—			283			—
Unrealized gain (loss) on available-for-sale investments		5			(55	)		—
Issuance of common stock upon automatic net exercise of warrants		—			—			3,901
Conversion of convertible notes payable and accrued interest to common stock		—			—			33,322
Conversion of Series C-1 and C-2 preferred stock to common stock		—			—			58,326
Acquisition of Andromeda (Note 4)
Cash paid for acquisition		14,345			—			—
Cash acquired in acquisition		(306	)		—			—
Net cash paid for acquisition		14,039			—			—
Fair value of common stock issued in connection with the acquisition		7,778			—			—

The accompanying notes are an integral part of these consolidated financial statements.

F-7

Hyperion Therapeutics, Inc.

Notes to Consolidated Financial Statements

1. Formation and Business of the Company

Hyperion Therapeutics, Inc. (the “Company”) was incorporated in the state of Delaware on November 1, 2006. The Company was in the development stage from inception through March 31, 2013. During this period, the Company’s activities consisted primarily of raising capital, negotiating a promotion and drug development collaboration agreement, establishing a management team and performing drug development activities. The Company launched RAVICTI^® (glycerol phenylbutyrate) Oral Liquid during the quarter ended March 31, 2013.

On May 31, 2013, the Company acquired BUPHENYL, an FDA-approved therapy for treatment of three of the most prevalent UCD subtypes, from Ucyclyd Pharma Inc. (“Ucyclyd”), a subsidiary of Valeant Pharmaceuticals International, Inc. (“Valeant”). Subsequent to the acquisition on May 31, 2013, the Company started selling BUPHENYL Tablets and Powder within and outside the United States. The Company pays Ucyclyd royalties on net sales in the United States of BUPHENYL to UCD patients outside of the FDA-approved labeled age range for RAVICTI.

As discussed in Note 4, on June 12, 2014, the Company completed the acquisition of Andromeda Biotech Ltd. (“Andromeda”), an Israeli company. On September 8, 2014 the Company announced that it was terminating development of DiaPep277^® for newly diagnosed Type 1 diabetes as a result of evidence that the Company uncovered that certain employees of Andromeda engaged in serious misconduct that compromised clinical trial results. The Company subsequently terminated the Andromeda employees involved in the misconduct. On September 22, 2014, Clal Biotechnology Industries Ltd., (“CBI”), the former owner of Andromeda filed suit against the Company in Delaware related to the Company’s announcement. On October 6, 2014 the Company entered into an interim agreement with CBI, to attempt to resolve their disputes. As discussed in Note 22, on January 16, 2015, CBI dismissed its claim against the Company without prejudice and the Company, CBI and Yeda Research and Development Company Ltd (“Yeda”) announced that they had reached an agreement to settle their disputes on February 16, 2015.

The Company is a commercial biopharmaceutical company focused on the development and commercialization of novel therapeutics to treat disorders in the areas of orphan diseases. The Company’s products RAVICTI^® (glycerol phenylbutyrate) Oral liquid, BUPHENYL^® and AMMONAPS^® (sodium phenylbutyrate) Tablets and Powder, are designed to lower ammonia in the blood. Ammonia is produced in the intestine after a person eats protein and is normally detoxified in the liver by conversion to urea. Elevated levels of ammonia are potentially toxic and can lead to severe medical complications which may include death. The Company developed RAVICTI, which was launched during the first quarter of 2013, to treat most urea cycle disorders (“UCD”) and is developing glycerol phenylbutyrate (“GPB”), the active pharmaceutical ingredient in RAVICTI, to treat hepatic encephalopathy (“HE”). UCD and HE are diseases in which blood ammonia is elevated. UCD are inherited rare genetic diseases caused by a deficiency of one or more enzymes or transporters that constitute the urea cycle, which in a healthy individual removes ammonia through its conversion to urea. HE may develop in some patients with liver scarring, known as cirrhosis, or acute liver failure and is a chronic complication of cirrhosis which fluctuates in severity and may lead to serious neurological damage.

On February 1, 2013, the U.S. Food and Drug Administration (“FDA”), granted approval of RAVICTI for the use as a nitrogen-binding agent for chronic management of adult and pediatric UCD patients greater than two years of age who cannot be managed by dietary protein restriction and/or amino acid supplementation alone.

On July 31, 2012, the Company completed its initial public offering (“IPO”) and issued 5,000,000 shares of its common stock at an initial offering price of $10.00 per share. In addition, the Company sold an additional 750,000 shares of common stock directly to its underwriters when they exercised their over-allotment option in

F-8

Hyperion Therapeutics, Inc.

Notes to Consolidated Financial Statements

full at the initial offering price of $10.00 per share. The shares began trading on the NASDAQ Global Market on July 26, 2012. The Company received net proceeds from the IPO of $51.3 million, after deducting underwriting discounts and commissions of $4.0 million and expenses of $2.2 million. Upon the closing of the IPO, the Company’s Series C-1 and Series C-2 preferred stock converted into 1,912,598 and 4,663,039 shares of common stock, respectively. In addition, the principal and accrued interest under the Company’s April 2011 Notes and October 2011 Notes amounting to $18.9 million and $15.6 million, respectively, converted into 1,888,054 and 1,556,816 shares of common stock. As of July 31, 2012, the carrying value of the April 2011 Notes including the impact of the amendment to the April 2011 Notes and accrued interest was $18.4 million. As of July 31, 2012, the carrying value (net of discount) and accrued interest under the October 2011 Notes was $14.9 million. Additionally, the April 2011 common stock warrants and October 2011 preferred stock warrants were converted into 322,599 and 17,762 shares of common stock, respectively, immediately prior to the closing of the IPO.

On March 13, 2013, the Company completed its follow-on offering and issued 2,875,000 shares of its common stock at an offering price of $20.75 per share. In addition, the Company sold an additional 431,250 shares of common stock directly to its underwriters when they exercised their over-allotment option in full at the offering price of $20.75 per share. The Company received net proceeds from the offering of $63.7 million, after deducting underwriting discounts and commissions of $4.1 million and expenses of $0.8 million.

On August 14, 2013, the Company filed a shelf registration statement on Form S-3, which was declared effective by the Securities and Exchange Commission (“SEC”) on September 13, 2013. The shelf registration statement permits: (a) the offering, issuance and sale by the Company of up to a maximum aggregate offering price of $150.0 million of its common stock, preferred stock, debt securities, warrants and/or units; (b) the sale of up to 8,727,000 shares of common stock by certain selling stockholders; and (c) the offering, issuance and sale by the Company of up to a maximum aggregate offering price of $50.0 million of its common stock that may be issued and sold under a sales agreement with Cantor Fitzgerald & Co. As of December 31, 2014, there were no sales of any securities registered pursuant to the shelf registration statement.

Since inception, the Company has incurred recurring annual net operating losses from operations. During the year ended December 31, 2014, the Company incurred a loss from operations of $4.2 million. At December 31, 2014, the Company had an accumulated deficit of $128.6 million. The Company expects to incur increased research and development expenses when it initiates a Phase 3 trial of GPB for the treatment of patients with episodic HE and completes the ongoing DIA AID 2 clinical trial of DiaPep277program. In addition, the Company expects to incur increased sales and marketing expenses with the continued commercialization of RAVICTI and marketing of BUPHENYL in UCD as it expands outside of the U.S. Management’s plans with respect to these matters include utilizing a substantial portion of the Company’s capital resources and efforts in completing the development and obtaining regulatory approval for GPB in HE, expanding the Company’s organization, commercialization of RAVICTI and marketing of BUPHENYL.

2. Summary of Significant Accounting Policies

Basis of Presentation and the Use of Estimates

The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). The preparation of the accompanying consolidated financial statements in accordance with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the consolidated financial statements, and the reported amounts of revenues and expenses during the reporting period. On an ongoing basis, the Company evaluates its estimates, including those related to the

F-9

Hyperion Therapeutics, Inc.

Notes to Consolidated Financial Statements

fair value of assets and liabilities, intangible asset valuation, acquisition-related contingent consideration, acquisition related contingent liability, impairment of goodwill and intangible assets, stock-based compensation expense, income taxes, revenue recognition and product sales allowances. Management bases its estimates on historical experience or on various other assumptions, including information received from its service providers, which it believes to be reasonable under the circumstances. Actual results could differ from those estimates.

Basis of Consolidation

The consolidated financial statements include the Company’s accounts and those of its wholly-owned subsidiaries: Hyperion Therapeutics Ltd., Hyperion Therapeutics Ireland Holding Ltd., Hyperion Therapeutics Ireland Operating Ltd., Hyperion Therapeutics Israel Holding Corp. Ltd., Penville Limited and Andromeda Biotech Ltd. All intercompany accounts and transactions have been eliminated.

Concentration of Credit Risk and Significant Customers

The Company’s cash and cash equivalents and investments are maintained with financial institutions located in and outside the United States. Deposits in these institutions may exceed the amount of insurance provided on such deposits. The Company has not recognized any losses from credit risks during the periods presented and management does not believe that the Company is exposed to significant credit risk from its cash and cash equivalents or investments.

The Company is also subject to credit risk from its accounts receivables related to its product sales. The Company monitors its exposure within accounts receivable and records a reserve against uncollectible accounts receivable as necessary. The Company extends credit to a specialty distributor in the United States and to international distributors, pharmacies and hospitals outside the United States. Customer creditworthiness is monitored and collateral is not required. As of December 31, 2014, there were no credit losses on the Company’s accounts receivable. As of December 31, 2014 and 2013, the specialty distributor in the United States accounted for 87% and 64% of accounts receivable balance, respectively. One international distributor accounted for 10% and 17% of the accounts receivable balance for the year ended December 31, 2014 and 2013, respectively.

The specialty distributor accounted for 91% and 88% of the net product revenue for the year ended December 31, 2014 and 2013, respectively.

Fair Value of Financial Instruments

The Company measures certain financial assets and liabilities at fair value based on the exchange price that would be received for an asset or paid for to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants. The carrying amounts of the Company’s financial instruments, including cash equivalents, short-term investments, accounts payable, and accrued liabilities, approximate fair value due to their short maturities. The carrying amounts of long-term investments, acquisition-related contingent consideration and acquisition related contingent liability represent their estimated fair values. The fair value of the notes payable are based on the present value of expected future cash flows and assumptions about current interest rates and the creditworthiness of the Company.

Business Combinations

The Company allocates the purchase price of an acquired business to the tangible and intangible assets acquired and liabilities assumed based upon their estimated fair values on the acquisition date. Any excess of the

F-10

Hyperion Therapeutics, Inc.

Notes to Consolidated Financial Statements

purchase price over the fair value of the net assets acquired is recorded as goodwill. Acquired in-process research and development (“IPR&D”) is recognized at fair value and initially characterized as an indefinite-lived intangible asset, irrespective of whether the acquired IPR&D has an alternative future use. The purchase price allocation process requires management to make significant estimates and assumptions, especially at the acquisition date with respect to intangible assets. Direct transaction costs associated with the business combination are expensed as incurred.

Cash and Cash Equivalents

The Company considers all highly liquid investments with original maturities of three months or less at the date of purchase to be cash equivalents. Cash and cash equivalents include money market funds and various deposit accounts.

Investments

The Company determines the appropriate classification of its investments in debt and equity securities at the time of purchase. All of the Company’s securities are classified as available-for-sale and reported in short-term investments or long-term investments based on maturity dates and whether such assets are reasonably expected to be realized in cash or sold or consumed during the normal cycle of business. Available-for-sale investments are recorded at fair value, with unrealized gains or losses included in Accumulated Other Comprehensive Loss on the Company’s Consolidated Balance Sheets, exclusive of other-than-temporary impairment losses, if any. Short-term and long-term investments are comprised of corporate notes, commercial paper, U.S. federal government agency securities and certificates of deposit.

Accounts Receivable

Trade accounts receivable are recorded net of product sales allowances for prompt-payment discounts, chargebacks, and doubtful accounts. Estimates for chargebacks and prompt-payment discounts are based on contractual terms, historical trends and expectations regarding the utilization rates for these programs. At December 31, 2014, the Company had no allowances for doubtful accounts.

Inventories

Inventories are valued at the lower of cost or market, with cost computed at standard cost (which approximates actual cost) on a first-in-first-out (FIFO) cost method and consists of raw materials, work-in-progress and finished goods. Costs capitalized as inventories include third party manufacturing costs, associated compensation related costs of personnel indirectly involved in the manufacturing process and other overhead costs such as ancillary supplies. Subsequent to FDA approval of RAVICTI on February 1, 2013, the Company began capitalizing RAVICTI inventories as the related costs were expected to be recoverable through the commercialization of the product. Costs incurred prior to the FDA approval of RAVICTI have been recorded as research and development expense in the consolidated statements of operations. If information becomes available that suggest that inventories may not be realizable, the Company may be required to expense a portion or all of the previously capitalized inventories.

Products that have been approved by the FDA or other regulatory authorities, such as RAVICTI, are also used in clinical programs, to assess the safety and efficacy of the products for usage in diseases that have not

F-11

Hyperion Therapeutics, Inc.

Notes to Consolidated Financial Statements

been approved by the FDA or other regulatory authorities. The form of RAVICTI utilized for both commercial and clinical programs is identical and, as a result, the inventory has an “alternative future use” as defined in authoritative guidance. Raw materials and purchased drug product associated with clinical development programs are included in inventory and charged to research and development expense when the product enters the research and development process and no longer can be used for commercial purposes and, therefore, does not have an “alternative future use”.

Intangible Assets

Intangible assets are recorded at acquisition cost less accumulated amortization and impairment. Intangible asset with finite lives are amortized over their estimated useful life using the economic use method, which reflects the pattern that the economic benefits of the intangible asset are consumed as revenue is generated. The pattern of consumption of the economic benefits is estimated using the future projected cash flows of the intangible asset.

IPR&D

The fair value of IPR&D acquired through a business combination is capitalized as an indefinite-lived intangible asset until the completion or abandonment of the related research and development activities. When the related research and development is completed, the asset is assigned a useful life and amortized.

The fair value of an IPR&D intangible asset is determined using an income approach. This approach starts with a forecast of the net cash flows expected to be generated by the asset over its estimated useful life. The net cash flows reflect the asset’s stage of completion, the probability of technical success, the projected costs to complete, expected market competition, and an assessment of the asset’s life-cycle. The net cash flows are then adjusted to present value by applying an appropriate discount rate that reflects the risk factors associated with the cash flow streams.

Goodwill

Goodwill represents the excess of the purchase price of acquired businesses over the estimated fair value of the identifiable net assets acquired. Goodwill is not amortized but is tested for impairment at least annually at the reporting unit level or more frequently if events or changes in circumstances indicate that the asset might be impaired.

Goodwill is tested for impairment annually or more frequently if events or changes in circumstances between annual tests indicate that the asset may be impaired. Impairment loss is recognized based on a comparison of the fair value of the asset to its carrying value, without consideration of any recoverability.

Impairment of Long-lived Assets

The Company reviews its property and equipment, intangible assets subject to amortization and other long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset class may not be recoverable. Indicators of potential impairment include: an adverse change in legal factors or in the business climate that could affect the value of the asset; an adverse change in the extent or manner in which the asset is used or is expected to be used, or in its physical condition; and current or forecasted operating

F-12

Hyperion Therapeutics, Inc.

Notes to Consolidated Financial Statements

or cash flow losses that demonstrate continuing losses associated with the use of the asset. If indicators of impairment are present, the asset is tested for recoverability by comparing the carrying value of the asset to the related estimated undiscounted future cash flows expected to be derived from the asset. If the expected cash flows are less than the carrying value of the asset, then the asset is considered to be impaired and its carrying value is written down to fair value, based on the related estimated discounted future cash flows.

Indefinite-lived intangible assets, including acquired IPR&D, are tested for impairment annually or more frequently if events or changes in circumstances between annual tests indicate that the asset may be impaired. Impairment losses on indefinite-lived intangible assets are recognized based on a comparison of the fair value of the asset to its carrying value, without consideration of any recoverability.

Acquisition-Related Contingent Consideration

Acquisition-related contingent consideration, which consists primarily of potential milestone payments and royalty obligations, is recorded in the consolidated balance sheets at its acquisition date estimated fair value, in accordance with the acquisition method of accounting. The fair value of the acquisition-related contingent consideration is remeasured each reporting period, with changes in fair value recorded in the consolidated statements of operations. Changes in the fair value of the acquisition-related contingent consideration obligations result from several factors including changes in discount periods and rates, changes in the timing and amount of revenue estimates and changes in probability assumptions with respect to the likelihood of achieving specified milestone criteria. The fair value measurement is based on significant inputs not observable in the market and thus represents a Level 3 measurement as defined in the fair value hierarchy.

Acquisition-Related Contingent Liability

Acquisition-related contingent liability, which consists primarily of potential milestone payments and royalty obligations, and potential payments to certain employees of Andromeda is recorded in the consolidated balance sheets at its acquisition date estimated fair value. The Company reassesses the probability and estimates associated with the contingent liability at each reporting period. For liability payable to third parties, any increase in the liability is recorded in the consolidated statements of operations. For liabilities payable to employees, the Company accounts for the liability in accordance with Financial Accounting Stands Board (“FASB”) Accounting Stand Codification (“ASC”) 450 Contingencies.

Property and Equipment

Property and equipment are stated at cost, net of accumulated depreciation and amortization. All property and equipment is depreciated on a straight-line basis over the following estimated useful lives:

Computer and office equipment	3 – 5 years
Software	3 years
Furniture and fixtures	3 years

Leasehold improvements are amortized over the lesser of their useful life or the term of the applicable lease. Upon sale or retirement of assets, the cost and related accumulated depreciation and amortization are removed from the consolidated balance sheet and the resulting gain or loss is reflected in operations. Maintenance and repairs are charged to operations as incurred.

F-13

Hyperion Therapeutics, Inc.

Notes to Consolidated Financial Statements

2012 Reverse Stock Split

The Company effected a 1-for-6.09 reverse stock split of its common stock and preferred stock on July 12, 2012. Accordingly, all share and per share amounts for all periods presented in these consolidated financial statements and notes thereto, have been adjusted retroactively to reflect this reverse stock split.

Preclinical and Clinical Trial Accruals

The Company’s clinical trial accruals are based on estimates of patient enrollment and related costs at clinical investigator sites as well as estimates for the services received and efforts expended pursuant to contracts with multiple research institutions and clinical research organizations that conduct and manage preclinical and clinical trials on the Company’s behalf. The Company accrues expenses related to clinical trials based on contracted amounts applied to the level of patient enrollment and activity according to the protocol. If timelines or contracts are modified based upon changes in the clinical trial protocol or scope of work to be performed, the Company modifies the estimates of accrued expenses accordingly. To date, the Company has had no significant adjustments to accrued preclinical and clinical trial expenses.

Revenue Recognition

The Company recognizes revenue in accordance with ASC 605, Revenue Recognition, when the following criteria have been met: persuasive evidence of an arrangement exists; delivery has occurred and risk of loss has passed; the seller’s price to the buyer is fixed or determinable and collectability is reasonably assured. The Company determines that persuasive evidence of an arrangement exists based on written contracts that defined the terms of the arrangements. In addition, the Company determines that services have been delivered in accordance with the arrangement. The Company assesses whether the fee is fixed or determinable based on the payment terms associated with the transaction and whether the sales price is subject to refund or adjustment. The Company assesses collectability based primarily on the customer’s payment history and on the creditworthiness of the customer.

Product Revenue, net: The Company’s product revenue represents sales of RAVICTI and BUPHENYL which are recognized once all four revenue recognition criteria described above are met. The Company recognizes revenue net of product sales allowances. Product shipping and handling costs are included in cost of sales. Prior to June 2014, revenue from the sale of RAVICTI was recognized based on the amount of product sold through to the end user consumer. Starting June 2014, the Company could reasonably estimate and determine sales allowances, therefore the Company began recognizing RAVICTI revenue at the point of sale to the specialty distributor, which resulted in the one-time non-recurring recognition of an additional $8.6 million in net revenues during the year ended December 31, 2014. The impact of this change resulted in a decrease in net loss of $7.9 million for year ended December 31, 2014, or $0.39 per basic and diluted share.

Product Sales Allowances: The Company establishes reserves for prompt-payment discounts, government and commercial rebates, product returns and chargebacks. Allowances relate to prompt-payment discounts and are recorded at the time of revenue recognition, resulting in a reduction in product sales revenue and a decrease in trade accounts receivables. Accruals related to government rebates, product returns and other applicable allowances such as distributor fees are recognized at the time of revenue recognition, resulting in a reduction in product sales and an increase in accrued expenses or a reduction in the related accounts receivable.

• Prompt-payment discounts: The specialty distributor and specialty pharmacies are offered prompt payment discounts. The Company expects the specialty distributor and specialty pharmacies will earn

F-14

Hyperion Therapeutics, Inc.

Notes to Consolidated Financial Statements

prompt payment discounts and, therefore deduct the full amount of these discounts from total product sales when revenues are recognized. The Company records prompt-payment discounts as allowances against accounts receivable on the consolidated balance sheets.

• Rebates: Allowances for rebates include mandated discounts under the Medicaid Drug Rebate Program. Rebate amounts are based upon contractual agreements or legal requirements with public sector (e.g. Medicaid) benefit providers. Rebates are amounts owed after the final dispensing of the product to a benefit plan participant and are based upon contractual agreements or legal requirements with public sector benefit providers. The allowance for rebates is based on statutory discount rates and expected utilization. The Company estimates for expected utilization of rebates based on historical data and data received from the specialty pharmacies. Rebates are generally invoiced and paid in arrears so that the accrual balance consists of an estimate of the amount expected to be incurred for the current quarter’s activity, plus an accrual balance for known prior quarter’s unpaid rebates. If actual future rebates vary from estimates, the Company may need to adjust prior period accruals, which would affect revenue in the period of adjustment. Allowance for rebates are recorded in accrued liabilities on the consolidated balance sheets.

• Chargebacks: Chargebacks are discounts that occur when contracted customers purchase directly from a specialty distributor. Contracted customers, which primarily consist of Public Health Service institutions, non-profit clinics, and Federal government entities purchasing via the Federal Supply Schedule, generally purchase the product at a discounted price. The specialty distributor, in turn, charges back to the Company the difference between the price initially paid by the specialty distributor and the discounted price paid to the specialty distributor by the customer. The allowance for chargebacks is based on historical sales data and known sales to contracted customers.

• Medicare Part D Coverage Gap: Medicare Part D prescription drug benefit mandates manufacturers to fund 50% of the Medicare Part D insurance coverage gap for prescription drugs sold to eligible patients. The Company estimates for the expected Medicare Part D coverage gap are based on historical invoices received and in part from data received from the specialty pharmacies. Funding of the coverage gap is generally invoiced and paid in arrears so that the accrual balance consists of an estimate of the amount expected to be incurred for the current quarter’s activity, plus an accrual balance for known prior quarters. If actual future funding varies from estimates, the Company may need to adjust prior period accruals, which would affect revenue in the period of adjustment. Estimates of the Medicare Part D coverage gap are recorded in accrued liabilities on the consolidated balance sheets.

• Distribution Service Fees: The Company has a written contract with the specialty distributor that includes terms for distribution-related fees. Distributor fees are calculated at percentage of gross sales based upon agreed contracted rate. The Company accrues distributor fees at the time of the revenue recognition, resulting in reduction of product sales revenue and the recording of accrued liabilities on the consolidated balance sheets. The Company records distribution and other fees paid to its customers as a reduction of revenue, unless it receives an identifiable and separate benefit for the consideration and it can reasonably estimate the fair value of the benefit received. If both conditions are met, the Company records the consideration paid to the customer as an operating expense. These costs are typically known at the time of sale.

• Product Returns: Consistent with industry practice, the Company generally offers customers a limited right to return. The Company accepts returns of products from patients resulting from breakage as

F-15

Hyperion Therapeutics, Inc.

Notes to Consolidated Financial Statements

defined within the Company’s returns policy. Additionally, the Company considers several other factors in the estimation process including the expiration dates of product shipped, third party data in monitoring channel inventory levels, shelf life of the product, prescription trends and other relevant factors. Provisions for estimated product returns are recorded as accrued liabilities on the consolidated balance sheets.

• Co-payment assistance: The Company provides a cash donation to a non-profit third party organization which supports patients, who have commercial insurance and meet certain financial eligibility requirements, with co-payment assistance and travel costs. The amount of co-payment assistance is accounted for by the Company as a reduction of revenues.

Cost of sales

Cost of sales includes third-party manufacturing cost of products sold, royalty fees, and other indirect costs related to personnel compensation, shipping and supplies. Costs incurred prior to FDA approval of RAVICTI have been recorded as research and development expense in the Company’s consolidated statement of operations. The Company expects that cost of RAVICTI sales as a percentage of revenue will increase in future periods as product manufactured prior to FDA approval, and therefore fully expensed, has been utilized. Cost of BUPHENYL sales for 2013 as a percentage of revenue was higher and not indicative of cost of sales in future periods due to the recording of the step-up value on BUPHENYL inventories acquired from Ucyclyd which is expensed to cost of sales as that inventory is sold. As of December 31, 2014, the entire fair value of acquired BUPHENYL inventory has been charged to expense, primarily cost of sales.

Foreign Currency Translations

Operations in non-U.S. entities are recorded in the functional currency of each entity. For financial reporting purposes, the functional currency of an entity is determined by a review of the source of an entity’s most predominant cash flows. The reporting and functional currency of the Company and its subsidiaries is the U.S. dollar.

Gains and losses resulting from foreign currency transactions are translated at the weighted average rate of exchange prevailing during the period. Any monetary asset or liability denominated in foreign currency and is translated at the rate of exchange in effect on the balance sheet date. Any gains and losses resulting from foreign currency translations are included in other income (expense)-net in the consolidated statements of operations. The Company does not currently utilize and has not in the past utilized any foreign currency hedging strategies to mitigate the effect of its foreign currency exposure.

Research and Development Expenses

Costs related to research and development of products are charged to expense as incurred. Research and development costs include, but are not limited to, payroll and personnel expenses, clinical trial supplies, fees for clinical trial services, consulting costs and allocated overhead, including rent, equipment, depreciation and utilities.

Stock-Based Compensation

The Company accounts for stock-based employee compensation arrangements in accordance with provisions of ASC 718, Compensation — Stock Compensation. ASC 718 requires the recognition of

F-16

Hyperion Therapeutics, Inc.

Notes to Consolidated Financial Statements

compensation expense, using a fair-value based method, for costs related to all share-based payments including stock options. ASC 718 requires companies to estimate the fair value of share-based payment awards on the date of grant using an option-pricing model. The Company calculates the fair value of stock options using the Black-Scholes method and expenses using the straight-line attribution approach.

Income Taxes

The Company accounts for income taxes under the liability method. Under this method, deferred tax assets and liabilities are determined based on the difference between the financial statement and tax bases of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to affect taxable income. Valuation allowances are established when necessary to reduce deferred tax assets to the amounts expected to be realized.

The Company accounts for uncertain tax positions in accordance with ASC 740-10, Accounting for Uncertainty in Income Taxes. The Company assesses all material positions taken in any income tax return, including all significant uncertain positions, in all tax years that are still subject to assessment or challenge by relevant taxing authorities. Assessing an uncertain tax position begins with the initial determination of the position’s sustainability and is measured at the largest amount of benefit that is greater than fifty percent likely of being realized upon ultimate settlement. As of each balance sheet date, unresolved uncertain tax positions must be reassessed, and the Company will determine whether (i) the factors underlying the sustainability assertion have changed and (ii) the amount of the recognized tax benefit is still appropriate. The recognition and measurement of tax benefits requires significant judgment. Judgments concerning the recognition and measurement of a tax benefit might change as new information becomes available.

Comprehensive Income (Loss)

Comprehensive income (loss) is comprised of net income (loss) and other comprehensive loss. Other comprehensive loss includes changes in stockholders’ equity that are excluded from net income (loss), specifically changes in unrealized gains and losses on the Company’s available-for-sale securities.

Net Income (Loss) per Share of Common Stock

Basic earnings per share is computed by dividing the net income (loss) by the weighted average number of shares of common stock outstanding during the periods presented. The computation of diluted earnings per share is similar to the computation of basic earnings per share, except that the denominator is increased for the assumed exercise of dilutive options and other potentially dilutive securities using the treasury stock method, unless the effect is antidilutive.

Recent Accounting Pronouncements

In July 2013, FASB issued ASU No. 2013-11, Income Taxes (Topic 740): Presentation of an unrecognized tax benefit when a net operating loss carryforward, a similar tax loss, or a tax credit carryforward exists. Under the amendments of this update an entity is required to present an unrecognized tax benefit, or a portion of an unrecognized tax benefit in the financial statements as a reduction to a deferred tax asset for a net operating loss carryforward, a similar tax loss, or a tax credit carryforward, except as follows. To the extent a net operating loss carryforward, a similar tax loss, or a tax credit carryforward is not available at the reporting date under the tax

F-17

Hyperion Therapeutics, Inc.

Notes to Consolidated Financial Statements

law of the applicable jurisdiction to settle any additional income taxes that would result from the disallowance of a tax position or the tax law of the applicable jurisdiction does not require the entity to use, and the entity does not intend to use, the deferred tax asset for such purpose, the unrecognized tax benefit should be presented in the financial statements as a liability and should not be combined with deferred tax assets. The assessment of whether a deferred tax asset is available is based on the unrecognized tax benefit and deferred tax asset that exist at the reporting date and should be made presuming disallowance of the tax position at the reporting date. For example, an entity should not evaluate whether the deferred tax asset expires before the statute of limitations on the tax position or whether the deferred tax asset may be used prior to the unrecognized tax benefits being settled. The provisions of this update was effective prospectively for the Company in fiscal years beginning after December 15, 2013 with early adoption and retrospective application permitted. The Company adopted this guidance on January 1, 2014. The implementation did not have an impact on the Company’s consolidated financial statements.

In May 2014, FASB issued Accounting Standards Update 2014-09 (ASU 2014-09), Revenue from Contracts with Customers. ASU 2014-09 will supersede the revenue recognition requirements in Revenue Recognition (Topic 605) and requires entities to recognize revenue in a way that depicts the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled to in exchange for those goods or services. ASU 2014-09 is effective for annual reporting periods beginning after December 15, 2016, including interim periods within that reporting period, which for the Company is January 1, 2017. Early adoption is not permitted. The Company is currently evaluating the potential impact the adoption of ASU 2014-09 will have on the Company’s consolidated financial statements.

3. Collaboration Agreement with Ucyclyd Pharma, Inc.

In March 2012, the Company entered into the purchase agreement with Ucyclyd under which the Company purchased the worldwide rights to RAVICTI and the amended and restated collaboration agreement (the “restated collaboration agreement”) under which Ucyclyd granted the Company an option to purchase all of Ucyclyd’s worldwide rights to BUPHENYL and AMMONUL at a fixed price at a future defined date, plus subsequent milestone and royalty payments, subject to Ucyclyd’s right to retain AMMONUL for a predefined price. The restated collaboration agreement superseded the collaboration agreement with Ucyclyd, dated August 23, 2007, as amended. The entry into the purchase agreement and the restated collaboration agreement resolved a dispute that the two parties had with respect to their rights under the prior collaboration agreement.

Under the purchase agreement, the Company made a payment of $6.0 million of which (i) $5.7 million was allocated to the worldwide rights to RAVICTI and (ii) $0.3 million was allocated to the option to purchase rights to BUPHENYL and AMMONUL, based on their relative fair values. The allocated amount to the rights to RAVICTI of $5.7 million was recorded to research and development expense in the consolidated statements of operations for the period ended March 31, 2012 due to the uncertainty of an alternative future use. The allocated amount for the option to purchase rights to BUPHENYL and AMMONUL in the amount of $0.3 million was included within other current assets and was subsequently offset against the gain recognized from the settlement of retention option (see Note 4).

The Company will also pay tiered mid to high single digit royalties on global net sales of RAVICTI and may owe regulatory milestones of up to $15.8 million related to approval of GPB in HE, regulatory milestones of up to $7.3 million per indication for approval of GPB in indications other than UCD or HE, and net sales milestones of up to $38.8 million if GPB is approved for use in indications other than UCD (such as HE) and all annual sales targets are reached.

F-18

Hyperion Therapeutics, Inc.

Notes to Consolidated Financial Statements

In addition, the intellectual property license agreements executed between Ucyclyd and Dr. Marshall L. Summar, (“Summar”) and Ucyclyd and Brusilow Enterprises, LLC, (“Brusilow”) were assigned to the Company, and the Company has assumed the royalty and milestone obligations under the Brusilow agreement for sales of RAVICTI in any indication and the royalty obligations under the Summar agreement on sales of GPB to treat HE. The Brusilow and Summar agreements provide that royalty obligations will continue, without adjustment, even if generic versions of the licensed products are introduced and sold in the relevant country.

Under the terms of the restated collaboration agreement, the Company had an option to purchase all of Ucyclyd’s worldwide rights in BUPHENYL and AMMONUL, subject to Ucyclyd’s option to retain rights to AMMONUL. The Company was permitted to exercise this option for 90 days beginning on the earlier of the date of the approval of RAVICTI for the treatment of UCD and June 30, 2013, but in no event earlier than January 1, 2013. The upfront purchase price for AMMONUL and BUPHENYL was $22.0 million. If the RAVICTI New Drug Application (“NDA”) for UCD was not approved by January 1, 2013, then Ucyclyd was obligated to make monthly payments of $0.5 million to the Company until the earliest of (1) FDA approval of the RAVICTI NDA for UCD, (2) June 30, 2013 and (3) the Company’s written notification of the decision not to purchase Ucyclyd’s worldwide rights to BUPHENYL and AMMONUL.

On February 1, 2013, the FDA approved RAVICTI for the treatment of UCD in adult and pediatric patients two years of age and older. In accordance with the restated collaboration agreement, Ucyclyd made a payment of $0.5 million during the quarter ended March 31, 2013.

On April 29, 2013, the Company exercised its option to purchase BUPHENYL and AMMONUL. Ucyclyd subsequently exercised it’s time-limited right to elect to retain all rights to AMMONUL for a contractual purchase price of $32.0 million (“retention amount”). Upon closing of the transaction, Ucyclyd paid the Company a net payment of $11.0 million, which reflects the Company’s contractual purchase price for Ucyclyd’s worldwide rights to BUPHENYL in the amount of $19.0 million being off-set against Ucyclyd’s retention amount for AMMONUL and a $2.0 million payment due to Ucyclyd for inventory that the Company purchased from Ucyclyd. The Company has retained a right of first negotiation should Ucyclyd later decide to sell, exclusively license, or otherwise transfer the AMMONUL assets to a third party.

On May 31, 2013, the Company completed the acquisition of BUPHENYL. Upon Ucyclyd’s exercise of its retention option, the Company recorded a gain of approximately $31.1 million in its consolidated statement of operations. The amount of gain is comprised of (i) fair value of BUPHENYL of $20.4 million and (ii) net cash received from Ucyclyd of $11.0 million off-set by (iii) the $0.3 million carrying value of the option to purchase the rights to BUPHENYL and AMMONUL.

4. Acquisitions

Acquisition of Andromeda

Description of the Transaction

On April 23, 2014, Hyperion Therapeutics Israel Holding Corp. Ltd. (“Hyperion Israel”), a wholly-owned subsidiary of the Company entered into a share purchase agreement (“SPA”) with Clal Biotechnology Industries Ltd. (“Clal”) to purchase all outstanding shares of Andromeda. Andromeda was incorporated in Israel in 2007 and was primarily focused on the development of DiaPep277.

F-19

Hyperion Therapeutics, Inc.

Notes to Consolidated Financial Statements

On June 12, 2014 (the “Acquisition Date”), Hyperion Israel completed the purchase of all of the outstanding ordinary shares of Andromeda. The Andromeda acquisition is accounted for as a business combination. The results of operations of Andromeda have been included in the Company’s consolidated statements of operations starting from the Acquisition Date, the date on which the Company obtained effective control of Andromeda.

Fair Value of Consideration Transferred as of the Acquisition Date

The Company accounted for the acquisition of Andromeda as a business combination under the acquisition method of accounting. The Acquisition Date fair value of the total consideration transferred to acquire Andromeda was as follows:

	Amounts Recognized as of the acquisition date (in thousands)
Cash paid	$	14,345
Fair value of Company’s common stock issued (312,869 shares)		7,778	*
Acquisition-related contingent consideration		68,961
Total fair value of consideration transferred	$	91,084

* The fair value of the common stock was measured using the Company’s closing stock price on June 12, 2014.

The Company estimated the fair value of the acquisition-related contingent consideration on the acquisition date using a probability-weighted income approach, which reflects the probability and timing of future payments. This fair value measurement on the acquisition date is based on key assumptions such as the anticipated timelines and probability of achieving development, regulatory approval or sales-based milestone events and projected revenues. The resulting probability-weighted cash flows are discounted using estimated discount rate that commensurate with the risks of the expected cash flows attributable to the various milestones. The material factors that may impact the fair value are the probabilities of achieving the related milestones and the discount rate. Significant increases or decreases in any of the probabilities of success would result in a significantly higher or lower fair value, respectively, and commensurate changes to this liability. The fair value relating to the acquisition-related contingent consideration at each reporting date will be updated with the changes in fair value reflected in the company’s consolidated statements of operations.

F-20

Hyperion Therapeutics, Inc.

Notes to Consolidated Financial Statements

Assets Acquired and Liabilities Assumed as of the Acquisition Date

The following table summarizes the provisional allocation of purchase price to the fair values of the assets acquired and liabilities assumed as of the acquisition date:

	Amounts Recognized as of the acquisition date (in thousands)
Assets acquired
IPR&D	$	135,712
Cash and cash equivalents		306
Prepaid expenses		95
Property and equipment, net		22
Other assets		578
Liabilities assumed
Current liabilities		(9,079	)
Deferred tax liability		(6,051	)
Acquisition related contingent liability		(34,288	)
Total identifiable net assets		87,295
Goodwill		3,789
Total consideration transferred	$	91,084

The amounts were considered preliminary and were subject to change once the Company finalizes the determination of the fair value of assets acquired and liabilities assumed. Thus, these amounts were subject to refinement and final determination of the fair values of net assets acquired and may result in certain adjustments to the amounts presented above.

The contingent liabilities amounting to $34.3 million relate to potential royalties and milestone payments and potential payments. The Company reassesses the probability and estimates associated with the contingent liability at each reporting period. For liability payable to third parties, any increase in the liability is recorded in the consolidated statements of operations. For liabilities payable to employees in exchange for services, the Company accounts for this liability arrangement as employee compensation over the applicable service period and in accordance with ASC 450 Contingencies.

The goodwill primarily represents the tax impact of the IPR&D and acquisition related contingencies as well as acquiring Andromeda’s assembled workforce.

Measurement period adjustments to provisional allocation of purchase price

On September 8, 2014 the Company announced the termination of further development of DiaPep277 beyond completion of the ongoing clinical trial as a result of evidence that the Company uncovered that certain employees of Andromeda engaged in serious misconduct that compromised clinical trial results. Additional evidence indicates that the biostatistics firm and certain Andromeda employees continued the improper practice of sharing and examining un-blinded data from the ongoing DIA-AID 2 trial. The Company intends to complete the ongoing Phase 3 clinical trial of DiaPep277 but does not expect to develop the product further.

The Company determined that the facts and circumstances described above existed as of the acquisition date and were not the result of intervening events subsequent to the acquisition date. In accordance with ASC 805,

F-21

Hyperion Therapeutics, Inc.

Notes to Consolidated Financial Statements

during the measurement period, the Company recognizes adjustments to the provisional amounts as if the accounting for the business combination had been completed at the acquisition date. Accordingly, the Company re-measured the preliminary determination of the fair values of assets acquired and liabilities assumed as of the acquisition date. The measurement period adjustments primarily relate to the: (i) decrease in the estimated fair value of intangible assets, (ii) reductions in the acquisition related contingent liability, and (iii) the tax impact of pre-tax measurement period adjustments.

Adjusted Assets Acquired and Liabilities Assumed — Measurement Period Adjustments

The following table summarizes the adjusted provisional allocation of purchase price to the fair values of the assets acquired and liabilities assumed as of the Acquisition Date:

	Amounts Recognized as of September 30, 2014 (as adjusted) (in thousands)
Assets acquired
IPR&D	$	—	*
Cash and cash equivalents		306
Prepaid expenses		95
Property and equipment, net		22
Other assets		578
Liabilities assumed
Current liabilities		(9,079	)
Deferred tax liability		—	**
Acquisition related contingent liability		—	*
Total identifiable net assets (liabilities)		(8,078	)
Adjusted Goodwill		30,201
Total consideration transferred	$	22,123

Adjusted Fair Value of Consideration Transferred

	Amounts Recognized as of September 30, 2014 (as adjusted) (in thousands)
Cash paid	$	14,345
Fair value of Company’s common stock issued (312,869 shares)		7,778
Acquisition-related contingent consideration		—	*
Total fair value of consideration transferred	$	22,123

* The Company has assigned no value to the IPR&D as a result of the evidence obtained related to the improper practices regarding the clinical trials. The Company had determined that the contingent consideration milestones and contingent liability milestones will not be achieved.

** The reduction in deferred tax liability relates to the tax impact of the IPR&D and acquisition- related contingencies.

F-22

Hyperion Therapeutics, Inc.

Notes to Consolidated Financial Statements

The Company’s allocation of purchase price to the fair values of the assets acquired and liabilities assumed as of acquisition date was determined to be final as the Company obtained the information necessary to complete the measurement process.

Acquisition of BUPHENYL from Ucyclyd Pharma, Inc.

Description of the Transaction

As discussed in Note 3, under the terms of the restated collaboration agreement, on April 29, 2013, the Company exercised its option to purchase all of Ucyclyd’s worldwide rights in BUPHENYL and AMMONUL. On May 17, 2013 Ucyclyd exercised its time-limited right to elect to retain all rights to AMMONUL. On May 31, 2013 (the “Acquisition Date”), the Company completed the acquisition of BUPHENYL. Accordingly, BUPHENYL results are included in Hyperion’s consolidated financial statements from the date of the acquisition. For the period from June 1, 2013 to December 31, 2013, BUPHENYL net revenue was $11.5 million.

The Company acquired BUPHENYL to enhance its commercial product portfolio and to allow the Company an opportunity to serve the entire UCD patient population, including those less than two years of age or for those patients who may prefer BUPHENYL.

Purchase Consideration and Assets Acquired

The Company accounted for the acquisition of BUPHENYL as a business combination under the acquisition method of accounting. On the Acquisition Date, the Company received a net payment of $11.0 million, which reflected the $32.0 million retention amount for AMMONUL due to the Company less the $19.0 million contractual purchase price for BUPHENYL due to Ucyclyd and a $2.0 million payment due to Ucyclyd for inventory that the Company purchased from Ucyclyd.

The fair value of purchase consideration was estimated based upon the fair value of assets acquired. The estimated fair value attributed to the BUPHENYL product rights was determined on a discounted forecast of the estimated net future cash flows to be generated from the product rights and has an expected useful life of 10 years. The following table summarizes the allocation of purchase price to the fair values of the assets acquired as of the acquisition date:

	(in thousands)
Inventories	$	3,900
Intangible Asset — BUPHENYL Product rights		16,500
Total	$	20,400

F-23

Hyperion Therapeutics, Inc.

Notes to Consolidated Financial Statements

Gain from Settlement of Retention Option

In connection with the allocation between the BUPHENYL acquisition described above and Ucyclyd’s exercise of its retention option, the Company recorded a gain of $31.1 million. The amount of gain is comprised of (i) fair value of BUPHENYL of $20.4 million and (ii) net cash received from Ucyclyd of $11.0 million off-set by (iii) the $0.3 million carrying value of the option to purchase the rights to BUPHENYL and AMMONUL. The following table summarizes the results of the Company’s allocation:

	(in thousands)
Ucyclyd’s retention option amount	$	32,000
Amount due to Ucyclyd for BUPHENYL product rights		(19,000	)
Amount due to Ucyclyd for inventory		(2,038	)
Net payment received from Ucyclyd		10,962
Option to purchase the rights to BUPHENYL and AMMONUL		(283	)
Fair value of BUPHENYL		20,400
Gain from settlement of retention option	$	31,079

Pro forma Impact of Business Combination

The following unaudited pro forma information is based on the assumption that the Andromeda acquisition occurred on January 1, 2013 and BUPHENYL acquisition occurred on January 1, 2012. The unaudited pro forma information is presented for comparative purposes only and is not necessarily indicative of the financial position or results of operations which would have been reported had the Company completed the acquisitions during these periods or which might be reported in the future. The unaudited pro forma information reflects primarily the application of the following adjustments:

• the elimination of the historical research and development expenses and general and administration expenses related to options granted to employees which were cancelled as part of the Andromeda acquisition;

• the elimination of the historical interest expenses related to loans provided by former shareholders which were cancelled as part of the Andromeda acquisition;

• the exclusion of acquisition-related costs incurred for the acquisitions;

• the exclusion of impairment of goodwill recognized in relation to the Andromeda acquisition;

• the inclusion of amortization expense related to the fair value of the intangible asset acquired relating to BUPHENYL;

• the inclusion of the step-up value related to inventory sold that was acquired as part of the BUPHENYL acquisition. Such amounts are included in the applicable comparative period for purposes of pro forma financial information; and

• as noted above, the Company issued 312,869 shares of its common stock as part of the Andromeda acquisition. The common shares were included in the pro-forma earnings per share calculation.

F-24

Hyperion Therapeutics, Inc.

Notes to Consolidated Financial Statements

The unaudited pro forma information is not necessarily indicative of what the Company’s consolidated results of operations actually would have been had the acquisition of Andromeda been completed on January 1, 2013 and acquisition of BUPHENYL been completed on January 1, 2012. In addition, the unaudited pro forma information does not purport to project the future results of operations of the Company.

	Year Ended December 31,
	2014		2013			2012
			( in thousands)
Net revenues	$	113,584	$	52,900		$	21,501
Net income (loss)		20,390		(12,199	)		(29,201	)
Net income (loss) per common share
Basic		0.99		(0.62	)		(4.02	)
Diluted		0.93		(0.62	)		(4.02	)

Acquisition-related Costs

Acquisition-related expenses consist of transaction costs which represent external costs directly related to the acquisition of Andromeda and primarily include expenditures for professional fees such as legal, accounting and other directly related incremental costs incurred to close the acquisition. Acquisition-related expenses for the year ended December 31, 2014 was $1.3 million. Acquisition-related expenses for the year ended December 31, 2013 were $0.6 million. These expenses were recorded to selling and general administrative expense in the consolidated statements of operations.

5. Investments

All investments were classified as available-for-sale at December 31, 2014 and December 31, 2013. The principal amounts of investments by contractual maturity at December 31, 2014 and December 31, 2013 are summarized in the tables below:

	Contractual Maturity Date for the Years Ending December  31,				Total Book Value at December 31, 2014		Unrealized Loss			Aggregate Fair Value at December 31, 2014
	2015		2016
Certificates of deposit	$	18,405	$	6,240	$	24,645	$	(35	)	$	24,610
Corporate notes		12,613		3,011		15,624		(12	)		15,612
Commercial paper		3,494		—		3,494		(3	)		3,491
Total	$	34,512	$	9,251	$	43,763	$	(50	)	$	43,713

	Contractual Maturity Date for the Years Ending December  31,				Total Book Value at December 31, 2013		Unrealized Loss			Aggregate Fair Value at December 31, 2013
	2014		2015
Certificates of deposit	$	10,525	$	2,845	$	13,370	$	(27	)	$	13,343
Corporate notes		6,047		12,960		19,007		(24	)		18,983
U.S. Government agency securities		8,011		—		8,011		(3	)		8,008
Commercial paper		3,492		—		3,492		(1	)		3,491
Total	$	28,075	$	15,805	$	43,880	$	(55	)	$	43,825

F-25

Hyperion Therapeutics, Inc.

Notes to Consolidated Financial Statements

The Company evaluated its investments and determined that there were no other-than-temporary impairments as of December 31, 2014.

The aggregate amounts of unrealized losses and related fair value of investments with unrealized losses as of December 31, 2014 and December 31, 2013 was as follows:

	Less Than 12 Months to Maturity					12 Months or More to Maturity					Total at December 31, 2014
	Aggregate Fair Value		Unrealized Losses			Aggregate Fair Value		Unrealized Losses			Aggregate Fair Value		Unrealized Losses
Certificates of deposit	$	18,386	$	(19	)	$	6,224	$	(16	)	$	24,610	$	(35	)
Corporate notes		12,610		(2	)		3,002		(10	)		15,612		(12	)
Commercial paper		3,491		(3	)		—		—			3,491		(3	)
Total	$	34,487	$	(24	)	$	9,226	$	(26	)	$	43,713	$	(50	)

	Less Than 12 Months to Maturity					12 Months or More to Maturity					Total at December 31, 2013
	Aggregate Fair Value		Unrealized Losses			Aggregate Fair Value		Unrealized Losses			Aggregate Fair Value		Unrealized Losses
Certificates of deposit	$	10,507	$	(18	)	$	2,836	$	(9	)	$	13,343	$	(27	)
Corporate notes		6,039		(8	)		12,944		(16	)		18,983		(24	)
U.S. Government agency securities		8,008		(3	)		—		—			8,008		(3	)
Commercial paper		3,491		(1	)		—		—			3,491		(1	)
Total	$	28,045	$	(30	)	$	15,780	$	(25	)	$	43,825	$	(55	)

6. Fair Value Measurements

The Company follows ASC 820-10, “Fair Value Measurements and Disclosures,” which among other things, defines fair value, establishes a consistent framework for measuring fair value and expands disclosure for each major asset and liability category measured at fair value on either a recurring or nonrecurring basis. Fair value is an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability. As a basis for considering such assumptions, a three-tier fair value hierarchy has been established, which prioritizes the inputs used in measuring fair value as follows:

• Level 1 — Inputs are unadjusted, quoted prices in active markets for identical assets or liabilities at the measurement date.

• Level 2 — Inputs (other than quoted prices included in Level 1) are either directly or indirectly observable for the asset or liability through correlation with market data at the measurement date and for the duration of the instrument’s anticipated life.

• Level 3 — Inputs reflect management’s best estimate of what market participants would use in pricing the asset or liability at the measurement date. Consideration is given to the risk inherent in the valuation technique and the risk inherent in the inputs to the model.

F-26

Hyperion Therapeutics, Inc.

Notes to Consolidated Financial Statements

The following table presents the Company’s fair value hierarchy for assets and liabilities measured at fair value on a recurring basis as of December 31, 2014 and December 31, 2013 (in thousands):

	Fair Value Measurements at December 31, 2014
	Quoted Price in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total
Assets:
Cash equivalents:
Money market funds	$	38,532	$	—	$	—	$	38,532
Certificates of deposit		—		720		—		720
Total cash equivalents	$	38,532	$	720	$	—	$	39,252
Available-for-sale securities:
Short-term:
Certificates of deposit	$	—	$	18,386	$	—	$	18,386
Corporate notes		—		12,610		—		12,610
Commercial paper		—		3,491		—		3,491
Total short-term investments		—		34,487		—		34,487
Long-term:
Certificates of deposit		—		6,224		—		6,224
Corporate notes		—		3,002		—		3,002
Total long-term investments		—		9,226		—		9,226
Total available-for-sale securities	$	—	$	43,713	$	—	$	43,713

	Fair Value Measurements at December 31, 2013
	Quoted Price in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total
Assets:
Cash equivalents:
Money market funds	$	38,506	$	—	$	—	$	38,506
Certificates of deposit		—		480		—		480
Total cash equivalents	$	38,506	$	480	$	—	$	38,986
Available-for-sale securities:
Short-term:
Certificates of deposit	$	—	$	10,507	$	—	$	10,507
Commercial paper		—		3,491		—		3,491
Corporate notes		—		6,039		—		6,039
U.S. Government agency securities		—		8,008		—		8,008
Total short-term investments		—		28,045		—		28,045
Long-term:
Certificates of deposit		—		2,836		—		2,836
Corporate notes		—		12,944		—		12,944
Total long-term investments		—		15,780		—		15,780
Total available-for-sale securities	$	—	$	43,825	$	—	$	43,825

F-27

Hyperion Therapeutics, Inc.

Notes to Consolidated Financial Statements

The following table presents the carrying value and estimated fair value of the Company’s notes payable as of December 31, 2014 and December 31, 2013 (in thousands):

	December 31, 2014
	Carrying Value		Estimated Fair Value
Term Loans (see Note 11)	$	16,124	$	16,746

	December 31, 2013
	Carrying Value		Estimated Fair Value
April and September 2012 Notes (see Note 11)	$	8,273	$	8,860

Valuation Techniques

Level 1 Inputs

The Company classifies money market funds, which are valued based on quoted market prices in active markets with no valuation adjustment, as Level 1 assets within the fair value hierarchy.

Level 2 Inputs

Items classified as Level 2 within the valuation hierarchy consist of commercial paper, corporate notes, U.S. government agency securities and certificates of deposit. The Company estimates the fair values of these marketable securities by taking into consideration valuations obtained from third-party pricing sources. These pricing sources utilize industry standard valuation models, including both income and market-based approaches, for which all significant inputs are observable, either directly or indirectly, to estimate fair value. These inputs include market pricing based on real-time trade data for the same or similar securities, issuer credit spreads, benchmark yields, and other observable inputs. The Company validates the prices provided by our third-party pricing sources by obtaining market values from other pricing sources and analyzing pricing data in certain instances.

Level 3 Inputs

Notes Payable

The Company has determined that its notes payable would be classified as a Level 3 item in the fair value hierarchy. The fair value of these notes is based on the present value of expected future cash flows and assumptions about current interest rates and the credit worthiness of the Company.

Acquisition-related Contingent Consideration and Liabilities

In connection with the acquisition of Andromeda, the Company may be required to pay future consideration that is contingent upon the achievement of specified development, regulatory approval or sales-based milestone events. The Company estimates the fair value of the contingent consideration liabilities on the acquisition date and each reporting period thereafter using a probability-weighted income approach, which reflects the probability and timing of future payments. This fair value measurement is based on significant Level 3 inputs such as the anticipated timelines and probability of achieving development, regulatory approval or sales-based milestone

F-28

Hyperion Therapeutics, Inc.

Notes to Consolidated Financial Statements

events and projected revenues. The resulting probability-weighted cash flows are discounted using estimated discount rate that commensurate with the risks of the expected cash flows attributable to the various milestones.

Each reporting period thereafter, the Company revalues these obligations by performing a review of the assumptions listed above and record increases or decreases in the fair value of these contingent consideration obligations in changes in fair value of contingent consideration expenses within the consolidated statements of operations until such time that the related product candidate receives marketing approval. In the absence of any significant changes in key assumptions, the quarterly determination of fair values of these contingent consideration obligations would primarily reflect the passage of time.

Updates to assumptions could have a significant impact on our results of operations in any given period and actual results may differ from estimates. For example, significant increases in the probability of achieving a milestone or projected revenues would result in a significantly higher fair value measurement while significant decreases in the estimated probability of achieving a milestone or projected revenues would result in a significantly lower fair value measurement. Significant increases in the discount rate or in the anticipated timelines would result in a significantly lower fair value measurement while significant decreases in the discount rate or anticipated timelines would result in a significantly higher fair value measurement.

As discussed in Note 4, the Company re-measured the preliminary determination of the fair values of assets acquired and liabilities assumed as of the acquisition date. The Company had determined that the contingent consideration milestones and contingent liability milestones will not be achieved.

7. Inventories

The following table represents the components of inventories, net of reserves (in thousands):

	December 31, 2014		December 31, 2013
Raw Materials	$	1,787	$	697
Work-in-process		543		—
Finished goods		2,291		2,816
Total	$	4,621	$	3,513

Reserves on the inventory balance was $0.3 million for the year ended December 31, 2014. There were no reserves for the year ended December 31, 2013.

8. Intangible Assets and Goodwill

Finite lived intangible asset

In May 2013, the Company acquired BUPHENYL and as part of this transaction, the Company recognized $16.5 million of an intangible asset relating to BUPHENYL product rights. The intangible asset is amortized over the estimated useful life using the economic use method, which reflects the pattern that the economic benefit of the intangible asset is consumed as revenue is generated. The pattern of consumption of the economic benefit is estimated using the future projected cash flow of the intangible asset which is reviewed on a regular basis. The Company estimated the useful life of the BUPHENYL product rights to be 10 years. The weighted average life remaining as of December 31, 2014 is 8.0 years.

F-29

Hyperion Therapeutics, Inc.

Notes to Consolidated Financial Statements

Intangible asset amortization expense was $4.6 million and $3.1 million for the years ended December 31, 2014 and 2013, respectively.

Estimated aggregate amortization expense for each of the five succeeding years ending December 31 is as follows (in thousands):

	2015		2016		2017		2018		2019
Amortization expense	$	6,495	$	1,655	$	1,515	$	1,477	$	1,441

Goodwill

As discussed in Note 4, in June 2014, the Company acquired Andromeda and as part of this transaction, the Company recognized goodwill in the amount of $30.2 million. The Company does not amortize goodwill but tests goodwill for impairment on an annual basis and in between annual tests if the Company becomes aware of any events or changes in circumstances that would more likely than not indicate a reduction in the fair value of a reporting unit below its carrying amount. Due to the Company’s decision to terminate the development of Diapep277, the Company determined that sufficient indicators of potential impairment existed to require an interim goodwill impairment analysis.

The impairment test for goodwill is a two-step process. Step one consists of a comparison of the fair value of a reporting unit against its carrying amount, including the goodwill allocated to each reporting unit. The Company determines the fair value of the reporting unit based on the present value of estimated future cash flows as well as various price or market multiples applied to the reporting unit’s operating results, which are classified as level 3 within the fair value hierarchy (as described in Note 6). If the carrying amount of the reporting unit is in excess of its fair value, step two requires the comparison of the implied fair value of the reporting unit’s goodwill against the carrying amount of the reporting unit’s goodwill. Any excess of the carrying value of the reporting unit’s goodwill over the implied fair value of the reporting unit’s goodwill is recorded as an impairment loss.

For the evaluation of the goodwill, management considered Andromeda to be a reporting unit and assigned no value to the Andromeda reporting unit. The Company also determined that the implied fair value of goodwill is zero. Thus, the excess of the carrying amount of goodwill over the implied fair value of the Andromeda reporting unit of $30.2 million was recorded as an impairment loss in the Company’s consolidated statements of operations for the year ended December 31, 2014.

9. Property and Equipment

The following table represents the components of property and equipment (in thousands):

	December 31,
	2014			2013
Computers and Software	$	1,202		$	563
Furniture and Fixtures		320			320
Office Equipment		53			53
Leasehold Improvements		—			—
Capital work in progress		181			264
		1,756			1,200
Less: Accumulated depreciation		(640	)		(264	)
Total property and equipment, net	$	1,116		$	936

F-30

Hyperion Therapeutics, Inc.

Notes to Consolidated Financial Statements

Depreciation expense for the years ended December 31, 2014, 2013 and 2012 was $0.5 million, $0.2 million and $15,000, respectively.

10. Accrued Liabilities

The following table represents the components of accrued liabilities (in thousands):

	December 31,
	2014		2013
Clinical trial expenses	$	2,399	$	246
Payroll and related expenses		4,134		4,278
Gross to net sales accruals		10,142		5,235
Royalty payable		2,080		1,154
Taxes payable		563		326
Legal expenses payable		410		45
Acquisition related accrual (Note 22)		4,615		—
Other		1,166		903
	$	25,509	$	12,187

11. Notes Payable

April 2011 Convertible Notes Payable

In April 2011, the Company entered into a convertible notes financing (the “April 2011 convertible notes financing”), in which it issued an aggregate principal amount of $17.5 million of convertible notes in an initial closing in April and an aggregate principal amount of $8,285 of convertible notes in subsequent closings in May 2011 (collectively, the “April 2011 Notes”) pursuant to the Convertible Note and Warrant Purchase Agreement dated April 1, 2011 (the “April 2011 Purchase Agreement”). The April 2011 Purchase Agreement permits the Company to issue up to an aggregate principal amount of $35.0 million.

The April 2011 Notes accrue interest at a rate of 6% per annum and have a maturity date of the earliest of (i) demand by the holders of 66% of the principal amount of the then-outstanding April 2011 Notes under certain circumstances, which demand may not be made earlier than December 31, 2012, as amended or (ii) an event of default. The April 2011 Notes cannot be prepaid, except on demand by the holders of the April 2011 Notes, as described above. The principal and the interest under the April 2011 Notes are automatically convertible (i) into securities that are sold in an issuance of preferred stock generating gross proceeds of at least $30.0 million, referred to herein as a qualified financing, at the lowest price at which such securities are sold to certain new investors in the qualified financing, (ii) into Series C-2 convertible preferred stock upon the occurrence of certain change of control events, unless the holders of 66% of the principal amount of the then-outstanding April 2011 Notes notify the Company of their election to accelerate the unpaid principal and interest of the April 2011 Notes in connection with the change of control event, or (iii) into common stock immediately prior to the consummation of an initial public offering, at a conversion price equal to the initial public offering price. In addition, holders of 66% of the principal amount of the then-outstanding April 2011 Notes have the option to convert the April 2011 Notes (i) in the event that the Company consummates an equity financing that is not a “qualified financing,” as described above, prior to the maturity of the April 2011 Notes, into the equity securities issued in the equity financing, or (ii) upon maturity of the April 2011 Notes, if the April 2011 Notes have not been previously converted, into shares of the Company’s Series C-2 convertible preferred stock.

F-31

Hyperion Therapeutics, Inc.

Notes to Consolidated Financial Statements

On July 31, 2012, upon closing of the IPO, the principal and accrued interest under the Company’s April 2011 Notes amounting to $18.9 million converted into 1,888,054 shares of common stock. The carrying value, including the impact of the amendment to the April 2011 Notes as discussed below and accrued interest under the Company’s April 2011 Notes was $18.4 million as of July 31, 2012.

October 2011 Convertible Notes Payable

In October 2011, the Company entered into a convertible notes financing (the “October 2011 convertible notes financing”), in which it issued an aggregate principal amount of $7.5 million of convertible notes in an initial closing in October and an aggregate principal amount of $3,551 of convertible notes in a subsequent initial closing in November 2011 and aggregate amount of $7.5 million of convertible notes in the second closing in February 2012 (collectively, the “October 2011 Notes”) pursuant to the Convertible Note and Warrant Purchase Agreement dated October 26, 2011 (the “October 2011 Purchase Agreement”). The October 2011 Purchase Agreement permitted the Company to issue up to an aggregate principal amount of $15.0 million.

The October 2011 Notes accrue interest at a rate of 6% per annum and have a maturity date of the earliest of (i) demand by the holders of 66% of the principal amount of the then-outstanding October 2011 Notes under certain circumstances, which demand may not be made earlier than December 31, 2012, or (ii) an event of default. The October 2011 Notes cannot be prepaid, except on demand by the holders of the October 2011 Notes, as described above. The principal and the interest under the October 2011 Notes are automatically convertible (a) into securities that are sold in an issuance of preferred stock generating gross proceeds of at least $40.0 million, referred to herein as a qualified financing, equal to the quotient of (i) the outstanding principal amount plus unpaid accrued interest divided by (ii) the price per share paid by the investors purchasing new preferred stock in the qualified financing; (b) upon the occurrence of certain change in control events, into new series of preferred stock equal to the quotient of (i) the outstanding principal amount plus accrued interest divided by (ii) the Series C-2 original issue price, or (c) into common stock immediately prior to the consummation of an initial public offering, at a conversion price equal to the initial public offering price. In addition, holders of 66% of the principal amount of the then-outstanding October 2011 Notes have the option to convert the October 2011 Notes (i) in the event that the Company consummates an equity financing that is not a “qualified financing,” as described above, prior to the maturity of the October 2011 Notes, into the equity securities issued in the equity financing, or (ii) upon maturity of the October 2011 Notes, if the October 2011 Notes have not been previously converted, into shares of the Company’s Series C-2 convertible preferred stock.

On July 31, 2012, upon closing of the IPO, the principal and accrued interest under the Company’s October 2011 Notes amounting to $15.6 million converted into 1,556,816 shares of common stock. The carrying value, (net of discount) and accrued interest under the Company’s October 2011 Notes was $14.9 million as of July 31, 2012.

October 2011 Call Option Liability

The October 2011 Purchase Agreement also provides that so long as there has not been a qualified financing, change of control or initial public offering, on or before June 30, 2012, or in the event that the October 2011 Notes issued in the initial closing or subsequent initial closings have not been previously converted into common or preferred stock as set forth in the agreement, upon the election and approval of the holders of 66% of the principal amount of the then-outstanding October 2011 Notes, the Company will issue (i) notes with an aggregate principal amount of $7.5 million or (ii) up to $7.5 million of notes in the event all or a portion of the subsequent initial closing notes have been issued. The additional note amount was determined to be a call option (“October 2011 call option”) that was recorded at its fair value of $0.8 million as a debt discount that has been amortized to interest expense over the term of the October 2011 Notes.

F-32

Hyperion Therapeutics, Inc.

Notes to Consolidated Financial Statements

The Company recorded $0.7 million to other income (expense), net in its consolidated statements of operations upon issuance of the second closing of the October 2011 Notes in February 2012 for $7.5 million. As of December 31, 2012, the April 2011 Notes and October 2011 Notes were no longer outstanding as they had converted into shares of common stock upon the closing of the Company’s IPO on July 31, 2012. During the year ended December 31, 2012, the Company recorded amortization for debt discount of $0.9 million related to the October 2011 Notes.

In addition, the Company determined that the April 2011 Notes and the October 2011 Notes have contingent beneficial conversion features related to the conversion options described above. Upon the occurrence of the contingent event underlying those conversion options, the Company may recognize a charge based on the difference, if any, between the adjusted conversion price and the fair market value of common stock at the original issuance date. This charge, if any, will impact net income (loss) attributable to common stockholders and basic and diluted net income (loss) per share attributable to common stockholders.

The Company determined that no beneficial conversion features exist at the dates of issuance of the April 2011 Notes and October 2011 Notes and upon closing of the IPO on July 31, 2012, at which time these notes were converted to common stock.

April 2012 and September 2012 Notes Payable

In April 2012, the Company borrowed $10.0 million (the “April 2012 Notes”) pursuant to a loan and security agreement (the “Original Loan Agreement”) with Silicon Valley Bank and Leader Lending, LLC—Series B (the “Lenders”). The loan carried an interest rate of 8.88%, with interest only payments for the period of 9 months from May 1, 2012. The loan is then payable in equal monthly principal payments plus interest over a period of 27 months from February 1, 2013. In connection with the Loan Agreement, the Company granted a security interest in all of its assets, except intellectual property. The Company’s obligations to the Lenders include restrictions on borrowing, asset transfers, placing liens or security interest on its assets including the Company’s intellectual property, mergers and acquisitions and distributions to stockholders. The Loan Agreement also requires the Company to provide the Lenders monthly financials and compliance certificate within 30 days of each month end, annual audited financials within 180 days of each fiscal year-end and annual approved financial projections. The Company issued warrants to the Lenders to purchase a total of 75,974 shares of common stock with an exercise price of $4.08 per share. The Loan Agreement requires immediate repayment of amounts outstanding upon an event of default, as defined in the Loan Agreement, which includes events such as a payment default, a covenant default or the occurrence of a material adverse change, as defined in the Loan Agreement. In addition, a final payment equal to 6.5% of the principal loan amount is due on the earlier of (i) maturity date, (ii) prepayment of the loan or (iii) an event of default.

Pursuant to the terms of the Original Loan Agreement, once the Company raises at least $30.0 million from the sale of equity securities or subordinated debt, the Lenders also agreed to lend the Company a one-time single loan in the amount of $2.5 million (the “Bank Term Loan”). In September 2012, the Company borrowed an additional $2.5 million (the “September 2012 Note”) from Silicon Valley Bank pursuant to the terms of the Bank Term Loan. In addition, the Company issued warrants to Silicon Valley Bank to purchase a total of 8,408 shares of common stock with an exercise price of $5.05 per share. A final payment equal to 6.5% of the principal loan amount is due on the earlier of (i) maturity date, (ii) prepayment of the loan or (iii) an event of default. The principal amount outstanding under the Bank Term Loan accrues interest at a per annum rate equal to the greater of (i) 8.88% and (ii) the Treasury Rate, as defined in the Loan Agreement, on the date the loan is funded plus 8.50%, with interest only payments for the period of 9 months from the date the loan is funded. The loan is then payable in equal monthly principal payments plus interest over a period of 27 months from the date the loan is funded. These loans were extinguished during the year ended December 31, 2014.

F-33

Hyperion Therapeutics, Inc.

Notes to Consolidated Financial Statements

Term Loans

On July 18, 2014, the Company entered into a new Loan and Security Agreement (the “Loan Agreement”) with Silicon Valley Bank (“SVB”), providing for two tranches of term loans of up to $16.0 million (the “Term Loans”) and a revolving credit line of up to $5.0 million (the “Revolving Loans”). In July 2014, the Company drew down both tranches of the Term Loans, of which approximately $5.8 million was used to pre-pay the Company’s existing April and September 2012 notes payable. In addition, the Company drew down $2.0 million from the revolving line of credit facility. The actual amount of the Revolving Loans that are available from time to time under the Loan Agreement is limited to a borrowing base amount that is determined according to, among other things, a percentage of the value of eligible accounts.

In accordance with ASC Topic No. 470, “Debt – Modifications and Extinguishments” (Topic No. 470), the new loan agreement was determined to be an extinguishment of the existing debt and an issuance of new debt. As a result of the extinguishment, the Company recorded a $0.6 million loss on extinguishment of debt which includes the remaining unamortized portion of the debt discount and debt issue costs associated with the April and September 2012 loans. The loss on extinguishment of debt was included within interest expense in the Company’s consolidated statements of operations.

The Company’s obligations under the Loan Agreement are collateralized by a first priority security interest in substantially all of the Company’s assets, excluding its intellectual property. The Company has also agreed not to pledge or otherwise encumber its intellectual property assets, except that the Company may grant licenses of its intellectual property as set forth in the Loan Agreement.

The Company is required to pay interest only for the first 18 months of the Term Loans, followed by 30 equal monthly payments of interest and principal. The Term Loans will mature on June 30, 2018. The Revolving Loans will mature on July 18, 2017. The Loan Agreement provides for an interest rate of 4.0% per year on the Term Loans and the prime rate plus 0.75% per year on the Revolving Loans, with a minimum interest requirement on the Revolving Loans. Upon the maturity date of the Term Loans, a final payment fee of 6.75% of the original principal amount of such Term Loans (the “Final Payment”) will be due.

The Loan Agreement contains customary representations, warranties and covenants (including the requirement to meet one of two financial covenants) by the Company, as well as customary events of default and indemnification obligations of the Company. The financial covenants include maintaining liquidity ratio on a monthly basis and achieving revenue projections on a quarterly basis as defined in the agreement. The Loan Agreement also requires the Company to provide SVB reports and compliance certificate within 30 days of each month end, quarterly financial statements within 45 days of the end of the quarter and annual audited financials within 180 days of each fiscal year-end and annual approved financial projections. The Loan Agreement requires immediate repayment of amounts outstanding upon an event of default, as defined in the Loan Agreement, which includes events such as a payment default, a covenant default or the occurrence of a material adverse change, as defined in the Loan Agreement. Upon an event of default, after any applicable grace or cure period, all amounts owed under the Loan Agreement may be declared due and payable, including the original principal amount of the Loans, the accrued but unpaid interest thereon, the Final Payment and the prepayment fee. In addition, the Loan Agreement also requires the Company to maintain its depository accounts, operating accounts, securities accounts and all foreign exchange transactions with SVB and SVB bank’s affiliates which accounts shall represent at least the lesser of (i) seventy five percent (75%) of the dollar value of the Company and its Subsidiaries’ accounts at all financial institutions or (ii) $40.0 million; provided, however, that the Company’s obligation relating to foreign exchange transactions is subject to SVB providing commercially competitive exchange rates.

Amortization of debt discount related to the April and September 2012 notes and term loans was $0.8 million, $0.5 million and $0.4 million for the years ended December 31, 2014, 2013 and 2012, respectively.

F-34

Hyperion Therapeutics, Inc.

Notes to Consolidated Financial Statements

Future minimum payments under the Loan Agreement as of December 31, 2014 are as follows (in thousands):

Years Ending December 31,
2015	$	730
2016		6,822
2017		8,786
2018		4,450
Total future minimum payments	$	20,788
Less: amount representing unamortized interest		(1,709	)
Less: amount representing debt discount		(955	)
Total minimum payments	$	18,124
Less: current portion		—
Non-current portion	$	18,124

12. Warrants

In connection with a Loan and Security Agreement entered into in October 2007, the Company issued warrants to purchase 274 shares of Series B convertible preferred stock. In June 2009, as part of the recapitalization, these warrants were converted into warrants to purchase shares of common stock. The warrants were exercisable at $1,913.05 per share and expire in October 2017 (the “October 2007 common stock warrants”). The October 2007 common stock warrants were outstanding as of December 31, 2014 and 2013.

13. Commitments and Contingencies

Operating Leases

On October 14, 2013, the Company entered into a lease agreement with 2000 Sierra Point Parkway LLC (“Landlord”) under which the Company will lease approximately 20,116 rentable square feet of office space in Brisbane, California. The initial term of the lease is six years and the lease commencement date is November 19, 2013. On December 12, 2013, the Company entered into the First Amendment to the Lease (“First Amendment”) under which the Company will lease approximately 352 rentable square feet of storage space. In addition to operating expenses and certain other additional expenses set forth in the Leases, the Company will pay total base rent of approximately $4.5 million during the initial term of the Leases.

The Company recognizes rent expense on a straight-line basis over the lease period with monthly base rent of approximately $0.1 million. In addition, the Company also leases certain office equipment under an operating lease, which expires in December 2016.

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Hyperion Therapeutics, Inc.

Notes to Consolidated Financial Statements

Aggregate total future minimum lease payments under operating facility and equipment leases as of December 31, 2014 were as follows (in thousands):

Years Ending December 31,
2015	$	797
2016		820
2017		821
2018		845
2019		766
Total	$	4,049

Rent expense including maintenance fees for the year ended December 31, 2014, 2013 and 2012 was $0.8 million, $0.4 million and $0.3 million, respectively.

Contingencies

In the normal course of business, the Company enters into contracts and agreements that contain a variety of representations and warranties and provide for general indemnifications. The Company’s exposure under these agreements is unknown because it involves claims that may be made against the Company in the future, but have not yet been made. Further, the Company may be subject to certain contingent liabilities that arise in the ordinary course of its business activities. The Company accrues a liability for such matters when it is probable that future expenditures will be made and such expenditures can be reasonably estimated.

In accordance with the Company’s amended and restated certificate of incorporation and amended and restated bylaws, the Company has indemnification obligations to its officers and directors for certain events or occurrences, subject to certain limits, while they are serving at the Company’s request in such capacity. There have been no claims to date and the Company has a director and officer insurance policy that may enable it to recover a portion of any amounts paid for future claims.

The Company is contingently committed for development milestone payments as well as sales-related milestone payments and royalties relating to potential future product sales under the restated collaboration agreement and purchase agreement with Ucyclyd (Note 3). The amount, timing and likelihood of these payments are unknown as they are dependent on the occurrence of future events that may or may not occur, including approval by the FDA of GPB for HE.

Other Matters

From time to time, the Company is a party to or otherwise involved in legal proceedings, claims and government inspections and other legal matters arising in the ordinary course of business or otherwise.

On March 17, 2014, the Company received notification of a Paragraph IV certification from the generic drug manufacturer Par Pharmaceutical, Inc. (“Par”) that it had filed an Abbreviated New Drug Application with the FDA seeking approval for a generic version of RAVICTI Oral Liquid. The Paragraph IV certification alleges that certain of the Company’s patents are invalid and/or will not be infringed by Par’s manufacture, use or sale of the product for which the ANDA was submitted. The Company filed suit against Par on April 23, 2014 to protect its patents and to obtain a stay of the FDA’s approval of Par’s ANDA. On July 22, 2014, Par filed a motion to

F-36

Hyperion Therapeutics, Inc.

Notes to Consolidated Financial Statements

dismiss for lack of personal jurisdiction, or in the alternative, a motion to transfer the case to the Southern District of New York. The Company will oppose the motion.

On September 22, 2014, CBI filed suit against the Company in Superior Court of the state of Delaware for New Castle County alleging breach of contract and breach of the implied covenant of good faith and fair dealing under the SPA with CBI relating related to the acquisition of Andromeda. CBI’s suit alleges $200.0 million in damages arising from the announcement on September 8, 2014 of the Company’s decision to terminate development of DiaPep277 after uncovering evidence of serious misconduct by certain Andromeda employees that compromised clinical trial results. The Company disputes CBI’s allegations. CBI has not served the complaint on the Company. On January 16, 2015, CBI dismissed its claim against the Company without prejudice. On February 16, 2015 the Company reached an agreement to settle with CBI and Yeda, the company from which Andromeda licenses the underlying DiaPep277 technology, DiaPep277 related claims against one another, and the Company granted CBI an option to acquire all of the outstanding stock of Andromeda. In connection with the agreement, CBI will transfer to the Company $2.5 million in shares of the common stock it holds, valued at the average closing price of the Company’s common stock for the fifteen trading days ending on February 11, 2015. The parties have appointed a steering committee to oversee the completion of the clinical trial with representatives of CBI and Yeda and a non-voting member appointed by the Company. The Company’s estimated budget from October 1, 2014 through the completion of the trial remains unchanged at $10.5 million. Any increase to this budget beyond $2.25 million, if incurred as a result of the direction of the steering committee, shall require CBI to reimburse those expenses in shares of the Company’s common stock. Under the agreement, CBI’s option is exercisable through September 30, 2015 for $3.5 million payable in shares of the Company’s common stock. In addition, if the option is exercised, then Andromeda will be obligated to pay Hyperion future contingent payments if and to the extent it or its shareholders receive revenues or certain other proceeds, which are capped at $36.5 million. This amount, together with the option exercise price that Hyperion may receive, approximates the total amount Hyperion will have invested in Andromeda by the option exercise date. Under the agreement, in the event that CBI does not exercise its option, the underlying DiaPep277 technology will revert to Yeda under the license agreement between Andromeda and Yeda. Also on February 16, 2015, the Company entered into a release with Evotec pursuant to which Evotec released its previously asserted claims to a milestone payment from the Company in connection with the acquisition of Andromeda and that it had suffered harm from recent incidents in relation to Diapep277in exchange for a payment of $500,000 from the Company.

14. Preferred Stock

On July 31, 2012, upon the closing of the IPO, the Company’s Series C-1 and Series C-2 preferred stock amounting to $58.3 million converted into 1,912,598 and 4,663,039 shares of common stock, respectively. On July 31, 2012, the Company amended its Certificate of Incorporation to decrease the number of authorized shares of preferred stock to 10,000,000 with a par value of $0.0001 per share. Pursuant to the Company’s amended and restated certificate of incorporation, the board of directors has the authority, without action by its stockholders, to designate and issue shares of preferred stock in one or more series and to fix the rights, preferences, privileges and restrictions thereof.

As of December 31, 2014 and 2013, there was no preferred stock outstanding.

15. Common Stock

On July 31, 2012, the Company completed its IPO and issued 5,000,000 shares of its common stock at an initial offering price of $10.00 per share. In addition, the Company sold an additional 750,000 shares of common

F-37

Hyperion Therapeutics, Inc.

Notes to Consolidated Financial Statements

stock directly to its underwriters when they exercised their over-allotment option in full at the initial offering price of $10.00 per share. The shares began trading on the NASDAQ Global Market on July 26, 2012. The Company received net proceeds from the IPO of $51.3 million, after deducting underwriting discounts and commissions of $4.0 million and expenses of $2.2 million.

On July 31, 2012, upon the closing of the IPO, the Company’s Series C-1 and Series C-2 preferred stock amounting to $58.3 million converted into 1,912,598 and 4,663,039 shares of common stock, respectively. In addition, the principal and accrued interest under the Company’s April 2011 Notes and October 2011 Notes amounting to $18.9 million and $15.6 million, respectively, converted into 1,888,054 and 1,556,816 shares of common stock. As of July 31, 2012, the carrying values and accrued interest under the April 2011 Notes and October 2011 Notes amounted to $18.4 million and $14.9 million, respectively. Additionally, the April 2011 common stock warrants and October 2011 preferred stock warrants were converted into 322,599 and 17,762 shares of common stock, respectively, immediately prior to the closing of the IPO. The fair value of the April 2011 common stock warrants and October 2011 preferred stock warrants as of July 31, 2012 of $3.9 million was reclassified to additional paid-in capital.

In addition, on July 31, 2012, the Company amended its Certificate of Incorporation to increase the number of authorized shares of common stock to 100,000,000 with a par value of $0.0001 per share.

Common stockholders are entitled to dividends when and if declared by the Board of Directors subject to prior rights of the preferred stockholders. The holder of each share of common stock is entitled to one vote.

On March 13, 2013, the Company completed a follow-on offering and issued 2,875,000 shares of its common stock at an offering price of $20.75 per share. In addition, the Company sold an additional 431,250 shares of common stock directly to its underwriters when they exercised their over-allotment option in full at an offering price of $20.75 per share. The Company received net proceeds from the offering of $63.7 million, after deducting underwriting discounts and commissions of $4.1 million and expenses of $0.8 million.

On August 14, 2013, the Company filed a shelf registration statement on Form S-3, which was declared effective by the SEC on September 13, 2013. The shelf registration statement permits: (a) the offering, issuance and sale by the Company of up to a maximum aggregate offering price of $150.0 million of its common stock, preferred stock, debt securities, warrants and/or units; (b) the sale of up to 8,727,000 shares of common stock by certain selling stockholders; and (c) the offering, issuance and sale by the Company of up to a maximum aggregate offering price of $50.0 million of its common stock that may be issued and sold under a sales agreement with Cantor Fitzgerald & Co. As of December 31, 2014, there were no sales of any securities registered pursuant to the shelf registration statement.

At December 31, 2014, the Company had reserved common stock for future issuances as follows:

Issuance of options under 2012 stock plan	688,842
Issuance upon exercise of options under the 2006 and 2012 stock plan	3,068,741
Issuance upon vesting of restricted and performance stock units under the 2012 stock plan	136,293
Issuance upon exercise of October 2007 common stock warrants	274
Total	3,894,150

F-38

Hyperion Therapeutics, Inc.

Notes to Consolidated Financial Statements

16. Stock Option Plan

2006 Plan

In December 2006, the Company adopted the 2006 Equity Incentive Plan (the “2006 Plan”), under which 457 shares of the Company’s common stock had been originally reserved for issuance to employees, directors and consultants. The 2006 Plan provides for the grant of the following stock awards: incentive stock options, non-statutory stock options, restricted stock awards, restricted stock unit awards and stock appreciation rights. Incentive stock options may be granted only to Company employees, which include officers and directors of the Company. Non-statutory stock options and stock purchase rights may be granted to employees and consultants. Stock awards other than incentive stock options may be granted to employees, directors and consultants.

The Board of Directors has the authority to determine to whom options will be granted, the number of options, the term and the exercise price. The exercise price of the stock option shall not be less than 100% of the fair market value of the common stock subject to the option on the date the option is granted. For individuals holding more than 10% of the voting rights of all classes of stock, the exercise price of an option will not be less than 110% of fair market value and the option is not exercisable after the expiration of five years from the date of the grant. Options granted to an employee who is not an officer, director or consultant shall provide for vesting of the total number of shares of common stock at a rate of at least 20% per year over five years from the date the option was granted, subject to reasonable conditions such as continued employment, at any time or during any period established by the Company. The contractual term of each option is ten years.

On July 25, 2012, the effective date of the 2012 Plan, the 2006 Plan was frozen and no additional awards will be made under the 2006 Plan. Any shares remaining available for future grant were allocated to the 2012 Plan and any shares underlying outstanding options that terminate by expiration, forfeiture, cancellation, or otherwise without issuance of such shares, will be allocated to the 2012 Plan.

Activity under the 2006 Plan is as follows:

				Outstanding Options
	Number of Shares Available for Grant			Number of Shares Underlying Outstanding Options			Weighted-Average Exercise Price Per Share
Balances at December 31, 2013		—			1,538,197			3.64
Options exercised		—			(190,263	)		3.73
Options cancelled		14,413			(14,413	)		6.78
Options re-allocated to 2012 Plan		(14,413	)		—			—
Balances at December 31, 2014		—			1,333,521		$	3.60

The aggregate intrinsic value of options exercised for the year ended December 31, 2014 was $4.1 million. Intrinsic value is calculated as the difference between the exercise price of the underlying options and the fair value of the common stock for the options that had exercise prices that were lower than the fair value per share of the common stock on the date of exercise.

F-39

Hyperion Therapeutics, Inc.

Notes to Consolidated Financial Statements

Aggregate options outstanding and vested and exercisable by exercise price at December 31, 2014 for the 2006 plan are as follows (dollars in thousands except per share values):

Options Outstanding							Options Vested and Exercisable
Exercise Price	Number Outstanding		Aggregate Intrinsic Value		Weighted Average Remaining Life (in Years)		Number Outstanding		Aggregate Intrinsic Value		Exercise Price
$    1.28		735,773	$	16,717		4.5		735,773	$	16,717	$	1.28
$    4.08		252,403		5,028		6.3		228,490		4,552	$	4.08
$    7.31		344,405		5,748		7.3		217,060		3,623	$	7.31
$    327.95		940		—		2.5		940		—	$	327.95
		1,333,521	$	27,493		5.5		1,182,263	$	24,892

The intrinsic values of outstanding, vested and exercisable options were determined by multiplying the number of shares by the difference in exercise price of the options and the fair value of the common stock as of December 31, 2014 of $24.00 per share.

For the year ended December 31, 2014, options vested and expected to vest for the 2006 plan aggregated to 1,328,822 options with an intrinsic value of $27.4 million, weighted average exercise price of $3.59 per share and the weighted average remaining life of 5.5 years.

2012 Plan

In April 2012, the board of directors of the Company adopted (approved by Company’s stockholders in July 2012) the 2012 Omnibus Incentive Plan (the “2012 Plan”). The 2012 Plan provides for the grant of stock options, stock appreciation rights, restricted stock, unrestricted stock, stock units, dividend equivalent rights, other equity-based awards and cash bonus awards. The 2012 Plan became effective on July 25, 2012.

As of December 31, 2014 and 2013, the Company had reserved 688,842 shares and 576,760 shares of common stock, respectively, for issuance under the 2012 Plan.

F-40

Hyperion Therapeutics, Inc.

Notes to Consolidated Financial Statements

Activity under the 2012 Plan is as follows:

				Outstanding Options					Restricted Stock Units Outstanding					Performance Stock Units Outstanding
	Number of Shares Available for Grant			Number of Shares Underlying Outstanding Options			Weighted-Average Exercise Price Per Share		Number of Shares Underlying Outstanding RSU’s			Grant Date Fair Value		Number of Shares Underlying Outstanding RSU’s		Grant Date Fair Value
Balances at December 31, 2013		576,760			1,252,433			20.75		18,000			19.39		—		—
Additional shares authorized		805,485			—			—		—			—		—		—
Options and awards granted		(938,062	)		806,919			25.99		122,155			26.68		8,988		25.08
Options exercised		—			(101,736	)		18.42		—			—		—		—
Awards released		—			—			—		(5,000	)		20.13		—		—
Options re-allocated to 2012 Plan		14,413			—			—		—			—		—		—
Options and awards cancelled		230,246			(222,396	)		22.66		(7,850	)		26.74		—		—
Balance at December 31, 2014		688,842			1,735,220		$	23.08		127,305		$	25.90		8,988	$	25.08

The aggregate intrinsic value of options exercised for the year ended December 31, 2014 was $0.8 million.

Aggregate options outstanding and vested and exercisable by exercise price at December 31, 2014 for the 2012 plan are as follows (dollars in thousands except per share values):

	Options Outstanding						Options Vested and Exercisable
Exercise Price	Number Outstanding		Aggregate Intrinsic Value		Weighted Average Remaining Life (in Years)		Number Outstanding		Aggregate Intrinsic Value		Exercise Price
$10.32- 18.24		242,962	$	2,799		7.9		118,837	$	1,415	$	10.32 - 18.24
$19.39- 21.05		200,170		746		9.0		36,504		162		19.39 - 21.05
$21.45- 24.38		128,450		220		8.7		41,514		83		21.45 - 24.38
$24.46- 26.74		1,095,725		—		8.8		253,207		—		24.46 - 26.74
$26.97- 28.08		42,313		—		9.3		—		—		26.97 - 28.08
$29.27- 31.00		25,600		—		9.3		—		—		29.27 - 31.00
		1,735,220	$	3,765		8.7		450,062	$	1,660

The intrinsic values of options vested and exercisable options as of December 31, 2014 were determined by multiplying the number of shares by the difference in exercise price of the options and the fair value of the common stock as of December 31, 2014 of $24.00 per share.

For the year ended December 31, 2014, options vested and expected to vest for the 2012 plan aggregated to 1,646,570 options with an aggregate intrinsic value of $3.6 million, weighted average exercise price of $23.02 per share and the weighted average remaining life of 8.7 years.

F-41

Hyperion Therapeutics, Inc.

Notes to Consolidated Financial Statements

Stock-Based Compensation

During the years ended December 31, 2014, 2013 and 2012 , the Company granted stock options to employees to purchase 806,919, 1,067,315 and 720,580 shares of common stock, respectively, with a weighted-average grant date fair value of $25.99, $22.90 and $6.76 per share, respectively. During the year ended December 31, 2014 and 2013, the Company granted 122,155 and 21,000 restricted stock units, respectively, to employees. There were no restricted stock units granted for the year ended December 31, 2012. During the year ended December 31, 2014, the Company granted 8,998 performance stock units to employees. There were no performance stock units granted for the years ended December 31, 2013 and 2012.

Stock-based compensation expense recognized during the years ended December 31, 2014, 2013 and 2012 includes compensation expense for stock-based awards granted to employees based on the grant date fair value estimated in accordance with the provisions of ASC 718 of $7.6 million, $4.3 million and $1.0 million, respectively. As of December 31, 2014, there was a total unrecognized compensation cost of $17.0 million related to unvested stock-based awards granted. These amounts are expected to be recognized over a period of approximately 2.5 years.

The Company determines the fair value of restricted stock units and performance stock units using the closing price of the Company’s common stock on the date of grant. The Company estimates the fair value of stock options using the Black-Scholes option valuation model. The fair value of employee stock options and restricted stock units are being amortized on a straight-line basis over the requisite service period of the awards. The fair value of the performance stock awards is being amortized based on the achievement of performance goals and over the requisite service period of the awards. The fair value of the employee stock options was estimated using the following weighted-average assumptions:

	Year Ended December 31,
	2014			2013			2012
Expected volatility		62.76	%		58	%		65	%
Risk-free interest rate		1.90	%		1.14	%		1.05	%
Dividend yield		0.0	%		0.0	%		0.0	%
Expected term (in years)		6.00			5.96			6.00

Determining Fair Value of Stock Options

The fair value of each grant of stock options was determined by the Company using the methods and assumptions discussed below. Each of these inputs is subjective and generally requires significant judgment to determine.

Expected Term — The expected term of stock options represents the weighted average period the stock options are expected to be outstanding. For option grants that are considered to be “plain vanilla”, the Company has opted to use the simplified method for estimating the expected term as provided by the Securities and Exchange Commission. The simplified method calculates the expected term as the average time-to-vesting and the contractual life of the options. For other option grants, the expected term is derived from the Company’s historical data on employee exercises and post-vesting employment termination behavior taking into account the contractual life of the award.

Expected Volatility — The expected stock price volatility assumption was determined by examining the historical volatilities of a group of industry peers and the Company’s own historical volatility since the Company began trading subsequent to its IPO in July 2012.

F-42

Hyperion Therapeutics, Inc.

Notes to Consolidated Financial Statements

Risk-Free Interest Rate — The risk free rate assumption is based on U.S. Treasury instruments for which the terms were consistent with the expected term of the Company’s stock options.

Expected Dividend — The expected dividend assumption is based on the Company’s history and expectation of dividend payouts.

Forfeiture Rate — ASC 718 requires forfeitures to be estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates. Forfeitures were estimated based on historical experience.

Fair Value of Common Stock — Prior to the IPO, the fair value of the shares of common stock underlying the stock options has historically been the responsibility of and determined by the Company’s board of directors. Because there was no public market for the Company’s common stock, the board of directors determined fair value of common stock at the time of grant of the option by considering a number of objective and subjective factors including independent third-party valuations of the Company’s common stock, sales of convertible preferred stock to unrelated third parties, operating and financial performance, the lack of liquidity of capital stock and general and industry specific economic outlook, amongst other factors. Subsequent to the IPO, the fair value of the shares of the common stock underlying the stock options is the closing price on the option grant date.

Total stock-based compensation expense related to options and awards granted was allocated as follows (in thousands):

	Year Ended December 31,
	2014		2013		2012
Cost of sales	$	70	$	27	$	—
Research and development		1,384		585		374
Selling general and administrative		6,184		3,709		619
Total	$	7,638	$	4,321	$	993

For the years ended December 31, 2014 and 2013, stock-based compensation of $0.1 million each was capitalized into inventories. Capitalized stock-based compensation is recognized as cost of sales when the related product is sold. Allocations to research and development, general and administrative and selling and marketing expense are based upon the department to which the associated employee reported.

17. Income Taxes

For the year ended December 31, 2014, the Company generated a pretax income of $30.0 million in the U.S. and a pretax loss of $36.0 million outside the U.S., for a net consolidated pretax loss of $6.0 million. For the years ended December 31, 2013 and 2012, the Company generated a pretax income of $16.7 million and a pretax loss of $32.3 million, respectively, in the U.S. In years prior to 2014, the Company has not generated any pretax income or loss outside the U.S.

F-43

Hyperion Therapeutics, Inc.

Notes to Consolidated Financial Statements

The components of the income tax expense are as follows (in thousands):

	Years ended December 31,
	2014			2013			2012
Current income tax expense:
Federal	$	736		$	—		$	—
State		703			326			—
		1,439			326			—
Deferred income tax benefit:
State		(1,136	)		(277	)		—
		(1,136	)		(277	)		—
Total income tax expense	$	303		$	49		$	—

The reconciliation of income tax expense computed at the statutory federal income tax rate of 35% to amounts included in the consolidated statements of operations is as follows:

	Year Ended December 31,
	2014			2013			2012
Statutory rate		35.0	%		35.0	%		34.0	%
State tax		0.6	%		5.5	%		5.4	%
Tax credits		57.5	%		(5.0	)%		0.7	%
Stock options		(28.0	)%		0.2	%		(0.7	)%
Valuation allowance		(81.8	)%		(29.6	)%		(37.1	)%
Impact of Andromeda acquisition		12.6	%		—			—
Change in federal tax rate		—			(6.0	)%		—
Other		(1.0	)%		0.2	%		(2.3	)%
		(5.1	)%		0.3	%		0.0	%

Deferred income tax assets and liabilities reflect the net tax effects of net operating loss and tax credit carryovers and the temporary differences between the carrying amounts of assets and liabilities for financial

F-44

Hyperion Therapeutics, Inc.

Notes to Consolidated Financial Statements

reporting and the amounts used for income tax purposes. Significant components of the Company’s deferred income tax assets are as follows (in thousands):

	Year Ended December 31,
	2014			2013
Deferred income tax assets
Fixed assets, capitalized intangibles and other assets	$	6,030		$	5,294
Net operating loss		35,164			31,842
Tax credits		23,024			18,480
Stock-based compensation expense		1,660			1,133
Accrued expenses and reserves		3,405			1,502
Capitalized research and development expenses		3,237			—
Tax basis in investments		12,624			—
Other		381			25
Total		85,525			58,276
Valuation allowance		(84,113	)		(58,000	)
Net deferred income tax assets	$	1,412		$	276

At December 31, 2014, the non-current deferred income tax asset of $1.4 million is included in “Other non-current assets” in the consolidated balance sheets.

At December 31, 2013, current deferred income tax asset of $0.1 million is included in “Prepaid expenses and other current assets” and the non-current deferred income tax asset of $0.2 million is included in “Other non-current assets” in the consolidated balance sheets.

The amounts recorded as deferred income tax assets as of December 31, 2014 and 2013 represent the amount of tax benefits of existing deductible temporary differences and carryforwards that are more likely than not to be realized through the generation of sufficient future taxable income within the carryforward period. For the year ended December 31, 2014, the valuation allowance on deferred income tax asset increased by $26.1 million. The amount of net operating losses associated with excess tax deductions from stock-based compensation arrangements that is allocated to contributed capital if the future tax benefits are subsequently recognized is $4.0 million.

At December 31, 2014, the Company had net operating loss carryforwards of approximately $36.4 million and $107.8 million available to reduce future taxable income, if any, for both federal and California state income tax purposes, respectively. In addition, the Company had $67.3 million of Israeli net operating loss carryforwards which do not expire. The net operating loss carryforwards will begin to expire in 2031 and 2028 for federal and state income tax purposes, respectively. If the Company experiences an “ownership change” for purposes of Section 382 of the Internal Revenue Code of 1986, as amended, it may be subject to annual limits on its ability to utilize net operating loss carryforwards and credits. An ownership change is, as a general matter, triggered by sales or acquisitions of its stock in excess of 50% on a cumulative basis during a three-year period by persons owning 5% or more of our total equity value. The Company determined that an ownership change occurred in 2014 resulting in an annual limitation of approximately $50 million per year. The Company also had federal and state tax credit carryforwards of approximately $22.6 million and $0.7 million respectively, at December 31, 2014. The federal credits will expire starting in 2027, if not utilized. The California credits have no expiration date.

F-45

Hyperion Therapeutics, Inc.

Notes to Consolidated Financial Statements

The Company was granted orphan drug designation in 2009 by the FDA for its products currently under development. The orphan drug designation allows the Company to claim increased federal tax credits for its research and development activities. Included in the $22.6 million of federal credit carryforwards is $21.1 million of Orphan Drug Credit claims for 2009 through 2014.

A reconciliation of the beginning and ending balances of the unrecognized income tax benefits during the years ended December 31, 2014, 2013 and 2012 is as follows (in thousands):

	Year Ended December 31,
	2014			2013		2012
Balance at the beginning of the year	$	6,269		$	5,723	$	5,357
Changes based on prior period tax positions		(2,325	)		—		(228	)
Changes based on current period tax positions		223			546		594
Balance at the end of the year	$	4,167		$	6,269	$	5,723

The entire amount of the unrecognized income tax benefits would not impact the Company’s effective tax rate if recognized.

There was no interest or penalties accrued through December 31, 2014. The Company’s policy is to recognize any related interest or penalties in income tax expense. The material jurisdictions in which the Company is subject to potential examination by tax authorities for tax years ended 2006 through the current period include the U.S. and California. The Company is not currently under income tax examinations by any tax authorities in federal, state or other jurisdictions.

18. Defined Contribution Plan

The Company sponsors a defined contribution plan under Section 401(k) of the Internal Revenue Code (“Plan”) covering substantially all full-time U.S. employees. Employee contributions are voluntary and are determined on an individual basis subject to the maximum allowable under federal tax regulations. Participants are always fully vested in their contributions. For the year ended December 31, 2014 and 2013, the Company made a contribution of $0.3 million and $0.2 million to the Plan. For the year ended December 31, 2012, the Company did not make any contributions to the Plan.

F-46

Hyperion Therapeutics, Inc.

Notes to Consolidated Financial Statements

19. Net Income (Loss) per Share of Common Stock

The following table sets forth the computation of basic and diluted net income (loss) per share of common stock for the periods indicated (in thousands, except share and per share amounts):

	Year Ended December 31,
	2014			2013		2012
Net income (loss) per share
Numerator:
Net income (loss) attributable to common stockholders	$	(6,255	)	$	16,627	$	(32,263	)
Denominator:
Weighted-average number of common shares outstanding — basic		20,470,025			19,415,822		7,256,537
Dilutive effect of stock-options and awards		—			1,315,091		—
Weighted average common shares outstanding — dilutive		20,470,025			20,730,913		7,256,537
Net income (loss) per share:
Basic	$	(0.31	)	$	0.86	$	(4.45	)
Diluted	$	(0.31	)	$	0.80	$	(4.45	)

The following outstanding potentially dilutive securities were excluded from the computation of diluted net income (loss) per share, as the effect of including them would have been antidilutive:

	Year Ended December 31,
	2014		2013		2012
Stock options		3,068,741		1,027,605		1,928,754
Common stock warrants		274		274		84,656
Total		3,069,015		1,027,879		2,013,410

20. Related Party Transaction

As part of the Company’s acquisition of BUPHENYL (see Note 4), the Company assumed the existing BUPHENYL distributors agreements, including the distribution agreement with Swedish Orphan Biovitrum AB (“SOBI”). Additionally, in the third quarter of 2013, SOBI was granted exclusive rights by the Company to distribute RAVICTI on a named patient basis for the chronic treatment of UCD in the Middle East. SOBI’s chairman, Bo Jesper Hansen, is a member of the Company’s Board of Directors. During the years ended December 31, 2014 and 2013, the Company recognized $5.1 million and $2.2 million, respectively, from sales to SOBI. As of December 31, 2014 and 2013, the accounts receivable from SOBI amounted to $1.5 million and $0.7 million, respectively.

21. Segment Reporting

The Company operates as one operating segment and uses one measurement of profitability to manage its business.

F-47

Hyperion Therapeutics, Inc.

Notes to Consolidated Financial Statements

Net product revenue for RAVICTI and BUPHENYL for the years ended December 31, 2014 and 2013 are as follows (in thousands):

	Year Ended December 31,
	2014			2013
RAVICTI	$	95,400		$	31,236
BUPHENYL		18,584			11,468
Co-payment assistance		(400	)		(500	)
Total	$	113,584		$	42,204

Net product revenue for RAVICTI and BUPHENYL by geographic region are as follows (in thousands):

	Year Ended December 31,
	2014		2013
United States	$	103,303	$	37,102
Canada		3,723		2,208
Rest of the world		6,558		2,894
Total	$	113,584	$	42,204

Long lived assets consist of property and equipment which at December 31, 2014 and 2013 are primarily in the U.S.

22. Subsequent Events

On February 16, 2015, the Company announced that it has amicably settled its disputes, and entered into a Completion of Phase 3 Clinical Trial, Option and Mutual Release Agreement (the “Release Agreement”) by and among the Company, Hyperion Therapeutics Israel Holding Corp Ltd (“Hyperion Israel”), CBI, Yeda and Andromeda regarding DiaPep277, a product candidate developed by Andromeda.

The parties to the Release Agreement appointed a steering committee with representatives of CBI and Yeda and a non-voting member from the Company to oversee completion of the Clinical Trial, the analysis of its results, and interactions with regulatory authorities. In addition, under the Release Agreement, CBI has an option to acquire Andromeda, which option expires September 30, 2015. In consideration for the option, CBI will pay to Hyperion Israel an option payment of $2.5 million in shares of the Company’s common stock held by CBI. The shares are valued based on the average closing price of the Company’s common stock for the fifteen trading days ending on February 11, 2015. If CBI exercises its option to acquire Andromeda, the option purchase price will be $3.5 million payable in shares of the Company’s common stock currently held by CBI to Hyperion Israel. In addition, if CBI exercises its option to acquire Andromeda, Andromeda will be obligated to pay Hyperion Israel future contingent payments if and to the extent it receive revenues or its shareholders receive certain other proceeds it is acquired, liquidated or makes other distributions of assets. The aggregate amount of all future contingent payments by Andromeda to Hyperion Israel is capped at $36.5 million which, together with the option exercise price that Hyperion Israel may receive, approximates the total amount the Company will have invested in Andromeda by the option exercise date. Under the Release Agreement, the Company’s estimated budget from October 2014 through completion of the Clinical Trial shall remain unchanged at $10.5 million. Any increase to the budget beyond $2.25 million, if incurred as a result of the direction of the steering committee, shall require

F-48

Hyperion Therapeutics, Inc.

Notes to Consolidated Financial Statements

CBI to reimburse expenses to Hyperion Israel. In the event that CBI does not exercise the option, the DiaPep277 intellectual property will revert to Yeda under the license agreement between Andromeda and Yeda.

Andromeda has also entered into a release agreement with Evotec International GmbH (“Evotec”) pursuant to which Andromeda has settled its disputes with Evotec regarding Evotec’s assertions that the Company’s acquisition of Andromeda triggered a €3.38 million milestone payment to it and that it suffered harm from recent incidents in relation to DiaPep277. Under the terms of the release, Evotec is releasing its claims against Andromeda in exchange for a $500,000 payment from the Company, and the Company confirms that based on its investigation of the Employee Conduct, as defined in the Release Agreement, it believes that neither Evotec nor its legal predecessor (i) had any involvement in any aspect or decision-making regarding the development of DiaPep277 and likewise, (ii) DeveloGen AG was also not involved in any way in the further development of DiaPep277 after selling it to Andromeda in June 2007, and had no role in the data generation and analyses. For the year ended December 31, 2014, the Company had $4.6 million included in “Accrued liabilities” in the Consolidated Balance Sheets. The Company considers this as a (Type 2) Subsequent event and will recognize $4.1 million as “Other Income” in the Consolidated Statements of Operations in the Quarterly Report on Form 10-Q for the period ended March 31, 2015.

23. Selected Quarterly Financial Data (Unaudited)

The following table presents selected unaudited quarterly financial information for the years ended December 31, 2014, 2013 and 2012. The results for any quarter are not necessarily indicative of future quarterly results and, accordingly, period to period comparisons should not be relied upon as an indication of future performance.

	For The Quarters Ended
(in thousands, except share and per share amounts)	December 31,		September  30,(1)			June 30,		March 31,
Year Ended December 31, 2014
Product revenue, net	$	30,805	$	26,201		$	37,095	$	19,483
Costs and expenses	$	24,078	$	55,031		$	20,898	$	17,784
Net income (loss) attributable to common stockholders	$	7,096	$	(32,793	)	$	18,183	$	1,259
Net income (loss) per share attributable to common stockholders — basic	$	0.34	$	(1.59	)	$	0.89	$	0.06
Net income (loss) per share attributable to common stockholders — diluted	$	0.32	$	(1.59	)	$	0.84	$	0.06
	For The Quarters Ended
(in thousands, except share and per share amounts)	December 31,		September 30,			June 30,(2)		March 31,
Year Ended December 31, 2013
Product revenue, net	$	18,627	$	15,489		$	7,305	$	783
Costs and expenses	$	17,747	$	15,037		$	12,986	$	9,851
Net income (loss) attributable to common stockholders	$	468	$	112		$	25,022	$	(8,975	)
Net income (loss) per share attributable to common stockholders — basic	$	0.02	$	0.01		$	1.25	$	(0.52	)
Net income (loss) per share attributable to common stockholders — diluted	$	0.02	$	0.01		$	1.17	$	(0.52	)

(1) For the quarter ended September 30, 2014, the Company recorded $30.2 million as an impairment charge of goodwill on the Company’s consolidated statements of operations. Also refer to the information contained in Note 4 of the consolidated financial statements appearing elsewhere in the report.

(2) For the quarter ended June 30, 2013, the Company recorded a gain of $31.1 million related to the BUPHENYL acquisition on the consolidated statements of operations. Also refer to the information contained in Note 4 of the consolidated financial statements appearing elsewhere in the report.

F-49

EXHIBIT INDEX

Exhibit No.	Description
2.1	Asset Purchase Agreement by and between the Company and Ucyclyd Pharma, Inc. (“Ucyclyd”), a wholly owned subsidiary of Medicis Pharmaceutical Corporation, dated March 22, 2012 (incorporated by reference to Exhibit 2.1 of the Registrant’s Amendment No. 1 to the Registration Statement on Form S-1, File No. 333-180694, filed on May 24, 2012).
3.1	Amended and Restated Certificate of Incorporation (incorporated by reference to Exhibit 3.1 of the Registrant’s Current Report on Form 8-K, File No. 001-35614, filed on July 31, 2012).
3.2	Amended and Restated bylaws (incorporated by reference to Exhibit 3.4 of the Registrant’s Amendment No. 1 to the Registration Statement on Form S-1, File No. 333-180694, filed on May 24, 2012).
4.1	Specimen common stock certificate (incorporated by reference to Exhibit 4.1 to the Registrant’s Amendment No. 3 to the Registration Statement on Form S-1, File No. 333-180694, filed on July 5, 2012).
4.2	Amended and Restated Warrant issued pursuant to the Loan and Security Agreement by and between the Company and Comerica Bank, dated October 2, 2007, and as amended on July 6, 2012 (incorporated by reference to Exhibit 4.2 to the Registrant’s Amendment No. 4 to the Registration Statement on Form S-1, File No. 333-180694, filed on July 13, 2012).
10.1	Second Amended and Restated Investor Rights Agreement by and among the Company and the investors named therein, dated June 29, 2009 (incorporated by reference to Exhibit 10.1 to the Registrant’s Registration Statement on Form S-1, File No. 333-180694, filed on April 13, 2012).
10.2	Form of Indemnification Agreement by and among the Company and each of its directors (incorporated by reference to Exhibit 10.5 to the Registrant’s Registration Statement on Form S-1, File No. 333-180694, filed on April 13, 2012).
10.3 +	Employment Agreement by and among the Company and Donald J. Santel, dated April 9, 2012 (incorporated by reference to Exhibit 10.6 to the Registrant’s Registration Statement on Form S-1, File No. 333-180694, filed on April 13, 2012).
10.4 +	Offer Letter Agreement by and among the Company and Jeffrey Farrow, dated November 12, 2009 (incorporated by reference to Exhibit 10.7 to the Registrant’s Registration Statement on Form S-1, File No. 333-180694, filed on April 13, 2012).
10.5 +	Letter Agreement by and among the Company and Bruce F. Scharschmidt, M.D., dated November 5, 2014 related to the Amended Terms of Employment.
10.6 +	Offer Letter Agreement by and among the Company and Christine A. Nash, dated September 7, 2007 (incorporated by reference to Exhibit 10.10 to the Registrant’s Registration Statement on Form S-1, File No. 333-180694, filed on April 13, 2012).
10.7 +	Offer Letter Agreement by and among the Company and Ashley C. Gould dated May 23, 2013 (incorporated by reference to Exhibit 10.8 to the Registrant’s Annual Report on Form 10-K, file No. 001-35614, filed on March 7, 2014).
10.8 +	Offer Letter Agreement by and among the Company and Natalie C. Holles dated May 31, 2013 (incorporated by reference to Exhibit 10.9 to the Registrant’s Annual Report on Form 10-K, file No. 001-35614, filed on March 7, 2014).
10.9 +	Form of General Severance Benefits and Change In Control Severance Benefits Agreement by and among the Company and its Senior Vice Presidents.
10.10 +	General Release and Post-Separation Consulting Agreement dated as of August 4, 2014, by and between the Company and Klara Dickinson-Eason (incorporated by reference to Exhibit 10.1 to the Registrant’s Quarterly Report on Form 10-Q, file No. 001-35614, filed on November 6, 2014).

Exhibit No.	Description
10.11 +	2006 Equity Incentive Plan, as amended (incorporated by reference to Exhibit 10.12 to the Registrant’s Registration Statement on Form S-1, File No. 333-180694, filed on April 13, 2012, and incorporated herein by reference).
10.12 +	2006 Equity Incentive Plan Amendment, dated April 15, 2011 (incorporated by reference to Exhibit 10.13 to the Registrant’s Registration Statement on Form S-1, File No. 333-180694, filed on April 13, 2012, and incorporated herein by reference).
10.13 +	Form of Option Agreement under 2006 Equity Incentive Plan (incorporated by reference to Exhibit 10.14 to the Registrant’s Registration Statement on Form S-1, File No. 333-180694, filed on April 13, 2012).
10.14 +	2012 Omnibus Incentive Plan (incorporated by reference to Exhibit 10.4 to the Registrant’s Quarterly Report on Form 10-Q, File No. 001-35614, filed on September 9, 2012).
10.15 +	Form of Incentive Stock Option Agreement under 2012 Omnibus Incentive Plan (incorporated by reference to Exhibit 10.16 to the Registrant’s Amendment No. 1 to the Registration Statement on Form S-1, File No. 333-180694, filed on May 24, 2012).
10.16 +	Form of Non-Qualified Option Agreement under the 2012 Omnibus Incentive Plan (incorporated by reference to Exhibit 10.17 to the Registrant’s Amendment No. 1 to the Registration Statement on Form S-1, File No. 333-180694, filed on May 24, 2012).
10.17 +	Form of Restricted Stock Unit Agreement under the 2012 Omnibus Incentive Plan (incorporated by reference to Exhibit 10.17 to the Registrant’s Annual Report on Form 10-K, file No. 001-35614, filed on March 7, 2014).
10.18	Office Lease dated October 14, 2013 by and between Company and Sierra Point Parkway LLC (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K as filed with the SEC on October 16, 2013).
10.19	First Amendment to Office Lease by and between the Company and Sierra Point Parkway, LLC, dated December 12, 2013 (incorporated by reference to Exhibit 10.19 to the Registrant’s Annual Report on Form 10-K, file No. 001-35614, filed on March 7, 2014).
10.20 †	Amended and Restated Collaboration Agreement by and among the Company and Ucyclyd, dated March 22, 2012, portions of which have been omitted pursuant to a request for confidential treatment (incorporated by reference to Exhibit 10.20 to the Registrant’s Amendment No. 1 to the Registration Statement on Form S-1, File No. 333-180694, filed on May 24, 2012).
10.21 †	License Agreement by and among Saul Brusilow, M.D. (“Brusilow”), Brusilow Enterprises, Inc. (“Brusilow Enterprises”) and Medicis Pharmaceutical Corporation (“Medicis”) dated April 16, 1999 (incorporated by reference to Exhibit 10.21 to the Registrant’s Amendment No. 1 to the Registration Statement on Form S-1, File No. 333-180694, filed on May 24, 2012).
10.22 †	Settlement Agreement and First Amendment to License Agreement by and among Brusilow, Brusilow Enterprises, Medicis and Ucyclyd, dated August 21, 2007 (incorporated by reference to Exhibit 10.22 to the Registrant’s Amendment No. 1 to the Registration Statement on Form S-1, File No. 333-180694, filed on May 24, 2012).
10.23 †	Agreement by and between Dr. Marshall L. Summar and Medicis, dated April 1, 2002 (incorporated by reference to Exhibit 10.23 to the Registrant’s Amendment No. 1 to the Registration Statement on Form S-1, File No. 333-180694, filed on May 24, 2012).
10.24	Loan and Security Agreement between the Company and Silicon Valley Bank dated July 18, 2014 (incorporated herein by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K, as filed with the SEC on July 21, 2014).
10.25†	Distribution Services Agreement by and between the Company and ASD Healthcare, a division of ASD Specialty Healthcare, Inc., dated February 14, 2013 (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K, File No. 001-35614, filed on February 20, 2013).

Exhibit No.	Description
10.26	First Amendment to Distribution Services Agreement, by and between the Company and ASD Healthcare, a division of ASD Specialty Healthcare, Inc., effective as of June 1, 2013 (incorporated by reference to Exhibit 10.2 to the Registrant’s Quarterly Report on Form 10-Q, File No. 001-35614, filed on November 12, 2014).
10.27 †	Stock Purchase Agreement by and among Hyperion Therapeutics, Inc., Hyperion Therapeutics Israel Holding Corp. Ltd. Andromeda Biotech Ltd., and Clal Biotechnology Industries Ltd., dated April 23, 2014 (incorporated by reference to Exhibit 10.1 to the Registrant’s Quarterly Report on Form 10-Q, File No. 001-35614, filed on August 8, 2014).
10.28 †	Research and Licence Agreement by and between Yeda Research and Development Company Ltd and Portman Pharmaceuticals, Inc., dated January 12, 1994, as amended (incorporated by reference to Exhibit 10.2 to the Registrant’s Quarterly Report on Form 10-Q, File No. 001-35614, filed on August 8, 2014).
21.1	Subsidiaries of the Company.
23.1	Consent of PricewaterhouseCoopers LLP.
24.1	Power of Attorney (included on signature page to this report).
31.1	Certification of Principal Executive Officer pursuant to Rules 13a-14(a) and 15d-14(a) promulgated under the Securities Exchange Act of 1934, as amended.
31.2	Certification of Principal Financial and Accounting Officer pursuant to Rules 13a-14(a) and 15d-14(a) promulgated under the Securities Exchange Act of 1934, as amended.
32.1*	Certifications of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2*	Certifications of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101	Financial statements from the Annual Report on Form 10-K of the Company for the year ended December 31, 2014, formatted in XBRL (eXtensible Business Reporting Language): (i) the Consolidated Balance Sheets, ii) the Consolidated Statements of Operations, (iii) the Consolidated Statements of Comprehensive Income (Loss), (iv) the Consolidated Statements of Stockholders’ Equity (Deficit), (v) the Consolidated Statements of Cash Flows and (vi) Notes to Consolidated Financial Statements.

+ Indicates a management contract or compensatory plan.

† Registrant has requested confidential treatment for certain portions of this agreement. This exhibit omits the information subject to this confidentiality request. The omitted portions have been filed separately with the SEC.

* Furnished herewith and not deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and shall not be deemed to be incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Exchange Act.

EX-10.5

Exhibit 10.5

November 5, 2014

Bruce F. Scharschmidt

Re: Amended Terms of Employment

Dear Bruce:

You have informed us that you wish to transition from full time employment into a part time advisory role sometime between April and June 2015. Hyperion Therapeutics, Inc. (the “Company”) is pleased to accommodate your request on the terms and conditions outlined in this letter (the “Amendment”).

1. Position and Duties. Your job title with the Company will remain Chief Medical and Development Officer until the Transition Effective Date (as defined below), at which time you will transition into your new role and your title will change to Emeritus Chief Medical Officer reporting to the Company’s Chief Executive Officer. After the Transition Effective Date, your employment status with the Company will be that of a part time, exempt employee, and we anticipate that you will work approximately half time, or no less than thirty (30) hours per week. Your responsibilities will include all duties customarily associated with your position, as well as any additional duties assigned to you by your supervisor or the Company. The Company may modify your job title, work location, duties, and responsibilities from time to time as it deems necessary.

2. Transition Effective Date and Transition Period. Your transition to the new position and work schedule will take place on the earlier of: (1) the start date of the Company’s new Chief Medical Officer or (2) a mutually agreed date falling between April and June 2015 (the “Transition Effective Date”), but no earlier than January 1, 2015. The Company anticipates that it will begin a search for a replacement Chief Medical Officer in November 2014 or shortly thereafter. Your employment with the Company in the Emeritus Chief Medical Officer position will be temporary, and will automatically terminate 12 months after the Transition Effective Date (with such 12 month period being defined as the “Transition Period”) unless you and the Company agree otherwise in writing at least 45 days before the expiration of the Transition Period. While the Company anticipates that your employment in your new position will continue for the entire Transition Period, you will be employed at all times on an at-will basis as described in Section 8 below, and either you or the Company may terminate your

2000 Sierra Point Parkway, Suite 400, Brisbane, CA 94005

employment at any time during or prior to the expiration of the Transition Period. Additionally, your completion of the Transition Period and/or the extension of your employment beyond the Transition Period will not constitute a guarantee or assurance of continued employment for any duration or length of time. Unless the term of your employment is extended in writing as permitted in this Section 2, the termination of your employment upon the expiration of the Transition Period shall not constitute a termination without Cause or a resignation for Good Reason for purposes of the CIC Agreement (as defined below), and the Company will not owe you any severance or other compensation beyond any accrued but unpaid salary, vacation and expense reimbursement that is payable in accordance with applicable law.

3. Compensation.

a. Base Salary. After the Transition Effective Date, you annual base salary will be Two Hundred Thousand Dollars ($200,000.00), payable in accordance with the Company’s normal payroll procedures. Your salary normally will be reviewed annually, beginning in 2016, and may be increased or decreased in connection with any such review.

b. Withholding. The Company shall withhold federal, state and local income, employment or other taxes as required by applicable law from all compensation or benefits paid to you in connection with your employment. You understand that the Company does not have a duty to design its compensation policies in a manner that minimizes your tax liabilities, and you agree that you will not make any claim against the Company or its Board of Directors related to tax liabilities arising from your employment arrangement and/or compensation

4. Equity and Benefits. Your existing equity grants, if any, shall continue to vest on the terms and conditions stated in your grant documents and the 2012 Omnibus Incentive Plan, the 2006 Equity Incentive Plan after the Transition Effective Date. The grant, exercise, forfeiture and other terms and conditions of the stock options shall be governed by and subject to the Company’s 2012 Omnibus Incentive Plan and 2006 Equity Incentive Plan, respectively. Subject to the terms and conditions of the applicable benefit plan documents, you will also continue to be eligible to participate in Company-sponsored medical, retirement and other benefits as approved by the Board of Directors and as offered by the Company.

5. Paid Leave and Holidays. Your eligibility and entitlement to accrued paid leave benefits existing as of the Transition Effective Date will continue to be governed by the terms and conditions of the applicable benefit plans or policies, which are subject to change or discontinuation at any time.

6. Company Policies; Existing Agreements. You shall remain subject to all Company policies and procedures before and after the Transition Effective Date. The following agreements that you entered into with the Company during your employment shall remain in full force and effect, except as modified herein, following the execution of this Amendment, and are incorporated by reference herein:

a. Employee Proprietary Information and Inventions Agreement, dated March 18, 2008 and effective as of your first date of employment, April 28, 2008.

2000 Sierra Point Parkway, Suite 400, Brisbane, CA 94005

b. Executive Change of Control and Severance Agreement, dated April 6, 2012 (the “CIC Agreement”).

c. Indemnification Agreement, dated April 9, 2012.

7. Resignation of Positions. Upon the Transition Effective Date, you shall resign from all the offices, directorships, and other positions that you hold with the Company and any of its directly- and indirectly-owned subsidiaries and affiliates, including without limitation your position as Chief Medical and Development Officer of the Company. You agree that the changes in your compensation, benefits, position, duties and authority set forth in this Amendment do not constitute a termination without Cause or a basis for a resignation for Good Reason for purposes of the CIC Agreement.

8. “At Will” Employment. Your employment with the Company is and shall at all times be at will, meaning that your employment is not guaranteed for any specified period, and either the Company or you may terminate your employment at any time for any reason, with or without cause, and with or without advance notice. The at- will nature of your employment cannot be changed except through a writing signed by both you and the chair of the Company’s Board of Directors.

9. No Other Promises. No commitments affecting the terms of your employment or altering your at-will employment status are binding on the Company unless contained in a writing signed by both you and the chair of the Company’s Board of Directors. You also acknowledge that this Amendment is intended as written, and that no marginal notations or other revisions to this Amendment are binding on the Company unless expressly consented to in writing by the chair of the Company’s Board of Directors. You acknowledge that in deciding to accept this new employment position, you have not relied on any promises, commitments, statements or representations, whether spoken or in writing, made to you by any Company representative, except for what is expressly stated in this Amendment.

10. Other Terms. Either your or the Company’s failure to strictly enforce any term, or any breach, of this Amendment shall not waive any of your or its rights subsequently to strictly enforce that or any other term or breach. Each provision of this Amendment is severable, and a finding that a term of this Amendment is invalid, contrary to, or in conflict with, any law or regulation shall not affect the remainder of the Amendment. This Amendment shall be construed, governed by and enforced in accordance with the laws of the State of California, without regard to its conflicts of law principles.

* * * * *

2000 Sierra Point Parkway, Suite 400, Brisbane, CA 94005

If you have any questions or require additional information, please feel free to contact me. Please confirm your acceptance of this Amendment by signing this letter and returning the signed copy to Connie Kasteros by no later than the close of business on November 10, 2014.

Very truly yours,
HYPERION THERAPEUTICS, INC.
By:	/s/ Donald J. Santel
	Donald J. Santel, CEO

I have read and understand the terms and conditions of at-will employment stated in this Amendment, and I accept continued employment with Hyperion Therapeutics, Inc. upon those terms and conditions:

/s/    Bruce F. Scharschmidt
Bruce F. Scharschmidt
Dated:	November 5, 2014

2000 Sierra Point Parkway, Suite 400, Brisbane, CA 94005

EX-10.9

Exhibit 10.9

TEMPLATE SVP SEVERANCE AND

CIC SEVERANCE AGREEMENT

This GENERAL SEVERANCE BENEFITS AND CHANGE IN CONTROL SEVERANCE BENEFITS AGREEMENT (this “Agreement”) is entered into as of the      day of [Month], 20     (the “Effective Date”), between [EMPLOYEE NAME] (“Executive”) and HYPERION THERAPEUTICS, INC. (the “Company”) (together, the “Parties”). This Agreement is intended to provide Executive with certain compensation and benefits in the event of certain qualifying terminations of employment. Certain capitalized terms used in this Agreement are defined in Article 5.

The Company and Executive hereby agree as follows:

ARTICLE 1

SCOPE OF AND CONSIDERATION FOR THIS AGREEMENT

1.1 The Company desires to employ Executive, or to continue Executive’s employment, in the position of [Position Title], and Executive wishes to be employed, or continue to be employed, by the Company in such position.

1.2 The Company and Executive wish to set forth the compensation and benefits that Executive shall be entitled to receive upon a Change in Control Termination or a Covered Termination.

1.3 The duties and obligations of the Company to Executive under this Agreement shall be in consideration for Executive’s employment with the Company (and if Executive is a continuing employee, his or her past services to the Company), and, with respect to the benefits described in Article 2 and Article 3, Executive’s compliance with the limitations and conditions on benefits as described in Article 4, including the execution of an effective Release, return of Company property and continued compliance with certain obligations. Executive acknowledges that Executive has read, understands, and agrees to the terms of Article 4, including Section 4.5 and the potential forfeiture of benefits thereunder.

1.4 This Agreement shall supersede any other policy, plan, program or arrangement, including any contract between Executive and the Company (or any subsidiary or affiliate of the Company) relating to severance benefits payable by the Company to Executive in connection with a Change in Control Termination or Covered Termination, including the Change of Control and Severance Agreement between the Parties dated as of [DATE]. For the avoidance of doubt, accelerated vesting under Section 17.3 (Change in Control in which Awards are not Assumed) of the Company’s 2012 Omnibus Incentive Plan (and any similar provisions under predecessor or successor incentive plans) is not a “severance benefit” that is superseded by this Agreement.

1.

ARTICLE 2

CHANGE IN CONTROL SEVERANCE BENEFITS

2.1 Change in Control Severance Benefits. Upon a Change in Control Termination, and subject to the limitations and conditions set forth in this Agreement (including the Release requirement), Executive shall be eligible to receive the benefits set forth in this Article 2.

2.2 Salary Continuance. Executive shall receive, as severance, an amount equal to Executive’s Base Salary for eighteen (18) months, payable over eighteen (18) months following the Termination Date in accordance with the Company’s payroll schedule then in effect. Except as set forth in Article 4, the payments provided for in this Section 2.2 shall commence on the first regularly scheduled payroll pay date following the sixtieth (60^th) day after the Termination Date. The first payment provided under this Section 2.2 shall be a “catch up” payment to include the total amount that Executive would have received as of such date if these payments had commenced with the first payroll pay date following the Termination Date.

2.3 Health Continuation Coverage.

(a) Provided that Executive is eligible and has made any necessary elections pursuant to COBRA, the Company shall pay the premiums (inclusive of premiums for Executive’s dependents to the extent these dependents are covered immediately prior to the Change in Control Termination) for continued health, dental, and vision coverage until the earlier of (i) eighteen (18) months following the Change in Control Termination and (ii) such time as Executive is eligible for coverage under a health, dental or vision insurance plan of a subsequent employer (the “CIC Coverage Period”). Such coverage shall be counted as coverage pursuant to COBRA, to the extent applicable. Executive shall be required to notify the Company in writing immediately if Executive becomes eligible for a health, dental, or vision insurance plan of a subsequent employer. If Executive or Executive’s dependents continue coverage pursuant to COBRA following the conclusion of the period that the Company makes premium payments hereunder, Executive will be responsible for the entire payment of such premiums for the remainder of the applicable COBRA period.

(b) Notwithstanding the foregoing, the Company may elect at any time during the CIC Coverage Period that, in lieu of paying the premiums, the Company instead shall provide Executive with monthly cash payment equal to the amount the Company would have paid pursuant to Section 2.3(a). Such monthly payments shall be made on the first payroll date to occur during each such month for the remaining portion of the period that ends on the earlier of (i) twenty-seven (27) months following the Change in Control Termination and (ii) such time as Executive is eligible for coverage under a health, dental or vision insurance plan of a subsequent employer.

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2.4 Equity Awards. Upon the later to occur of the Change in Control and the Termination Date, (i) the vesting and exercisability of all outstanding options to purchase the Company’s common stock, stock appreciation rights, restricted stock units or other rights with respect to stock of the Company issued pursuant to any equity incentive plan of the Company that are held by Executive on the Termination Date shall be accelerated in full, (ii) any reacquisition or repurchase rights held by the Company with respect to common stock of the Company issued or issuable (or with respect to other rights with respect to stock of the Company issued or issuable) pursuant to any stock award granted to Executive pursuant to any equity incentive plan of the Company and held by Executive on the Termination Date shall lapse in full, and (iii) to the extent that any options or other stock awards with respect to the Company’s common stock issued pursuant to an equity incentive plan of the Company that are held by Executive on the Termination Date are subject to performance vesting conditions, the Company shall make a reasonable and good faith determination of the extent to which such conditions have been met or the extent to which progress has been made towards meeting such conditions, and a corresponding percentage of such awards shall vest.

2.5 Bonus Severance Payment. Executive shall receive an additional severance payment in an amount equal to 150% of Executive’s target annual bonus in effect for the fiscal year in which the Termination Date occurs, if any (the “Bonus Severance Payment”). The Bonus Severance Payment shall be subject to applicable payroll deductions and tax withholdings, and shall be paid on the first regular payroll date following the sixtieth (60th) day after the Termination Date; provided, however, that if the Termination Date occurs before the Change in Control, the additional portion of the Bonus Severance Payment due hereunder and not paid under Section 3.5 shall be paid no later than March 15th following the Change in Control.

2.6 Transition Support Severance Payment. Executive shall receive an additional severance payment of $15,000, which may be used by Executive for outplacement assistance, tax planning, educational assistance, or similar transition support (the “Transition Support Severance Payment”). The Transition Support Severance Payment shall be subject to applicable payroll deductions and tax withholdings, and shall be paid on the first regular payroll date following the sixtieth (60th) day after the Termination Date. Notwithstanding the foregoing, Executive shall not receive the Transition Support Severance Payment if the Company, in its sole discretion, provides Executive with outplacement assistance or services (at the Company’s expense) through a professional outplacement firm or other third party provider as may be selected by the Company. If outplacement assistance or services will be provided, the Company will inform Executive no later than within thirty (30) days after the Termination Date.

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ARTICLE 3

GENERAL SEVERANCE BENEFITS (NOT IN CONNECTION WITH CHANGE IN CONTROL)

3.1 General Severance Benefits. Upon a Covered Termination, and subject to the limitations and conditions set forth in this Agreement (including the Release requirement), Executive shall be eligible to receive the benefits set forth in this Article 3.

3.2 Salary Continuance. Executive shall receive, as severance, an amount equal to Executive’s Base Salary for twelve (12) months, payable over twelve (12) months following the Termination Date in accordance with the Company’s payroll schedule then in effect. Except as set forth in Article 4, the payments provided for in this Section 3.2 shall commence on the first regularly scheduled payroll pay date following the sixtieth (60^th) day after the Termination Date. The first payment provided under this Section 3.2 shall be a “catch up” payment to include the total amount that Executive would have received as of such date if these payments had commenced with the first payroll pay date following the Termination Date.

3.3 Health Continuation Coverage.

(a) Provided that Executive is eligible and has made any necessary elections pursuant to COBRA, the Company shall pay the premiums (inclusive of premiums for Executive’s dependents to the extent these dependents are covered immediately prior to the Covered Termination) for continued health, dental, and vision coverage until the earlier of (i) eighteen (18) months following the Covered Termination and (ii) such time as Executive is eligible for coverage under a health, dental or vision insurance plan of a subsequent employer (the “General Coverage Period”). Such coverage shall be counted as coverage pursuant to COBRA, to the extent applicable. Executive shall be required to notify the Company in writing immediately if Executive becomes eligible by a health, dental, or vision insurance plan of a subsequent employer. If Executive or Executive’s dependents continue coverage pursuant to COBRA following the conclusion of the period that the Company makes premium payments hereunder, Executive will be responsible for the entire payment of such premiums for the remainder of the applicable COBRA period.

(b) Notwithstanding the foregoing, the Company may elect at any time during the General Coverage Period that, in lieu of paying the premiums, the Company instead shall provide Executive with monthly cash payment equal to the amount the Company would have paid pursuant to Section 3.3(a). Such monthly payments shall be made on the first payroll date to occur during each such month for the remaining portion of the period that ends on the earlier of (i) twenty-seven (27) months following the Covered Termination and (ii) such time as Executive is eligible for coverage under a health, dental or vision insurance plan of a subsequent employer.

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3.4 Equity Awards.

(a) Upon a Covered Termination, (i) the vesting and exercisability of all outstanding options to purchase the Company’s common stock, stock appreciation rights, restricted stock units or other rights with respect to stock of the Company issued pursuant to any equity incentive plan of the Company that are held by Executive on the Termination Date shall be accelerated with respect to the number of shares that otherwise would have vested if Executive’s employment with the Company had continued for twelve (12) months following the Termination Date, and (ii) any reacquisition or repurchase rights held by the Company with respect to common stock of the Company issued or issuable (or with respect to other rights with respect to stock of the Company issued or issuable) pursuant to any stock award granted to Executive pursuant to any equity incentive plan of the Company and held by Executive on the Termination Date shall lapse with respect to the number of shares that otherwise would have lapsed if Executive’s employment with the Company had continued for twelve (12) months following the Termination Date. To the extent that any options or other stock awards with respect to the Company’s common stock are subject to performance vesting conditions that have not been satisfied as of the Covered Termination, the Company shall determine in its sole discretion whether to treat any such conditions as having been satisfied.

(b) Following a Covered Termination, the Company shall take appropriate action to preserve the intent of Section 2.4, which may provide for additional equity award vesting if a Change in Control occurs within three (3) moths following a Covered Termination, including not cancelling or forfeiting equity awards that remain unvested and, subject to a stock option’s final termination date, extending the exercise period of stock options that remain unvested.

3.5 Bonus Severance Payment. Executive shall receive an additional severance payment in an amount equal to Executive’s target annual bonus in effect for the fiscal year in which the Termination Date occurs, if any (the “Bonus Severance Payment”). The Bonus Severance Payment shall be subject to applicable payroll deductions and tax withholdings, and shall be paid on the first regular payroll date following the sixtieth (60th) day after the Termination Date.

3.6 Transition Support Severance Payment. Executive shall receive an additional severance payment of $15,000, which may be used by Executive for outplacement assistance, tax planning, educational assistance, or similar transition support (the “Transition Support Severance Payment”). The Transition Support Severance Payment shall be subject to applicable payroll deductions and tax withholdings, and shall be paid on the first regular payroll date following the sixtieth (60th) day after the Termination Date. Notwithstanding the foregoing, Executive shall not receive the Transition Support Severance Payment if the Company, in its sole discretion, provides Executive with outplacement assistance or services (at the Company’s expense) through a professional outplacement firm or other third party provider as may be selected by the Company. If outplacement assistance or services will be provided, the Company will inform Executive no later than within thirty (30) days after the Termination Date.

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ARTICLE 4

LIMITATIONS AND CONDITIONS ON BENEFITS

4.1 Rights Conditioned on Compliance. Executive’s rights to receive all severance benefits described in Article 2 and Article 3 shall be conditioned upon and subject to Executive’s compliance with the limitations and conditions on benefits as described in this Article 4.

4.2 Continuation of Service Until Date of Termination. Executive shall continue to provide service to the Company in good faith until the Termination Date, unless such performance is otherwise excused in writing by the Company.

4.3 Release Prior to Payment of Benefits. Upon the occurrence of a Change in Control Termination or a Covered Termination, as applicable, and prior to the provision or payment of any benefits under this Agreement on account of such Change in Control Termination or Covered Termination, as applicable, Executive must execute a general waiver and release of all claims in substantially the form attached hereto and incorporated herein as Exhibit A, Exhibit B, or Exhibit C, as appropriate (each a “Release”), and such Release must become effective in accordance with its terms, but in no event later than sixty (60) days following the Termination Date. No amount shall be paid prior to such date. Instead, on the 60^th day following the Termination Date, the Company will pay Executive the severance amount that Executive would otherwise have received on or prior to such date but for the delay in payment related to the effectiveness of the Release, with the balance of the severance amount being paid as originally scheduled. The Company may modify the Release in its discretion to comply with changes in applicable law at any time prior to Executive’s execution of such Release. Such Release shall specifically relate to all of Executive’s rights and claims in existence at the time of such execution and shall confirm Executive’s obligations under Executive’s written confidentiality or proprietary information agreement (or any successor agreement thereto) and any similar obligations under applicable law. It is understood that, as specified in the applicable Release, Executive has a certain number of calendar days to consider whether to execute such Release. If Executive does not execute such Release within the applicable period, Executive shall have no further rights, title or interests in or to any severance benefits or payments pursuant to, this Agreement. It is further understood that if Executive is aged 40 years old or older at the time of a Change in Control Termination or a Covered Termination, as applicable, Executive may revoke the applicable Release in writing within seven (7) calendar days after its execution by Executive. If Executive revokes such Release within such subsequent seven (7) day period, no benefits shall be provided or payable under this Agreement pursuant to such Change in Control Termination or Covered Termination, as applicable.

4.4 Return of Company Property. Not later than the Termination Date (unless otherwise agreed by the Company in writing), Executive shall return to the Company all documents (and all copies thereof) and other property and information belonging to the Company that Executive has in his or her possession or control. The documents and property to be returned include all files, correspondence, email, memoranda, notes, notebooks, records, plans, forecasts, reports, studies, analyses, compilations

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of data, proposals, agreements, financial information, research and development information, marketing information, operational and personnel information, databases, computer-recorded information, tangible property and equipment (including computers, facsimile machines and servers), credit cards, entry cards, identification badges and keys; and any materials of any kind which contain or embody any proprietary or confidential information of the Company (and all reproductions thereof in whole or in part). Executive agrees to make a diligent search to locate any such documents, property and information. If Executive has used any personally owned computer, server, e-mail system or handheld device to receive, store, review, prepare or transmit any Company confidential or proprietary data, materials or information, then within ten (10) business days after the Termination Date (or within such other timing as provided in writing by the Company), Executive shall provide the Company with a computer-useable copy of all such information and then permanently delete and expunge such confidential or proprietary information from those systems without retention of any reproductions. Executive agrees to provide the Company access to Executive’s personally owned computer, server, e-mail systems or handheld device as requested to verify that the necessary copying and/or deletion is done. If Executive’s personal phone number was ported to a handheld device that was issued by the Company and that Executive returns to the Company, then the Company shall port the phone number back to Executive’s personal handheld device if requested by Executive within fifteen (15) days following the Termination Date.

4.5 Cooperation and Continued Compliance with Confidentiality, Proprietary Information and Non-Solicitation Obligations.

(a) From and after the Termination Date, Executive shall cooperate fully with the Company in connection with its actual or contemplated defense, prosecution, or investigation of any existing or future litigation, arbitrations, mediations, claims, demands, audits, government or regulatory inquiries, or other matters arising from events, acts, or failures to act that occurred during the time period in which Executive was employed by the Company (including any period of employment with an entity acquired by the Company). Such cooperation includes being available upon reasonable notice, without subpoena, to provide accurate and complete advice, assistance and information to the Company, including offering and explaining evidence, providing truthful and accurate sworn statements, and participating in discovery and trial preparation and testimony. Executive also agrees to promptly send the Company copies of all correspondence (for example, but not limited to, subpoenas) received by Executive in connection with any such legal proceedings, unless Executive is expressly prohibited by law from so doing. Subject to Section 4.9 of this Agreement, the Company will reimburse Executive for reasonable out-of-pocket expenses incurred in connection with any such cooperation (excluding foregone wages, salary, or other compensation) within thirty (30) days of Executive’s timely presentation of appropriate documentation thereof, in accordance with the Company’s standard reimbursement policies and procedures, and will make reasonable efforts to accommodate Executive’s scheduling needs.

(b) From and after the Termination Date, Executive shall continue to abide by all of the terms and provisions of Executive’s written confidentiality or proprietary information agreement (and any other comparable agreement signed by Executive), including any provisions relating to non-solicitation of employees and independent contractors.

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(c) Executive acknowledges and agrees that Executive’s obligations under this Section 4.5 are an essential part of the consideration Executive is providing hereunder in exchange for which and in reliance upon which the Company has agreed to provide the payments and benefits under this Agreement. Accordingly, Executive agrees that Executive will forfeit, effective as of the date of any breach or failure to comply with any of Executive’s continuing obligations, all severance payments and benefits provided in Article 2 or Article 3. Within thirty (30) days, Executive shall repay to the Company such payments and the amounts of such benefits already provided by the Company. Executive’s obligations under this Section 4.5(c) are full recourse.

4.6 Parachute Payments.

(a) If any payment or benefit (including payments and benefits pursuant to this Agreement) Executive would receive in connection with a Change in Control from the Company or otherwise (“Payment”) would (i) constitute a “parachute payment” within the meaning of Section 280G of the Code, and (ii) but for this sentence, be subject to the excise tax imposed by Section 4999 of the Code (the “Excise Tax”), then such Payment will be equal to the Reduced Amount. The “Reduced Amount” will be either (A) the largest portion of the Payment that would result in no portion of the Payment being subject to the Excise Tax, or (B) the largest portion, up to and including the total, of the Payment, whichever amount set forth in clause (A) or (B), after taking into account all applicable federal, state, provincial, foreign, and local employment taxes, income taxes, and the Excise Tax (all computed at the highest applicable marginal rate), results in Executive’s receipt, on an after-tax basis, of the greatest economic benefit notwithstanding that all or some portion of the Payment may be subject to the Excise Tax. If a reduction in payments or benefits constituting “parachute payments” is necessary so that the Payment equals the Reduced Amount, reduction will occur in the following order: (1) reduction of cash payments; (2) cancellation of accelerated vesting of stock awards other than stock options; (3) cancellation of accelerated vesting of stock options; and (4) reduction of other benefits paid to Executive. Within any such category of Payments (that is, (1), (2), (3) or (4)), a reduction will occur first with respect to amounts that are not “deferred compensation” within the meaning of Section 409A of the Code and then with respect to amounts that are “deferred compensation.” In the event that acceleration of vesting of stock award compensation is to be reduced, such acceleration of vesting will be cancelled in the reverse order of the date of grant of Executive’s applicable type of stock award (i.e., earliest granted stock awards are cancelled last). If Section 409A of the Code is not applicable by law to Executive, the Company will determine whether any similar law in Executive’s jurisdiction applies and should be taken into account.

(b) A professional firm engaged by the Company for such purposes shall make all determinations required to be made under this Section 4.6. The Company shall bear all expenses with respect to the determinations by such professional firm required to be made hereunder. Any good faith determinations of the professional firm made hereunder shall be final, binding and conclusive upon the Company and Executive.

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4.7 Certain Reductions and Offsets. To the extent that any federal, state or local laws, including the federal Worker Adjustment and Retraining Notification Act or any other so-called “plant closing” laws (including to California Labor Code Section 1400 et seq.), require the Company to give advance notice or make a payment of any kind to Executive because of Executive’s involuntary termination due to a layoff, reduction in force, plant or facility closing, sale of business, change in control, or any other similar event or reason, the benefits payable under this Agreement shall be correspondingly reduced. The benefits provided under this Agreement are intended to satisfy any and all statutory obligations that may arise out of Executive’s involuntary termination of employment for the foregoing reasons, and the Parties shall construe and enforce the terms of this Agreement accordingly.

4.8 Indebtedness of Executive. If Executive is indebted to the Company on the effective date of a Change in Control Termination or Covered Termination, the Company reserves the right to offset any severance payments and benefits under this Agreement by the amount of such indebtedness; provided, however, that any such offset does not violate or result in the imposition of tax under Section 409A of the Code. Executive hereby consents to any such offset.

4.9 Section 409A.

(a) The intent of the Parties is that payments and benefits under this Agreement comply with or be exempt from Section 409A of the Code and, accordingly, to the maximum extent permitted, this Agreement shall be interpreted to be in compliance therewith. To the extent that any provision hereof is modified in order to comply with or be exempt from Section 409A, such modification shall be made in good faith and shall, to the maximum extent reasonably possible, maintain the original intent and economic benefit to Executive and the Company of the applicable provision without violating the provisions of Section 409A.

(b) (i) All expenses or other reimbursements as provided herein shall be payable in accordance with the Company’s policies in effect from time to time, but in any event shall be made on or prior to the last day of the taxable year following the taxable year in which such expenses were incurred by Executive; (ii) no such reimbursement or expenses eligible for reimbursement in any taxable year shall in any way affect the expenses eligible for reimbursement in any other taxable year; and (iii) the right to reimbursement or in-kind benefits shall not be subject to liquidation or exchanged for another benefit.

(c) For purposes of Section 409A, Executive’s right to receive any installment payments pursuant to this Agreement shall be treated as a right to receive a series of separate and distinct payments. Whenever a payment under this Agreement specifies a payment period with reference to a number of days (e.g., “payment shall be made within thirty days following the date of termination”), the actual date of payment within the specified period shall be within the sole discretion of the Company.

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(d) A termination of employment shall not be deemed to have occurred for purposes of this Agreement providing for the payment of any amounts or benefits that are considered nonqualified deferred compensation under Section 409A upon or following a termination of employment, unless such termination is also a “separation from service” within the meaning of Section 409A and the payment thereof prior to a “separation from service” would violate Section 409A. For purposes of any such provision of this Agreement relating to any such payments or benefits, references to a “termination,” “termination of employment” or like terms shall mean “separation from service.” If Executive is deemed on the date of termination to be a “specified employee” within the meaning of that term under Section 409A(a)(2)(B), then, notwithstanding any other provision herein, with regard to any payment or the provision of any benefit that is considered nonqualified deferred compensation under Section 409A payable on account of a “separation from service,” such payment or benefit shall not be made or provided prior to the date which is the earlier of (A) the expiration of the six-month period measured from the date of such “separation from service” of Executive, and (B) the date of Executive’s death (the “Delay Period”). Upon the expiration of the Delay Period, all payments and benefits delayed pursuant to this Section 4.9 (whether they would have otherwise been payable in a single lump sum or in installments in the absence of such delay) shall be paid or reimbursed to Executive in a lump sum on the first business day following the Delay Period, and any remaining payments and benefits due under this Agreement shall be paid or provided in accordance with the normal payment dates specified for them herein.

(e) The parties intend that the relocation distance specified in Section 5.11(c) would be a “material change” for purposes of Section 409A, given Executive’s current office location in the San Francisco metro area.

(f) Nothing contained in this Agreement shall constitute any representation or warranty by the Company regarding compliance with Section 409A. Subject to the above provisions of this Section 4.9, (i) the Company has no obligation to take any action to prevent the assessment of any additional income tax, interest or penalties under Section 409A on any person and (ii) the Company, its subsidiaries and affiliates, and each of their employees and representatives shall not have any liability to Executive with respect thereto.

4.10 Tax Withholding. All payments under this Agreement shall be subject to applicable withholding for federal, state and local income and employment taxes.

ARTICLE 5

DEFINITIONS

Unless otherwise provided, for purposes of this Agreement, the following definitions shall apply:

5.1 “Base Salary” means 1/12^th of Executive’s annual base salary (excluding incentive pay, premium pay, commissions, overtime, bonuses, and other forms of variable compensation) as in effect on the date of a Change in Control Termination or a Covered Termination, as applicable, except that any reduction in base salary that results in Good Reason shall be disregarded.

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5.2 “Board” means the Board of Directors of the Company.

5.3 “Cause” means a reasonable determination by the Company that Executive has engaged in any of the following conduct: (i) is convicted of, or enters into a plea of nolo contendere to, a felony; (ii) theft, dishonesty or falsification of any employment or Company records; (iii) maliciously or recklessly disclosed the Company’s confidential or proprietary information or otherwise breached any provision of Executive’s written confidentiality or proprietary information agreement; (iv) committed any gross or willful misconduct; (v) committed any immoral or illegal act which the Company reasonably determines has (A) seriously undermined the ability of the Board or of management to entrust Executive with important matters or otherwise work effectively with Executive, (B) contributed to the Company’s loss of significant revenues or business opportunities, or (C) significantly and detrimentally affected the business or reputation of the Company or any of its subsidiaries; and/or (vi) failed or refused to follow the reasonable and lawful directives of the Company, provided such failure or refusal continues and has not been corrected after Executive’s receipt of at least thirty (30) days’ notice in writing of such failure or refusal and an opportunity to correct such failure or refusal (provided that, if such failure or refusal is not reasonably capable of being corrected, then no advance notice shall be required).

5.4 “Change in Control” shall mean the occurrence of any of the following events: (i) consummation of a merger or consolidation of the Company with any other corporation, other than a merger or consolidation which would result in the voting securities of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity) more than fifty percent (50%) of the total voting power represented by the voting securities of the Company or such surviving entity outstanding immediately after such merger or consolidation; (ii) the approval by the shareholders of the Company of a plan of complete liquidation of the Company or an agreement for the sale or disposition by the Company of all or substantially all of the Company’s assets; (iii) any “person” (as such term is used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended) becoming the “beneficial owner” (as defined in Rule 13d-3 under said Act), directly or indirectly, of securities of the Company representing fifty percent (50%) or more of the total voting power represented by the Company’s then outstanding voting securities; or (iv) a change in the composition of the Board, as a result of which fewer than a majority of the directors are Incumbent Directors. For purposes of the foregoing, “Incumbent Directors” shall mean directors who either (A) are directors of the Company as of the date hereof, or (B) are elected, or nominated for election, to the Board with the affirmative votes of at least a majority of those directors whose election or nomination was not in connection with any transactions described in subsections (i), (ii) or (iii) or in connection with an actual or threatened proxy contest relating to the election of directors of the Company.

Notwithstanding the foregoing, a transaction shall not constitute a Change in Control if: (1) its sole purpose is to change the state of the Company’s incorporation; (2) its sole purpose is to create a holding

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company that will be owned in substantially the same proportions by the persons who held the Company’s securities immediately before such transaction; or (3) it is a transaction effected primarily for the purpose of financing the Company with cash (as determined by the Board acting in good faith and without regard to whether such transaction is effectuated by a merger, equity financing or otherwise). In addition, to the extent required for compliance with Section 409A of the Code, in no event will a Change in Control be deemed to have occurred if such transaction is not also a “change in the ownership or effective control of” the Company or a “change in the ownership of a substantial portion of the assets of” the Company, as determined under Treasury Regulations Section 1.409A-3(i)(5).

5.5 “Change in Control Termination” means an “Involuntary Termination Without Cause” or “Resignation for Good Reason,” either of which occurs during the period beginning on the date that is three (3) months prior to the effective date of a Change in Control and ending on the date that is twelve (12) months following the effective date of a Change in Control, provided that any such termination is a “separation from service” within the meaning of Treasury Regulation Section 1.409A-1(h). For the sake of clarity, a termination of employment due to Executive’s death or disability will not constitute a Change in Control Termination for purposes of this Agreement.

5.6 “COBRA” means the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended, or any similar applicable state law.

5.7 “Code” means the Internal Revenue Code of 1986, as amended.

5.8 “Company” means Hyperion Therapeutics, Inc. or, following a Change in Control, the surviving entity resulting from such transaction, or any subsequent surviving entity resulting from any subsequent Change in Control.

5.9 “Covered Termination” means an “Involuntary Termination Without Cause” or “Resignation for Good Reason” other than a Change in Control Termination, provided that any such termination is a “separation from service” within the meaning of Treasury Regulation Section 1.409A-1(h). For the sake of clarity, a termination of employment due to Executive’s death or disability will not constitute a Covered Termination for purposes of this Agreement.

5.10 “Involuntary Termination Without Cause” means Executive’s dismissal or discharge by the Company for reasons other than Cause and other than as a result of death or disability.

5.11 “Resignation for Good Reason” means Executive’s resignation from all positions Executive holds with the Company at such time, which resignation occurs within one hundred twenty (120) days following any of the following events occurring without Executive’s written consent, provided that Executive has given the Company written notice of such event within ninety (90) days after the first occurrence of such event and the Company has not cured such event within thirty (30) days after such notice:

(a) With respect to a Covered Termination, a material diminution in Executive’s base salary other than in connection with an across-the-board reduction for similarly situated executives, or, with respect to a Change in Control Termination, a material diminution in Executive’s base salary regardless of any reduction for similarly situated executives;

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(b) a change in Executive’s position with the Company that materially reduces Executive’s level of authority, responsibilities or duties (including any change in Executive’s position such that Executive is no longer employed in substantially the same position and with substantially the same level of authority, responsibilities or duties at the ultimate parent corporation in an affiliated group of companies);

(c) A relocation of Executive’s assigned office location more than fifteen (15) miles from Executive’s assigned office location on the date hereof (except for required business travel); provided, however, that any relocation of an office of the Company that results from events beyond the control of the Company, including acts of God, natural disasters, and acts of war, shall not give rise to Good Reason; or

(d) The material breach by the Company of this Agreement.

5.12 “Section 409A” means, collectively, Section 409A of the Code and the regulations and guidance promulgated thereunder.

5.13 “Termination Date” means the effective date of the Change in Control Termination or Covered Termination, as applicable.

ARTICLE 6

GENERAL PROVISIONS

6.1 Employment Status. This Agreement does not constitute a contract of employment or impose upon Executive any obligation to remain as an employee, or impose on the Company any obligation (i) to retain Executive as an employee, (ii) to change the status of Executive as an at-will employee or (iii) to change the Company’s policies regarding termination of employment.

6.2 Notices. Any notices provided hereunder must be in writing, and such notices or any other written communication shall be deemed effective upon the earlier of personal delivery (including personal delivery by facsimile) or the third day after mailing by first class mail, to the Company at its primary office location and to Executive at Executive’s address as listed in the Company’s payroll records. Either Party can change his or its address for receipt of notice by providing writing notice to the other Party of such change.

6.3 Severability. Whenever possible, each provision of this Agreement will be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Agreement

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is held to be invalid, illegal or unenforceable in any respect under any applicable law or rule in any jurisdiction, such invalidity, illegality or unenforceability will not affect any other provision or any other jurisdiction, but this Agreement will be reformed, construed and enforced in such jurisdiction as if such invalid, illegal or unenforceable provisions had never been contained herein.

6.4 Waiver. If either party should waive any breach of any provisions of this Agreement, such Party shall not thereby be deemed to have waived any preceding or succeeding breach of the same or any other provision of this Agreement.

6.5 Complete Agreement. This Agreement, including Exhibit A, Exhibit B and Exhibit C, constitutes the entire agreement between Executive and the Company and is the complete, final, and exclusive embodiment of their agreement with regard to this subject matter, wholly superseding all written and oral agreements with respect to payments and benefits to Executive in the event of employment termination. It is entered into without reliance on any promise or representation other than those expressly contained herein.

6.6 Amendment or Termination of Agreement; Continuation of Agreement. This Agreement may be changed or terminated only upon the mutual written consent of the Company and Executive. The written consent of the Company to a change or termination of this Agreement must be signed by an executive officer of the Company (other than Executive). Unless so terminated, this Agreement shall continue in effect for as long as Executive continues to be employed by the Company or by any surviving entity following any Change in Control. In other words, if, following a Change in Control, Executive continues to be employed by the surviving entity without a Change in Control Termination and the surviving entity then undergoes a Change in Control, following which Executive is terminated by the subsequent surviving entity in a Change in Control Termination, then Executive shall receive the benefits described in Article 2 hereof.

6.7 Counterparts. This Agreement may be executed in separate counterparts, any one of which need not contain signatures of more than one party, but all of which taken together will constitute one and the same Agreement.

6.8 Headings. The headings of the Articles and Sections hereof are inserted for convenience only and shall not be deemed to constitute a part hereof nor to affect the meaning thereof.

6.9 Successors and Assigns. This Agreement is intended to bind and inure to the benefit of and be enforceable by Executive, and the Company, and any surviving entity resulting from a Change in Control and upon any other person who is a successor by merger, acquisition, consolidation or otherwise to the business formerly carried on by the Company, and their respective successors, assigns, heirs, executors and administrators, without regard to whether or not such person actively assumes any rights or duties hereunder; provided, however, that Executive may not assign any duties hereunder and may not assign any rights hereunder without the written consent of the Company.

14.

6.10 Choice of Law. All questions concerning the construction, validity and interpretation of this Agreement will be governed by the law of the State of California, without regard to such state’s conflict of laws rules that might refer construction to another jurisdiction.

6.11 Remedies. Nothing in this Agreement shall limit the rights of the Company to seek equitable relief in the event of a breach or threatened breach of Executive’s written confidentiality or proprietary information agreement (and any other comparable agreement signed by Executive). No right, power or remedy conferred upon a party in this Agreement shall be exclusive, and each such right, power and remedy shall be cumulative and in addition to every other right, power, or remedy, whether conferred in this Agreement or any other agreement, or now or hereafter available at law or in equity or by statute or otherwise.

6.12 Construction of Agreement. In the event of a conflict between the text of the Agreement and any summary, description or other information regarding the Agreement, the text of the Agreement shall control. This Agreement shall be deemed drafted equally by both the Company and Executive. Any references to paragraphs, subparagraphs, sections or subsections are to those parts of this Agreement, unless the context clearly indicates to the contrary. Unless the context clearly indicates to the contrary, (i) the plural includes the singular and the singular includes the plural; (ii) “includes” and “including” are each “without limitation”; (iii) “herein,” “hereof,” “hereunder” and other similar compounds of the word “here” refer to the entire Agreement and not to any particular paragraph, subparagraph, section or subsection; and (vi) all pronouns and any variations thereof shall be deemed to refer to the masculine, feminine, neuter, singular or plural as the identity of the entities or persons referred to may require.

IN WITNESS WHEREOF, the Parties have executed this Agreement on the Effective Date written above.

HYPERION THERAPEUTICS, INC.	EXECUTIVE
By:
Name:
Title:

Exhibit A:	Release (Individual Termination – Age 40 or Older)
Exhibit B:	Release (Individual and Group Termination – Under Age 40)
Exhibit C:	Release (Group Termination – Age 40 or Older)

15.

EXHIBIT A

RELEASE

(INDIVIDUAL TERMINATION – AGE 40 OR OLDER)

Certain capitalized terms used in this Release are defined in the General Severance Benefits and Change in Control Severance Benefits Agreement (the “Agreement”) which I have executed and of which this Release is a part.

I hereby confirm my obligations under the Company’s [Employee Confidentiality and Inventions Assignment Agreement] (or other comparable or subsequent agreement that I have signed, if any).

I acknowledge that I have read and understand Section 1542 of the California Civil Code which reads as follows: “A general release does not extend to claims which the creditor does not know or suspect to exist in his or her favor at the time of executing the release, which if known by him or her must have materially affected his or her settlement with the debtor.” I hereby expressly waive and relinquish all rights and benefits under that section and any law of any jurisdiction of similar effect with respect to my release of any claims provided herein, including but not limited to any unknown or unsuspected claims.

Except as otherwise set forth in this Release, I hereby generally and completely release the Company, its parent and subsidiary entities, and its and their respective directors, officers, employees, shareholders, stockholders, partners, agents, attorneys, predecessors, successors, investors, insurers, affiliates, and assigns (collectively with the Company, the “Released Parties”), of and from any and all claims, liabilities and obligations, both known and unknown, that arise out of or are in any way related to events, acts, conduct, or omissions occurring prior to or on the date that I sign this Release (the “Released Claims”). The Released Claims include, but are not limited to: (a) all claims arising out of or in any way related to my employment or the termination of that employment; (b) all claims related to my compensation or benefits, including salary, bonuses, commissions, incentive compensation, vacation, sick leave, paid time off, expense reimbursements, severance benefits or severance pay (other than the severance benefits that I am entitled to receive under the Agreement), fringe benefits, car allowance, monthly allowances, premium pay, stock, stock options, equity awards, or any other ownership or profits interests in the Company or any affiliated entities; (c) all claims for breach of contract, wrongful termination, and breach of the implied covenant of good faith and fair dealing; (d) all tort claims, including claims for fraud, defamation, emotional distress, and discharge in violation of public policy; and (e) all constitutional, federal, state, and local statutory claims, including claims for discrimination, harassment, retaliation, attorneys’ fees, or other claims arising under the federal Civil Rights Act of 1964 (as amended), the federal Americans with Disabilities Act of 1990, the federal Age Discrimination in Employment Act of 1967 (as amended) (“ADEA”), the federal Employee Retirement Income Security Act of 1974 (as amended), the federal Family and Medical Leave Act (as amended), the California Family Rights Act (as amended), the California Fair Employment and Housing Act (as amended), and the California Labor Code (as amended).

A-1.

Notwithstanding the release in the foregoing paragraph, I am not releasing the following (the “Excluded Claims”): (a) any rights or claims for defense and indemnification I may have pursuant to any written and fully signed indemnification agreement with the Company to which I am a party, the charter, bylaws, operating agreements and insurance policies of the Company, or under applicable law; (b) my rights with respect to any vested and timely exercised stock options or other vested equity awards or stock owned by me; (c) my rights to continued benefits coverage as a former employee as provided under applicable law; (d) any rights or claims which are not waivable as a matter of law; and (e) any claims for breach of the Agreement arising after the date that I sign this Release. In addition, nothing in this Release prevents me from filing, cooperating with, or participating in any proceeding before the federal Equal Employment Opportunity Commission, the federal Department of Labor, or any other government agency, except that I acknowledge and agree that I am hereby waiving my right to any monetary benefits in connection with any such claim, charge or proceeding. I hereby represent and warrant that, other than the Excluded Claims, I am not aware of any claims I have or might have against any of the Released Parties that are not included in the Released Claims.

The Released Claims includes any claims based on or arising under the ADEA. I acknowledge that I am knowingly and voluntarily waiving and releasing any rights I may have under the ADEA, that the consideration given for the waiver and release in this Release is in addition to anything of value to which I am already entitled, and that I have been advised, as required by the ADEA, that: (a) my waiver and release do not apply to any rights or claims that may arise after the date that I sign this Release; (b) I should consult with an attorney prior to signing this Release (although I may choose voluntarily not to do so); (c) I have twenty-one (21) days in which to sign this Release (although I may choose voluntarily to sign it earlier, although no earlier than my employment termination date); (d) I have seven (7) days following the date I sign this Release to revoke the Release by providing written notice of my revocation to the Chief Executive Officer of the Company; and (e) this Release will not be effective until the date upon which the revocation period has expired, which will be the eighth day after the date that this Release is signed by me, provided that I do not revoke the Release (the “Effective Date”).

I hereby represent that I have been paid all compensation owed and for all hours worked, I have received all the leave and leave benefits and protections for which I am eligible, pursuant to the federal Family and Medical Leave Act, the California Family Rights Act, any Company policy or applicable law, and I have not suffered any on-the-job injury or illness for which I have not already filed a workers’ compensation claim.

A-2.

EXECUTIVE:

Signature

Printed Name

Date:

A-3.

EXHIBIT B

RELEASE

(INDIVIDUAL AND GROUP TERMINATION – UNDER AGE 40)

Certain capitalized terms used in this Release are defined in the General Severance Benefits and Change in Control Severance Benefits Agreement (the “Agreement”) which I have executed and of which this Release is a part.

I hereby confirm my obligations under the Company’s [Employee Confidentiality and Inventions Assignment Agreement] (or other comparable or subsequent agreement that I have signed, if any).

I acknowledge that I have read and understand Section 1542 of the California Civil Code which reads as follows: “A general release does not extend to claims which the creditor does not know or suspect to exist in his or her favor at the time of executing the release, which if known by him or her must have materially affected his or her settlement with the debtor.” I hereby expressly waive and relinquish all rights and benefits under that section and any law of any jurisdiction of similar effect with respect to my release of any claims provided herein, including but not limited to any unknown or unsuspected claims.

Except as otherwise set forth in this Release, I hereby generally and completely release the Company, its parent and subsidiary entities, and its and their respective directors, officers, employees, shareholders, stockholders, partners, agents, attorneys, predecessors, successors, investors, insurers, affiliates, and assigns (collectively with the Company, the “Released Parties”), of and from any and all claims, liabilities and obligations, both known and unknown, that arise out of or are in any way related to events, acts, conduct, or omissions occurring prior to or on the date that I sign this Release (the “Released Claims”). The Released Claims include, but are not limited to: (a) all claims arising out of or in any way related to my employment or the termination of that employment; (b) all claims related to my compensation or benefits, including salary, bonuses, commissions, incentive compensation, vacation, sick leave, paid time off, expense reimbursements, severance benefits or severance pay (other than the severance benefits that I am entitled to receive under the Agreement), fringe benefits, car allowance, monthly allowances, premium pay, stock, stock options, equity awards, or any other ownership or profits interests in the Company or any affiliated entities; (c) all claims for breach of contract, wrongful termination, and breach of the implied covenant of good faith and fair dealing; (d) all tort claims, including claims for fraud, defamation, emotional distress, and discharge in violation of public policy; and (e) all constitutional, federal, state, and local statutory claims, including claims for discrimination, harassment, retaliation, attorneys’ fees, or other claims arising under the federal Civil Rights Act of 1964 (as amended), the federal Americans with Disabilities Act of 1990, the federal Employee Retirement Income Security Act of 1974 (as amended), the federal Family and Medical Leave Act (as amended), the California Family Rights Act (as amended), the California Fair Employment and Housing Act (as amended), and the California Labor Code (as amended).

B-1.

Notwithstanding the release in the foregoing paragraph, I am not releasing the following (the “Excluded Claims”): (a) any rights or claims for defense and indemnification I may have pursuant to any written and fully signed indemnification agreement with the Company to which I am a party, the charter, bylaws, operating agreements and insurance policies of the Company, or under applicable law; (b) my rights with respect to any vested and timely exercised stock options or other vested equity awards or stock owned by me; (c) my rights to continued benefits coverage as a former employee as provided under applicable law; (d) any rights or claims which are not waivable as a matter of law; and (e) any claims for breach of the Agreement arising after the date that I sign this Release. In addition, nothing in this Release prevents me from filing, cooperating with, or participating in any proceeding before the federal Equal Employment Opportunity Commission, the federal Department of Labor, or any other government agency, except that I acknowledge and agree that I am hereby waiving my right to any monetary benefits in connection with any such claim, charge or proceeding. I hereby represent and warrant that, other than the Excluded Claims, I am not aware of any claims I have or might have against any of the Released Parties that are not included in the Released Claims.

I acknowledge that the consideration given under the Agreement for the waiver and release in the preceding paragraphs hereof is in addition to anything of value to which I was already entitled. I further acknowledge that I have been advised by this writing that: (a) my waiver and release do not apply to any rights or claims that may arise after the date that I sign this Release; (b) I should consult with an attorney prior to signing this Release (although I may choose voluntarily not to do so); (c) I have fourteen (14) days in which to sign this Release (although I may choose voluntarily to sign it earlier, although no earlier than my employment termination date); and (c) this Release shall be effective as of the date that I return the fully signed and dated Release to the Company (the “Effective Date”).

I hereby represent that I have been paid all compensation owed and for all hours worked, I have received all the leave and leave benefits and protections for which I am eligible, pursuant to the federal Family and Medical Leave Act, the California Family Rights Act, any Company policy or applicable law, and I have not suffered any on-the-job injury or illness for which I have not already filed a workers’ compensation claim.

B-2.

EXECUTIVE:

Signature

Printed Name

Date:

B-3.

EXHIBIT C

RELEASE

(GROUP TERMINATION – AGE 40 OR OLDER)

Certain capitalized terms used in this Release are defined in the General Severance Benefits and Change in Control Severance Benefits Agreement (the “Agreement”) which I have executed and of which this Release is a part.

I hereby confirm my obligations under the Company’s [Employee Confidentiality and Inventions Assignment Agreement] (or other comparable or subsequent agreement that I have signed, if any).

I acknowledge that I have read and understand Section 1542 of the California Civil Code which reads as follows: “A general release does not extend to claims which the creditor does not know or suspect to exist in his or her favor at the time of executing the release, which if known by him or her must have materially affected his or her settlement with the debtor.” I hereby expressly waive and relinquish all rights and benefits under that section and any law of any jurisdiction of similar effect with respect to my release of any claims provided herein, including but not limited to any unknown or unsuspected claims.

Except as otherwise set forth in this Release, I hereby generally and completely release the Company, its parent and subsidiary entities, and its and their respective directors, officers, employees, shareholders, stockholders, partners, agents, attorneys, predecessors, successors, investors, insurers, affiliates, and assigns (collectively with the Company, the “Released Parties”), of and from any and all claims, liabilities and obligations, both known and unknown, that arise out of or are in any way related to events, acts, conduct, or omissions occurring prior to or on the date that I sign this Release (the “Released Claims”). The Released Claims include, but are not limited to: (a) all claims arising out of or in any way related to my employment or the termination of that employment; (b) all claims related to my compensation or benefits, including salary, bonuses, commissions, incentive compensation, vacation, sick leave, paid time off, expense reimbursements, severance benefits or severance pay (other than the severance benefits that I am entitled to receive under the Agreement), fringe benefits, car allowance, monthly allowances, premium pay, stock, stock options, equity awards, or any other ownership or profits interests in the Company or any affiliated entities; (c) all claims for breach of contract, wrongful termination, and breach of the implied covenant of good faith and fair dealing; (d) all tort claims, including claims for fraud, defamation, emotional distress, and discharge in violation of public policy; and (e) all constitutional, federal, state, and local statutory claims, including claims for discrimination, harassment, retaliation, attorneys’ fees, or other claims arising under the federal Civil Rights Act of 1964 (as amended), the federal Americans with Disabilities Act of 1990, the federal Age Discrimination in Employment Act of 1967 (as amended) (“ADEA”), the federal Employee Retirement Income Security Act

C-1.

of 1974 (as amended), the federal Family and Medical Leave Act (as amended), the California Family Rights Act (as amended), the California Fair Employment and Housing Act (as amended), and the California Labor Code (as amended).

Notwithstanding the release in the foregoing paragraph, I am not releasing the following (the “Excluded Claims”): (a) any rights or claims for defense and indemnification I may have pursuant to any written and fully signed indemnification agreement with the Company to which I am a party, the charter, bylaws, operating agreements and insurance policies of the Company, or under applicable law; (b) my rights with respect to any vested and timely exercised stock options or other vested equity awards or stock owned by me; (c) my rights to continued benefits coverage as a former employee as provided under applicable law; (d) any rights or claims which are not waivable as a matter of law; and (e) any claims for breach of the Agreement arising after the date that I sign this Release. In addition, nothing in this Release prevents me from filing, cooperating with, or participating in any proceeding before the federal Equal Employment Opportunity Commission, the federal Department of Labor, or any other government agency, except that I acknowledge and agree that I am hereby waiving my right to any monetary benefits in connection with any such claim, charge or proceeding. I hereby represent and warrant that, other than the Excluded Claims, I am not aware of any claims I have or might have against any of the Released Parties that are not included in the Released Claims.

The Released Claims includes any claims based on or arising under the ADEA. I acknowledge that I am knowingly and voluntarily waiving and releasing any rights I may have under the ADEA, that the consideration given for the waiver and release in this Release is in addition to anything of value to which I am already entitled, and that I have been advised, as required by the ADEA, that: (a) my waiver and release do not apply to any rights or claims that may arise after the date that I sign this Release; (b) I should consult with an attorney prior to signing this Release (although I may choose voluntarily not to do so); (c) I have forty-five (45) days in which to sign this Release (although I may choose voluntarily to sign it earlier, although no earlier than my employment termination date); (d) I have seven (7) days following the date I sign this Release to revoke the Release by providing written notice of my revocation to the Chief Executive Officer of the Company; and (e) this Release will not be effective until the date upon which the revocation period has expired, which will be the eighth day after the date that this Release is signed by me, provided that I do not revoke the Release (the “Effective Date”). In addition, I hereby confirm that I have received with this Release the required written disclosure for a “group termination” under the ADEA with certain required information concerning the group termination.

I hereby represent that I have been paid all compensation owed and for all hours worked, I have received all the leave and leave benefits and protections for which I am eligible, pursuant to the federal Family and Medical Leave Act, the California Family Rights Act, any Company policy or applicable law, and I have not suffered any on-the-job injury or illness for which I have not already filed a workers’ compensation claim.

C-2.

EXECUTIVE:

Signature

Printed Name

Date:

C-3.

EX-21.1

Exhibit 21.1

LIST OF SUBSIDIARIES

HYPERION THERAPEUTICS LIMITED

ANDROMEDA BIOTECH LTD

HYPERION THERAPEUTICS ISRAEL HOLDING CORP LTD

HYPERION THERAPEUTICS IRELAND HOLDING LIMITED

HYPERION THERAPEUTICS IRELAND OPERATING LIMITED

PENVILLE LIMITED

EX-23.1

Exhibit 23.1

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We hereby consent to the incorporation by reference in the Registration Statements on Form S-3 (No. 333-190624) and Form S-8 (No. 333-184486, No. 333-188088, No. 333-193712 and No. 333-201638) of Hyperion Therapeutics, Inc of our report dated March 4, 2015 relating to the consolidated financial statements, which appears in this Form 10-K.

/s/ PricewaterhouseCoopers LLP

San Jose, California

March 4, 2015

EX-31.1

Exhibit 31.1

CERTIFICATION OF THE CHIEF EXECUTIVE OFFICER

Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

I, Donald J. Santel, hereby certify that:

1. I have reviewed this annual report on Form 10-K of Hyperion Therapeutics, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting;

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Dated: March 4, 2015

/s/ Donald J. Santel

Donald J. Santel

Chief Executive Officer and President

(Principal Executive Officer)

EX-31.2

Exhibit 31.2

CERTIFICATION OF THE CHIEF FINANCIAL OFFICER

Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

I, Jeffrey S. Farrow, hereby certify that:

1. I have reviewed this annual report on Form 10-K of Hyperion Therapeutics, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting;

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Dated: March 4, 2015

/s/ Jeffrey S. Farrow

Jeffrey S. Farrow

Chief Financial Officer

(Principal Financial and Accounting Officer)

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Annual Report on Form 10-K of Hyperion Therapeutics, Inc. (“Hyperion”) for the year ended December 31, 2014, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Donald J. Santel, Chief Executive Officer and President of Hyperion, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of Hyperion.

Dated: March 4, 2015

/s/ Donald J. Santel

Donald J. Santel

Chief Executive Officer and President

(Principal Executive Officer)

EX-32.2

Exhibit 32.2

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Annual Report on Form 10-K of Hyperion Therapeutics, Inc. (“Hyperion”) for the year ended December 31, 2014, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Jeffrey S. Farrow, Chief Financial Officer of Hyperion, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of Hyperion.

Dated: March 4, 2015

/s/ Jeffrey S. Farrow

Jeffrey S. Farrow

Chief Financial Officer

(Principal Financial and Accounting Officer)

XML

Property and Equipment (Tables)

12 Months Ended

Dec. 31, 2014

Property, Plant and Equipment [Abstract]

Components of Property and Equipment

The following table represents the components of property and equipment (in thousands):

	December 31,
	2014			2013
Computers and Software	$	1,202		$	563
Furniture and Fixtures		320			320
Office Equipment		53			53
Leasehold Improvements		—			—
Capital work in progress		181			264
		1,756			1,200
Less: Accumulated depreciation		(640	)		(264	)
Total property and equipment, net	$	1,116		$	936

XML

Consideration for Acquisition Transferred (Detail) (USD $) In Thousands, unless otherwise specified	12 Months Ended	0 Months Ended
	Dec. 31, 2014	Sep. 30, 2014	Jun. 12, 2014
Business Acquisition, Contingent Consideration [Line Items]
Cash paid	$ 14,345
Measurement Period Adjustments
Business Acquisition, Contingent Consideration [Line Items]
Cash paid		14,345
Fair value of Company's common stock issued (312,869 shares)		7,778
Total fair value of consideration transferred		22,123
Andromeda
Business Acquisition, Contingent Consideration [Line Items]
Cash paid			14,345
Fair value of Company's common stock issued (312,869 shares)			7,778
Acquisition-related contingent consideration			68,961
Total fair value of consideration transferred			$ 91,084

XML

Selected Quarterly Financial Data (Tables)

12 Months Ended

Dec. 31, 2014

Quarterly Financial Information Disclosure [Abstract]

Selected Unaudited Quarterly Financial Information

The following table presents selected unaudited quarterly financial information for the years ended December 31, 2014, 2013 and 2012. The results for any quarter are not necessarily indicative of future quarterly results and, accordingly, period to period comparisons should not be relied upon as an indication of future performance.

	For The Quarters Ended
(in thousands, except share and per share amounts)	December 31,		September  30,(1)			June 30,		March 31,
Year Ended December 31, 2014
Product revenue, net	$	30,805	$	26,201		$	37,095	$	19,483
Costs and expenses	$	24,078	$	55,031		$	20,898	$	17,784
Net income (loss) attributable to common stockholders	$	7,096	$	(32,793	)	$	18,183	$	1,259
Net income (loss) per share attributable to common stockholders — basic	$	0.34	$	(1.59	)	$	0.89	$	0.06
Net income (loss) per share attributable to common stockholders — diluted	$	0.32	$	(1.59	)	$	0.84	$	0.06
	For The Quarters Ended
(in thousands, except share and per share amounts)	December 31,		September 30,			June 30,(2)		March 31,
Year Ended December 31, 2013
Product revenue, net	$	18,627	$	15,489		$	7,305	$	783
Costs and expenses	$	17,747	$	15,037		$	12,986	$	9,851
Net income (loss) attributable to common stockholders	$	468	$	112		$	25,022	$	(8,975	)
Net income (loss) per share attributable to common stockholders — basic	$	0.02	$	0.01		$	1.25	$	(0.52	)
Net income (loss) per share attributable to common stockholders — diluted	$	0.02	$	0.01		$	1.17	$	(0.52	)

(1) For the quarter ended September 30, 2014, the Company recorded $30.2 million as an impairment charge of goodwill on the Company’s consolidated statements of operations. Also refer to the information contained in Note 4 of the consolidated financial statements appearing elsewhere in the report.

(2) For the quarter ended June 30, 2013, the Company recorded a gain of $31.1 million related to the BUPHENYL acquisition on the consolidated statements of operations. Also refer to the information contained in Note 4 of the consolidated financial statements appearing elsewhere in the report.

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Property and Equipment - Additional Information (Detail) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Property, Plant and Equipment [Abstract]
Depreciation expense	$ 496	$ 198	$ 15

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Consideration for Acquisition Transferred (Parenthetical) (Detail)	0 Months Ended
	Jun. 12, 2014	Sep. 30, 2014
Andromeda
Business Acquisition, Contingent Consideration [Line Items]
Fair value of Company's common stock issued, shares	312,869
Measurement Period Adjustments
Business Acquisition, Contingent Consideration [Line Items]
Fair value of Company's common stock issued, shares		312,869

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Future Minimum Lease Payments (Detail) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2014
Commitments and Contingencies Disclosure [Abstract]
2015	$ 797
2016	820
2017	821
2018	845
2019	766
Total	$ 4,049

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Net Income (Loss) per Share of Common Stock (Tables)

12 Months Ended

Dec. 31, 2014

Earnings Per Share [Abstract]

Net Income (Loss) Per Share of Common Stock

The following table sets forth the computation of basic and diluted net income (loss) per share of common stock for the periods indicated (in thousands, except share and per share amounts):

	Year Ended December 31,
	2014			2013		2012
Net income (loss) per share
Numerator:
Net income (loss) attributable to common stockholders	$	(6,255	)	$	16,627	$	(32,263	)
Denominator:
Weighted-average number of common shares outstanding — basic		20,470,025			19,415,822		7,256,537
Dilutive effect of stock-options and awards		—			1,315,091		—
Weighted average common shares outstanding — dilutive		20,470,025			20,730,913		7,256,537
Net income (loss) per share:
Basic	$	(0.31	)	$	0.86	$	(4.45	)
Diluted	$	(0.31	)	$	0.80	$	(4.45	)

Antidilutive Securities Excluded from Computation of Earnings Per Share

The following outstanding potentially dilutive securities were excluded from the computation of diluted net income (loss) per share, as the effect of including them would have been antidilutive:

	Year Ended December 31,
	2014		2013		2012
Stock options		3,068,741		1,027,605		1,928,754
Common stock warrants		274		274		84,656
Total		3,069,015		1,027,879		2,013,410

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Summary of Significant Accounting Policies (Tables)

12 Months Ended

Dec. 31, 2014

Accounting Policies [Abstract]

Schedule of Property and Equipment Estimated Useful Lives

All property and equipment is depreciated on a straight-line basis over the following estimated useful lives:

Computer and office equipment	3 – 5 years
Software	3 years
Furniture and fixtures	3 years

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Preferred Stock - Additional Information (Detail) (USD $) In Millions, except Share data, unless otherwise specified	0 Months Ended
	Jul. 31, 2012	Dec. 31, 2014	Dec. 31, 2013	Jul. 31, 2012
Temporary Equity [Line Items]
Total value of preferred stock converted	$ 58.3
Preferred stock, authorized	10,000,000	10,000,000	10,000,000	10,000,000
Preferred stock, par value	$ 0.0001	$ 0.0001	$ 0.0001	$ 0.0001
Preferred stock, outstanding		0	0
Series C-1 Convertible Preferred Stock
Temporary Equity [Line Items]
Issuance of common stock for converted preferred stock	1,912,598			1,912,598
Series C-2 Convertible Preferred Stock
Temporary Equity [Line Items]
Issuance of common stock for converted preferred stock	4,663,039			4,663,039

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Notes Payable - Additional Information 1 (Detail) (USD $)	0 Months Ended	1 Months Ended	12 Months Ended	1 Months Ended
	Jul. 31, 2012	Oct. 31, 2011	Dec. 31, 2012	Feb. 29, 2012	Dec. 31, 2014	Nov. 30, 2011
October 2011 Convertible Notes Payable
Debt Instrument [Line Items]
Aggregate principal amount of notes issued		$ 7,500,000		$ 7,500,000		$ 3,551
Aggregate principal amount that may be issued, maximum		15,000,000
Stated interest rate on notes		6.00%
Portion of principal amount outstanding for holders having early maturity date		66.00%
Minimum amount of proceeds from preferred stock		40,000,000
Principal and accrued interest converted upon closing of IPO	15,600,000
Number of shares issued upon conversion of notes	1,556,816
Carrying value and accrued interest	14,900,000
Amortization of debt discount			900,000
Carrying value of notes			0
Beneficial conversion features					0
October 2011 Call Option Liability
Debt Instrument [Line Items]
Aggregate principal amount in event that none of subsequent closing notes issued					7,500,000
Aggregate principal amount in event that all or portion of subsequent closing notes issued					7,500,000
Amortization of debt discount		800,000
Other Income (Expense)				$ 700,000

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Reconciliation of Income Tax Expense (Detail)	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Income Tax Disclosure [Abstract]
Statutory rate	35.00%	35.00%	34.00%
State tax	0.60%	5.50%	5.40%
Tax credits	57.50%	(5.00%)	0.70%
Stock options	(28.00%)	0.20%	(0.70%)
Valuation allowance	(81.80%)	(29.60%)	(37.10%)
Impact of Andromeda acquisition	12.60%
Change in federal tax rate		(6.00%)
Other	(1.00%)	0.20%	(2.30%)
Effective Income Tax Rate, Continuing Operations, Total	(5.10%)	0.30%	0.00%

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Schedule of Purchase Price Allocation (Detail) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2014	May 31, 2013
Business Acquisition [Line Items]
Purchase price and fair values of assets acquired, total		$ 20,400
BUPHENYL
Business Acquisition [Line Items]
Inventories		3,900
Intangible Asset - BUPHENYL Product rights	16,500	16,500
Purchase price and fair values of assets acquired, total		$ 20,400

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Warrants - Additional Information (Detail) (October 2007 Common Stock Warrants, USD $)	12 Months Ended
	Dec. 31, 2014	Oct. 31, 2007
October 2007 Common Stock Warrants
Class of Warrant or Right [Line Items]
Number of warrants issued		274
Exercise price of warrants	$ 1,913.05
Expiration date of warrants	October 2017

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Allocation of Stock-Based Compensation Expense (Detail) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Stock-based compensation expenses related to employees	$ 7,638	$ 4,321	$ 993
Cost of sales
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Stock-based compensation expenses related to employees	70	27
Research and development
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Stock-based compensation expenses related to employees	1,384	585	374
Selling general and administrative
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Stock-based compensation expenses related to employees	$ 6,184	$ 3,709	$ 619

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Common Stock Reserved for Future Issuances (Detail)	Dec. 31, 2014
Common Stock [Line Items]
Common stock reserved for future issuance	3,894,150
Stock options | 2012 Plan
Common Stock [Line Items]
Common stock reserved for future issuance	688,842
Stock Option Exercises | 2006 and 2012 Plan
Common Stock [Line Items]
Common stock reserved for future issuance	3,068,741
Restricted and Performance Stock Units Vesting | 2012 Plan
Common Stock [Line Items]
Common stock reserved for future issuance	136,293
Conversion of Common Stock Warrants | October 2007 Common Stock Warrants
Common Stock [Line Items]
Common stock reserved for future issuance	274

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Income Taxes - Additional Information (Detail) (USD $)	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Tax Credit Carryforward [Line Items]
Income (loss) before income taxes	$ (5,952,000)	$ 16,676,000	$ (32,263,000)
Statutory federal income tax rate	35.00%	35.00%	34.00%
Increase (decrease) in deferred tax asset valuation allowance	26,100,000
Excess tax deductions from stock-based compensation expense	4,000,000
Minimum percentage of stock for change of ownership	50.00%
Term of acquisition/sales for change of ownership	3 years
Percentage of total equity value of acquiree or seller for change in ownership	5.00%
Annual limitation on ownership change	50,000,000
Interest or penalties accrued	0
Other non-current assets
Tax Credit Carryforward [Line Items]
Non-current deferred income tax asset	1,400,000	200,000
Prepaid expenses and other current assets
Tax Credit Carryforward [Line Items]
Current deferred income tax asset		100,000
United States
Tax Credit Carryforward [Line Items]
Income (loss) before income taxes	30,000,000	16,700,000	(32,300,000)
Net operating loss carryforwards	36,400,000
Operating loss expirations	Begin to expire in 2031
Tax credit carryforward	22,600,000
United States | Research and development tax credit carryforward
Tax Credit Carryforward [Line Items]
Tax credit carryforward	22,600,000
Outside United States
Tax Credit Carryforward [Line Items]
Income (loss) before income taxes	(36,000,000)
California
Tax Credit Carryforward [Line Items]
Net operating loss carryforwards	107,800,000
Operating loss expirations	Begin to expire in 2028
Tax credit carryforward	700,000
Israel Tax Authority
Tax Credit Carryforward [Line Items]
Net operating loss carryforwards	67,300,000
Operating loss expirations	Do not expire
Minimum | United States
Tax Credit Carryforward [Line Items]
Tax credit carryforward expiration	2027
Federal Orphan Drug Credit | United States | Research and development tax credit carryforward
Tax Credit Carryforward [Line Items]
Tax credit carryforward	$ 21,100,000

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Commitments and Contingencies - Additional Information (Detail) (USD $)	0 Months Ended	12 Months Ended			0 Months Ended
	Oct. 14, 2013	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012	Feb. 16, 2015	Sep. 22, 2014	Dec. 12, 2013 sqft
Loss Contingencies [Line Items]
Leased space	20,116						352
Initial lease term		6 years
Total base rent	$ 4,500,000
Lease commencement date		Nov. 19, 2013
Total monthly base rent		100,000
Lease expiration date		2016-12
Rent expense including maintenance fees		800,000	400,000	300,000
Allegation description		CBI filed suit against the Company in Superior Court of the state of Delaware for New Castle County alleging breach of contract and breach of the implied covenant of good faith and fair dealing under the SPA with CBI relating related to the acquisition of Andromeda.
Common Stock [Member]
Loss Contingencies [Line Items]
Number of trading days for valuation of shares		15 days
Andromeda
Loss Contingencies [Line Items]
Estimated budget for trial		10,500,000
Increase in estimated budget for trial		2,250,000
Option to acquire outstanding stock payable		3,500,000
Andromeda | Subsequent Events
Loss Contingencies [Line Items]
Milestone payment exchange					500,000
Andromeda | Common Stock [Member]
Loss Contingencies [Line Items]
Consideration paid in shares of common stock		2,500,000
Andromeda | Common Stock [Member] | Subsequent Events
Loss Contingencies [Line Items]
Number of trading days for valuation of shares					15 days
Andromeda
Loss Contingencies [Line Items]
Lawsuit filing date		September 22, 2014
File suit for damages relating to acquisition						200,000,000
Estimated budget for trial		10,500,000
Increase in estimated budget for trial		2,250,000
Option to acquire outstanding stock payable		3,500,000
Andromeda | Subsequent Events
Loss Contingencies [Line Items]
Milestone payment exchange					500,000
Andromeda | Maximum
Loss Contingencies [Line Items]
Contingent payments based on future revenue		$ 36,500,000

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Components of Accrued Liabilities (Detail) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2014	Dec. 31, 2013
Payables and Accruals [Abstract]
Clinical trial expenses	$ 2,399	$ 246
Payroll and related expenses	4,134	4,278
Gross to net sales accruals	10,142	5,235
Royalty payable	2,080	1,154
Taxes payable	563	326
Legal expenses payable	410	45
Acquisition related accrual (Note 22)	4,615
Other	1,166	903
Accrued liabilities	$ 25,509	$ 12,187

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Income Taxes

12 Months Ended

Dec. 31, 2014

Income Tax Disclosure [Abstract]

Income Taxes

17. Income Taxes

For the year ended December 31, 2014, the Company generated a pretax income of $30.0 million in the U.S. and a pretax loss of $36.0 million outside the U.S., for a net consolidated pretax loss of $6.0 million. For the years ended December 31, 2013 and 2012, the Company generated a pretax income of $16.7 million and a pretax loss of $32.3 million, respectively, in the U.S. In years prior to 2014, the Company has not generated any pretax income or loss outside the U.S.

The components of the income tax expense are as follows (in thousands):

	Years ended December 31,
	2014			2013			2012
Current income tax expense:
Federal	$	736		$	—		$	—
State		703			326			—
		1,439			326			—
Deferred income tax benefit:
State		(1,136	)		(277	)		—
		(1,136	)		(277	)		—
Total income tax expense	$	303		$	49		$	—

The reconciliation of income tax expense computed at the statutory federal income tax rate of 35% to amounts included in the consolidated statements of operations is as follows:

	Year Ended December 31,
	2014			2013			2012
Statutory rate		35.0	%		35.0	%		34.0	%
State tax		0.6	%		5.5	%		5.4	%
Tax credits		57.5	%		(5.0	)%		0.7	%
Stock options		(28.0	)%		0.2	%		(0.7	)%
Valuation allowance		(81.8	)%		(29.6	)%		(37.1	)%
Impact of Andromeda acquisition		12.6	%		—			—
Change in federal tax rate		—			(6.0	)%		—
Other		(1.0	)%		0.2	%		(2.3	)%
		(5.1	)%		0.3	%		0.0	%

Deferred income tax assets and liabilities reflect the net tax effects of net operating loss and tax credit carryovers and the temporary differences between the carrying amounts of assets and liabilities for financial reporting and the amounts used for income tax purposes. Significant components of the Company’s deferred income tax assets are as follows (in thousands):

	Year Ended December 31,
	2014			2013
Deferred income tax assets
Fixed assets, capitalized intangibles and other assets	$	6,030		$	5,294
Net operating loss		35,164			31,842
Tax credits		23,024			18,480
Stock-based compensation expense		1,660			1,133
Accrued expenses and reserves		3,405			1,502
Capitalized research and development expenses		3,237			—
Tax basis in investments		12,624			—
Other		381			25
Total		85,525			58,276
Valuation allowance		(84,113	)		(58,000	)
Net deferred income tax assets	$	1,412		$	276

At December 31, 2014, the non-current deferred income tax asset of $1.4 million is included in “Other non-current assets” in the consolidated balance sheets.

At December 31, 2013, current deferred income tax asset of $0.1 million is included in “Prepaid expenses and other current assets” and the non-current deferred income tax asset of $0.2 million is included in “Other non-current assets” in the consolidated balance sheets.

The amounts recorded as deferred income tax assets as of December 31, 2014 and 2013 represent the amount of tax benefits of existing deductible temporary differences and carryforwards that are more likely than not to be realized through the generation of sufficient future taxable income within the carryforward period. For the year ended December 31, 2014, the valuation allowance on deferred income tax asset increased by $26.1 million. The amount of net operating losses associated with excess tax deductions from stock-based compensation arrangements that is allocated to contributed capital if the future tax benefits are subsequently recognized is $4.0 million.

At December 31, 2014, the Company had net operating loss carryforwards of approximately $36.4 million and $107.8 million available to reduce future taxable income, if any, for both federal and California state income tax purposes, respectively. In addition, the Company had $67.3 million of Israeli net operating loss carryforwards which do not expire. The net operating loss carryforwards will begin to expire in 2031 and 2028 for federal and state income tax purposes, respectively. If the Company experiences an “ownership change” for purposes of Section 382 of the Internal Revenue Code of 1986, as amended, it may be subject to annual limits on its ability to utilize net operating loss carryforwards and credits. An ownership change is, as a general matter, triggered by sales or acquisitions of its stock in excess of 50% on a cumulative basis during a three-year period by persons owning 5% or more of our total equity value. The Company determined that an ownership change occurred in 2014 resulting in an annual limitation of approximately $50 million per year. The Company also had federal and state tax credit carryforwards of approximately $22.6 million and $0.7 million respectively, at December 31, 2014. The federal credits will expire starting in 2027, if not utilized. The California credits have no expiration date.

The Company was granted orphan drug designation in 2009 by the FDA for its products currently under development. The orphan drug designation allows the Company to claim increased federal tax credits for its research and development activities. Included in the $22.6 million of federal credit carryforwards is $21.1 million of Orphan Drug Credit claims for 2009 through 2014.

A reconciliation of the beginning and ending balances of the unrecognized income tax benefits during the years ended December 31, 2014, 2013 and 2012 is as follows (in thousands):

	Year Ended December 31,
	2014			2013		2012
Balance at the beginning of the year	$	6,269		$	5,723	$	5,357
Changes based on prior period tax positions		(2,325	)		—		(228	)
Changes based on current period tax positions		223			546		594
Balance at the end of the year	$	4,167		$	6,269	$	5,723

The entire amount of the unrecognized income tax benefits would not impact the Company’s effective tax rate if recognized.

There was no interest or penalties accrued through December 31, 2014. The Company’s policy is to recognize any related interest or penalties in income tax expense. The material jurisdictions in which the Company is subject to potential examination by tax authorities for tax years ended 2006 through the current period include the U.S. and California. The Company is not currently under income tax examinations by any tax authorities in federal, state or other jurisdictions.

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Summary of Significant Accounting Policies - Additional Information (Detail) (USD $)	0 Months Ended	12 Months Ended
	Jul. 12, 2012	Dec. 31, 2014	Dec. 31, 2013
Summary Of Significant Accounting Policies [Line Items]
Credit losses on investments		$ 0
Allowances for doubtful accounts		0
Reverse stock split	1-for-6.09
Reverse stock split ratio	6.09
Adjustments to accrued preclinical trail expenses		0
Percentage of Medicare Part D insurance coverage gap to eligible patients		50.00%
RAVICTI
Summary Of Significant Accounting Policies [Line Items]
Net revenues		8,600,000
Decrease in net loss		$ 7,900,000
Decrease in earnings per share, basic and diluted		$ 0.39
Customer Concentration Risk | Sales Revenue, Goods, Net | Specialty Distributor
Summary Of Significant Accounting Policies [Line Items]
Percentage of concentration risk by specialty distributor		91.00%	88.00%
United States | Credit Concentration Risk | Accounts Receivable
Summary Of Significant Accounting Policies [Line Items]
Percentage of concentration risk by specialty distributor		87.00%	64.00%
International | Credit Concentration Risk | Accounts Receivable
Summary Of Significant Accounting Policies [Line Items]
Percentage of concentration risk by specialty distributor		10.00%	17.00%

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Commitments and Contingencies (Tables)

12 Months Ended

Dec. 31, 2014

Commitments and Contingencies Disclosure [Abstract]

Future Minimum Lease Payments

Aggregate total future minimum lease payments under operating facility and equipment leases as of December 31, 2014 were as follows (in thousands):

Years Ending December 31,
2015	$	797
2016		820
2017		821
2018		845
2019		766
Total	$	4,049

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Future Minimum Payments Under Loan Agreement (Detail) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013
Debt Instrument [Line Items]
Less: current portion		$ (5,652)
Non-current portion	18,124	2,621
Loan Agreement
Debt Instrument [Line Items]
2015	730
2016	6,822
2017	8,786
2018	4,450
Total future minimum payments	20,788
Less: amount representing unamortized interest	(1,709)
Less: amount representing debt discount	(955)
Total minimum payments	18,124
Less: current portion	0
Non-current portion	$ 18,124

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Net Product Revenue for Ravicti and Buphenyl by Geographic Region (Detail) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013
Segment Reporting Information [Line Items]
Revenue	$ 113,584	$ 42,204
United States
Segment Reporting Information [Line Items]
Revenue	103,303	37,102
Canada
Segment Reporting Information [Line Items]
Revenue	3,723	2,208
Rest of the world
Segment Reporting Information [Line Items]
Revenue	$ 6,558	$ 2,894

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Inventories (Tables)

12 Months Ended

Dec. 31, 2014

Inventory Disclosure [Abstract]

Components of Inventories

The following table represents the components of inventories, net of reserves (in thousands):

	December 31, 2014		December 31, 2013
Raw Materials	$	1,787	$	697
Work-in-process		543		—
Finished goods		2,291		2,816
Total	$	4,621	$	3,513

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Collaboration Agreement with Ucyclyd Pharma, Inc. - Additional Information (Detail) (USD $)	0 Months Ended	1 Months Ended	6 Months Ended	12 Months Ended
	May 31, 2013	Mar. 31, 2012	Jun. 30, 2013	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012	May 31, 2013
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]
Option to purchase rights to BUPHENYL and AMMONUL						$ 283,000
Purchase option exercise period		90 days
Purchase price for AMMONUL and BUPHENYL		22,000,000
Monthly payments			500,000
Purchase price to retain product rights				32,000,000
Net payment to be received for purchase transaction				11,000,000
Cash paid to Ucyclyd for BUPHENYL product rights				19,000,000
Cash due to Ucyclyd for inventory				2,000,000
Gain from settlement of retention option	31,100,000				31,079,000
Fair value of BUPHENYL	20,400,000						20,400,000
Net payment received from Ucyclyd	11,000,000				10,962,000
Option to purchase rights to BUPHENYL and AMMONUL	300,000				283,000
Purchase agreement with Ucyclyd
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]
Payment under purchase agreement		6,000,000
Purchase agreement with Ucyclyd | RAVICTI
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]
Payment under purchase agreement		5,700,000
Purchase agreement with Ucyclyd | RAVICTI | Scenario One
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]
Maximum amount of regulatory milestones, product approval		15,800,000
Regulatory milestones, product approval, description				Regulatory milestones related to approval of GPB in HE
Purchase agreement with Ucyclyd | RAVICTI | Scenario Two
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]
Regulatory milestones, product approval, description				Regulatory milestones approval of GPB in indications other than UCD or HE
Maximum amount of regulatory milestones, approval in other indications		7,300,000
Purchase agreement with Ucyclyd | RAVICTI | Scenario Three
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]
Regulatory milestones, product approval, description				Net sales milestones if GPB is approved for use in indications other than UCD (such as HE) and all annual sales targets are reached
Maximum amount of regulatory milestones, approval in other indications		38,800,000
Purchase agreement with Ucyclyd | BUPHENYL and AMMONUL
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]
Option to purchase rights to BUPHENYL and AMMONUL		$ 300,000

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Intangible Assets and Goodwill - Additional Information (Detail) (USD $)	3 Months Ended	12 Months Ended		0 Months Ended
	Sep. 30, 2014	Dec. 31, 2014	Dec. 31, 2013	May 31, 2013	Jun. 12, 2014
Finite-Lived Intangible Assets [Line Items]
Amortization of intangible asset		$ 4,626,000	$ 3,058,000
Goodwill acquired		30,200,000
Impairment loss	30,200,000
BUPHENYL
Finite-Lived Intangible Assets [Line Items]
Intangible asset acquired		16,500,000		16,500,000
Estimated useful life of intangible assets		10 years
Remaining weighted average useful life		8 years		10 years
Andromeda
Finite-Lived Intangible Assets [Line Items]
Intangible asset acquired					135,712,000
Impairment loss		30,200,000
Fair value of goodwill		0
Andromeda | Implied
Finite-Lived Intangible Assets [Line Items]
Fair value of goodwill		$ 0

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Investments - Additional Information (Detail) (USD $)	12 Months Ended
	Dec. 31, 2014
Investments, Debt and Equity Securities [Abstract]
Other-than-temporary impairments	$ 0

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Segment Reporting (Tables)

12 Months Ended

Dec. 31, 2014

Segment Reporting [Abstract]

Net Product Revenue for Ravicti and Buphenyl

Net product revenue for RAVICTI and BUPHENYL for the years ended December 31, 2014 and 2013 are as follows (in thousands):

	Year Ended December 31,
	2014			2013
RAVICTI	$	95,400		$	31,236
BUPHENYL		18,584			11,468
Co-payment assistance		(400	)		(500	)
Total	$	113,584		$	42,204

Net Product Revenue for Ravicti and Buphenyl by Geographic Region

Net product revenue for RAVICTI and BUPHENYL by geographic region are as follows (in thousands):

	Year Ended December 31,
	2014		2013
United States	$	103,303	$	37,102
Canada		3,723		2,208
Rest of the world		6,558		2,894
Total	$	113,584	$	42,204

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Formation and Business of the Company

12 Months Ended

Dec. 31, 2014

Accounting Policies [Abstract]

Formation and Business of the Company

1. Formation and Business of the Company

Hyperion Therapeutics, Inc. (the “Company”) was incorporated in the state of Delaware on November 1, 2006. The Company was in the development stage from inception through March 31, 2013. During this period, the Company’s activities consisted primarily of raising capital, negotiating a promotion and drug development collaboration agreement, establishing a management team and performing drug development activities. The Company launched RAVICTI^® (glycerol phenylbutyrate) Oral Liquid during the quarter ended March 31, 2013.

On May 31, 2013, the Company acquired BUPHENYL, an FDA-approved therapy for treatment of three of the most prevalent UCD subtypes, from Ucyclyd Pharma Inc. (“Ucyclyd”), a subsidiary of Valeant Pharmaceuticals International, Inc. (“Valeant”). Subsequent to the acquisition on May 31, 2013, the Company started selling BUPHENYL Tablets and Powder within and outside the United States. The Company pays Ucyclyd royalties on net sales in the United States of BUPHENYL to UCD patients outside of the FDA-approved labeled age range for RAVICTI.

As discussed in Note 4, on June 12, 2014, the Company completed the acquisition of Andromeda Biotech Ltd. (“Andromeda”), an Israeli company. On September 8, 2014 the Company announced that it was terminating development of DiaPep277^® for newly diagnosed Type 1 diabetes as a result of evidence that the Company uncovered that certain employees of Andromeda engaged in serious misconduct that compromised clinical trial results. The Company subsequently terminated the Andromeda employees involved in the misconduct. On September 22, 2014, Clal Biotechnology Industries Ltd., (“CBI”), the former owner of Andromeda filed suit against the Company in Delaware related to the Company’s announcement. On October 6, 2014 the Company entered into an interim agreement with CBI, to attempt to resolve their disputes. As discussed in Note 22, on January 16, 2015, CBI dismissed its claim against the Company without prejudice and the Company, CBI and Yeda Research and Development Company Ltd (“Yeda”) announced that they had reached an agreement to settle their disputes on February 16, 2015.

The Company is a commercial biopharmaceutical company focused on the development and commercialization of novel therapeutics to treat disorders in the areas of orphan diseases. The Company’s products RAVICTI^® (glycerol phenylbutyrate) Oral liquid, BUPHENYL^® and AMMONAPS^® (sodium phenylbutyrate) Tablets and Powder, are designed to lower ammonia in the blood. Ammonia is produced in the intestine after a person eats protein and is normally detoxified in the liver by conversion to urea. Elevated levels of ammonia are potentially toxic and can lead to severe medical complications which may include death. The Company developed RAVICTI, which was launched during the first quarter of 2013, to treat most urea cycle disorders (“UCD”) and is developing glycerol phenylbutyrate (“GPB”), the active pharmaceutical ingredient in RAVICTI, to treat hepatic encephalopathy (“HE”). UCD and HE are diseases in which blood ammonia is elevated. UCD are inherited rare genetic diseases caused by a deficiency of one or more enzymes or transporters that constitute the urea cycle, which in a healthy individual removes ammonia through its conversion to urea. HE may develop in some patients with liver scarring, known as cirrhosis, or acute liver failure and is a chronic complication of cirrhosis which fluctuates in severity and may lead to serious neurological damage.

On February 1, 2013, the U.S. Food and Drug Administration (“FDA”), granted approval of RAVICTI for the use as a nitrogen-binding agent for chronic management of adult and pediatric UCD patients greater than two years of age who cannot be managed by dietary protein restriction and/or amino acid supplementation alone.

On July 31, 2012, the Company completed its initial public offering (“IPO”) and issued 5,000,000 shares of its common stock at an initial offering price of $10.00 per share. In addition, the Company sold an additional 750,000 shares of common stock directly to its underwriters when they exercised their over-allotment option in full at the initial offering price of $10.00 per share. The shares began trading on the NASDAQ Global Market on July 26, 2012. The Company received net proceeds from the IPO of $51.3 million, after deducting underwriting discounts and commissions of $4.0 million and expenses of $2.2 million. Upon the closing of the IPO, the Company’s Series C-1 and Series C-2 preferred stock converted into 1,912,598 and 4,663,039 shares of common stock, respectively. In addition, the principal and accrued interest under the Company’s April 2011 Notes and October 2011 Notes amounting to $18.9 million and $15.6 million, respectively, converted into 1,888,054 and 1,556,816 shares of common stock. As of July 31, 2012, the carrying value of the April 2011 Notes including the impact of the amendment to the April 2011 Notes and accrued interest was $18.4 million. As of July 31, 2012, the carrying value (net of discount) and accrued interest under the October 2011 Notes was $14.9 million. Additionally, the April 2011 common stock warrants and October 2011 preferred stock warrants were converted into 322,599 and 17,762 shares of common stock, respectively, immediately prior to the closing of the IPO.

On March 13, 2013, the Company completed its follow-on offering and issued 2,875,000 shares of its common stock at an offering price of $20.75 per share. In addition, the Company sold an additional 431,250 shares of common stock directly to its underwriters when they exercised their over-allotment option in full at the offering price of $20.75 per share. The Company received net proceeds from the offering of $63.7 million, after deducting underwriting discounts and commissions of $4.1 million and expenses of $0.8 million.

On August 14, 2013, the Company filed a shelf registration statement on Form S-3, which was declared effective by the Securities and Exchange Commission (“SEC”) on September 13, 2013. The shelf registration statement permits: (a) the offering, issuance and sale by the Company of up to a maximum aggregate offering price of $150.0 million of its common stock, preferred stock, debt securities, warrants and/or units; (b) the sale of up to 8,727,000 shares of common stock by certain selling stockholders; and (c) the offering, issuance and sale by the Company of up to a maximum aggregate offering price of $50.0 million of its common stock that may be issued and sold under a sales agreement with Cantor Fitzgerald & Co. As of December 31, 2014, there were no sales of any securities registered pursuant to the shelf registration statement.

Since inception, the Company has incurred recurring annual net operating losses from operations. During the year ended December 31, 2014, the Company incurred a loss from operations of $4.2 million. At December 31, 2014, the Company had an accumulated deficit of $128.6 million. The Company expects to incur increased research and development expenses when it initiates a Phase 3 trial of GPB for the treatment of patients with episodic HE and completes the ongoing DIA AID 2 clinical trial of DiaPep277program. In addition, the Company expects to incur increased sales and marketing expenses with the continued commercialization of RAVICTI and marketing of BUPHENYL in UCD as it expands outside of the U.S. Management’s plans with respect to these matters include utilizing a substantial portion of the Company’s capital resources and efforts in completing the development and obtaining regulatory approval for GPB in HE, expanding the Company’s organization, commercialization of RAVICTI and marketing of BUPHENYL.

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Schedule of Unrealized Losses and Related Fair Value of Investments with Unrealized Losses (Detail) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013
Schedule of Available-for-sale Securities [Line Items]
Less Than 12 Months to Maturity, Aggregate Fair Value	$ 34,487	$ 28,045
Less Than 12 Months to Maturity, Unrealized Losses	(24)	(30)
12 Months or More to Maturity, Aggregate Fair Value	9,226	15,780
12 Months or More to Maturity, Unrealized Losses	(26)	(25)
Aggregate Fair Value, Total	43,713	43,825
Unrealized Losses, Total	(50)	(55)
Corporate notes
Schedule of Available-for-sale Securities [Line Items]
Less Than 12 Months to Maturity, Aggregate Fair Value	12,610	6,039
Less Than 12 Months to Maturity, Unrealized Losses	(2)	(8)
12 Months or More to Maturity, Aggregate Fair Value	3,002	12,944
12 Months or More to Maturity, Unrealized Losses	(10)	(16)
Aggregate Fair Value, Total	15,612	18,983
Unrealized Losses, Total	(12)	(24)
Certificates of deposit
Schedule of Available-for-sale Securities [Line Items]
Less Than 12 Months to Maturity, Aggregate Fair Value	18,386	10,507
Less Than 12 Months to Maturity, Unrealized Losses	(19)	(18)
12 Months or More to Maturity, Aggregate Fair Value	6,224	2,836
12 Months or More to Maturity, Unrealized Losses	(16)	(9)
Aggregate Fair Value, Total	24,610	13,343
Unrealized Losses, Total	(35)	(27)
U.S. Government agency securities
Schedule of Available-for-sale Securities [Line Items]
Less Than 12 Months to Maturity, Aggregate Fair Value		8,008
Less Than 12 Months to Maturity, Unrealized Losses		(3)
Aggregate Fair Value, Total		8,008
Unrealized Losses, Total		(3)
Commercial paper
Schedule of Available-for-sale Securities [Line Items]
Less Than 12 Months to Maturity, Aggregate Fair Value	3,491	3,491
Less Than 12 Months to Maturity, Unrealized Losses	(3)	(1)
Aggregate Fair Value, Total	3,491	3,491
Unrealized Losses, Total	$ (3)	$ (1)

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Common Stock (Tables)

12 Months Ended

Dec. 31, 2014

Text Block [Abstract]

Common Stock Reserved for Future Issuances

At December 31, 2014, the Company had reserved common stock for future issuances as follows:

Issuance of options under 2012 stock plan	688,842
Issuance upon exercise of options under the 2006 and 2012 stock plan	3,068,741
Issuance upon vesting of restricted and performance stock units under the 2012 stock plan	136,293
Issuance upon exercise of October 2007 common stock warrants	274
Total	3,894,150

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Segment Reporting

12 Months Ended

Dec. 31, 2014

Segment Reporting [Abstract]

Segment Reporting

21. Segment Reporting

The Company operates as one operating segment and uses one measurement of profitability to manage its business.

Net product revenue for RAVICTI and BUPHENYL for the years ended December 31, 2014 and 2013 are as follows (in thousands):

	Year Ended December 31,
	2014			2013
RAVICTI	$	95,400		$	31,236
BUPHENYL		18,584			11,468
Co-payment assistance		(400	)		(500	)
Total	$	113,584		$	42,204

Net product revenue for RAVICTI and BUPHENYL by geographic region are as follows (in thousands):

	Year Ended December 31,
	2014		2013
United States	$	103,303	$	37,102
Canada		3,723		2,208
Rest of the world		6,558		2,894
Total	$	113,584	$	42,204

Long lived assets consist of property and equipment which at December 31, 2014 and 2013 are primarily in the U.S.

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Related Party Transaction

12 Months Ended

Dec. 31, 2014

Related Party Transactions [Abstract]

Related Party Transaction

20. Related Party Transaction

As part of the Company’s acquisition of BUPHENYL (see Note 4), the Company assumed the existing BUPHENYL distributors agreements, including the distribution agreement with Swedish Orphan Biovitrum AB (“SOBI”). Additionally, in the third quarter of 2013, SOBI was granted exclusive rights by the Company to distribute RAVICTI on a named patient basis for the chronic treatment of UCD in the Middle East. SOBI’s chairman, Bo Jesper Hansen, is a member of the Company’s Board of Directors. During the years ended December 31, 2014 and 2013, the Company recognized $5.1 million and $2.2 million, respectively, from sales to SOBI. As of December 31, 2014 and 2013, the accounts receivable from SOBI amounted to $1.5 million and $0.7 million, respectively.

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Selected Unaudited Quarterly Financial Information (Parenthetical) (Detail) (USD $)	0 Months Ended	3 Months Ended	12 Months Ended	3 Months Ended
	May 31, 2013	Sep. 30, 2014	Dec. 31, 2013	Jun. 30, 2013
Schedule Of Quarterly Financial Information [Line Items]
Impairment charge of goodwill		$ 30,200,000
Gain from settlement of retention option	31,100,000		31,079,000
BUPHENYL
Schedule Of Quarterly Financial Information [Line Items]
Gain from settlement of retention option	$ 31,079,000			$ 31,100,000

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Allocation of Purchase Price to the Fair Values of Assets Acquired and Liabilities Assumed (Detail) (USD $) In Thousands, unless otherwise specified	Jun. 12, 2014	Sep. 30, 2014
Andromeda
Assets acquired
IPR&D	$ 135,712
Cash and cash equivalents	306
Prepaid expenses	95
Property and equipment, net	22
Other assets	578
Liabilities assumed
Current liabilities	(9,079)
Deferred tax liability	(6,051)
Acquisition related contingent liability	(34,288)
Total identifiable net assets (liabilities)	87,295
Goodwill	3,789
Total consideration transferred	91,084
Measurement Period Adjustments
Assets acquired
Cash and cash equivalents		306
Prepaid expenses		95
Property and equipment, net		22
Other assets		578
Liabilities assumed
Current liabilities		(9,079)
Total identifiable net assets (liabilities)		(8,078)
Goodwill		30,201
Total consideration transferred		$ 22,123

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Stock Option Plan (Tables)

12 Months Ended

Dec. 31, 2014

Weighted-Average Assumptions for Fair Value of Stock Options

The fair value of the employee stock options was estimated using the following weighted-average assumptions:

	Year Ended December 31,
	2014			2013			2012
Expected volatility		62.76	%		58	%		65	%
Risk-free interest rate		1.90	%		1.14	%		1.05	%
Dividend yield		0.0	%		0.0	%		0.0	%
Expected term (in years)		6.00			5.96			6.00

Allocation of Stock-Based Compensation Expense

Total stock-based compensation expense related to options and awards granted was allocated as follows (in thousands):

	Year Ended December 31,
	2014		2013		2012
Cost of sales	$	70	$	27	$	—
Research and development		1,384		585		374
Selling general and administrative		6,184		3,709		619
Total	$	7,638	$	4,321	$	993

2006 Plan

Schedule of Option Activity

Activity under the 2006 Plan is as follows:

				Outstanding Options
	Number of Shares Available for Grant			Number of Shares Underlying Outstanding Options			Weighted-Average Exercise Price Per Share
Balances at December 31, 2013		—			1,538,197			3.64
Options exercised		—			(190,263	)		3.73
Options cancelled		14,413			(14,413	)		6.78
Options re-allocated to 2012 Plan		(14,413	)		—			—
Balances at December 31, 2014		—			1,333,521		$	3.60

Aggregate Options Outstanding and Vested and Exercisable by Exercise Price

Aggregate options outstanding and vested and exercisable by exercise price at December 31, 2014 for the 2006 plan are as follows (dollars in thousands except per share values):

Options Outstanding							Options Vested and Exercisable
Exercise Price	Number Outstanding		Aggregate Intrinsic Value		Weighted Average Remaining Life (in Years)		Number Outstanding		Aggregate Intrinsic Value		Exercise Price
$    1.28		735,773	$	16,717		4.5		735,773	$	16,717	$	1.28
$    4.08		252,403		5,028		6.3		228,490		4,552	$	4.08
$    7.31		344,405		5,748		7.3		217,060		3,623	$	7.31
$    327.95		940		—		2.5		940		—	$	327.95
		1,333,521	$	27,493		5.5		1,182,263	$	24,892

2012 Plan

Schedule of Option Activity

Activity under the 2012 Plan is as follows:

				Outstanding Options					Restricted Stock Units Outstanding					Performance Stock Units Outstanding
	Number of Shares Available for Grant			Number of Shares Underlying Outstanding Options			Weighted-Average Exercise Price Per Share		Number of Shares Underlying Outstanding RSU’s			Grant Date Fair Value		Number of Shares Underlying Outstanding RSU’s		Grant Date Fair Value
Balances at December 31, 2013		576,760			1,252,433			20.75		18,000			19.39		—		—
Additional shares authorized		805,485			—			—		—			—		—		—
Options and awards granted		(938,062	)		806,919			25.99		122,155			26.68		8,988		25.08
Options exercised		—			(101,736	)		18.42		—			—		—		—
Awards released		—			—			—		(5,000	)		20.13		—		—
Options re-allocated to 2012 Plan		14,413			—			—		—			—		—		—
Options and awards cancelled		230,246			(222,396	)		22.66		(7,850	)		26.74		—		—
Balance at December 31, 2014		688,842			1,735,220		$	23.08		127,305		$	25.90		8,988	$	25.08

Aggregate Options Outstanding and Vested and Exercisable by Exercise Price

Aggregate options outstanding and vested and exercisable by exercise price at December 31, 2014 for the 2012 plan are as follows (dollars in thousands except per share values):

	Options Outstanding						Options Vested and Exercisable
Exercise Price	Number Outstanding		Aggregate Intrinsic Value		Weighted Average Remaining Life (in Years)		Number Outstanding		Aggregate Intrinsic Value		Exercise Price
$10.32- 18.24		242,962	$	2,799		7.9		118,837	$	1,415	$	10.32 - 18.24
$19.39- 21.05		200,170		746		9.0		36,504		162		19.39 - 21.05
$21.45- 24.38		128,450		220		8.7		41,514		83		21.45 - 24.38
$24.46- 26.74		1,095,725		—		8.8		253,207		—		24.46 - 26.74
$26.97- 28.08		42,313		—		9.3		—		—		26.97 - 28.08
$29.27- 31.00		25,600		—		9.3		—		—		29.27 - 31.00
		1,735,220	$	3,765		8.7		450,062	$	1,660

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Subsequent Events

12 Months Ended

Dec. 31, 2014

Subsequent Events [Abstract]

Subsequent Events

22. Subsequent Events

On February 16, 2015, the Company announced that it has amicably settled its disputes, and entered into a Completion of Phase 3 Clinical Trial, Option and Mutual Release Agreement (the “Release Agreement”) by and among the Company, Hyperion Therapeutics Israel Holding Corp Ltd (“Hyperion Israel”), CBI, Yeda and Andromeda regarding DiaPep277, a product candidate developed by Andromeda.

The parties to the Release Agreement appointed a steering committee with representatives of CBI and Yeda and a non-voting member from the Company to oversee completion of the Clinical Trial, the analysis of its results, and interactions with regulatory authorities. In addition, under the Release Agreement, CBI has an option to acquire Andromeda, which option expires September 30, 2015. In consideration for the option, CBI will pay to Hyperion Israel an option payment of $2.5 million in shares of the Company’s common stock held by CBI. The shares are valued based on the average closing price of the Company’s common stock for the fifteen trading days ending on February 11, 2015. If CBI exercises its option to acquire Andromeda, the option purchase price will be $3.5 million payable in shares of the Company’s common stock currently held by CBI to Hyperion Israel. In addition, if CBI exercises its option to acquire Andromeda, Andromeda will be obligated to pay Hyperion Israel future contingent payments if and to the extent it receive revenues or its shareholders receive certain other proceeds it is acquired, liquidated or makes other distributions of assets. The aggregate amount of all future contingent payments by Andromeda to Hyperion Israel is capped at $36.5 million which, together with the option exercise price that Hyperion Israel may receive, approximates the total amount the Company will have invested in Andromeda by the option exercise date. Under the Release Agreement, the Company’s estimated budget from October 2014 through completion of the Clinical Trial shall remain unchanged at $10.5 million. Any increase to the budget beyond $2.25 million, if incurred as a result of the direction of the steering committee, shall require CBI to reimburse expenses to Hyperion Israel. In the event that CBI does not exercise the option, the DiaPep277 intellectual property will revert to Yeda under the license agreement between Andromeda and Yeda.

Andromeda has also entered into a release agreement with Evotec International GmbH (“Evotec”) pursuant to which Andromeda has settled its disputes with Evotec regarding Evotec’s assertions that the Company’s acquisition of Andromeda triggered a €3.38 million milestone payment to it and that it suffered harm from recent incidents in relation to DiaPep277. Under the terms of the release, Evotec is releasing its claims against Andromeda in exchange for a $500,000 payment from the Company, and the Company confirms that based on its investigation of the Employee Conduct, as defined in the Release Agreement, it believes that neither Evotec nor its legal predecessor (i) had any involvement in any aspect or decision-making regarding the development of DiaPep277 and likewise, (ii) DeveloGen AG was also not involved in any way in the further development of DiaPep277 after selling it to Andromeda in June 2007, and had no role in the data generation and analyses. For the year ended December 31, 2014, the Company had $4.6 million included in “Accrued liabilities” in the Consolidated Balance Sheets. The Company considers this as a (Type 2) Subsequent event and will recognize $4.1 million as “Other Income” in the Consolidated Statements of Operations in the Quarterly Report on Form 10-Q for the period ended March 31, 2015.

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Selected Quarterly Financial Data

12 Months Ended

Dec. 31, 2014

Quarterly Financial Information Disclosure [Abstract]

Selected Quarterly Financial Data

23. Selected Quarterly Financial Data (Unaudited)

The following table presents selected unaudited quarterly financial information for the years ended December 31, 2014, 2013 and 2012. The results for any quarter are not necessarily indicative of future quarterly results and, accordingly, period to period comparisons should not be relied upon as an indication of future performance.

	For The Quarters Ended
(in thousands, except share and per share amounts)	December 31,		September  30,(1)			June 30,		March 31,
Year Ended December 31, 2014
Product revenue, net	$	30,805	$	26,201		$	37,095	$	19,483
Costs and expenses	$	24,078	$	55,031		$	20,898	$	17,784
Net income (loss) attributable to common stockholders	$	7,096	$	(32,793	)	$	18,183	$	1,259
Net income (loss) per share attributable to common stockholders — basic	$	0.34	$	(1.59	)	$	0.89	$	0.06
Net income (loss) per share attributable to common stockholders — diluted	$	0.32	$	(1.59	)	$	0.84	$	0.06
	For The Quarters Ended
(in thousands, except share and per share amounts)	December 31,		September 30,			June 30,(2)		March 31,
Year Ended December 31, 2013
Product revenue, net	$	18,627	$	15,489		$	7,305	$	783
Costs and expenses	$	17,747	$	15,037		$	12,986	$	9,851
Net income (loss) attributable to common stockholders	$	468	$	112		$	25,022	$	(8,975	)
Net income (loss) per share attributable to common stockholders — basic	$	0.02	$	0.01		$	1.25	$	(0.52	)
Net income (loss) per share attributable to common stockholders — diluted	$	0.02	$	0.01		$	1.17	$	(0.52	)

(1) For the quarter ended September 30, 2014, the Company recorded $30.2 million as an impairment charge of goodwill on the Company’s consolidated statements of operations. Also refer to the information contained in Note 4 of the consolidated financial statements appearing elsewhere in the report.

(2) For the quarter ended June 30, 2013, the Company recorded a gain of $31.1 million related to the BUPHENYL acquisition on the consolidated statements of operations. Also refer to the information contained in Note 4 of the consolidated financial statements appearing elsewhere in the report.

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Condensed Consolidated Statements of Cash Flows (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Cash flows from operating activities
Net income (loss)	$ (6,255)	$ 16,627	$ (32,263)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities
Depreciation	496	198	15
Amortization of debt discount and debt issuance costs	627	556	1,381
Re-measurement of warrants liability			780
Re-measurement of call option liability and preferred stock liability			(737)
Stock-based compensation expense	7,568	4,294	993
Amortization of intangible asset	4,626	3,058
Impairment of goodwill (Notes 4 and 8)	30,201
Gain from settlement of retention option (Note 4)		(31,079)
Unrealized loss on foreign currency translation adjustments	7	14
Provision of inventory obsolescence	346
Amortization of discount on available-for-sale investments	397	51
Excess tax benefit from stock-based compensation	(108)
Changes in assets and liabilities, net of impact of acquisition of Andromeda Biotech Ltd. ("Andromeda")
Accounts receivable	(10,452)	(4,433)
Inventories	(1,376)	468
Prepaid expenses and other assets	(1,705)	(809)	(249)
Accounts payable	(1,857)	115	290
Accrued liabilities and other	7,978	9,647	1,259
Deferred revenue	224
Deferred rent	281	81
Net cash provided by (used in) operating activities	30,998	(1,212)	(28,531)
Cash flows from investing activities
Acquisition of property and equipment	(654)	(1,085)	(45)
Purchase of available-for-sale investments	(29,023)	(43,931)
Maturity of available-for-sale investments	28,743
Acquisition of Andromeda, net of cash acquired	(14,039)
Option to purchase BUPHENYL and AMMONUL (Note 4)			(283)
Acquisition of rights to BUPHENYL, net of AMMONUL option (Note 4)		10,962
Change in restricted cash			330
Net cash provided by (used in) investing activities	(14,973)	(34,054)	2
Cash flows from financing activities
Proceeds from issuance of common stock in initial public offering, net of underwriting discounts			53,475
Proceeds from issuance of common stock in follow-on offering, net of underwriting discounts		64,488
Proceeds from issuance of common stock from stock option exercises	2,584	637	147
Proceeds from term loans	16,000
Proceeds from revolving credit line	2,000
Excess tax benefit from stock-based compensation	108
Proceeds from issuance of convertible notes payable			7,504
Proceeds from issuance of notes payable, net of issuance costs			12,401
Payments of offering costs		(1,132)	(2,163)
Principal payments under notes payable	(8,153)	(4,348)
Net cash provided by financing activities	12,539	59,645	71,364
Net increase in cash and cash equivalents	28,564	24,379	42,835
Cash and cash equivalents, beginning of period	74,232	49,853	7,018
Cash and cash equivalents, end of period	102,796	74,232	49,853
Supplemental cash flow information
Cash paid for interest	1,526	966	593
Cash paid for income tax	1,099
Stock-based compensation capitalized into inventories	79	82
Supplemental disclosure of noncash investing and financing activities
Warrants issued in connection with notes payable			1,302
Option to purchase rights to BUPHENYL and AMMONUL (Note 4)		283
Unrealized gain (loss) on available-for-sale investments	5	(55)
Issuance of common stock upon automatic net exercise of warrants			3,901
Conversion of convertible notes payable and accrued interest to common stock			33,322
Conversion of Series C-1 and C-2 preferred stock to common stock			58,326
Acquisition of Andromeda (Note 4)
Cash paid for acquisition	14,345
Cash acquired in acquisition	(306)
Net cash paid for acquisition	14,039
Fair value of common stock issued in connection with the acquisition	$ 7,778

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Summary of Significant Accounting Policies (Policies)

12 Months Ended

Dec. 31, 2014

Accounting Policies [Abstract]

Basis of Presentation and the Use of Estimates

Basis of Presentation and the Use of Estimates

The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). The preparation of the accompanying consolidated financial statements in accordance with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the consolidated financial statements, and the reported amounts of revenues and expenses during the reporting period. On an ongoing basis, the Company evaluates its estimates, including those related to the fair value of assets and liabilities, intangible asset valuation, acquisition-related contingent consideration, acquisition related contingent liability, impairment of goodwill and intangible assets, stock-based compensation expense, income taxes, revenue recognition and product sales allowances. Management bases its estimates on historical experience or on various other assumptions, including information received from its service providers, which it believes to be reasonable under the circumstances. Actual results could differ from those estimates.

Basis of Consolidation

Basis of Consolidation

The consolidated financial statements include the Company’s accounts and those of its wholly-owned subsidiaries: Hyperion Therapeutics Ltd., Hyperion Therapeutics Ireland Holding Ltd., Hyperion Therapeutics Ireland Operating Ltd., Hyperion Therapeutics Israel Holding Corp. Ltd., Penville Limited and Andromeda Biotech Ltd. All intercompany accounts and transactions have been eliminated.

Concentration of Credit Risk and Significant Customers

Concentration of Credit Risk and Significant Customers

The Company’s cash and cash equivalents and investments are maintained with financial institutions located in and outside the United States. Deposits in these institutions may exceed the amount of insurance provided on such deposits. The Company has not recognized any losses from credit risks during the periods presented and management does not believe that the Company is exposed to significant credit risk from its cash and cash equivalents or investments.

The Company is also subject to credit risk from its accounts receivables related to its product sales. The Company monitors its exposure within accounts receivable and records a reserve against uncollectible accounts receivable as necessary. The Company extends credit to a specialty distributor in the United States and to international distributors, pharmacies and hospitals outside the United States. Customer creditworthiness is monitored and collateral is not required. As of December 31, 2014, there were no credit losses on the Company’s accounts receivable. As of December 31, 2014 and 2013, the specialty distributor in the United States accounted for 87% and 64% of accounts receivable balance, respectively. One international distributor accounted for 10% and 17% of the accounts receivable balance for the year ended December 31, 2014 and 2013, respectively.

The specialty distributor accounted for 91% and 88% of the net product revenue for the year ended December 31, 2014 and 2013, respectively.

Fair Value of Financial Instruments

Fair Value of Financial Instruments

The Company measures certain financial assets and liabilities at fair value based on the exchange price that would be received for an asset or paid for to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants. The carrying amounts of the Company’s financial instruments, including cash equivalents, short-term investments, accounts payable, and accrued liabilities, approximate fair value due to their short maturities. The carrying amounts of long-term investments, acquisition-related contingent consideration and acquisition related contingent liability represent their estimated fair values. The fair value of the notes payable are based on the present value of expected future cash flows and assumptions about current interest rates and the creditworthiness of the Company.

Business Combinations

Business Combinations

The Company allocates the purchase price of an acquired business to the tangible and intangible assets acquired and liabilities assumed based upon their

Cash and Cash Equivalents

Cash and Cash Equivalents

The Company considers all highly liquid investments with original maturities of three months or less at the date of purchase to be cash equivalents. Cash and cash equivalents include money market funds and various deposit accounts.

Investments

Investments

The Company determines the appropriate classification of its investments in debt and equity securities at the time of purchase. All of the Company’s securities are classified as available-for-sale and reported in short-term investments or long-term investments based on maturity dates and whether such assets are reasonably expected to be realized in cash or sold or consumed during the normal cycle of business. Available-for-sale investments are recorded at fair value, with unrealized gains or losses included in Accumulated Other Comprehensive Loss on the Company’s Consolidated Balance Sheets, exclusive of other-than-temporary impairment losses, if any. Short-term and long-term investments are comprised of corporate notes, commercial paper, U.S. federal government agency securities and certificates of deposit.

Accounts Receivable

Accounts Receivable

Trade accounts receivable are recorded net of product sales allowances for prompt-payment discounts, chargebacks, and doubtful accounts. Estimates for chargebacks and prompt-payment discounts are based on contractual terms, historical trends and expectations regarding the utilization rates for these programs. At December 31, 2014, the Company had no allowances for doubtful accounts.

Inventories

Inventories

Inventories are valued at the lower of cost or market, with cost computed at standard cost (which approximates actual cost) on a first-in-first-out (FIFO) cost method and consists of raw materials, work-in-progress and finished goods. Costs capitalized as inventories include third party manufacturing costs, associated compensation related costs of personnel indirectly involved in the manufacturing process and other overhead costs such as ancillary supplies. Subsequent to FDA approval of RAVICTI on February 1, 2013, the Company began capitalizing RAVICTI inventories as the related costs were expected to be recoverable through the commercialization of the product. Costs incurred prior to the FDA approval of RAVICTI have been recorded as research and development expense in the consolidated statements of operations. If information becomes available that suggest that inventories may not be realizable, the Company may be required to expense a portion or all of the previously capitalized inventories.

Products that have been approved by the FDA or other regulatory authorities, such as RAVICTI, are also used in clinical programs, to assess the safety and efficacy of the products for usage in diseases that have not been approved by the FDA or other regulatory authorities. The form of RAVICTI utilized for both commercial and clinical programs is identical and, as a result, the inventory has an “alternative future use” as defined in authoritative guidance. Raw materials and purchased drug product associated with clinical development programs are included in inventory and charged to research and development expense when the product enters the research and development process and no longer can be used for commercial purposes and, therefore, does not have an “alternative future use”.

Intangible Assets

Intangible Assets

Intangible assets are recorded at acquisition cost less accumulated amortization and impairment. Intangible asset with finite lives are amortized over their estimated useful life using the economic use method, which reflects the pattern that the economic benefits of the intangible asset are consumed as revenue is generated. The pattern of consumption of the economic benefits is estimated using the future projected cash flows of the intangible asset.

IPR&D

IPR&D

The fair value of IPR&D acquired through a business combination is capitalized as an indefinite-lived intangible asset until the completion or abandonment of the related research and development activities. When the related research and development is completed, the asset is assigned a useful life and amortized.

The fair value of an IPR&D intangible asset is determined using an income approach. This approach starts with a forecast of the net cash flows expected to be generated by the asset over its estimated useful life. The net cash flows reflect the asset’s stage of completion, the probability of technical success, the projected costs to complete, expected market competition, and an assessment of the asset’s life-cycle. The net cash flows are then adjusted to present value by applying an appropriate discount rate that reflects the risk factors associated with the cash flow streams.

Goodwill

Goodwill

Goodwill represents the excess of the purchase price of acquired businesses over the estimated fair value of the identifiable net assets acquired. Goodwill is not amortized but is tested for impairment at least annually at the reporting unit level or more frequently if events or changes in circumstances indicate that the asset might be impaired.

Goodwill is tested for impairment annually or more frequently if events or changes in circumstances between annual tests indicate that the asset may be impaired. Impairment loss is recognized based on a comparison of the fair value of the asset to its carrying value, without consideration of any recoverability.

Impairment of Long-lived Assets

Impairment of Long-lived Assets

The Company reviews its property and equipment, intangible assets subject to amortization and other long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset class may not be recoverable. Indicators of potential impairment include: an adverse change in legal factors or in the business climate that could affect the value of the asset; an adverse change in the extent or manner in which the asset is used or is expected to be used, or in its physical condition; and current or forecasted operating or cash flow losses that demonstrate continuing losses associated with the use of the asset. If indicators of impairment are present, the asset is tested for recoverability by comparing the carrying value of the asset to the related estimated undiscounted future cash flows expected to be derived from the asset. If the expected cash flows are less than the carrying value of the asset, then the asset is considered to be impaired and its carrying value is written down to fair value, based on the related estimated discounted future cash flows.

Indefinite-lived intangible assets, including acquired IPR&D, are tested for impairment annually or more frequently if events or changes in circumstances between annual tests indicate that the asset may be impaired. Impairment losses on indefinite-lived intangible assets are recognized based on a comparison of the fair value of the asset to its carrying value, without consideration of any recoverability.

Acquisition-Related Contingent Consideration

Acquisition-Related Contingent Consideration

Acquisition-related contingent consideration, which consists primarily of potential milestone payments and royalty obligations, is recorded in the consolidated balance sheets at its acquisition date estimated fair value, in accordance with the acquisition method of accounting. The fair value of the acquisition-related contingent consideration is remeasured each reporting period, with changes in fair value recorded in the consolidated statements of operations. Changes in the fair value of the acquisition-related contingent consideration obligations result from several factors including changes in discount periods and rates, changes in the timing and amount of revenue estimates and changes in probability assumptions with respect to the likelihood of achieving specified milestone criteria. The fair value measurement is based on significant inputs not observable in the market and thus represents a Level 3 measurement as defined in the fair value hierarchy.

Acquisition-Related Contingent Liability

Acquisition-Related Contingent Liability

Acquisition-related contingent liability, which consists primarily of potential milestone payments and royalty obligations, and potential payments to certain employees of Andromeda is recorded in the consolidated balance sheets at its acquisition date estimated fair value. The Company reassesses the probability and estimates associated with the contingent liability at each reporting period. For liability payable to third parties, any increase in the liability is recorded in the consolidated statements of operations. For liabilities payable to employees, the Company accounts for the liability in accordance with Financial Accounting Stands Board (“FASB”) Accounting Stand Codification (“ASC”) 450 Contingencies.

Property and Equipment

Property and Equipment

Property and equipment are stated at cost, net of accumulated depreciation and amortization. All property and equipment is depreciated on a straight-line basis over the following estimated useful lives:

Computer and office equipment	3 – 5 years
Software	3 years
Furniture and fixtures	3 years

Leasehold improvements are amortized over the lesser of their useful life or the term of the applicable lease. Upon sale or retirement of assets, the cost and related accumulated depreciation and amortization are removed from the consolidated balance sheet and the resulting gain or loss is reflected in operations. Maintenance and repairs are charged to operations as incurred.

2012 Reverse Stock Split

2012 Reverse Stock Split

The Company effected a 1-for-6.09 reverse stock split of its common stock and preferred stock on July 12, 2012. Accordingly, all share and per share amounts for all periods presented in these consolidated financial statements and notes thereto, have been adjusted retroactively to reflect this reverse stock split.

Preclinical and Clinical Trial Accruals

Preclinical and Clinical Trial Accruals

The Company’s clinical trial accruals are based on estimates of patient enrollment and related costs at clinical investigator sites as well as estimates for the services received and efforts expended pursuant to contracts with multiple research institutions and clinical research organizations that conduct and manage preclinical and clinical trials on the Company’s behalf. The Company accrues expenses related to clinical trials based on contracted amounts applied to the level of patient enrollment and activity according to the protocol. If timelines or contracts are modified based upon changes in the clinical trial protocol or scope of work to be performed, the Company modifies the estimates of accrued expenses accordingly. To date, the Company has had no significant adjustments to accrued preclinical and clinical trial expenses.

Revenue Recognition

Revenue Recognition

The Company recognizes revenue in accordance with ASC 605, Revenue Recognition, when the following criteria have been met: persuasive evidence of an arrangement exists; delivery has occurred and risk of loss has passed; the seller’s price to the buyer is fixed or determinable and collectability is reasonably assured. The Company determines that persuasive evidence of an arrangement exists based on written contracts that defined the terms of the arrangements. In addition, the Company determines that services have been delivered in accordance with the arrangement. The Company assesses whether the fee is fixed or determinable based on the payment terms associated with the transaction and whether the sales price is subject to refund or adjustment. The Company assesses collectability based primarily on the customer’s payment history and on the creditworthiness of the customer.

Product Revenue, net: The Company’s product revenue represents sales of RAVICTI and BUPHENYL which are recognized once all four revenue recognition criteria described above are met. The Company recognizes revenue net of product sales allowances. Product shipping and handling costs are included in cost of sales. Prior to June 2014, revenue from the sale of RAVICTI was recognized based on the amount of product sold through to the end user consumer. Starting June 2014, the Company could reasonably estimate and determine sales allowances, therefore the Company began recognizing RAVICTI revenue at the point of sale to the specialty distributor, which resulted in the one-time non-recurring recognition of an additional $8.6 million in net revenues during the year ended December 31, 2014. The impact of this change resulted in a decrease in net loss of $7.9 million for year ended December 31, 2014, or $0.39 per basic and diluted share.

Product Sales Allowances: The Company establishes reserves for prompt-payment discounts, government and commercial rebates, product returns and chargebacks. Allowances relate to prompt-payment discounts and are recorded at the time of revenue recognition, resulting in a reduction in product sales revenue and a decrease in trade accounts receivables. Accruals related to government rebates, product returns and other applicable allowances such as distributor fees are recognized at the time of revenue recognition, resulting in a reduction in product sales and an increase in accrued expenses or a reduction in the related accounts receivable.

• Prompt-payment discounts: The specialty distributor and specialty pharmacies are offered prompt payment discounts. The Company expects the specialty distributor and specialty pharmacies will earn prompt payment discounts and, therefore deduct the full amount of these discounts from total product sales when revenues are recognized. The Company records prompt-payment discounts as allowances against accounts receivable on the consolidated balance sheets.

• Rebates: Allowances for rebates include mandated discounts under the Medicaid Drug Rebate Program. Rebate amounts are based upon contractual agreements or legal requirements with public sector (e.g. Medicaid) benefit providers. Rebates are amounts owed after the final dispensing of the product to a benefit plan participant and are based upon contractual agreements or legal requirements with public sector benefit providers. The allowance for rebates is based on statutory discount rates and expected utilization. The Company estimates for expected utilization of rebates based on historical data and data received from the specialty pharmacies. Rebates are generally invoiced and paid in arrears so that the accrual balance consists of an estimate of the amount expected to be incurred for the current quarter’s activity, plus an accrual balance for known prior quarter’s unpaid rebates. If actual future rebates vary from estimates, the Company may need to adjust prior period accruals, which would affect revenue in the period of adjustment. Allowance for rebates are recorded in accrued liabilities on the consolidated balance sheets.

• Chargebacks: Chargebacks are discounts that occur when contracted customers purchase directly from a specialty distributor. Contracted customers, which primarily consist of Public Health Service institutions, non-profit clinics, and Federal government entities purchasing via the Federal Supply Schedule, generally purchase the product at a discounted price. The specialty distributor, in turn, charges back to the Company the difference between the price initially paid by the specialty distributor and the discounted price paid to the specialty distributor by the customer. The allowance for chargebacks is based on historical sales data and known sales to contracted customers.

• Medicare Part D Coverage Gap: Medicare Part D prescription drug benefit mandates manufacturers to fund 50% of the Medicare Part D insurance coverage gap for prescription drugs sold to eligible patients. The Company estimates for the expected Medicare Part D coverage gap are based on historical invoices received and in part from data received from the specialty pharmacies. Funding of the coverage gap is generally invoiced and paid in arrears so that the accrual balance consists of an estimate of the amount expected to be incurred for the current quarter’s activity, plus an accrual balance for known prior quarters. If actual future funding varies from estimates, the Company may need to adjust prior period accruals, which would affect revenue in the period of adjustment. Estimates of the Medicare Part D coverage gap are recorded in accrued liabilities on the consolidated balance sheets.

• Distribution Service Fees: The Company has a written contract with the specialty distributor that includes terms for distribution-related fees. Distributor fees are calculated at percentage of gross sales based upon agreed contracted rate. The Company accrues distributor fees at the time of the revenue recognition, resulting in reduction of product sales revenue and the recording of accrued liabilities on the consolidated balance sheets. The Company records distribution and other fees paid to its customers as a reduction of revenue, unless it receives an identifiable and separate benefit for the consideration and it can reasonably estimate the fair value of the benefit received. If both conditions are met, the Company records the consideration paid to the customer as an operating expense. These costs are typically known at the time of sale.

• Product Returns: Consistent with industry practice, the Company generally offers customers a limited right to return. The Company accepts returns of products from patients resulting from breakage as defined within the Company’s returns policy. Additionally, the Company considers several other factors in the estimation process including the expiration dates of product shipped, third party data in monitoring channel inventory levels, shelf life of the product, prescription trends and other relevant factors. Provisions for estimated product returns are recorded as accrued liabilities on the consolidated balance sheets.

• Co-payment assistance: The Company provides a cash donation to a non-profit third party organization which supports patients, who have commercial insurance and meet certain financial eligibility requirements, with co-payment assistance and travel costs. The amount of co-payment assistance is accounted for by the Company as a reduction of revenues.

Cost of sales

Cost of sales

Cost of sales includes third-party manufacturing cost of products sold, royalty fees, and other indirect costs related to personnel compensation, shipping and supplies. Costs incurred prior to FDA approval of RAVICTI have been recorded as research and development expense in the Company’s consolidated statement of operations. The Company expects that cost of RAVICTI sales as a percentage of revenue will increase in future periods as product manufactured prior to FDA approval, and therefore fully expensed, has been utilized. Cost of BUPHENYL sales for 2013 as a percentage of revenue was higher and not indicative of cost of sales in future periods due to the recording of the step-up value on BUPHENYL inventories acquired from Ucyclyd which is expensed to cost of sales as that inventory is sold. As of December 31, 2014, the entire fair value of acquired BUPHENYL inventory has been charged to expense, primarily cost of sales.

Foreign Currency Translations

Foreign Currency Translations

Operations in non-U.S. entities are recorded in the functional currency of each entity. For financial reporting purposes, the functional currency of an entity is determined by a review of the source of an entity’s most predominant cash flows. The reporting and functional currency of the Company and its subsidiaries is the U.S. dollar.

Gains and losses resulting from foreign currency transactions are translated at the weighted average rate of exchange prevailing during the period. Any monetary asset or liability denominated in foreign currency and is translated at the rate of exchange in effect on the balance sheet date. Any gains and losses resulting from foreign currency translations are included in other income (expense)-net in the consolidated statements of operations. The Company does not currently utilize and has not in the past utilized any foreign currency hedging strategies to mitigate the effect of its foreign currency exposure.

Research and Development Expenses

Research and Development Expenses

Costs related to research and development of products are charged to expense as incurred. Research and development costs include, but are not limited to, payroll and personnel expenses, clinical trial supplies, fees for clinical trial services, consulting costs and allocated overhead, including rent, equipment, depreciation and utilities.

Stock-Based Compensation

Stock-Based Compensation

The Company accounts for stock-based employee compensation arrangements in accordance with provisions of ASC 718, Compensation — Stock Compensation. ASC 718 requires the recognition of compensation expense, using a fair-value based method, for costs related to all share-based payments including stock options. ASC 718 requires companies to estimate the fair value of share-based payment awards on the date of grant using an option-pricing model. The Company calculates the fair value of stock options using the Black-Scholes method and expenses using the straight-line attribution approach.

Income Taxes

Income Taxes

The Company accounts for income taxes under the liability method. Under this method, deferred tax assets and liabilities are determined based on the difference between the financial statement and tax bases of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to affect taxable income. Valuation allowances are established when necessary to reduce deferred tax assets to the amounts expected to be realized.

The Company accounts for uncertain tax positions in accordance with ASC 740-10, Accounting for Uncertainty in Income Taxes. The Company assesses all material positions taken in any income tax return, including all significant uncertain positions, in all tax years that are still subject to assessment or challenge by relevant taxing authorities. Assessing an uncertain tax position begins with the initial determination of the position’s sustainability and is measured at the largest amount of benefit that is greater than fifty percent likely of being realized upon ultimate settlement. As of each balance sheet date, unresolved uncertain tax positions must be reassessed, and the Company will determine whether (i) the factors underlying the sustainability assertion have changed and (ii) the amount of the recognized tax benefit is still appropriate. The recognition and measurement of tax benefits requires significant judgment. Judgments concerning the recognition and measurement of a tax benefit might change as new information becomes available.

Comprehensive Income (Loss)

Comprehensive Income (Loss)

Comprehensive income (loss) is comprised of net income (loss) and other comprehensive loss. Other comprehensive loss includes changes in stockholders’ equity that are excluded from net income (loss), specifically changes in unrealized gains and losses on the Company’s available-for-sale securities.

Net Income (Loss) per Share of Common Stock

Net Income (Loss) per Share of Common Stock

Basic earnings per share is computed by dividing the net income (loss) by the weighted average number of shares of common stock outstanding during the periods presented. The computation of diluted earnings per share is similar to the computation of basic earnings per share, except that the denominator is increased for the assumed exercise of dilutive options and other potentially dilutive securities using the treasury stock method, unless the effect is antidilutive.

Recent Accounting Pronouncements

Recent Accounting Pronouncements

In July 2013, FASB issued ASU No. 2013-11, Income Taxes (Topic 740): Presentation of an unrecognized tax benefit when a net operating loss carryforward, a similar tax loss, or a tax credit carryforward exists. Under the amendments of this update an entity is required to present an unrecognized tax benefit, or a portion of an unrecognized tax benefit in the financial statements as a reduction to a deferred tax asset for a net operating loss carryforward, a similar tax loss, or a tax credit carryforward, except as follows. To the extent a net operating loss carryforward, a similar tax loss, or a tax credit carryforward is not available at the reporting date under the tax law of the applicable jurisdiction to settle any additional income taxes that would result from the disallowance of a tax position or the tax law of the applicable jurisdiction does not require the entity to use, and the entity does not intend to use, the deferred tax asset for such purpose, the unrecognized tax benefit should be presented in the financial statements as a liability and should not be combined with deferred tax assets. The assessment of whether a deferred tax asset is available is based on the unrecognized tax benefit and deferred tax asset that exist at the reporting date and should be made presuming disallowance of the tax position at the reporting date. For example, an entity should not evaluate whether the deferred tax asset expires before the statute of limitations on the tax position or whether the deferred tax asset may be used prior to the unrecognized tax benefits being settled. The provisions of this update was effective prospectively for the Company in fiscal years beginning after December 15, 2013 with early adoption and retrospective application permitted. The Company adopted this guidance on January 1, 2014. The implementation did not have an impact on the Company’s consolidated financial statements.

In May 2014, FASB issued Accounting Standards Update 2014-09 (ASU 2014-09), Revenue from Contracts with Customers. ASU 2014-09 will supersede the revenue recognition requirements in Revenue Recognition (Topic 605) and requires entities to recognize revenue in a way that depicts the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled to in exchange for those goods or services. ASU 2014-09 is effective for annual reporting periods beginning after December 15, 2016, including interim periods within that reporting period, which for the Company is January 1, 2017. Early adoption is not permitted. The Company is currently evaluating the potential impact the adoption of ASU 2014-09 will have on the Company’s consolidated financial statements.

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Schedule of Option Activity (Detail) (USD $)	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
2006 Plan
Number of Shares Available for Grant
Options exercised	0
Options re-allocated	(14,413)
Options and awards cancelled	14,413
Number of Shares Underlying Outstanding Options
Beginning Balance	1,538,197
Options exercised	(190,263)
Options and awards cancelled	(14,413)
Ending Balance	1,333,521
Weighted-Average Exercise Price Per Share
Beginning Balance	$ 3.64
Options exercised	$ 3.73
Options and awards cancelled	$ 6.78
Ending Balance	$ 3.60
2012 Plan
Number of Shares Available for Grant
Beginning Balance	576,760
Additional shares authorized	805,485
Options and awards granted	(938,062)
Options re-allocated	14,413
Options and awards cancelled	230,246
Ending Balance	688,842	576,760
Number of Shares Underlying Outstanding Options
Beginning Balance	1,252,433
Options and awards granted	806,919	1,067,315	720,580
Options exercised	(101,736)
Options and awards cancelled	(222,396)
Ending Balance	1,735,220	1,252,433
Weighted-Average Exercise Price Per Share
Beginning Balance	$ 20.75
Options and awards granted	$ 25.99
Options exercised	$ 18.42
Options and awards cancelled	$ 22.66
Ending Balance	$ 23.08	$ 20.75
2012 Plan | Restricted Stock
Number of Shares Underlying Outstanding Options
Beginning Balance	18,000
Options and awards granted	122,155	21,000	0
Awards released	(5,000)
Options and awards cancelled	(7,850)
Ending Balance	127,305	18,000
Options Vested and Exercisable
Beginning Balance	$ 19.39
Options and awards granted	$ 26.68
Awards released	$ 20.13
Options and awards cancelled	$ 26.74
Ending Balance	$ 25.90	$ 19.39
2012 Plan | Performance stock units
Number of Shares Underlying Outstanding Options
Beginning Balance	0
Options and awards granted	8,988
Ending Balance	8,988		0
Options Vested and Exercisable
Options and awards granted	$ 25.08
Ending Balance	$ 25.08

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Accrued Liabilities (Tables)

12 Months Ended

Dec. 31, 2014

Payables and Accruals [Abstract]

Components of Accrued Liabilities

The following table represents the components of accrued liabilities (in thousands):

	December 31,
	2014		2013
Clinical trial expenses	$	2,399	$	246
Payroll and related expenses		4,134		4,278
Gross to net sales accruals		10,142		5,235
Royalty payable		2,080		1,154
Taxes payable		563		326
Legal expenses payable		410		45
Acquisition related accrual (Note 22)		4,615		—
Other		1,166		903
	$	25,509	$	12,187

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Acquisitions - Additional Information (Detail) (USD $)	0 Months Ended	3 Months Ended								12 Months Ended		0 Months Ended	7 Months Ended
	May 31, 2013	Dec. 31, 2014	Sep. 30, 2014	Jun. 30, 2014	Mar. 31, 2014	Dec. 31, 2013	Sep. 30, 2013	Jun. 30, 2013	Mar. 31, 2013	Dec. 31, 2014	Dec. 31, 2013	Jun. 12, 2014	Dec. 31, 2013
Business Acquisition [Line Items]
Net revenue		$ 30,805,000	$ 26,201,000	$ 37,095,000	$ 19,483,000	$ 18,627,000	$ 15,489,000	$ 7,305,000	$ 783,000	$ 113,584,000	$ 42,204,000
Net payment to be received for purchase transaction										11,000,000
Cash paid to Ucyclyd for BUPHENYL product rights										19,000,000
Cash due to Ucyclyd for inventory										2,000,000
Purchase price to retain product rights		32,000,000								32,000,000
Gain from settlement of retention option	31,100,000										31,079,000
Fair value of BUPHENYL	20,400,000
Net payment received from Ucyclyd	11,000,000										10,962,000
Option to purchase rights to BUPHENYL and AMMONUL	300,000										283,000
Andromeda
Business Acquisition [Line Items]
Acquisition date										Jun. 12, 2014
Contingent liabilities												34,288,000
Issuance of common stock as part of acquisition												312,869
Acquisition-related expenses										1,300,000	600,000
BUPHENYL
Business Acquisition [Line Items]
Acquisition date										May 31, 2013
Net revenue													11,500,000
Net payment to be received for purchase transaction	11,000,000
Cash paid to Ucyclyd for BUPHENYL product rights	19,000,000
Cash due to Ucyclyd for inventory	2,038,000
Purchase price to retain product rights	32,000,000
Expected useful life of acquired product rights	10 years									8 years
Gain from settlement of retention option	31,079,000							31,100,000
Fair value of BUPHENYL	20,400,000
Net payment received from Ucyclyd	10,962,000
Option to purchase rights to BUPHENYL and AMMONUL	$ 283,000

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Notes Payable - Additional Information (Detail) (April 2011 Convertible Notes Payable, USD $)	0 Months Ended	1 Months Ended
	Jul. 31, 2012	Apr. 30, 2011	Jul. 31, 2012	May 31, 2011
April 2011 Convertible Notes Payable
Debt Instrument [Line Items]
Aggregate principal amount of notes issued		$ 17,500,000		$ 8,285
Aggregate principal amount that may be issued, maximum		35,000,000
Stated interest rate on notes		6.00%
Portion of principal amount outstanding for holders having early maturity date		66.00%
Minimum amount of proceeds from preferred stock		30,000,000
Principal and accrued interest converted upon closing of IPO	18,900,000		18,900,000
Number of shares issued upon conversion of notes	1,888,054
Carrying value and accrued interest	$ 18,400,000		$ 18,400,000

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Condensed Consolidated Balance Sheets (USD $) In Thousands, unless otherwise specified	Dec. 31, 2014	Dec. 31, 2013
Current assets
Cash and cash equivalents	$ 102,796	$ 74,232
Short-term investments	34,487	28,045
Accounts receivable, net	14,864	4,419
Inventories, net	4,621	3,513
Prepaid expenses and other current assets	2,632	1,403
Total current assets	159,400	111,612
Long-term investments	9,226	15,780
Property and equipment, net	1,116	936
Intangible asset, net	8,816	13,442
Other non-current assets	1,858	749
Total assets	180,416	142,519
Current liabilities
Accounts payable	4,669	2,292
Accrued liabilities	25,509	12,187
Deferred revenue	224
Notes payable, current portion		5,652
Total current liabilities	30,402	20,131
Notes payable, net of current portion	18,124	2,621
Deferred rent	338	81
Total liabilities	48,864	22,833
Commitments and contingencies (Note 13)
Stockholders' equity
Preferred stock, par value $0.0001 - 10,000,000 shares authorized at December 31, 2014 and 2013; none issued and outstanding
Common stock, par value $0.0001 - 100,000,000 shares authorized at December 31, 2014 and 2013; 20,747,013 and 20,137,145 shares issued and outstanding at December 31, 2014 and 2013, respectively	2	2
Additional paid-in capital	260,225	242,109
Accumulated other comprehensive loss	(50)	(55)
Accumulated deficit	(128,625)	(122,370)
Total stockholders' equity	131,552	119,686
Total liabilities and stockholders' equity	$ 180,416	$ 142,519

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Income Taxes (Tables)

12 Months Ended

Dec. 31, 2014

Income Tax Disclosure [Abstract]

Components of Income Tax Expense

The components of the income tax expense are as follows (in thousands):

	Years ended December 31,
	2014			2013			2012
Current income tax expense:
Federal	$	736		$	—		$	—
State		703			326			—
		1,439			326			—
Deferred income tax benefit:
State		(1,136	)		(277	)		—
		(1,136	)		(277	)		—
Total income tax expense	$	303		$	49		$	—

Reconciliation of Income Tax Expense

The reconciliation of income tax expense computed at the statutory federal income tax rate of 35% to amounts included in the consolidated statements of operations is as follows:

	Year Ended December 31,
	2014			2013			2012
Statutory rate		35.0	%		35.0	%		34.0	%
State tax		0.6	%		5.5	%		5.4	%
Tax credits		57.5	%		(5.0	)%		0.7	%
Stock options		(28.0	)%		0.2	%		(0.7	)%
Valuation allowance		(81.8	)%		(29.6	)%		(37.1	)%
Impact of Andromeda acquisition		12.6	%		—			—
Change in federal tax rate		—			(6.0	)%		—
Other		(1.0	)%		0.2	%		(2.3	)%
		(5.1	)%		0.3	%		0.0	%

Components of Deferred Income Tax Assets

Significant components of the Company’s deferred income tax assets are as follows (in thousands):

	Year Ended December 31,
	2014			2013
Deferred income tax assets
Fixed assets, capitalized intangibles and other assets	$	6,030		$	5,294
Net operating loss		35,164			31,842
Tax credits		23,024			18,480
Stock-based compensation expense		1,660			1,133
Accrued expenses and reserves		3,405			1,502
Capitalized research and development expenses		3,237			—
Tax basis in investments		12,624			—
Other		381			25
Total		85,525			58,276
Valuation allowance		(84,113	)		(58,000	)
Net deferred income tax assets	$	1,412		$	276

Reconciliation of Beginning and Ending Balances of Unrecognized Income Tax Benefits

A reconciliation of the beginning and ending balances of the unrecognized income tax benefits during the years ended December 31, 2014, 2013 and 2012 is as follows (in thousands):

	Year Ended December 31,
	2014			2013		2012
Balance at the beginning of the year	$	6,269		$	5,723	$	5,357
Changes based on prior period tax positions		(2,325	)		—		(228	)
Changes based on current period tax positions		223			546		594
Balance at the end of the year	$	4,167		$	6,269	$	5,723

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Net Product Revenue for Ravicti and Buphenyl (Detail) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013
Revenue from External Customer [Line Items]
Revenue	$ 113,584	$ 42,204
RAVICTI
Revenue from External Customer [Line Items]
Revenue	95,400	31,236
BUPHENYL
Revenue from External Customer [Line Items]
Revenue	18,584	11,468
Co-payment assistance
Revenue from External Customer [Line Items]
Revenue	$ (400)	$ (500)

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Consolidated Statements of Stockholders' Equity (Deficit) (USD $) In Thousands, except Share data	Total USD ($)	Initial Public Offering USD ($)	Follow-on offering USD ($)	Convertible Notes Payable USD ($)	Convertible preferred stock USD ($)	Common Stock [Member] USD ($)	Common Stock [Member] Initial Public Offering USD ($)	Common Stock [Member] Follow-on offering	Common Stock [Member] Convertible Notes Payable	Additional Paid-in Capital USD ($)	Additional Paid-in Capital Initial Public Offering USD ($)	Additional Paid-in Capital Follow-on offering USD ($)	Additional Paid-in Capital Convertible Notes Payable USD ($)	Accumulated Other Comprehensive Loss USD ($)	Accumulated Deficit USD ($)
Balance at Dec. 31, 2011	$ (82,104)				$ 58,326					$ 24,630					$ (106,734)
Balance, shares at Dec. 31, 2011					6,575,637	469,319
Issuance of stock		51,312					1				51,311
Issuance of stock (in shares)							5,750,000
Issuance of common stock upon conversion of convertible securities	58,326				(58,326)	1				58,325
Issuance of common stock upon conversion of convertible securities (in shares)					(6,575,637)	6,575,637
Conversion of convertible notes payable and accrued interest to common stock	33,322			33,322									33,322
Conversion of convertible notes payable and accrued interest to common stock, (in shares)									3,444,870
Issuance of common stock upon automatic net exercise of warrants	3,901									3,901
Issuance of common stock upon automatic net exercise of warrants (in shares)						340,361
Issuance of common stock warrant	755									755
Issuance of common stock upon exercise of stock options	147									147
Issuance of common stock upon exercise of stock options (in shares)						66,082
Stock-based compensation expense	993									993
Net income (loss)	(32,263)														(32,263)
Balance at Dec. 31, 2012	34,389					2				173,384					(138,997)
Balance, shares at Dec. 31, 2012						16,646,269
Issuance of stock			63,712									63,712
Issuance of stock (in shares)								3,306,250
Exercise of common stock warrants (in shares)									67,503
Issuance of common stock upon exercise of stock options	637									637
Issuance of common stock upon exercise of stock options (in shares)						117,123
Stock-based compensation expense	4,376									4,376
Other comprehensive income(loss)	(55)													(55)
Net income (loss)	16,627														16,627
Balance at Dec. 31, 2013	119,686					2				242,109				(55)	(122,370)
Balance, shares at Dec. 31, 2013						20,137,145
Issuance of common stock upon exercise of stock options	2,583									2,583
Issuance of common stock upon exercise of stock options (in shares)						291,999
Issuance of common stock upon release of restricted stock units	0				0	0				0				0	0
Issuance of common stock upon release of restricted stock units (in shares)						5,000
Issuance of common stock upon acquisition of Andromeda Biotech Ltd (Note 4)	7,778									7,778
Issuance of common stock upon acquisition of Andromeda Biotech Ltd (Note 4) (in shares)						312,869
Stock-based compensation expense	7,647									7,647
Excess tax benefit from stock-based compensation	108									108
Other comprehensive income(loss)	5													5
Net income (loss)	(6,255)														(6,255)
Balance at Dec. 31, 2014	$ 131,552					$ 2				$ 260,225				$ (50)	$ (128,625)
Balance, shares at Dec. 31, 2014						20,747,013

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Antidilutive Securities Excluded from Computation of Earnings Per Share (Detail)	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Potentially dilutive securities excluded from the computation of diluted net loss per share	3,069,015	1,027,879	2,013,410
Stock options
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Potentially dilutive securities excluded from the computation of diluted net loss per share	3,068,741	1,027,605	1,928,754
Common stock warrants
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Potentially dilutive securities excluded from the computation of diluted net loss per share	274	274	84,656

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Consolidated Pro Forma Information (Detail) (USD $) In Thousands, except Per Share data, unless otherwise specified	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Business Combinations [Abstract]
Net revenues	$ 113,584	$ 52,900	$ 21,501
Net income (loss)	$ 20,390	$ (12,199)	$ (29,201)
Net income (loss) per common share
Basic	$ 0.99	$ (0.62)	$ (4.02)
Diluted	$ 0.93	$ (0.62)	$ (4.02)

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Selected Unaudited Quarterly Financial Information (Detail) (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended								12 Months Ended
	Dec. 31, 2014	Sep. 30, 2014	Jun. 30, 2014	Mar. 31, 2014	Dec. 31, 2013	Sep. 30, 2013	Jun. 30, 2013	Mar. 31, 2013	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Quarterly Financial Information Disclosure [Abstract]
Product revenue, net	$ 30,805	$ 26,201	$ 37,095	$ 19,483	$ 18,627	$ 15,489	$ 7,305	$ 783	$ 113,584	$ 42,204
Costs and expenses	24,078	55,031	20,898	17,784	17,747	15,037	12,986	9,851	117,791	55,621	28,533
Net income (loss) attributable to common stockholders	$ 7,096	$ (32,793)	$ 18,183	$ 1,259	$ 468	$ 112	$ 25,022	$ (8,975)	$ (6,255)	$ 16,627	$ (32,263)
Net income (loss) per share attributable to common stockholders - basic	$ 0.34	$ (1.59)	$ 0.89	$ 0.06	$ 0.02	$ 0.01	$ 1.25	$ (0.52)	$ (0.31)	$ 0.86	$ (4.45)
Net income (loss) per share attributable to common stockholders - diluted	$ 0.32	$ (1.59)	$ 0.84	$ 0.06	$ 0.02	$ 0.01	$ 1.17	$ (0.52)	$ (0.31)	$ 0.80	$ (4.45)

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Investments (Tables)

12 Months Ended

Dec. 31, 2014

Investments, Debt and Equity Securities [Abstract]

Schedule of Investments by Contractual Maturity

The principal amounts of investments by contractual maturity at December 31, 2014 and December 31, 2013 are summarized in the tables below:

	Contractual Maturity Date for the Years Ending December  31,				Total Book Value at December 31, 2014		Unrealized Loss			Aggregate Fair Value at December 31, 2014
	2015		2016
Certificates of deposit	$	18,405	$	6,240	$	24,645	$	(35	)	$	24,610
Corporate notes		12,613		3,011		15,624		(12	)		15,612
Commercial paper		3,494		—		3,494		(3	)		3,491
Total	$	34,512	$	9,251	$	43,763	$	(50	)	$	43,713

	Contractual Maturity Date for the Years Ending December  31,				Total Book Value at December 31, 2013		Unrealized Loss			Aggregate Fair Value at December 31, 2013
	2014		2015
Certificates of deposit	$	10,525	$	2,845	$	13,370	$	(27	)	$	13,343
Corporate notes		6,047		12,960		19,007		(24	)		18,983
U.S. Government agency securities		8,011		—		8,011		(3	)		8,008
Commercial paper		3,492		—		3,492		(1	)		3,491
Total	$	28,075	$	15,805	$	43,880	$	(55	)	$	43,825

Schedule of Unrealized Losses and Related Fair Value of Investments with Unrealized Losses

The aggregate amounts of unrealized losses and related fair value of investments with unrealized losses as of December 31, 2014 and December 31, 2013 was as follows:

	Less Than 12 Months to Maturity					12 Months or More to Maturity					Total at December 31, 2014
	Aggregate Fair Value		Unrealized Losses			Aggregate Fair Value		Unrealized Losses			Aggregate Fair Value		Unrealized Losses
Certificates of deposit	$	18,386	$	(19	)	$	6,224	$	(16	)	$	24,610	$	(35	)
Corporate notes		12,610		(2	)		3,002		(10	)		15,612		(12	)
Commercial paper		3,491		(3	)		—		—			3,491		(3	)
Total	$	34,487	$	(24	)	$	9,226	$	(26	)	$	43,713	$	(50	)

	Less Than 12 Months to Maturity					12 Months or More to Maturity					Total at December 31, 2013
	Aggregate Fair Value		Unrealized Losses			Aggregate Fair Value		Unrealized Losses			Aggregate Fair Value		Unrealized Losses
Certificates of deposit	$	10,507	$	(18	)	$	2,836	$	(9	)	$	13,343	$	(27	)
Corporate notes		6,039		(8	)		12,944		(16	)		18,983		(24	)
U.S. Government agency securities		8,008		(3	)		—		—			8,008		(3	)
Commercial paper		3,491		(1	)		—		—			3,491		(1	)
Total	$	28,045	$	(30	)	$	15,780	$	(25	)	$	43,825	$	(55	)

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Components of Inventories (Detail) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2014	Dec. 31, 2013
Inventory Disclosure [Abstract]
Raw Materials	$ 1,787	$ 697
Work-in-process	543
Finished goods	2,291	2,816
Total	$ 4,621	$ 3,513

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Preferred Stock

12 Months Ended

Dec. 31, 2014

Equity [Abstract]

Preferred Stock

14. Preferred Stock

On July 31, 2012, upon the closing of the IPO, the Company’s Series C-1 and Series C-2 preferred stock amounting to $58.3 million converted into 1,912,598 and 4,663,039 shares of common stock, respectively. On July 31, 2012, the Company amended its Certificate of Incorporation to decrease the number of authorized shares of preferred stock to 10,000,000 with a par value of $0.0001 per share. Pursuant to the Company’s amended and restated certificate of incorporation, the board of directors has the authority, without action by its stockholders, to designate and issue shares of preferred stock in one or more series and to fix the rights, preferences, privileges and restrictions thereof.

As of December 31, 2014 and 2013, there was no preferred stock outstanding.

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Fair Value Measurements (Tables)

12 Months Ended

Dec. 31, 2014

Fair Value Disclosures [Abstract]

Hierarchy for Assets and Liabilities Measured at Fair Value on Recurring Basis

The following table presents the Company’s fair value hierarchy for assets and liabilities measured at fair value on a recurring basis as of December 31, 2014 and December 31, 2013 (in thousands):

	Fair Value Measurements at December 31, 2014
	Quoted Price in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total
Assets:
Cash equivalents:
Money market funds	$	38,532	$	—	$	—	$	38,532
Certificates of deposit		—		720		—		720
Total cash equivalents	$	38,532	$	720	$	—	$	39,252
Available-for-sale securities:
Short-term:
Certificates of deposit	$	—	$	18,386	$	—	$	18,386
Corporate notes		—		12,610		—		12,610
Commercial paper		—		3,491		—		3,491
Total short-term investments		—		34,487		—		34,487
Long-term:
Certificates of deposit		—		6,224		—		6,224
Corporate notes		—		3,002		—		3,002
Total long-term investments		—		9,226		—		9,226
Total available-for-sale securities	$	—	$	43,713	$	—	$	43,713

	Fair Value Measurements at December 31, 2013
	Quoted Price in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total
Assets:
Cash equivalents:
Money market funds	$	38,506	$	—	$	—	$	38,506
Certificates of deposit		—		480		—		480
Total cash equivalents	$	38,506	$	480	$	—	$	38,986
Available-for-sale securities:
Short-term:
Certificates of deposit	$	—	$	10,507	$	—	$	10,507
Commercial paper		—		3,491		—		3,491
Corporate notes		—		6,039		—		6,039
U.S. Government agency securities		—		8,008		—		8,008
Total short-term investments		—		28,045		—		28,045
Long-term:
Certificates of deposit		—		2,836		—		2,836
Corporate notes		—		12,944		—		12,944
Total long-term investments		—		15,780		—		15,780
Total available-for-sale securities	$	—	$	43,825	$	—	$	43,825

Carrying Value and Estimated Fair Value of Company's Notes Payable and Term Loans

The following table presents the carrying value and estimated fair value of the Company’s notes payable as of December 31, 2014 and December 31, 2013 (in thousands):

	December 31, 2014
	Carrying Value		Estimated Fair Value
Term Loans (see Note 11)	$	16,124	$	16,746

	December 31, 2013
	Carrying Value		Estimated Fair Value
April and September 2012 Notes (see Note 11)	$	8,273	$	8,860

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Subsequent Events - Additional Information (Detail)	12 Months Ended	3 Months Ended	12 Months Ended			0 Months Ended
	Dec. 31, 2014 Andromeda USD ($)	Mar. 31, 2015 Scenario, Forecast [Member] Andromeda USD ($)	Dec. 31, 2014 Common Stock [Member]	Dec. 31, 2014 Common Stock [Member] Andromeda USD ($)	Dec. 31, 2014 Evotec Maximum Andromeda USD ($)	Feb. 16, 2015 Subsequent Events Andromeda USD ($)	Feb. 16, 2015 Subsequent Events Common Stock [Member] Andromeda	Feb. 16, 2015 Subsequent Events Evotec Andromeda EUR (€)
Subsequent Event [Line Items]
Estimated budget for clinical trial	$ 10,500,000
Increase in estimated budget for clinical trial	2,250,000
Option to acquire outstanding stock payable	3,500,000
Contingent payments based on future revenue					36,500,000			3,380,000
Consideration paid in shares of common stock				2,500,000
Option expiration date	Sep. 30, 2015
Number of trading days for valuation of shares			15 days				15 days
Accrued liabilities	4,600,000
Other income		4,100,000
Milestone payment exchange						$ 500,000

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Stock Option Plan

12 Months Ended

Dec. 31, 2014

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Stock Option Plan

16. Stock Option Plan

2006 Plan

In December 2006, the Company adopted the 2006 Equity Incentive Plan (the “2006 Plan”), under which 457 shares of the Company’s common stock had been originally reserved for issuance to employees, directors and consultants. The 2006 Plan provides for the grant of the following stock awards: incentive stock options, non-statutory stock options, restricted stock awards, restricted stock unit awards and stock appreciation rights. Incentive stock options may be granted only to Company employees, which include officers and directors of the Company. Non-statutory stock options and stock purchase rights may be granted to employees and consultants. Stock awards other than incentive stock options may be granted to employees, directors and consultants.

The Board of Directors has the authority to determine to whom options will be granted, the number of options, the term and the exercise price. The exercise price of the stock option shall not be less than 100% of the fair market value of the common stock subject to the option on the date the option is granted. For individuals holding more than 10% of the voting rights of all classes of stock, the exercise price of an option will not be less than 110% of fair market value and the option is not exercisable after the expiration of five years from the date of the grant. Options granted to an employee who is not an officer, director or consultant shall provide for vesting of the total number of shares of common stock at a rate of at least 20% per year over five years from the date the option was granted, subject to reasonable conditions such as continued employment, at any time or during any period established by the Company. The contractual term of each option is ten years.

On July 25, 2012, the effective date of the 2012 Plan, the 2006 Plan was frozen and no additional awards will be made under the 2006 Plan. Any shares remaining available for future grant were allocated to the 2012 Plan and any shares underlying outstanding options that terminate by expiration, forfeiture, cancellation, or otherwise without issuance of such shares, will be allocated to the 2012 Plan.

Activity under the 2006 Plan is as follows:

				Outstanding Options
	Number of Shares Available for Grant			Number of Shares Underlying Outstanding Options			Weighted-Average Exercise Price Per Share
Balances at December 31, 2013		—			1,538,197			3.64
Options exercised		—			(190,263	)		3.73
Options cancelled		14,413			(14,413	)		6.78
Options re-allocated to 2012 Plan		(14,413	)		—			—
Balances at December 31, 2014		—			1,333,521		$	3.60

The aggregate intrinsic value of options exercised for the year ended December 31, 2014 was $4.1 million. Intrinsic value is calculated as the difference between the exercise price of the underlying options and the fair value of the common stock for the options that had exercise prices that were lower than the fair value per share of the common stock on the date of exercise.

Aggregate options outstanding and vested and exercisable by exercise price at December 31, 2014 for the 2006 plan are as follows (dollars in thousands except per share values):

Options Outstanding							Options Vested and Exercisable
Exercise Price	Number Outstanding		Aggregate Intrinsic Value		Weighted Average Remaining Life (in Years)		Number Outstanding		Aggregate Intrinsic Value		Exercise Price
$    1.28		735,773	$	16,717		4.5		735,773	$	16,717	$	1.28
$    4.08		252,403		5,028		6.3		228,490		4,552	$	4.08
$    7.31		344,405		5,748		7.3		217,060		3,623	$	7.31
$    327.95		940		—		2.5		940		—	$	327.95
		1,333,521	$	27,493		5.5		1,182,263	$	24,892

The intrinsic values of outstanding, vested and exercisable options were determined by multiplying the number of shares by the difference in exercise price of the options and the fair value of the common stock as of December 31, 2014 of $24.00 per share.

For the year ended December 31, 2014, options vested and expected to vest for the 2006 plan aggregated to 1,328,822 options with an intrinsic value of $27.4 million, weighted average exercise price of $3.59 per share and the weighted average remaining life of 5.5 years.

2012 Plan

In April 2012, the board of directors of the Company adopted (approved by Company’s stockholders in July 2012) the 2012 Omnibus Incentive Plan (the “2012 Plan”). The 2012 Plan provides for the grant of stock options, stock appreciation rights, restricted stock, unrestricted stock, stock units, dividend equivalent rights, other equity-based awards and cash bonus awards. The 2012 Plan became effective on July 25, 2012.

As of December 31, 2014 and 2013, the Company had reserved 688,842 shares and 576,760 shares of common stock, respectively, for issuance under the 2012 Plan.

Activity under the 2012 Plan is as follows:

				Outstanding Options					Restricted Stock Units Outstanding					Performance Stock Units Outstanding
	Number of Shares Available for Grant			Number of Shares Underlying Outstanding Options			Weighted-Average Exercise Price Per Share		Number of Shares Underlying Outstanding RSU’s			Grant Date Fair Value		Number of Shares Underlying Outstanding RSU’s		Grant Date Fair Value
Balances at December 31, 2013		576,760			1,252,433			20.75		18,000			19.39		—		—
Additional shares authorized		805,485			—			—		—			—		—		—
Options and awards granted		(938,062	)		806,919			25.99		122,155			26.68		8,988		25.08
Options exercised		—			(101,736	)		18.42		—			—		—		—
Awards released		—			—			—		(5,000	)		20.13		—		—
Options re-allocated to 2012 Plan		14,413			—			—		—			—		—		—
Options and awards cancelled		230,246			(222,396	)		22.66		(7,850	)		26.74		—		—
Balance at December 31, 2014		688,842			1,735,220		$	23.08		127,305		$	25.90		8,988	$	25.08

The aggregate intrinsic value of options exercised for the year ended December 31, 2014 was $0.8 million.

Aggregate options outstanding and vested and exercisable by exercise price at December 31, 2014 for the 2012 plan are as follows (dollars in thousands except per share values):

	Options Outstanding						Options Vested and Exercisable
Exercise Price	Number Outstanding		Aggregate Intrinsic Value		Weighted Average Remaining Life (in Years)		Number Outstanding		Aggregate Intrinsic Value		Exercise Price
$10.32- 18.24		242,962	$	2,799		7.9		118,837	$	1,415	$	10.32 - 18.24
$19.39- 21.05		200,170		746		9.0		36,504		162		19.39 - 21.05
$21.45- 24.38		128,450		220		8.7		41,514		83		21.45 - 24.38
$24.46- 26.74		1,095,725		—		8.8		253,207		—		24.46 - 26.74
$26.97- 28.08		42,313		—		9.3		—		—		26.97 - 28.08
$29.27- 31.00		25,600		—		9.3		—		—		29.27 - 31.00
		1,735,220	$	3,765		8.7		450,062	$	1,660

The intrinsic values of options vested and exercisable options as of December 31, 2014 were determined by multiplying the number of shares by the difference in exercise price of the options and the fair value of the common stock as of December 31, 2014 of $24.00 per share.

For the year ended December 31, 2014, options vested and expected to vest for the 2012 plan aggregated to 1,646,570 options with an aggregate intrinsic value of $3.6 million, weighted average exercise price of $23.02 per share and the weighted average remaining life of 8.7 years.

Stock-Based Compensation

During the years ended December 31, 2014, 2013 and 2012 , the Company granted stock options to employees to purchase 806,919, 1,067,315 and 720,580 shares of common stock, respectively, with a weighted-average grant date fair value of $25.99, $22.90 and $6.76 per share, respectively. During the year ended December 31, 2014 and 2013, the Company granted 122,155 and 21,000 restricted stock units, respectively, to employees. There were no restricted stock units granted for the year ended December 31, 2012. During the year ended December 31, 2014, the Company granted 8,998 performance stock units to employees. There were no performance stock units granted for the years ended December 31, 2013 and 2012.

Stock-based compensation expense recognized during the years ended December 31, 2014, 2013 and 2012 includes compensation expense for stock-based awards granted to employees based on the grant date fair value estimated in accordance with the provisions of ASC 718 of $7.6 million, $4.3 million and $1.0 million, respectively. As of December 31, 2014, there was a total unrecognized compensation cost of $17.0 million related to unvested stock-based awards granted. These amounts are expected to be recognized over a period of approximately 2.5 years.

The Company determines the fair value of restricted stock units and performance stock units using the closing price of the Company’s common stock on the date of grant. The Company estimates the fair value of stock options using the Black-Scholes option valuation model. The fair value of employee stock options and restricted stock units are being amortized on a straight-line basis over the requisite service period of the awards. The fair value of the performance stock awards is being amortized based on the achievement of performance goals and over the requisite service period of the awards. The fair value of the employee stock options was estimated using the following weighted-average assumptions:

	Year Ended December 31,
	2014			2013			2012
Expected volatility		62.76	%		58	%		65	%
Risk-free interest rate		1.90	%		1.14	%		1.05	%
Dividend yield		0.0	%		0.0	%		0.0	%
Expected term (in years)		6.00			5.96			6.00

Determining Fair Value of Stock Options

The fair value of each grant of stock options was determined by the Company using the methods and assumptions discussed below. Each of these inputs is subjective and generally requires significant judgment to determine.

Expected Term — The expected term of stock options represents the weighted average period the stock options are expected to be outstanding. For option grants that are considered to be “plain vanilla”, the Company has opted to use the simplified method for estimating the expected term as provided by the Securities and Exchange Commission. The simplified method calculates the expected term as the average time-to-vesting and the contractual life of the options. For other option grants, the expected term is derived from the Company’s historical data on employee exercises and post-vesting employment termination behavior taking into account the contractual life of the award.

Expected Volatility — The expected stock price volatility assumption was determined by examining the historical volatilities of a group of industry peers and the Company’s own historical volatility since the Company began trading subsequent to its IPO in July 2012.

Risk-Free Interest Rate — The risk free rate assumption is based on U.S. Treasury instruments for which the terms were consistent with the expected term of the Company’s stock options.

Expected Dividend — The expected dividend assumption is based on the Company’s history and expectation of dividend payouts.

Forfeiture Rate — ASC 718 requires forfeitures to be estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates. Forfeitures were estimated based on historical experience.

Fair Value of Common Stock — Prior to the IPO, the fair value of the shares of common stock underlying the stock options has historically been the responsibility of and determined by the Company’s board of directors. Because there was no public market for the Company’s common stock, the board of directors determined fair value of common stock at the time of grant of the option by considering a number of objective and subjective factors including independent third-party valuations of the Company’s common stock, sales of convertible preferred stock to unrelated third parties, operating and financial performance, the lack of liquidity of capital stock and general and industry specific economic outlook, amongst other factors. Subsequent to the IPO, the fair value of the shares of the common stock underlying the stock options is the closing price on the option grant date.

Total stock-based compensation expense related to options and awards granted was allocated as follows (in thousands):

	Year Ended December 31,
	2014		2013		2012
Cost of sales	$	70	$	27	$	—
Research and development		1,384		585		374
Selling general and administrative		6,184		3,709		619
Total	$	7,638	$	4,321	$	993

For the years ended December 31, 2014 and 2013, stock-based compensation of $0.1 million each was capitalized into inventories. Capitalized stock-based compensation is recognized as cost of sales when the related product is sold. Allocations to research and development, general and administrative and selling and marketing expense are based upon the department to which the associated employee reported.

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Schedule of Expected Amortization Expense (Detail) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2014
Goodwill and Intangible Assets Disclosure [Abstract]
2015	$ 6,495
2016	1,655
2017	1,515
2018	1,477
2019	$ 1,441

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Consolidated Statements of Stockholders' Equity (Deficit) (Parenthetical) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012
Statement of Stockholders' Equity [Abstract]
Underwriting discounts and commissions	$ 4,116	$ 4,025
Offering costs	$ 776	$ 2,163

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Condensed Consolidated Balance Sheets (Parenthetical) (USD $)	Dec. 31, 2014	Dec. 31, 2013
Statement of Financial Position [Abstract]
Preferred stock, par value	$ 0.0001	$ 0.0001
Preferred stock, shares authorized	10,000,000	10,000,000
Preferred stock, issued	0	0
Preferred stock, outstanding	0	0
Common stock, par value	$ 0.0001	$ 0.0001
Common stock, shares authorized	100,000,000	100,000,000
Common stock, shares issued	20,747,013	20,137,145
Common stock, shares outstanding	20,747,013	20,137,145

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Property and Equipment

12 Months Ended

Dec. 31, 2014

Property, Plant and Equipment [Abstract]

Property and Equipment

9. Property and Equipment

The following table represents the components of property and equipment (in thousands):

	December 31,
	2014			2013
Computers and Software	$	1,202		$	563
Furniture and Fixtures		320			320
Office Equipment		53			53
Leasehold Improvements		—			—
Capital work in progress		181			264
		1,756			1,200
Less: Accumulated depreciation		(640	)		(264	)
Total property and equipment, net	$	1,116		$	936

Depreciation expense for the years ended December 31, 2014, 2013 and 2012 was $0.5 million, $0.2 million and $15,000, respectively.

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Net Income (Loss) Per Share of Common Stock (Detail) (USD $) In Thousands, except Share data, unless otherwise specified	3 Months Ended								12 Months Ended
	Dec. 31, 2014	Sep. 30, 2014	Jun. 30, 2014	Mar. 31, 2014	Dec. 31, 2013	Sep. 30, 2013	Jun. 30, 2013	Mar. 31, 2013	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Net income (loss) per share Numerator:
Net income (loss) attributable to common stockholders	$ 7,096	$ (32,793)	$ 18,183	$ 1,259	$ 468	$ 112	$ 25,022	$ (8,975)	$ (6,255)	$ 16,627	$ (32,263)
Denominator:
Basic									20,470,025	19,415,822	7,256,537
Dilutive effect of stock-options and awards										1,315,091
Diluted									20,470,025	20,730,913	7,256,537
Net income (loss) per share:
Basic	$ 0.34	$ (1.59)	$ 0.89	$ 0.06	$ 0.02	$ 0.01	$ 1.25	$ (0.52)	$ (0.31)	$ 0.86	$ (4.45)
Diluted	$ 0.32	$ (1.59)	$ 0.84	$ 0.06	$ 0.02	$ 0.01	$ 1.17	$ (0.52)	$ (0.31)	$ 0.80	$ (4.45)

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Reconciliation of Beginning and Ending Balances of Unrecognized Income Tax Benefits (Detail) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Income Tax Disclosure [Abstract]
Balance at the beginning of the year	$ 6,269	$ 5,723	$ 5,357
Changes based on prior period tax positions	(2,325)		(228)
Changes based on current period tax positions	223	546	594
Balance at the end of the year	$ 4,167	$ 6,269	$ 5,723

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Document and Entity Information (USD $)	12 Months Ended
	Dec. 31, 2014	Feb. 27, 2015	Jun. 30, 2014
Document And Entity Information [Abstract]
Document Type	10-K
Amendment Flag	false
Document Period End Date	Dec. 31, 2014
Document Fiscal Year Focus	2014
Document Fiscal Period Focus	FY
Trading Symbol	HPTX
Entity Registrant Name	HYPERION THERAPEUTICS INC
Entity Central Index Key	0001386858
Current Fiscal Year End Date	--12-31
Entity Well-known Seasoned Issuer	No
Entity Current Reporting Status	Yes
Entity Voluntary Filers	No
Entity Filer Category	Accelerated Filer
Entity Common Stock, Shares Outstanding		20,774,744
Entity Public Float			$ 420,544,733

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Accrued Liabilities

12 Months Ended

Dec. 31, 2014

Payables and Accruals [Abstract]

Accrued Liabilities

10. Accrued Liabilities

The following table represents the components of accrued liabilities (in thousands):

	December 31,
	2014		2013
Clinical trial expenses	$	2,399	$	246
Payroll and related expenses		4,134		4,278
Gross to net sales accruals		10,142		5,235
Royalty payable		2,080		1,154
Taxes payable		563		326
Legal expenses payable		410		45
Acquisition related accrual (Note 22)		4,615		—
Other		1,166		903
	$	25,509	$	12,187

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Common Stock - Additional Information (Detail) (USD $)	0 Months Ended	12 Months Ended		0 Months Ended
	Jul. 31, 2012	Dec. 31, 2013	Dec. 31, 2012	Mar. 13, 2013	Dec. 31, 2014	Aug. 14, 2013
Common Stock [Line Items]
Offering price per share	$ 10.00
Additional shares issued for over-allotment	750,000
Net proceeds from initial public offering			$ 53,475,000
Underwriting discounts and commissions		4,116,000	4,025,000
Total value of preferred stock converted	58,300,000
Common stock, authorized	100,000,000	100,000,000			100,000,000
Common stock, par value	$ 0.0001	$ 0.0001			$ 0.0001
Votes per common stock	1
Net proceeds from public offering		64,488,000
Aggregate offering price						150,000,000
Common stock shares sold by selling stockholders						8,727,000
Aggregate offering price under sales agreement						50,000,000
Sales of securities					0
April 2011 Convertible Notes Payable
Common Stock [Line Items]
Principal and accrued interest converted upon closing of IPO	18,900,000
Number of shares issued upon conversion of notes	1,888,054
Carrying value and accrued interest	18,400,000
October 2011 Convertible Notes Payable
Common Stock [Line Items]
Principal and accrued interest converted upon closing of IPO	15,600,000
Number of shares issued upon conversion of notes	1,556,816
Carrying value and accrued interest	14,900,000
Series C-1 Convertible Preferred Stock
Common Stock [Line Items]
Issuance of common stock for converted preferred stock	1,912,598
Series C-2 Convertible Preferred Stock
Common Stock [Line Items]
Issuance of common stock for converted preferred stock	4,663,039
April 2011 Common Stock Warrants Liability
Common Stock [Line Items]
Shares issued for conversion of warrants upon closing of IPO	322,599
October 2011 Preferred Stock Warrants Liability
Common Stock [Line Items]
Shares issued for conversion of warrants upon closing of IPO	17,762
April 2011 common stock warrants and October 2011 preferred stock warrants
Common Stock [Line Items]
Fair value of warrants	3,900,000
Initial Public Offering
Common Stock [Line Items]
Common stock, shares issued	5,000,000
Net proceeds from initial public offering	51,300,000
Underwriting discounts and commissions	4,025,000
Other offering expenses	2,200,000
Follow-on offering
Common Stock [Line Items]
Common stock, shares issued				2,875,000
Offering price per share				$ 20.75
Additional shares issued for over-allotment				431,250
Underwriting discounts and commissions				4,116,000
Other offering expenses				800,000
Net proceeds from public offering				$ 63,700,000

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Components of Deferred Income Tax Assets (Detail) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2014	Dec. 31, 2013
Deferred income tax assets
Fixed assets, capitalized intangibles and other assets	$ 6,030	$ 5,294
Net operating loss	35,164	31,842
Tax credits	23,024	18,480
Stock-based compensation expense	1,660	1,133
Accrued expenses and reserves	3,405	1,502
Capitalized research and development expenses	3,237
Tax basis in investments	12,624
Other	381	25
Total	85,525	58,276
Valuation allowance	(84,113)	(58,000)
Net deferred income tax assets	$ 1,412	$ 276

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Condensed Consolidated Statements of Operations (USD $) In Thousands, except Share data, unless otherwise specified	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Income Statement [Abstract]
Net product revenue	$ 113,584	$ 42,204
Costs and expenses:
Cost of sales	13,727	6,740
Research and development	20,715	9,984	17,046
Selling, general and administrative	48,522	35,839	11,487
Impairment of goodwill (Notes 4 and 8)	30,201
Amortization of intangible asset	4,626	3,058
Total costs and expenses	117,791	55,621	28,533
Loss from operations	(4,207)	(13,417)	(28,533)
Interest income	555	27	12
Interest expense	(1,601)	(1,539)	(3,703)
Gain from settlement of retention option (Note 4)		31,079
Other income (expense), net	(699)	526	(39)
Income (loss) before income taxes	(5,952)	16,676	(32,263)
Income tax expense	303	49
Net income (loss)	$ (6,255)	$ 16,627	$ (32,263)
Net income (loss) per share:
Basic	$ (0.31)	$ 0.86	$ (4.45)
Diluted	$ (0.31)	$ 0.80	$ (4.45)
Weighted average number of shares used to compute net income (loss) per share of common stock:
Basic	20,470,025	19,415,822	7,256,537
Diluted	20,470,025	20,730,913	7,256,537

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Acquisitions

12 Months Ended

Dec. 31, 2014

Business Combinations [Abstract]

Acquisitions

4. Acquisitions

Acquisition of Andromeda

Description of the Transaction

On April 23, 2014, Hyperion Therapeutics Israel Holding Corp. Ltd. (“Hyperion Israel”), a wholly-owned subsidiary of the Company entered into a share purchase agreement (“SPA”) with Clal Biotechnology Industries Ltd. (“Clal”) to purchase all outstanding shares of Andromeda. Andromeda was incorporated in Israel in 2007 and was primarily focused on the development of DiaPep277.

On June 12, 2014 (the “Acquisition Date”), Hyperion Israel completed the purchase of all of the outstanding ordinary shares of Andromeda. The Andromeda acquisition is accounted for as a business combination. The results of operations of Andromeda have been included in the Company’s consolidated statements of operations starting from the Acquisition Date, the date on which the Company obtained effective control of Andromeda.

Fair Value of Consideration Transferred as of the Acquisition Date

The Company accounted for the acquisition of Andromeda as a business combination under the acquisition method of accounting. The Acquisition Date fair value of the total consideration transferred to acquire Andromeda was as follows:

	Amounts Recognized as of the acquisition date (in thousands)
Cash paid	$	14,345
Fair value of Company’s common stock issued (312,869 shares)		7,778	*
Acquisition-related contingent consideration		68,961
Total fair value of consideration transferred	$	91,084

* The fair value of the common stock was measured using the Company’s closing stock price on June 12, 2014.

The Company estimated the fair value of the acquisition-related contingent consideration on the acquisition date using a probability-weighted income approach, which reflects the probability and timing of future payments. This fair value measurement on the acquisition date is based on key assumptions such as the anticipated timelines and probability of achieving development, regulatory approval or sales-based milestone events and projected revenues. The resulting probability-weighted cash flows are discounted using estimated discount rate that commensurate with the risks of the expected cash flows attributable to the various milestones. The material factors that may impact the fair value are the probabilities of achieving the related milestones and the discount rate. Significant increases or decreases in any of the probabilities of success would result in a significantly higher or lower fair value, respectively, and commensurate changes to this liability. The fair value relating to the acquisition-related contingent consideration at each reporting date will be updated with the changes in fair value reflected in the company’s consolidated statements of operations.

Assets Acquired and Liabilities Assumed as of the Acquisition Date

The following table summarizes the provisional allocation of purchase price to the fair values of the assets acquired and liabilities assumed as of the acquisition date:

	Amounts Recognized as of the acquisition date (in thousands)
Assets acquired
IPR&D	$	135,712
Cash and cash equivalents		306
Prepaid expenses		95
Property and equipment, net		22
Other assets		578
Liabilities assumed
Current liabilities		(9,079	)
Deferred tax liability		(6,051	)
Acquisition related contingent liability		(34,288	)
Total identifiable net assets		87,295
Goodwill		3,789
Total consideration transferred	$	91,084

The amounts were considered preliminary and were subject to change once the Company finalizes the determination of the fair value of assets acquired and liabilities assumed. Thus, these amounts were subject to refinement and final determination of the fair values of net assets acquired and may result in certain adjustments to the amounts presented above.

The contingent liabilities amounting to $34.3 million relate to potential royalties and milestone payments and potential payments. The Company reassesses the probability and estimates associated with the contingent liability at each reporting period. For liability payable to third parties, any increase in the liability is recorded in the consolidated statements of operations. For liabilities payable to employees in exchange for services, the Company accounts for this liability arrangement as employee compensation over the applicable service period and in accordance with ASC 450 Contingencies.

The goodwill primarily represents the tax impact of the IPR&D and acquisition related contingencies as well as acquiring Andromeda’s assembled workforce.

Measurement period adjustments to provisional allocation of purchase price

On September 8, 2014 the Company announced the termination of further development of DiaPep277 beyond completion of the ongoing clinical trial as a result of evidence that the Company uncovered that certain employees of Andromeda engaged in serious misconduct that compromised clinical trial results. Additional evidence indicates that the biostatistics firm and certain Andromeda employees continued the improper practice of sharing and examining un-blinded data from the ongoing DIA-AID 2 trial. The Company intends to complete the ongoing Phase 3 clinical trial of DiaPep277 but does not expect to develop the product further.

The Company determined that the facts and circumstances described above existed as of the acquisition date and were not the result of intervening events subsequent to the acquisition date. In accordance with ASC 805, during the measurement period, the Company recognizes adjustments to the provisional amounts as if the accounting for the business combination had been completed at the acquisition date. Accordingly, the Company re-measured the preliminary determination of the fair values of assets acquired and liabilities assumed as of the acquisition date. The measurement period adjustments primarily relate to the: (i) decrease in the estimated fair value of intangible assets, (ii) reductions in the acquisition related contingent liability, and (iii) the tax impact of pre-tax measurement period adjustments.

Adjusted Assets Acquired and Liabilities Assumed — Measurement Period Adjustments

The following table summarizes the adjusted provisional allocation of purchase price to the fair values of the assets acquired and liabilities assumed as of the Acquisition Date:

	Amounts Recognized as of September 30, 2014 (as adjusted) (in thousands)
Assets acquired
IPR&D	$	—	*
Cash and cash equivalents		306
Prepaid expenses		95
Property and equipment, net		22
Other assets		578
Liabilities assumed
Current liabilities		(9,079	)
Deferred tax liability		—	**
Acquisition related contingent liability		—	*
Total identifiable net assets (liabilities)		(8,078	)
Adjusted Goodwill		30,201
Total consideration transferred	$	22,123

Adjusted Fair Value of Consideration Transferred

	Amounts Recognized as of September 30, 2014 (as adjusted) (in thousands)
Cash paid	$	14,345
Fair value of Company’s common stock issued (312,869 shares)		7,778
Acquisition-related contingent consideration		—	*
Total fair value of consideration transferred	$	22,123

* The Company has assigned no value to the IPR&D as a result of the evidence obtained related to the improper practices regarding the clinical trials. The Company had determined that the contingent consideration milestones and contingent liability milestones will not be achieved.

** The reduction in deferred tax liability relates to the tax impact of the IPR&D and acquisition- related contingencies.

The Company’s allocation of purchase price to the fair values of the assets acquired and liabilities assumed as of acquisition date was determined to be final as the Company obtained the information necessary to complete the measurement process.

Acquisition of BUPHENYL from Ucyclyd Pharma, Inc.

Description of the Transaction

As discussed in Note 3, under the terms of the restated collaboration agreement, on April 29, 2013, the Company exercised its option to purchase all of Ucyclyd’s worldwide rights in BUPHENYL and AMMONUL. On May 17, 2013 Ucyclyd exercised its time-limited right to elect to retain all rights to AMMONUL. On May 31, 2013 (the “Acquisition Date”), the Company completed the acquisition of BUPHENYL. Accordingly, BUPHENYL results are included in Hyperion’s consolidated financial statements from the date of the acquisition. For the period from June 1, 2013 to December 31, 2013, BUPHENYL net revenue was $11.5 million.

The Company acquired BUPHENYL to enhance its commercial product portfolio and to allow the Company an opportunity to serve the entire UCD patient population, including those less than two years of age or for those patients who may prefer BUPHENYL.

Purchase Consideration and Assets Acquired

The Company accounted for the acquisition of BUPHENYL as a business combination under the acquisition method of accounting. On the Acquisition Date, the Company received a net payment of $11.0 million, which reflected the $32.0 million retention amount for AMMONUL due to the Company less the $19.0 million contractual purchase price for BUPHENYL due to Ucyclyd and a $2.0 million payment due to Ucyclyd for inventory that the Company purchased from Ucyclyd.

The fair value of purchase consideration was estimated based upon the fair value of assets acquired. The estimated fair value attributed to the BUPHENYL product rights was determined on a discounted forecast of the estimated net future cash flows to be generated from the product rights and has an expected useful life of 10 years. The following table summarizes the allocation of purchase price to the fair values of the assets acquired as of the acquisition date:

	(in thousands)
Inventories	$	3,900
Intangible Asset — BUPHENYL Product rights		16,500
Total	$	20,400

Gain from Settlement of Retention Option

In connection with the allocation between the BUPHENYL acquisition described above and Ucyclyd’s exercise of its retention option, the Company recorded a gain of $31.1 million. The amount of gain is comprised of (i) fair value of BUPHENYL of $20.4 million and (ii) net cash received from Ucyclyd of $11.0 million off-set by (iii) the $0.3 million carrying value of the option to purchase the rights to BUPHENYL and AMMONUL. The following table summarizes the results of the Company’s allocation:

	(in thousands)
Ucyclyd’s retention option amount	$	32,000
Amount due to Ucyclyd for BUPHENYL product rights		(19,000	)
Amount due to Ucyclyd for inventory		(2,038	)
Net payment received from Ucyclyd		10,962
Option to purchase the rights to BUPHENYL and AMMONUL		(283	)
Fair value of BUPHENYL		20,400
Gain from settlement of retention option	$	31,079

Pro forma Impact of Business Combination

The following unaudited pro forma information is based on the assumption that the Andromeda acquisition occurred on January 1, 2013 and BUPHENYL acquisition occurred on January 1, 2012. The unaudited pro forma information is presented for comparative purposes only and is not necessarily indicative of the financial position or results of operations which would have been reported had the Company completed the acquisitions during these periods or which might be reported in the future. The unaudited pro forma information reflects primarily the application of the following adjustments:

• the elimination of the historical research and development expenses and general and administration expenses related to options granted to employees which were cancelled as part of the Andromeda acquisition;

• the elimination of the historical interest expenses related to loans provided by former shareholders which were cancelled as part of the Andromeda acquisition;

• the exclusion of acquisition-related costs incurred for the acquisitions;

• the exclusion of impairment of goodwill recognized in relation to the Andromeda acquisition;

• the inclusion of amortization expense related to the fair value of the intangible asset acquired relating to BUPHENYL;

• the inclusion of the step-up value related to inventory sold that was acquired as part of the BUPHENYL acquisition. Such amounts are included in the applicable comparative period for purposes of pro forma financial information; and

• as noted above, the Company issued 312,869 shares of its common stock as part of the Andromeda acquisition. The common shares were included in the pro-forma earnings per share calculation.

The unaudited pro forma information is not necessarily indicative of what the Company’s consolidated results of operations actually would have been had the acquisition of Andromeda been completed on January 1, 2013 and acquisition of BUPHENYL been completed on January 1, 2012. In addition, the unaudited pro forma information does not purport to project the future results of operations of the Company.

	Year Ended December 31,
	2014		2013			2012
			( in thousands)
Net revenues	$	113,584	$	52,900		$	21,501
Net income (loss)		20,390		(12,199	)		(29,201	)
Net income (loss) per common share
Basic		0.99		(0.62	)		(4.02	)
Diluted		0.93		(0.62	)		(4.02	)

Acquisition-related Costs

Acquisition-related expenses consist of transaction costs which represent external costs directly related to the acquisition of Andromeda and primarily include expenditures for professional fees such as legal, accounting and other directly related incremental costs incurred to close the acquisition. Acquisition-related expenses for the year ended December 31, 2014 was $1.3 million. Acquisition-related expenses for the year ended December 31, 2013 were $0.6 million. These expenses were recorded to selling and general administrative expense in the consolidated statements of operations.

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Collaboration Agreement with Ucyclyd Pharma, Inc.

12 Months Ended

Dec. 31, 2014

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Collaboration Agreement with Ucyclyd Pharma, Inc.

3. Collaboration Agreement with Ucyclyd Pharma, Inc.

In March 2012, the Company entered into the purchase agreement with Ucyclyd under which the Company purchased the worldwide rights to RAVICTI and the amended and restated collaboration agreement (the “restated collaboration agreement”) under which Ucyclyd granted the Company an option to purchase all of Ucyclyd’s worldwide rights to BUPHENYL and AMMONUL at a fixed price at a future defined date, plus subsequent milestone and royalty payments, subject to Ucyclyd’s right to retain AMMONUL for a predefined price. The restated collaboration agreement superseded the collaboration agreement with Ucyclyd, dated August 23, 2007, as amended. The entry into the purchase agreement and the restated collaboration agreement resolved a dispute that the two parties had with respect to their rights under the prior collaboration agreement.

Under the purchase agreement, the Company made a payment of $6.0 million of which (i) $5.7 million was allocated to the worldwide rights to RAVICTI and (ii) $0.3 million was allocated to the option to purchase rights to BUPHENYL and AMMONUL, based on their relative fair values. The allocated amount to the rights to RAVICTI of $5.7 million was recorded to research and development expense in the consolidated statements of operations for the period ended March 31, 2012 due to the uncertainty of an alternative future use. The allocated amount for the option to purchase rights to BUPHENYL and AMMONUL in the amount of $0.3 million was included within other current assets and was subsequently offset against the gain recognized from the settlement of retention option (see Note 4).

The Company will also pay tiered mid to high single digit royalties on global net sales of RAVICTI and may owe regulatory milestones of up to $15.8 million related to approval of GPB in HE, regulatory milestones of up to $7.3 million per indication for approval of GPB in indications other than UCD or HE, and net sales milestones of up to $38.8 million if GPB is approved for use in indications other than UCD (such as HE) and all annual sales targets are reached.

In addition, the intellectual property license agreements executed between Ucyclyd and Dr. Marshall L. Summar, (“Summar”) and Ucyclyd and Brusilow Enterprises, LLC, (“Brusilow”) were assigned to the Company, and the Company has assumed the royalty and milestone obligations under the Brusilow agreement for sales of RAVICTI in any indication and the royalty obligations under the Summar agreement on sales of GPB to treat HE. The Brusilow and Summar agreements provide that royalty obligations will continue, without adjustment, even if generic versions of the licensed products are introduced and sold in the relevant country.

Under the terms of the restated collaboration agreement, the Company had an option to purchase all of Ucyclyd’s worldwide rights in BUPHENYL and AMMONUL, subject to Ucyclyd’s option to retain rights to AMMONUL. The Company was permitted to exercise this option for 90 days beginning on the earlier of the date of the approval of RAVICTI for the treatment of UCD and June 30, 2013, but in no event earlier than January 1, 2013. The upfront purchase price for AMMONUL and BUPHENYL was $22.0 million. If the RAVICTI New Drug Application (“NDA”) for UCD was not approved by January 1, 2013, then Ucyclyd was obligated to make monthly payments of $0.5 million to the Company until the earliest of (1) FDA approval of the RAVICTI NDA for UCD, (2) June 30, 2013 and (3) the Company’s written notification of the decision not to purchase Ucyclyd’s worldwide rights to BUPHENYL and AMMONUL.

On February 1, 2013, the FDA approved RAVICTI for the treatment of UCD in adult and pediatric patients two years of age and older. In accordance with the restated collaboration agreement, Ucyclyd made a payment of $0.5 million during the quarter ended March 31, 2013.

On April 29, 2013, the Company exercised its option to purchase BUPHENYL and AMMONUL. Ucyclyd subsequently exercised it’s time-limited right to elect to retain all rights to AMMONUL for a contractual purchase price of $32.0 million (“retention amount”). Upon closing of the transaction, Ucyclyd paid the Company a net payment of $11.0 million, which reflects the Company’s contractual purchase price for Ucyclyd’s worldwide rights to BUPHENYL in the amount of $19.0 million being off-set against Ucyclyd’s retention amount for AMMONUL and a $2.0 million payment due to Ucyclyd for inventory that the Company purchased from Ucyclyd. The Company has retained a right of first negotiation should Ucyclyd later decide to sell, exclusively license, or otherwise transfer the AMMONUL assets to a third party.

On May 31, 2013, the Company completed the acquisition of BUPHENYL. Upon Ucyclyd’s exercise of its retention option, the Company recorded a gain of approximately $31.1 million in its consolidated statement of operations. The amount of gain is comprised of (i) fair value of BUPHENYL of $20.4 million and (ii) net cash received from Ucyclyd of $11.0 million off-set by (iii) the $0.3 million carrying value of the option to purchase the rights to BUPHENYL and AMMONUL.

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Common Stock

12 Months Ended

Dec. 31, 2014

Text Block [Abstract]

Common Stock

15. Common Stock

On July 31, 2012, the Company completed its IPO and issued 5,000,000 shares of its common stock at an initial offering price of $10.00 per share. In addition, the Company sold an additional 750,000 shares of common stock directly to its underwriters when they exercised their over-allotment option in full at the initial offering price of $10.00 per share. The shares began trading on the NASDAQ Global Market on July 26, 2012. The Company received net proceeds from the IPO of $51.3 million, after deducting underwriting discounts and commissions of $4.0 million and expenses of $2.2 million.

On July 31, 2012, upon the closing of the IPO, the Company’s Series C-1 and Series C-2 preferred stock amounting to $58.3 million converted into 1,912,598 and 4,663,039 shares of common stock, respectively. In addition, the principal and accrued interest under the Company’s April 2011 Notes and October 2011 Notes amounting to $18.9 million and $15.6 million, respectively, converted into 1,888,054 and 1,556,816 shares of common stock. As of July 31, 2012, the carrying values and accrued interest under the April 2011 Notes and October 2011 Notes amounted to $18.4 million and $14.9 million, respectively. Additionally, the April 2011 common stock warrants and October 2011 preferred stock warrants were converted into 322,599 and 17,762 shares of common stock, respectively, immediately prior to the closing of the IPO. The fair value of the April 2011 common stock warrants and October 2011 preferred stock warrants as of July 31, 2012 of $3.9 million was reclassified to additional paid-in capital.

In addition, on July 31, 2012, the Company amended its Certificate of Incorporation to increase the number of authorized shares of common stock to 100,000,000 with a par value of $0.0001 per share.

Common stockholders are entitled to dividends when and if declared by the Board of Directors subject to prior rights of the preferred stockholders. The holder of each share of common stock is entitled to one vote.

On March 13, 2013, the Company completed a follow-on offering and issued 2,875,000 shares of its common stock at an offering price of $20.75 per share. In addition, the Company sold an additional 431,250 shares of common stock directly to its underwriters when they exercised their over-allotment option in full at an offering price of $20.75 per share. The Company received net proceeds from the offering of $63.7 million, after deducting underwriting discounts and commissions of $4.1 million and expenses of $0.8 million.

On August 14, 2013, the Company filed a shelf registration statement on Form S-3, which was declared effective by the SEC on September 13, 2013. The shelf registration statement permits: (a) the offering, issuance and sale by the Company of up to a maximum aggregate offering price of $150.0 million of its common stock, preferred stock, debt securities, warrants and/or units; (b) the sale of up to 8,727,000 shares of common stock by certain selling stockholders; and (c) the offering, issuance and sale by the Company of up to a maximum aggregate offering price of $50.0 million of its common stock that may be issued and sold under a sales agreement with Cantor Fitzgerald & Co. As of December 31, 2014, there were no sales of any securities registered pursuant to the shelf registration statement.

At December 31, 2014, the Company had reserved common stock for future issuances as follows:

Issuance of options under 2012 stock plan	688,842
Issuance upon exercise of options under the 2006 and 2012 stock plan	3,068,741
Issuance upon vesting of restricted and performance stock units under the 2012 stock plan	136,293
Issuance upon exercise of October 2007 common stock warrants	274
Total	3,894,150

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Notes Payable

12 Months Ended

Dec. 31, 2014

Debt Disclosure [Abstract]

Notes Payable

11. Notes Payable

April 2011 Convertible Notes Payable

In April 2011, the Company entered into a convertible notes financing (the “April 2011 convertible notes financing”), in which it issued an aggregate principal amount of $17.5 million of convertible notes in an initial closing in April and an aggregate principal amount of $8,285 of convertible notes in subsequent closings in May 2011 (collectively, the “April 2011 Notes”) pursuant to the Convertible Note and Warrant Purchase Agreement dated April 1, 2011 (the “April 2011 Purchase Agreement”). The April 2011 Purchase Agreement permits the Company to issue up to an aggregate principal amount of $35.0 million.

The April 2011 Notes accrue interest at a rate of 6% per annum and have a maturity date of the earliest of (i) demand by the holders of 66% of the principal amount of the then-outstanding April 2011 Notes under certain circumstances, which demand may not be made earlier than December 31, 2012, as amended or (ii) an event of default. The April 2011 Notes cannot be prepaid, except on demand by the holders of the April 2011 Notes, as described above. The principal and the interest under the April 2011 Notes are automatically convertible (i) into securities that are sold in an issuance of preferred stock generating gross proceeds of at least $30.0 million, referred to herein as a qualified financing, at the lowest price at which such securities are sold to certain new investors in the qualified financing, (ii) into Series C-2 convertible preferred stock upon the occurrence of certain change of control events, unless the holders of 66% of the principal amount of the then-outstanding April 2011 Notes notify the Company of their election to accelerate the unpaid principal and interest of the April 2011 Notes in connection with the change of control event, or (iii) into common stock immediately prior to the consummation of an initial public offering, at a conversion price equal to the initial public offering price. In addition, holders of 66% of the principal amount of the then-outstanding April 2011 Notes have the option to convert the April 2011 Notes (i) in the event that the Company consummates an equity financing that is not a “qualified financing,” as described above, prior to the maturity of the April 2011 Notes, into the equity securities issued in the equity financing, or (ii) upon maturity of the April 2011 Notes, if the April 2011 Notes have not been previously converted, into shares of the Company’s Series C-2 convertible preferred stock.

On July 31, 2012, upon closing of the IPO, the principal and accrued interest under the Company’s April 2011 Notes amounting to $18.9 million converted into 1,888,054 shares of common stock. The carrying value, including the impact of the amendment to the April 2011 Notes as discussed below and accrued interest under the Company’s April 2011 Notes was $18.4 million as of July 31, 2012.

October 2011 Convertible Notes Payable

In October 2011, the Company entered into a convertible notes financing (the “October 2011 convertible notes financing”), in which it issued an aggregate principal amount of $7.5 million of convertible notes in an initial closing in October and an aggregate principal amount of $3,551 of convertible notes in a subsequent initial closing in November 2011 and aggregate amount of $7.5 million of convertible notes in the second closing in February 2012 (collectively, the “October 2011 Notes”) pursuant to the Convertible Note and Warrant Purchase Agreement dated October 26, 2011 (the “October 2011 Purchase Agreement”). The October 2011 Purchase Agreement permitted the Company to issue up to an aggregate principal amount of $15.0 million.

The October 2011 Notes accrue interest at a rate of 6% per annum and have a maturity date of the earliest of (i) demand by the holders of 66% of the principal amount of the then-outstanding October 2011 Notes under certain circumstances, which demand may not be made earlier than December 31, 2012, or (ii) an event of default. The October 2011 Notes cannot be prepaid, except on demand by the holders of the October 2011 Notes, as described above. The principal and the interest under the October 2011 Notes are automatically convertible (a) into securities that are sold in an issuance of preferred stock generating gross proceeds of at least $40.0 million, referred to herein as a qualified financing, equal to the quotient of (i) the outstanding principal amount plus unpaid accrued interest divided by (ii) the price per share paid by the investors purchasing new preferred stock in the qualified financing; (b) upon the occurrence of certain change in control events, into new series of preferred stock equal to the quotient of (i) the outstanding principal amount plus accrued interest divided by (ii) the Series C-2 original issue price, or (c) into common stock immediately prior to the consummation of an initial public offering, at a conversion price equal to the initial public offering price. In addition, holders of 66% of the principal amount of the then-outstanding October 2011 Notes have the option to convert the October 2011 Notes (i) in the event that the Company consummates an equity financing that is not a “qualified financing,” as described above, prior to the maturity of the October 2011 Notes, into the equity securities issued in the equity financing, or (ii) upon maturity of the October 2011 Notes, if the October 2011 Notes have not been previously converted, into shares of the Company’s Series C-2 convertible preferred stock.

On July 31, 2012, upon closing of the IPO, the principal and accrued interest under the Company’s October 2011 Notes amounting to $15.6 million converted into 1,556,816 shares of common stock. The carrying value, (net of discount) and accrued interest under the Company’s October 2011 Notes was $14.9 million as of July 31, 2012.

October 2011 Call Option Liability

The October 2011 Purchase Agreement also provides that so long as there has not been a qualified financing, change of control or initial public offering, on or before June 30, 2012, or in the event that the October 2011 Notes issued in the initial closing or subsequent initial closings have not been previously converted into common or preferred stock as set forth in the agreement, upon the election and approval of the holders of 66% of the principal amount of the then-outstanding October 2011 Notes, the Company will issue (i) notes with an aggregate principal amount of $7.5 million or (ii) up to $7.5 million of notes in the event all or a portion of the subsequent initial closing notes have been issued. The additional note amount was determined to be a call option (“October 2011 call option”) that was recorded at its fair value of $0.8 million as a debt discount that has been amortized to interest expense over the term of the October 2011 Notes.

The Company recorded $0.7 million to other income (expense), net in its consolidated statements of operations upon issuance of the second closing of the October 2011 Notes in February 2012 for $7.5 million. As of December 31, 2012, the April 2011 Notes and October 2011 Notes were no longer outstanding as they had converted into shares of common stock upon the closing of the Company’s IPO on July 31, 2012. During the year ended December 31, 2012, the Company recorded amortization for debt discount of $0.9 million related to the October 2011 Notes.

In addition, the Company determined that the April 2011 Notes and the October 2011 Notes have contingent beneficial conversion features related to the conversion options described above. Upon the occurrence of the contingent event underlying those conversion options, the Company may recognize a charge based on the difference, if any, between the adjusted conversion price and the fair market value of common stock at the original issuance date. This charge, if any, will impact net income (loss) attributable to common stockholders and basic and diluted net income (loss) per share attributable to common stockholders.

The Company determined that no beneficial conversion features exist at the dates of issuance of the April 2011 Notes and October 2011 Notes and upon closing of the IPO on July 31, 2012, at which time these notes were converted to common stock.

April 2012 and September 2012 Notes Payable

In April 2012, the Company borrowed $10.0 million (the “April 2012 Notes”) pursuant to a loan and security agreement (the “Original Loan Agreement”) with Silicon Valley Bank and Leader Lending, LLC—Series B (the “Lenders”). The loan carried an interest rate of 8.88%, with interest only payments for the period of 9 months from May 1, 2012. The loan is then payable in equal monthly principal payments plus interest over a period of 27 months from February 1, 2013. In connection with the Loan Agreement, the Company granted a security interest in all of its assets, except intellectual property. The Company’s obligations to the Lenders include restrictions on borrowing, asset transfers, placing liens or security interest on its assets including the Company’s intellectual property, mergers and acquisitions and distributions to stockholders. The Loan Agreement also requires the Company to provide the Lenders monthly financials and compliance certificate within 30 days of each month end, annual audited financials within 180 days of each fiscal year-end and annual approved financial projections. The Company issued warrants to the Lenders to purchase a total of 75,974 shares of common stock with an exercise price of $4.08 per share. The Loan Agreement requires immediate repayment of amounts outstanding upon an event of default, as defined in the Loan Agreement, which includes events such as a payment default, a covenant default or the occurrence of a material adverse change, as defined in the Loan Agreement. In addition, a final payment equal to 6.5% of the principal loan amount is due on the earlier of (i) maturity date, (ii) prepayment of the loan or (iii) an event of default.

Pursuant to the terms of the Original Loan Agreement, once the Company raises at least $30.0 million from the sale of equity securities or subordinated debt, the Lenders also agreed to lend the Company a one-time single loan in the amount of $2.5 million (the “Bank Term Loan”). In September 2012, the Company borrowed an additional $2.5 million (the “September 2012 Note”) from Silicon Valley Bank pursuant to the terms of the Bank Term Loan. In addition, the Company issued warrants to Silicon Valley Bank to purchase a total of 8,408 shares of common stock with an exercise price of $5.05 per share. A final payment equal to 6.5% of the principal loan amount is due on the earlier of (i) maturity date, (ii) prepayment of the loan or (iii) an event of default. The principal amount outstanding under the Bank Term Loan accrues interest at a per annum rate equal to the greater of (i) 8.88% and (ii) the Treasury Rate, as defined in the Loan Agreement, on the date the loan is funded plus 8.50%, with interest only payments for the period of 9 months from the date the loan is funded. The loan is then payable in equal monthly principal payments plus interest over a period of 27 months from the date the loan is funded. These loans were extinguished during the year ended December 31, 2014.

Term Loans

On July 18, 2014, the Company entered into a new Loan and Security Agreement (the “Loan Agreement”) with Silicon Valley Bank (“SVB”), providing for two tranches of term loans of up to $16.0 million (the “Term Loans”) and a revolving credit line of up to $5.0 million (the “Revolving Loans”). In July 2014, the Company drew down both tranches of the Term Loans, of which approximately $5.8 million was used to pre-pay the Company’s existing April and September 2012 notes payable. In addition, the Company drew down $2.0 million from the revolving line of credit facility. The actual amount of the Revolving Loans that are available from time to time under the Loan Agreement is limited to a borrowing base amount that is determined according to, among other things, a percentage of the value of eligible accounts.

In accordance with ASC Topic No. 470, “Debt – Modifications and Extinguishments” (Topic No. 470), the new loan agreement was determined to be an extinguishment of the existing debt and an issuance of new debt. As a result of the extinguishment, the Company recorded a $0.6 million loss on extinguishment of debt which includes the remaining unamortized portion of the debt discount and debt issue costs associated with the April and September 2012 loans. The loss on extinguishment of debt was included within interest expense in the Company’s consolidated statements of operations.

The Company’s obligations under the Loan Agreement are collateralized by a first priority security interest in substantially all of the Company’s assets, excluding its intellectual property. The Company has also agreed not to pledge or otherwise encumber its intellectual property assets, except that the Company may grant licenses of its intellectual property as set forth in the Loan Agreement.

The Company is required to pay interest only for the first 18 months of the Term Loans, followed by 30 equal monthly payments of interest and principal. The Term Loans will mature on June 30, 2018. The Revolving Loans will mature on July 18, 2017. The Loan Agreement provides for an interest rate of 4.0% per year on the Term Loans and the prime rate plus 0.75% per year on the Revolving Loans, with a minimum interest requirement on the Revolving Loans. Upon the maturity date of the Term Loans, a final payment fee of 6.75% of the original principal amount of such Term Loans (the “Final Payment”) will be due.

The Loan Agreement contains customary representations, warranties and covenants (including the requirement to meet one of two financial covenants) by the Company, as well as customary events of default and indemnification obligations of the Company. The financial covenants include maintaining liquidity ratio on a monthly basis and achieving revenue projections on a quarterly basis as defined in the agreement. The Loan Agreement also requires the Company to provide SVB reports and compliance certificate within 30 days of each month end, quarterly financial statements within 45 days of the end of the quarter and annual audited financials within 180 days of each fiscal year-end and annual approved financial projections. The Loan Agreement requires immediate repayment of amounts outstanding upon an event of default, as defined in the Loan Agreement, which includes events such as a payment default, a covenant default or the occurrence of a material adverse change, as defined in the Loan Agreement. Upon an event of default, after any applicable grace or cure period, all amounts owed under the Loan Agreement may be declared due and payable, including the original principal amount of the Loans, the accrued but unpaid interest thereon, the Final Payment and the prepayment fee. In addition, the Loan Agreement also requires the Company to maintain its depository accounts, operating accounts, securities accounts and all foreign exchange transactions with SVB and SVB bank’s affiliates which accounts shall represent at least the lesser of (i) seventy five percent (75%) of the dollar value of the Company and its Subsidiaries’ accounts at all financial institutions or (ii) $40.0 million; provided, however, that the Company’s obligation relating to foreign exchange transactions is subject to SVB providing commercially competitive exchange rates.

Amortization of debt discount related to the April and September 2012 notes and term loans was $0.8 million, $0.5 million and $0.4 million for the years ended December 31, 2014, 2013 and 2012, respectively.

Future minimum payments under the Loan Agreement as of December 31, 2014 are as follows (in thousands):

Years Ending December 31,
2015	$	730
2016		6,822
2017		8,786
2018		4,450
Total future minimum payments	$	20,788
Less: amount representing unamortized interest		(1,709	)
Less: amount representing debt discount		(955	)
Total minimum payments	$	18,124
Less: current portion		—
Non-current portion	$	18,124

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Aggregate Options Outstanding and Vested and Exercisable by Exercise Price (Detail) (USD $) In Thousands, except Share data, unless otherwise specified	12 Months Ended
	Dec. 31, 2014
2006 Plan
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]
Options Outstanding, Number Outstanding	1,333,521
Options Outstanding, Aggregate Intrinsic Value	$ 27,493
Options Outstanding, Weighted Average Remaining Life (in Years)	5 years 6 months
Options Vested and Exercisable, Options Number Outstanding	1,182,263
Options Vested and Exercisable, Aggregate Intrinsic Value	24,892
2012 Plan
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]
Options Outstanding, Number Outstanding	1,735,220
Options Outstanding, Aggregate Intrinsic Value	3,765
Options Outstanding, Weighted Average Remaining Life (in Years)	8 years 8 months 12 days
Options Vested and Exercisable, Options Number Outstanding	450,062
Options Vested and Exercisable, Aggregate Intrinsic Value	1,660
Exercise Price 1 | 2006 Plan
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]
Options Outstanding, Exercise Price	$ 1.28
Options Outstanding, Number Outstanding	735,773
Options Outstanding, Aggregate Intrinsic Value	16,717
Options Outstanding, Weighted Average Remaining Life (in Years)	4 years 6 months
Options Vested and Exercisable, Options Number Outstanding	735,773
Options Vested and Exercisable, Aggregate Intrinsic Value	16,717
Options Vested and Exercisable, Exercise Price	$ 1.28
Exercise Price 1 | 2012 Plan
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]
Options Outstanding, Number Outstanding	242,962
Options Outstanding, Aggregate Intrinsic Value	2,799
Options Outstanding, Weighted Average Remaining Life (in Years)	7 years 10 months 24 days
Options Vested and Exercisable, Options Number Outstanding	118,837
Options Vested and Exercisable, Aggregate Intrinsic Value	1,415
Exercise Price 1 | 2012 Plan | Minimum
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]
Options Outstanding, Exercise Price	$ 10.32
Options Vested and Exercisable, Exercise Price	$ 10.32
Exercise Price 1 | 2012 Plan | Maximum
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]
Options Outstanding, Exercise Price	$ 18.24
Options Vested and Exercisable, Exercise Price	$ 18.24
Exercise Price 2 | 2006 Plan
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]
Options Outstanding, Exercise Price	$ 4.08
Options Outstanding, Number Outstanding	252,403
Options Outstanding, Aggregate Intrinsic Value	5,028
Options Outstanding, Weighted Average Remaining Life (in Years)	6 years 3 months 18 days
Options Vested and Exercisable, Options Number Outstanding	228,490
Options Vested and Exercisable, Aggregate Intrinsic Value	4,552
Options Vested and Exercisable, Exercise Price	$ 4.08
Exercise Price 2 | 2012 Plan
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]
Options Outstanding, Number Outstanding	200,170
Options Outstanding, Aggregate Intrinsic Value	746
Options Outstanding, Weighted Average Remaining Life (in Years)	9 years
Options Vested and Exercisable, Options Number Outstanding	36,504
Options Vested and Exercisable, Aggregate Intrinsic Value	162
Exercise Price 2 | 2012 Plan | Minimum
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]
Options Outstanding, Exercise Price	$ 19.39
Options Vested and Exercisable, Exercise Price	$ 19.39
Exercise Price 2 | 2012 Plan | Maximum
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]
Options Outstanding, Exercise Price	$ 21.05
Options Vested and Exercisable, Exercise Price	$ 21.05
Exercise Price 3 | 2006 Plan
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]
Options Outstanding, Exercise Price	$ 7.31
Options Outstanding, Number Outstanding	344,405
Options Outstanding, Aggregate Intrinsic Value	5,748
Options Outstanding, Weighted Average Remaining Life (in Years)	7 years 3 months 18 days
Options Vested and Exercisable, Options Number Outstanding	217,060
Options Vested and Exercisable, Aggregate Intrinsic Value	3,623
Options Vested and Exercisable, Exercise Price	$ 7.31
Exercise Price 3 | 2012 Plan
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]
Options Outstanding, Number Outstanding	128,450
Options Outstanding, Aggregate Intrinsic Value	220
Options Outstanding, Weighted Average Remaining Life (in Years)	8 years 8 months 12 days
Options Vested and Exercisable, Options Number Outstanding	41,514
Options Vested and Exercisable, Aggregate Intrinsic Value	$ 83
Exercise Price 3 | 2012 Plan | Minimum
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]
Options Outstanding, Exercise Price	$ 21.45
Options Vested and Exercisable, Exercise Price	$ 21.45
Exercise Price 3 | 2012 Plan | Maximum
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]
Options Outstanding, Exercise Price	$ 24.38
Options Vested and Exercisable, Exercise Price	$ 24.38
Exercise Price 4 | 2006 Plan
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]
Options Outstanding, Exercise Price	$ 327.95
Options Outstanding, Number Outstanding	940
Options Outstanding, Weighted Average Remaining Life (in Years)	2 years 6 months
Options Vested and Exercisable, Options Number Outstanding	940
Options Vested and Exercisable, Exercise Price	$ 327.95
Exercise Price 4 | 2012 Plan
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]
Options Outstanding, Number Outstanding	1,095,725
Options Outstanding, Weighted Average Remaining Life (in Years)	8 years 9 months 18 days
Options Vested and Exercisable, Options Number Outstanding	253,207
Exercise Price 4 | 2012 Plan | Minimum
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]
Options Outstanding, Exercise Price	$ 24.46
Options Vested and Exercisable, Exercise Price	$ 24.46
Exercise Price 4 | 2012 Plan | Maximum
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]
Options Outstanding, Exercise Price	$ 26.74
Options Vested and Exercisable, Exercise Price	$ 26.74
Exercise Price 5 | 2012 Plan
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]
Options Outstanding, Number Outstanding	42,313
Options Outstanding, Weighted Average Remaining Life (in Years)	9 years 3 months 18 days
Exercise Price 5 | 2012 Plan | Minimum
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]
Options Outstanding, Exercise Price	$ 26.97
Options Vested and Exercisable, Exercise Price	$ 26.97
Exercise Price 5 | 2012 Plan | Maximum
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]
Options Outstanding, Exercise Price	$ 28.08
Options Vested and Exercisable, Exercise Price	$ 28.08
Exercise Price 6 | 2012 Plan
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]
Options Outstanding, Number Outstanding	25,600
Options Outstanding, Weighted Average Remaining Life (in Years)	9 years 3 months 18 days
Exercise Price 6 | 2012 Plan | Minimum
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]
Options Outstanding, Exercise Price	$ 29.27
Options Vested and Exercisable, Exercise Price	$ 29.27
Exercise Price 6 | 2012 Plan | Maximum
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]
Options Outstanding, Exercise Price	$ 31.00
Options Vested and Exercisable, Exercise Price	$ 31.00

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Inventories

12 Months Ended

Dec. 31, 2014

Inventory Disclosure [Abstract]

Inventories

7. Inventories

The following table represents the components of inventories, net of reserves (in thousands):

	December 31, 2014		December 31, 2013
Raw Materials	$	1,787	$	697
Work-in-process		543		—
Finished goods		2,291		2,816
Total	$	4,621	$	3,513

Reserves on the inventory balance was $0.3 million for the year ended December 31, 2014. There were no reserves for the year ended December 31, 2013.

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Schedule of Investments by Contractual Maturity (Detail) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2014	Dec. 31, 2013
Schedule of Available-for-sale Securities [Line Items]
Contractual Maturity Year One	$ 34,512	$ 28,075
Contractual Maturity Year Two	9,251	15,805
Contractual Maturity, Total Book Value	43,763	43,880
Unrealized Loss	(50)	(55)
Aggregate Fair Value	43,713	43,825
Corporate notes
Schedule of Available-for-sale Securities [Line Items]
Contractual Maturity Year One	12,613	6,047
Contractual Maturity Year Two	3,011	12,960
Contractual Maturity, Total Book Value	15,624	19,007
Unrealized Loss	(12)	(24)
Aggregate Fair Value	15,612	18,983
Certificates of deposit
Schedule of Available-for-sale Securities [Line Items]
Contractual Maturity Year One	18,405	10,525
Contractual Maturity Year Two	6,240	2,845
Contractual Maturity, Total Book Value	24,645	13,370
Unrealized Loss	(35)	(27)
Aggregate Fair Value	24,610	13,343
Commercial paper
Schedule of Available-for-sale Securities [Line Items]
Contractual Maturity Year One	3,494	3,492
Contractual Maturity, Total Book Value	3,494	3,492
Unrealized Loss	(3)	(1)
Aggregate Fair Value	3,491	3,491
U.S. Government agency securities
Schedule of Available-for-sale Securities [Line Items]
Contractual Maturity Year One		8,011
Contractual Maturity, Total Book Value		8,011
Unrealized Loss		(3)
Aggregate Fair Value		$ 8,008

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Investments

12 Months Ended

Dec. 31, 2014

Investments, Debt and Equity Securities [Abstract]

Investments

5. Investments

All investments were classified as available-for-sale at December 31, 2014 and December 31, 2013. The principal amounts of investments by contractual maturity at December 31, 2014 and December 31, 2013 are summarized in the tables below:

	Contractual Maturity Date for the Years Ending December  31,				Total Book Value at December 31, 2014		Unrealized Loss			Aggregate Fair Value at December 31, 2014
	2015		2016
Certificates of deposit	$	18,405	$	6,240	$	24,645	$	(35	)	$	24,610
Corporate notes		12,613		3,011		15,624		(12	)		15,612
Commercial paper		3,494		—		3,494		(3	)		3,491
Total	$	34,512	$	9,251	$	43,763	$	(50	)	$	43,713

	Contractual Maturity Date for the Years Ending December  31,				Total Book Value at December 31, 2013		Unrealized Loss			Aggregate Fair Value at December 31, 2013
	2014		2015
Certificates of deposit	$	10,525	$	2,845	$	13,370	$	(27	)	$	13,343
Corporate notes		6,047		12,960		19,007		(24	)		18,983
U.S. Government agency securities		8,011		—		8,011		(3	)		8,008
Commercial paper		3,492		—		3,492		(1	)		3,491
Total	$	28,075	$	15,805	$	43,880	$	(55	)	$	43,825

The Company evaluated its investments and determined that there were no other-than-temporary impairments as of December 31, 2014.

The aggregate amounts of unrealized losses and related fair value of investments with unrealized losses as of December 31, 2014 and December 31, 2013 was as follows:

	Less Than 12 Months to Maturity					12 Months or More to Maturity					Total at December 31, 2014
	Aggregate Fair Value		Unrealized Losses			Aggregate Fair Value		Unrealized Losses			Aggregate Fair Value		Unrealized Losses
Certificates of deposit	$	18,386	$	(19	)	$	6,224	$	(16	)	$	24,610	$	(35	)
Corporate notes		12,610		(2	)		3,002		(10	)		15,612		(12	)
Commercial paper		3,491		(3	)		—		—			3,491		(3	)
Total	$	34,487	$	(24	)	$	9,226	$	(26	)	$	43,713	$	(50	)

	Less Than 12 Months to Maturity					12 Months or More to Maturity					Total at December 31, 2013
	Aggregate Fair Value		Unrealized Losses			Aggregate Fair Value		Unrealized Losses			Aggregate Fair Value		Unrealized Losses
Certificates of deposit	$	10,507	$	(18	)	$	2,836	$	(9	)	$	13,343	$	(27	)
Corporate notes		6,039		(8	)		12,944		(16	)		18,983		(24	)
U.S. Government agency securities		8,008		(3	)		—		—			8,008		(3	)
Commercial paper		3,491		(1	)		—		—			3,491		(1	)
Total	$	28,045	$	(30	)	$	15,780	$	(25	)	$	43,825	$	(55	)

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Fair Value Measurements

12 Months Ended

Dec. 31, 2014

Fair Value Disclosures [Abstract]

Fair Value Measurements

6. Fair Value Measurements

The Company follows ASC 820-10, “Fair Value Measurements and Disclosures,” which among other things, defines fair value, establishes a consistent framework for measuring fair value and expands disclosure for each major asset and liability category measured at fair value on either a recurring or nonrecurring basis. Fair value is an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability. As a basis for considering such assumptions, a three-tier fair value hierarchy has been established, which prioritizes the inputs used in measuring fair value as follows:

• Level 1 — Inputs are unadjusted, quoted prices in active markets for identical assets or liabilities at the measurement date.

• Level 2 — Inputs (other than quoted prices included in Level 1) are either directly or indirectly observable for the asset or liability through correlation with market data at the measurement date and for the duration of the instrument’s anticipated life.

• Level 3 — Inputs reflect management’s best estimate of what market participants would use in pricing the asset or liability at the measurement date. Consideration is given to the risk inherent in the valuation technique and the risk inherent in the inputs to the model.

The following table presents the Company’s fair value hierarchy for assets and liabilities measured at fair value on a recurring basis as of December 31, 2014 and December 31, 2013 (in thousands):

	Fair Value Measurements at December 31, 2014
	Quoted Price in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total
Assets:
Cash equivalents:
Money market funds	$	38,532	$	—	$	—	$	38,532
Certificates of deposit		—		720		—		720
Total cash equivalents	$	38,532	$	720	$	—	$	39,252
Available-for-sale securities:
Short-term:
Certificates of deposit	$	—	$	18,386	$	—	$	18,386
Corporate notes		—		12,610		—		12,610
Commercial paper		—		3,491		—		3,491
Total short-term investments		—		34,487		—		34,487
Long-term:
Certificates of deposit		—		6,224		—		6,224
Corporate notes		—		3,002		—		3,002
Total long-term investments		—		9,226		—		9,226
Total available-for-sale securities	$	—	$	43,713	$	—	$	43,713

	Fair Value Measurements at December 31, 2013
	Quoted Price in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total
Assets:
Cash equivalents:
Money market funds	$	38,506	$	—	$	—	$	38,506
Certificates of deposit		—		480		—		480
Total cash equivalents	$	38,506	$	480	$	—	$	38,986
Available-for-sale securities:
Short-term:
Certificates of deposit	$	—	$	10,507	$	—	$	10,507
Commercial paper		—		3,491		—		3,491
Corporate notes		—		6,039		—		6,039
U.S. Government agency securities		—		8,008		—		8,008
Total short-term investments		—		28,045		—		28,045
Long-term:
Certificates of deposit		—		2,836		—		2,836
Corporate notes		—		12,944		—		12,944
Total long-term investments		—		15,780		—		15,780
Total available-for-sale securities	$	—	$	43,825	$	—	$	43,825

The following table presents the carrying value and estimated fair value of the Company’s notes payable as of December 31, 2014 and December 31, 2013 (in thousands):

	December 31, 2014
	Carrying Value		Estimated Fair Value
Term Loans (see Note 11)	$	16,124	$	16,746

	December 31, 2013
	Carrying Value		Estimated Fair Value
April and September 2012 Notes (see Note 11)	$	8,273	$	8,860

Valuation Techniques

Level 1 Inputs

The Company classifies money market funds, which are valued based on quoted market prices in active markets with no valuation adjustment, as Level 1 assets within the fair value hierarchy.

Level 2 Inputs

Items classified as Level 2 within the valuation hierarchy consist of commercial paper, corporate notes, U.S. government agency securities and certificates of deposit. The Company estimates the fair values of these marketable securities by taking into consideration valuations obtained from third-party pricing sources. These pricing sources utilize industry standard valuation models, including both income and market-based approaches, for which all significant inputs are observable, either directly or indirectly, to estimate fair value. These inputs include market pricing based on real-time trade data for the same or similar securities, issuer credit spreads, benchmark yields, and other observable inputs. The Company validates the prices provided by our third-party pricing sources by obtaining market values from other pricing sources and analyzing pricing data in certain instances.

Level 3 Inputs

Notes Payable

The Company has determined that its notes payable would be classified as a Level 3 item in the fair value hierarchy. The fair value of these notes is based on the present value of expected future cash flows and assumptions about current interest rates and the credit worthiness of the Company.

Acquisition-related Contingent Consideration and Liabilities

In connection with the acquisition of Andromeda, the Company may be required to pay future consideration that is contingent upon the achievement of specified development, regulatory approval or sales-based milestone events. The Company estimates the fair value of the contingent consideration liabilities on the acquisition date and each reporting period thereafter using a probability-weighted income approach, which reflects the probability and timing of future payments. This fair value measurement is based on significant Level 3 inputs such as the anticipated timelines and probability of achieving development, regulatory approval or sales-based milestone events and projected revenues. The resulting probability-weighted cash flows are discounted using estimated discount rate that commensurate with the risks of the expected cash flows attributable to the various milestones.

Each reporting period thereafter, the Company revalues these obligations by performing a review of the assumptions listed above and record increases or decreases in the fair value of these contingent consideration obligations in changes in fair value of contingent consideration expenses within the consolidated statements of operations until such time that the related product candidate receives marketing approval. In the absence of any significant changes in key assumptions, the quarterly determination of fair values of these contingent consideration obligations would primarily reflect the passage of time.

Updates to assumptions could have a significant impact on our results of operations in any given period and actual results may differ from estimates. For example, significant increases in the probability of achieving a milestone or projected revenues would result in a significantly higher fair value measurement while significant decreases in the estimated probability of achieving a milestone or projected revenues would result in a significantly lower fair value measurement. Significant increases in the discount rate or in the anticipated timelines would result in a significantly lower fair value measurement while significant decreases in the discount rate or anticipated timelines would result in a significantly higher fair value measurement.

As discussed in Note 4, the Company re-measured the preliminary determination of the fair values of assets acquired and liabilities assumed as of the acquisition date. The Company had determined that the contingent consideration milestones and contingent liability milestones will not be achieved.

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Intangible Assets and Goodwill

12 Months Ended

Dec. 31, 2014

Goodwill and Intangible Assets Disclosure [Abstract]

Intangible Assets and Goodwill

8. Intangible Assets and Goodwill

Finite lived intangible asset

In May 2013, the Company acquired BUPHENYL and as part of this transaction, the Company recognized $16.5 million of an intangible asset relating to BUPHENYL product rights. The intangible asset is amortized over the estimated useful life using the economic use method, which reflects the pattern that the economic benefit of the intangible asset is consumed as revenue is generated. The pattern of consumption of the economic benefit is estimated using the future projected cash flow of the intangible asset which is reviewed on a regular basis. The Company estimated the useful life of the BUPHENYL product rights to be 10 years. The weighted average life remaining as of December 31, 2014 is 8.0 years.

Intangible asset amortization expense was $4.6 million and $3.1 million for the years ended December 31, 2014 and 2013, respectively.

Estimated aggregate amortization expense for each of the five succeeding years ending December 31 is as follows (in thousands):

	2015		2016		2017		2018		2019
Amortization expense	$	6,495	$	1,655	$	1,515	$	1,477	$	1,441

Goodwill

As discussed in Note 4, in June 2014, the Company acquired Andromeda and as part of this transaction, the Company recognized goodwill in the amount of $30.2 million. The Company does not amortize goodwill but tests goodwill for impairment on an annual basis and in between annual tests if the Company becomes aware of any events or changes in circumstances that would more likely than not indicate a reduction in the fair value of a reporting unit below its carrying amount. Due to the Company’s decision to terminate the development of Diapep277, the Company determined that sufficient indicators of potential impairment existed to require an interim goodwill impairment analysis.

The impairment test for goodwill is a two-step process. Step one consists of a comparison of the fair value of a reporting unit against its carrying amount, including the goodwill allocated to each reporting unit. The Company determines the fair value of the reporting unit based on the present value of estimated future cash flows as well as various price or market multiples applied to the reporting unit’s operating results, which are classified as level 3 within the fair value hierarchy (as described in Note 6). If the carrying amount of the reporting unit is in excess of its fair value, step two requires the comparison of the implied fair value of the reporting unit’s goodwill against the carrying amount of the reporting unit’s goodwill. Any excess of the carrying value of the reporting unit’s goodwill over the implied fair value of the reporting unit’s goodwill is recorded as an impairment loss.

For the evaluation of the goodwill, management considered Andromeda to be a reporting unit and assigned no value to the Andromeda reporting unit. The Company also determined that the implied fair value of goodwill is zero. Thus, the excess of the carrying amount of goodwill over the implied fair value of the Andromeda reporting unit of $30.2 million was recorded as an impairment loss in the Company’s consolidated statements of operations for the year ended December 31, 2014.

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Carrying Value and Estimated Fair Value of Company's Notes Payable and Term Loans (Detail) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2014	Dec. 31, 2013
Term Loans | Carrying Value
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Total	$ 16,124
Term Loans | Estimated Fair Value
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Total	16,746
April and September 2012 Notes | Carrying Value
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Total		8,273
April and September 2012 Notes | Estimated Fair Value
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Total		$ 8,860

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Weighted-Average Assumptions for Fair Value of Stock Options (Detail)	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]
Expected volatility	62.76%	58.00%	65.00%
Risk-free interest rate	1.90%	1.14%	1.05%
Dividend yield	0.00%	0.00%	0.00%
Expected term (in years)	6 years	5 years 11 months 16 days	6 years

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Inventories - Additional Information (Detail) (USD $) In Millions, unless otherwise specified	Dec. 31, 2014	Dec. 31, 2013
Inventory Disclosure [Abstract]
Inventory reserves	$ 0.3	$ 0

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Hierarchy for Assets and Liabilities Measured at Fair Value on Recurring Basis (Detail) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2014	Dec. 31, 2013
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total cash equivalents	$ 39,252	$ 38,986
Fair value of available-for-sale securities	43,713	43,825
Certificates of deposit
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total cash equivalents	720	480
Fair value of available-for-sale securities	24,610	13,343
Commercial paper
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair value of available-for-sale securities	3,491	3,491
U.S. Government agency securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair value of available-for-sale securities		8,008
Corporate notes
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair value of available-for-sale securities	15,612	18,983
Available-for-sale securities, Short-term
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair value of available-for-sale securities	34,487	28,045
Available-for-sale securities, Short-term | Certificates of deposit
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair value of available-for-sale securities	18,386	10,507
Available-for-sale securities, Short-term | Commercial paper
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair value of available-for-sale securities	3,491	3,491
Available-for-sale securities, Short-term | U.S. Government agency securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair value of available-for-sale securities		8,008
Available-for-sale securities, Short-term | Corporate notes
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair value of available-for-sale securities	12,610	6,039
Available-for-sale securities, Long-term
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair value of available-for-sale securities	9,226	15,780
Available-for-sale securities, Long-term | Certificates of deposit
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair value of available-for-sale securities	6,224	2,836
Available-for-sale securities, Long-term | Corporate notes
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair value of available-for-sale securities	3,002	12,944
Money market funds
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total cash equivalents	38,532	38,506
Quoted Prices in Active Markets for Identical Items (Level 1)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total cash equivalents	38,532	38,506
Quoted Prices in Active Markets for Identical Items (Level 1) | Money market funds
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total cash equivalents	38,532	38,506
Significant Other Observable Inputs (Level 2)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total cash equivalents	720	480
Fair value of available-for-sale securities	43,713	43,825
Significant Other Observable Inputs (Level 2) | Certificates of deposit
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total cash equivalents	720	480
Significant Other Observable Inputs (Level 2) | Available-for-sale securities, Short-term
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair value of available-for-sale securities	34,487	28,045
Significant Other Observable Inputs (Level 2) | Available-for-sale securities, Short-term | Certificates of deposit
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair value of available-for-sale securities	18,386	10,507
Significant Other Observable Inputs (Level 2) | Available-for-sale securities, Short-term | Commercial paper
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair value of available-for-sale securities	3,491	3,491
Significant Other Observable Inputs (Level 2) | Available-for-sale securities, Short-term | U.S. Government agency securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair value of available-for-sale securities		8,008
Significant Other Observable Inputs (Level 2) | Available-for-sale securities, Short-term | Corporate notes
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair value of available-for-sale securities	12,610	6,039
Significant Other Observable Inputs (Level 2) | Available-for-sale securities, Long-term
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair value of available-for-sale securities	9,226	15,780
Significant Other Observable Inputs (Level 2) | Available-for-sale securities, Long-term | Certificates of deposit
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair value of available-for-sale securities	6,224	2,836
Significant Other Observable Inputs (Level 2) | Available-for-sale securities, Long-term | Corporate notes
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair value of available-for-sale securities	$ 3,002	$ 12,944

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Defined Contribution Plan - Additional Information (Detail) (USD $)	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Defined Contribution Pension and Other Postretirement Plans Disclosure [Abstract]
Amount of contribution to Plan	$ 300,000	$ 200,000	$ 0

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Acquisitions (Tables)

12 Months Ended

Dec. 31, 2014

Schedule of Purchase Price Allocation

The following table summarizes the allocation of purchase price to the fair values of the assets acquired as of the acquisition date:

	(in thousands)
Inventories	$	3,900
Intangible Asset — BUPHENYL Product rights		16,500
Total	$	20,400

Total Gain from Buphenyl Acquisition

The following table summarizes the results of the Company’s allocation:

	(in thousands)
Ucyclyd’s retention option amount	$	32,000
Amount due to Ucyclyd for BUPHENYL product rights		(19,000	)
Amount due to Ucyclyd for inventory		(2,038	)
Net payment received from Ucyclyd		10,962
Option to purchase the rights to BUPHENYL and AMMONUL		(283	)
Fair value of BUPHENYL		20,400
Gain from settlement of retention option	$	31,079

Consolidated Pro Forma Information

                       In addition, the unaudited pro forma information does not purport to project the future results of operations of the Company.

	Year Ended December 31,
	2014		2013			2012
			( in thousands)
Net revenues	$	113,584	$	52,900		$	21,501
Net income (loss)		20,390		(12,199	)		(29,201	)
Net income (loss) per common share
Basic		0.99		(0.62	)		(4.02	)
Diluted		0.93		(0.62	)		(4.02	)

Andromeda

Consideration for Acquisition Transferred

The Acquisition Date fair value of the total consideration transferred to acquire Andromeda was as follows:

	Amounts Recognized as of the acquisition date (in thousands)
Cash paid	$	14,345
Fair value of Company’s common stock issued (312,869 shares)		7,778	*
Acquisition-related contingent consideration		68,961
Total fair value of consideration transferred	$	91,084

* The fair value of the common stock was measured using the Company’s closing stock price on June 12, 2014.

Allocation of Purchase Price to the Fair Values of Assets Acquired and Liabilities Assumed

The following table summarizes the provisional allocation of purchase price to the fair values of the assets acquired and liabilities assumed as of the acquisition date:

	Amounts Recognized as of the acquisition date (in thousands)
Assets acquired
IPR&D	$	135,712
Cash and cash equivalents		306
Prepaid expenses		95
Property and equipment, net		22
Other assets		578
Liabilities assumed
Current liabilities		(9,079	)
Deferred tax liability		(6,051	)
Acquisition related contingent liability		(34,288	)
Total identifiable net assets		87,295
Goodwill		3,789
Total consideration transferred	$	91,084

Measurement Period Adjustments

Consideration for Acquisition Transferred

Adjusted Fair Value of Consideration Transferred

	Amounts Recognized as of September 30, 2014 (as adjusted) (in thousands)
Cash paid	$	14,345
Fair value of Company’s common stock issued (312,869 shares)		7,778
Acquisition-related contingent consideration		—	*
Total fair value of consideration transferred	$	22,123

* The Company has assigned no value to the IPR&D as a result of the evidence obtained related to the improper practices regarding the clinical trials. The Company had determined that the contingent consideration milestones and contingent liability milestones will not be achieved.

** The reduction in deferred tax liability relates to the tax impact of the IPR&D and acquisition- related contingencies.

Allocation of Purchase Price to the Fair Values of Assets Acquired and Liabilities Assumed

The following table summarizes the adjusted provisional allocation of purchase price to the fair values of the assets acquired and liabilities assumed as of the Acquisition Date:

	Amounts Recognized as of September 30, 2014 (as adjusted) (in thousands)
Assets acquired
IPR&D	$	—	*
Cash and cash equivalents		306
Prepaid expenses		95
Property and equipment, net		22
Other assets		578
Liabilities assumed
Current liabilities		(9,079	)
Deferred tax liability		—	**
Acquisition related contingent liability		—	*
Total identifiable net assets (liabilities)		(8,078	)
Adjusted Goodwill		30,201
Total consideration transferred	$	22,123

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Schedule of Property and Equipment Estimated Useful Lives (Detail)	12 Months Ended
	Dec. 31, 2014
Software
Property, Plant and Equipment [Line Items]
Estimated useful lives	3 years
Furniture and Fixtures
Property, Plant and Equipment [Line Items]
Estimated useful lives	3 years
Minimum | Computer and office equipment
Property, Plant and Equipment [Line Items]
Estimated useful lives	3 years
Maximum | Computer and office equipment
Property, Plant and Equipment [Line Items]
Estimated useful lives	5 years

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Commitments and Contingencies

12 Months Ended

Dec. 31, 2014

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

13. Commitments and Contingencies

Operating Leases

On October 14, 2013, the Company entered into a lease agreement with 2000 Sierra Point Parkway LLC (“Landlord”) under which the Company will lease approximately 20,116 rentable square feet of office space in Brisbane, California. The initial term of the lease is six years and the lease commencement date is November 19, 2013. On December 12, 2013, the Company entered into the First Amendment to the Lease (“First Amendment”) under which the Company will lease approximately 352 rentable square feet of storage space. In addition to operating expenses and certain other additional expenses set forth in the Leases, the Company will pay total base rent of approximately $4.5 million during the initial term of the Leases.

The Company recognizes rent expense on a straight-line basis over the lease period with monthly base rent of approximately $0.1 million. In addition, the Company also leases certain office equipment under an operating lease, which expires in December 2016.

Aggregate total future minimum lease payments under operating facility and equipment leases as of December 31, 2014 were as follows (in thousands):

Years Ending December 31,
2015	$	797
2016		820
2017		821
2018		845
2019		766
Total	$	4,049

Rent expense including maintenance fees for the year ended December 31, 2014, 2013 and 2012 was $0.8 million, $0.4 million and $0.3 million, respectively.

Contingencies

In the normal course of business, the Company enters into contracts and agreements that contain a variety of representations and warranties and provide for general indemnifications. The Company’s exposure under these agreements is unknown because it involves claims that may be made against the Company in the future, but have not yet been made. Further, the Company may be subject to certain contingent liabilities that arise in the ordinary course of its business activities. The Company accrues a liability for such matters when it is probable that future expenditures will be made and such expenditures can be reasonably estimated.

In accordance with the Company’s amended and restated certificate of incorporation and amended and restated bylaws, the Company has indemnification obligations to its officers and directors for certain events or occurrences, subject to certain limits, while they are serving at the Company’s request in such capacity. There have been no claims to date and the Company has a director and officer insurance policy that may enable it to recover a portion of any amounts paid for future claims.

The Company is contingently committed for development milestone payments as well as sales-related milestone payments and royalties relating to potential future product sales under the restated collaboration agreement and purchase agreement with Ucyclyd (Note 3). The amount, timing and likelihood of these payments are unknown as they are dependent on the occurrence of future events that may or may not occur, including approval by the FDA of GPB for HE.

Other Matters

From time to time, the Company is a party to or otherwise involved in legal proceedings, claims and government inspections and other legal matters arising in the ordinary course of business or otherwise.

On March 17, 2014, the Company received notification of a Paragraph IV certification from the generic drug manufacturer Par Pharmaceutical, Inc. (“Par”) that it had filed an Abbreviated New Drug Application with the FDA seeking approval for a generic version of RAVICTI Oral Liquid. The Paragraph IV certification alleges that certain of the Company’s patents are invalid and/or will not be infringed by Par’s manufacture, use or sale of the product for which the ANDA was submitted. The Company filed suit against Par on April 23, 2014 to protect its patents and to obtain a stay of the FDA’s approval of Par’s ANDA. On July 22, 2014, Par filed a motion to dismiss for lack of personal jurisdiction, or in the alternative, a motion to transfer the case to the Southern District of New York. The Company will oppose the motion.

On September 22, 2014, CBI filed suit against the Company in Superior Court of the state of Delaware for New Castle County alleging breach of contract and breach of the implied covenant of good faith and fair dealing under the SPA with CBI relating related to the acquisition of Andromeda. CBI’s suit alleges $200.0 million in damages arising from the announcement on September 8, 2014 of the Company’s decision to terminate development of DiaPep277 after uncovering evidence of serious misconduct by certain Andromeda employees that compromised clinical trial results. The Company disputes CBI’s allegations. CBI has not served the complaint on the Company. On January 16, 2015, CBI dismissed its claim against the Company without prejudice. On February 16, 2015 the Company reached an agreement to settle with CBI and Yeda, the company from which Andromeda licenses the underlying DiaPep277 technology, DiaPep277 related claims against one another, and the Company granted CBI an option to acquire all of the outstanding stock of Andromeda. In connection with the agreement, CBI will transfer to the Company $2.5 million in shares of the common stock it holds, valued at the average closing price of the Company’s common stock for the fifteen trading days ending on February 11, 2015. The parties have appointed a steering committee to oversee the completion of the clinical trial with representatives of CBI and Yeda and a non-voting member appointed by the Company. The Company’s estimated budget from October 1, 2014 through the completion of the trial remains unchanged at $10.5 million. Any increase to this budget beyond $2.25 million, if incurred as a result of the direction of the steering committee, shall require CBI to reimburse those expenses in shares of the Company’s common stock. Under the agreement, CBI’s option is exercisable through September 30, 2015 for $3.5 million payable in shares of the Company’s common stock. In addition, if the option is exercised, then Andromeda will be obligated to pay Hyperion future contingent payments if and to the extent it or its shareholders receive revenues or certain other proceeds, which are capped at $36.5 million. This amount, together with the option exercise price that Hyperion may receive, approximates the total amount Hyperion will have invested in Andromeda by the option exercise date. Under the agreement, in the event that CBI does not exercise its option, the underlying DiaPep277 technology will revert to Yeda under the license agreement between Andromeda and Yeda. Also on February 16, 2015, the Company entered into a release with Evotec pursuant to which Evotec released its previously asserted claims to a milestone payment from the Company in connection with the acquisition of Andromeda and that it had suffered harm from recent incidents in relation to Diapep277in exchange for a payment of $500,000 from the Company.

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Defined Contribution Plan

12 Months Ended

Dec. 31, 2014

Postemployment Benefits [Abstract]

Defined Contribution Plan

18. Defined Contribution Plan

The Company sponsors a defined contribution plan under Section 401(k) of the Internal Revenue Code (“Plan”) covering substantially all full-time U.S. employees. Employee contributions are voluntary and are determined on an individual basis subject to the maximum allowable under federal tax regulations. Participants are always fully vested in their contributions. For the year ended December 31, 2014 and 2013, the Company made a contribution of $0.3 million and $0.2 million to the Plan. For the year ended December 31, 2012, the Company did not make any contributions to the Plan.

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Related Party Transaction - Additional Information (Detail) (Swedish Orphan Biovitrum AB, USD $) In Millions, unless otherwise specified	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013
Swedish Orphan Biovitrum AB
Related Party Transaction [Line Items]
Sales recognized	$ 5.1	$ 2.2
Accounts receivable from SOBI	$ 1.5	$ 0.7

XML

Formation and Business of the Company - Additional Information (Detail) (USD $)	0 Months Ended	12 Months Ended			0 Months Ended
	Jul. 31, 2012	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012	Mar. 13, 2013	Aug. 14, 2013
Nature Of Operations [Line Items]
Offering price per share	$ 10.00
Additional shares issued for over-allotment	750,000
Net proceeds from initial public offering				$ 53,475,000
Underwriting discounts and commissions			4,116,000	4,025,000
Net proceeds from public offering			64,488,000
Aggregate offering price						150,000,000
Common stock shares sold by selling stockholders						8,727,000
Aggregate offering price under sales agreement						50,000,000
Sales of securities		0
Income (loss) from operations		(4,207,000)	(13,417,000)	(28,533,000)
Accumulated deficit		(128,625,000)	(122,370,000)
April 2011 Convertible Notes Payable
Nature Of Operations [Line Items]
Principal and accrued interest converted upon closing of IPO	18,900,000
Number of shares issued upon conversion of notes	1,888,054
Carrying value and accrued interest	18,400,000
October 2011 Convertible Notes Payable
Nature Of Operations [Line Items]
Principal and accrued interest converted upon closing of IPO	15,600,000
Number of shares issued upon conversion of notes	1,556,816
Carrying value and accrued interest	14,900,000
Series C-1 Convertible Preferred Stock
Nature Of Operations [Line Items]
Preferred stock converted into common stock	1,912,598
Series C-2 Convertible Preferred Stock
Nature Of Operations [Line Items]
Preferred stock converted into common stock	4,663,039
April 2011 Common Stock Warrants Liability
Nature Of Operations [Line Items]
Shares issued for conversion of warrants upon closing of IPO	322,599
October 2011 Preferred Stock Warrants Liability
Nature Of Operations [Line Items]
Shares issued for conversion of warrants upon closing of IPO	17,762
Initial Public Offering
Nature Of Operations [Line Items]
Common stock, shares issued	5,000,000
Net proceeds from initial public offering	51,300,000
Underwriting discounts and commissions	4,025,000
Other offering expenses	2,200,000
Follow-on offering
Nature Of Operations [Line Items]
Common stock, shares issued					2,875,000
Offering price per share					$ 20.75
Additional shares issued for over-allotment					431,250
Underwriting discounts and commissions					4,116,000
Other offering expenses					800,000
Net proceeds from public offering					$ 63,700,000
BUPHENYL
Nature Of Operations [Line Items]
Business acquisition date		May 31, 2013
Andromeda
Nature Of Operations [Line Items]
Business acquisition date		Jun. 12, 2014

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Notes Payable (Tables)

12 Months Ended

Dec. 31, 2014

Debt Disclosure [Abstract]

Future Minimum Payments Under Loan Agreement

Future minimum payments under the Loan Agreement as of December 31, 2014 are as follows (in thousands):

Years Ending December 31,
2015	$	730
2016		6,822
2017		8,786
2018		4,450
Total future minimum payments	$	20,788
Less: amount representing unamortized interest		(1,709	)
Less: amount representing debt discount		(955	)
Total minimum payments	$	18,124
Less: current portion		—
Non-current portion	$	18,124

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Condensed Consolidated Statements of Comprehensive Income (Loss) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Statement of Comprehensive Income [Abstract]
Net income (loss)	$ (6,255)	$ 16,627	$ (32,263)
Other comprehensive income (loss):
Unrealized gain (loss) on investments arising during the year	5	(55)
Other comprehensive income (loss)	5	(55)
Comprehensive income (loss)	$ (6,250)	$ 16,572	$ (32,263)

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Components of Income Tax Expense (Detail) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013
Current income tax expense:
Federal	$ 736
State	703	326
Total current income tax expense	1,439	326
Deferred income tax benefit:
State	(1,136)	(277)
Total deferred income tax benefit	(1,136)	(277)
Total income tax expense	$ 303	$ 49

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Summary of Significant Accounting Policies

12 Months Ended

Dec. 31, 2014

Accounting Policies [Abstract]

Summary of Significant Accounting Policies

2. Summary of Significant Accounting Policies

Basis of Presentation and the Use of Estimates

The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). The preparation of the accompanying consolidated financial statements in accordance with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the consolidated financial statements, and the reported amounts of revenues and expenses during the reporting period. On an ongoing basis, the Company evaluates its estimates, including those related to the fair value of assets and liabilities, intangible asset valuation, acquisition-related contingent consideration, acquisition related contingent liability, impairment of goodwill and intangible assets, stock-based compensation expense, income taxes, revenue recognition and product sales allowances. Management bases its estimates on historical experience or on various other assumptions, including information received from its service providers, which it believes to be reasonable under the circumstances. Actual results could differ from those estimates.

Basis of Consolidation

The consolidated financial statements include the Company’s accounts and those of its wholly-owned subsidiaries: Hyperion Therapeutics Ltd., Hyperion Therapeutics Ireland Holding Ltd., Hyperion Therapeutics Ireland Operating Ltd., Hyperion Therapeutics Israel Holding Corp. Ltd., Penville Limited and Andromeda Biotech Ltd. All intercompany accounts and transactions have been eliminated.

Concentration of Credit Risk and Significant Customers

The Company’s cash and cash equivalents and investments are maintained with financial institutions located in and outside the United States. Deposits in these institutions may exceed the amount of insurance provided on such deposits. The Company has not recognized any losses from credit risks during the periods presented and management does not believe that the Company is exposed to significant credit risk from its cash and cash equivalents or investments.

The Company is also subject to credit risk from its accounts receivables related to its product sales. The Company monitors its exposure within accounts receivable and records a reserve against uncollectible accounts receivable as necessary. The Company extends credit to a specialty distributor in the United States and to international distributors, pharmacies and hospitals outside the United States. Customer creditworthiness is monitored and collateral is not required. As of December 31, 2014, there were no credit losses on the Company’s accounts receivable. As of December 31, 2014 and 2013, the specialty distributor in the United States accounted for 87% and 64% of accounts receivable balance, respectively. One international distributor accounted for 10% and 17% of the accounts receivable balance for the year ended December 31, 2014 and 2013, respectively.

The specialty distributor accounted for 91% and 88% of the net product revenue for the year ended December 31, 2014 and 2013, respectively.

Fair Value of Financial Instruments

The Company measures certain financial assets and liabilities at fair value based on the exchange price that would be received for an asset or paid for to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants. The carrying amounts of the Company’s financial instruments, including cash equivalents, short-term investments, accounts payable, and accrued liabilities, approximate fair value due to their short maturities. The carrying amounts of long-term investments, acquisition-related contingent consideration and acquisition related contingent liability represent their estimated fair values. The fair value of the notes payable are based on the present value of expected future cash flows and assumptions about current interest rates and the creditworthiness of the Company.

Business Combinations

The Company allocates the purchase price of an acquired business to the tangible and intangible assets acquired and liabilities assumed based upon their estimated fair values on the acquisition date. Any excess of the purchase price over the fair value of the net assets acquired is recorded as goodwill. Acquired in-process research and development (“IPR&D”) is recognized at fair value and initially characterized as an indefinite-lived intangible asset, irrespective of whether the acquired IPR&D has an alternative future use. The purchase price allocation process requires management to make significant estimates and assumptions, especially at the acquisition date with respect to intangible assets. Direct transaction costs associated with the business combination are expensed as incurred.

Cash and Cash Equivalents

The Company considers all highly liquid investments with original maturities of three months or less at the date of purchase to be cash equivalents. Cash and cash equivalents include money market funds and various deposit accounts.

Investments

The Company determines the appropriate classification of its investments in debt and equity securities at the time of purchase. All of the Company’s securities are classified as available-for-sale and reported in short-term investments or long-term investments based on maturity dates and whether such assets are reasonably expected to be realized in cash or sold or consumed during the normal cycle of business. Available-for-sale investments are recorded at fair value, with unrealized gains or losses included in Accumulated Other Comprehensive Loss on the Company’s Consolidated Balance Sheets, exclusive of other-than-temporary impairment losses, if any. Short-term and long-term investments are comprised of corporate notes, commercial paper, U.S. federal government agency securities and certificates of deposit.

Accounts Receivable

Trade accounts receivable are recorded net of product sales allowances for prompt-payment discounts, chargebacks, and doubtful accounts. Estimates for chargebacks and prompt-payment discounts are based on contractual terms, historical trends and expectations regarding the utilization rates for these programs. At December 31, 2014, the Company had no allowances for doubtful accounts.

Inventories

Inventories are valued at the lower of cost or market, with cost computed at standard cost (which approximates actual cost) on a first-in-first-out (FIFO) cost method and consists of raw materials, work-in-progress and finished goods. Costs capitalized as inventories include third party manufacturing costs, associated compensation related costs of personnel indirectly involved in the manufacturing process and other overhead costs such as ancillary supplies. Subsequent to FDA approval of RAVICTI on February 1, 2013, the Company began capitalizing RAVICTI inventories as the related costs were expected to be recoverable through the commercialization of the product. Costs incurred prior to the FDA approval of RAVICTI have been recorded as research and development expense in the consolidated statements of operations. If information becomes available that suggest that inventories may not be realizable, the Company may be required to expense a portion or all of the previously capitalized inventories.

Products that have been approved by the FDA or other regulatory authorities, such as RAVICTI, are also used in clinical programs, to assess the safety and efficacy of the products for usage in diseases that have not been approved by the FDA or other regulatory authorities. The form of RAVICTI utilized for both commercial and clinical programs is identical and, as a result, the inventory has an “alternative future use” as defined in authoritative guidance. Raw materials and purchased drug product associated with clinical development programs are included in inventory and charged to research and development expense when the product enters the research and development process and no longer can be used for commercial purposes and, therefore, does not have an “alternative future use”.

Intangible Assets

Intangible assets are recorded at acquisition cost less accumulated amortization and impairment. Intangible asset with finite lives are amortized over their estimated useful life using the economic use method, which reflects the pattern that the economic benefits of the intangible asset are consumed as revenue is generated. The pattern of consumption of the economic benefits is estimated using the future projected cash flows of the intangible asset.

IPR&D

The fair value of IPR&D acquired through a business combination is capitalized as an indefinite-lived intangible asset until the completion or abandonment of the related research and development activities. When the related research and development is completed, the asset is assigned a useful life and amortized.

The fair value of an IPR&D intangible asset is determined using an income approach. This approach starts with a forecast of the net cash flows expected to be generated by the asset over its estimated useful life. The net cash flows reflect the asset’s stage of completion, the probability of technical success, the projected costs to complete, expected market competition, and an assessment of the asset’s life-cycle. The net cash flows are then adjusted to present value by applying an appropriate discount rate that reflects the risk factors associated with the cash flow streams.

Goodwill

Goodwill represents the excess of the purchase price of acquired businesses over the estimated fair value of the identifiable net assets acquired. Goodwill is not amortized but is tested for impairment at least annually at the reporting unit level or more frequently if events or changes in circumstances indicate that the asset might be impaired.

Goodwill is tested for impairment annually or more frequently if events or changes in circumstances between annual tests indicate that the asset may be impaired. Impairment loss is recognized based on a comparison of the fair value of the asset to its carrying value, without consideration of any recoverability.

Impairment of Long-lived Assets

The Company reviews its property and equipment, intangible assets subject to amortization and other long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset class may not be recoverable. Indicators of potential impairment include: an adverse change in legal factors or in the business climate that could affect the value of the asset; an adverse change in the extent or manner in which the asset is used or is expected to be used, or in its physical condition; and current or forecasted operating or cash flow losses that demonstrate continuing losses associated with the use of the asset. If indicators of impairment are present, the asset is tested for recoverability by comparing the carrying value of the asset to the related estimated undiscounted future cash flows expected to be derived from the asset. If the expected cash flows are less than the carrying value of the asset, then the asset is considered to be impaired and its carrying value is written down to fair value, based on the related estimated discounted future cash flows.

Indefinite-lived intangible assets, including acquired IPR&D, are tested for impairment annually or more frequently if events or changes in circumstances between annual tests indicate that the asset may be impaired. Impairment losses on indefinite-lived intangible assets are recognized based on a comparison of the fair value of the asset to its carrying value, without consideration of any recoverability.

Acquisition-Related Contingent Consideration

Acquisition-related contingent consideration, which consists primarily of potential milestone payments and royalty obligations, is recorded in the consolidated balance sheets at its acquisition date estimated fair value, in accordance with the acquisition method of accounting. The fair value of the acquisition-related contingent consideration is remeasured each reporting period, with changes in fair value recorded in the consolidated statements of operations. Changes in the fair value of the acquisition-related contingent consideration obligations result from several factors including changes in discount periods and rates, changes in the timing and amount of revenue estimates and changes in probability assumptions with respect to the likelihood of achieving specified milestone criteria. The fair value measurement is based on significant inputs not observable in the market and thus represents a Level 3 measurement as defined in the fair value hierarchy.

Acquisition-Related Contingent Liability

Acquisition-related contingent liability, which consists primarily of potential milestone payments and royalty obligations, and potential payments to certain employees of Andromeda is recorded in the consolidated balance sheets at its acquisition date estimated fair value. The Company reassesses the probability and estimates associated with the contingent liability at each reporting period. For liability payable to third parties, any increase in the liability is recorded in the consolidated statements of operations. For liabilities payable to employees, the Company accounts for the liability in accordance with Financial Accounting Stands Board (“FASB”) Accounting Stand Codification (“ASC”) 450 Contingencies.

Property and Equipment

Property and equipment are stated at cost, net of accumulated depreciation and amortization. All property and equipment is depreciated on a straight-line basis over the following estimated useful lives:

Computer and office equipment	3 – 5 years
Software	3 years
Furniture and fixtures	3 years

Leasehold improvements are amortized over the lesser of their useful life or the term of the applicable lease. Upon sale or retirement of assets, the cost and related accumulated depreciation and amortization are removed from the consolidated balance sheet and the resulting gain or loss is reflected in operations. Maintenance and repairs are charged to operations as incurred.

2012 Reverse Stock Split

The Company effected a 1-for-6.09 reverse stock split of its common stock and preferred stock on July 12, 2012. Accordingly, all share and per share amounts for all periods presented in these consolidated financial statements and notes thereto, have been adjusted retroactively to reflect this reverse stock split.

Preclinical and Clinical Trial Accruals

The Company’s clinical trial accruals are based on estimates of patient enrollment and related costs at clinical investigator sites as well as estimates for the services received and efforts expended pursuant to contracts with multiple research institutions and clinical research organizations that conduct and manage preclinical and clinical trials on the Company’s behalf. The Company accrues expenses related to clinical trials based on contracted amounts applied to the level of patient enrollment and activity according to the protocol. If timelines or contracts are modified based upon changes in the clinical trial protocol or scope of work to be performed, the Company modifies the estimates of accrued expenses accordingly. To date, the Company has had no significant adjustments to accrued preclinical and clinical trial expenses.

Revenue Recognition

The Company recognizes revenue in accordance with ASC 605, Revenue Recognition, when the following criteria have been met: persuasive evidence of an arrangement exists; delivery has occurred and risk of loss has passed; the seller’s price to the buyer is fixed or determinable and collectability is reasonably assured. The Company determines that persuasive evidence of an arrangement exists based on written contracts that defined the terms of the arrangements. In addition, the Company determines that services have been delivered in accordance with the arrangement. The Company assesses whether the fee is fixed or determinable based on the payment terms associated with the transaction and whether the sales price is subject to refund or adjustment. The Company assesses collectability based primarily on the customer’s payment history and on the creditworthiness of the customer.

Product Revenue, net: The Company’s product revenue represents sales of RAVICTI and BUPHENYL which are recognized once all four revenue recognition criteria described above are met. The Company recognizes revenue net of product sales allowances. Product shipping and handling costs are included in cost of sales. Prior to June 2014, revenue from the sale of RAVICTI was recognized based on the amount of product sold through to the end user consumer. Starting June 2014, the Company could reasonably estimate and determine sales allowances, therefore the Company began recognizing RAVICTI revenue at the point of sale to the specialty distributor, which resulted in the one-time non-recurring recognition of an additional $8.6 million in net revenues during the year ended December 31, 2014. The impact of this change resulted in a decrease in net loss of $7.9 million for year ended December 31, 2014, or $0.39 per basic and diluted share.

Product Sales Allowances: The Company establishes reserves for prompt-payment discounts, government and commercial rebates, product returns and chargebacks. Allowances relate to prompt-payment discounts and are recorded at the time of revenue recognition, resulting in a reduction in product sales revenue and a decrease in trade accounts receivables. Accruals related to government rebates, product returns and other applicable allowances such as distributor fees are recognized at the time of revenue recognition, resulting in a reduction in product sales and an increase in accrued expenses or a reduction in the related accounts receivable.

• Prompt-payment discounts: The specialty distributor and specialty pharmacies are offered prompt payment discounts. The Company expects the specialty distributor and specialty pharmacies will earn prompt payment discounts and, therefore deduct the full amount of these discounts from total product sales when revenues are recognized. The Company records prompt-payment discounts as allowances against accounts receivable on the consolidated balance sheets.

• Rebates: Allowances for rebates include mandated discounts under the Medicaid Drug Rebate Program. Rebate amounts are based upon contractual agreements or legal requirements with public sector (e.g. Medicaid) benefit providers. Rebates are amounts owed after the final dispensing of the product to a benefit plan participant and are based upon contractual agreements or legal requirements with public sector benefit providers. The allowance for rebates is based on statutory discount rates and expected utilization. The Company estimates for expected utilization of rebates based on historical data and data received from the specialty pharmacies. Rebates are generally invoiced and paid in arrears so that the accrual balance consists of an estimate of the amount expected to be incurred for the current quarter’s activity, plus an accrual balance for known prior quarter’s unpaid rebates. If actual future rebates vary from estimates, the Company may need to adjust prior period accruals, which would affect revenue in the period of adjustment. Allowance for rebates are recorded in accrued liabilities on the consolidated balance sheets.

• Chargebacks: Chargebacks are discounts that occur when contracted customers purchase directly from a specialty distributor. Contracted customers, which primarily consist of Public Health Service institutions, non-profit clinics, and Federal government entities purchasing via the Federal Supply Schedule, generally purchase the product at a discounted price. The specialty distributor, in turn, charges back to the Company the difference between the price initially paid by the specialty distributor and the discounted price paid to the specialty distributor by the customer. The allowance for chargebacks is based on historical sales data and known sales to contracted customers.

• Medicare Part D Coverage Gap: Medicare Part D prescription drug benefit mandates manufacturers to fund 50% of the Medicare Part D insurance coverage gap for prescription drugs sold to eligible patients. The Company estimates for the expected Medicare Part D coverage gap are based on historical invoices received and in part from data received from the specialty pharmacies. Funding of the coverage gap is generally invoiced and paid in arrears so that the accrual balance consists of an estimate of the amount expected to be incurred for the current quarter’s activity, plus an accrual balance for known prior quarters. If actual future funding varies from estimates, the Company may need to adjust prior period accruals, which would affect revenue in the period of adjustment. Estimates of the Medicare Part D coverage gap are recorded in accrued liabilities on the consolidated balance sheets.

• Distribution Service Fees: The Company has a written contract with the specialty distributor that includes terms for distribution-related fees. Distributor fees are calculated at percentage of gross sales based upon agreed contracted rate. The Company accrues distributor fees at the time of the revenue recognition, resulting in reduction of product sales revenue and the recording of accrued liabilities on the consolidated balance sheets. The Company records distribution and other fees paid to its customers as a reduction of revenue, unless it receives an identifiable and separate benefit for the consideration and it can reasonably estimate the fair value of the benefit received. If both conditions are met, the Company records the consideration paid to the customer as an operating expense. These costs are typically known at the time of sale.

• Product Returns: Consistent with industry practice, the Company generally offers customers a limited right to return. The Company accepts returns of products from patients resulting from breakage as defined within the Company’s returns policy. Additionally, the Company considers several other factors in the estimation process including the expiration dates of product shipped, third party data in monitoring channel inventory levels, shelf life of the product, prescription trends and other relevant factors. Provisions for estimated product returns are recorded as accrued liabilities on the consolidated balance sheets.

• Co-payment assistance: The Company provides a cash donation to a non-profit third party organization which supports patients, who have commercial insurance and meet certain financial eligibility requirements, with co-payment assistance and travel costs. The amount of co-payment assistance is accounted for by the Company as a reduction of revenues.

Cost of sales

Cost of sales includes third-party manufacturing cost of products sold, royalty fees, and other indirect costs related to personnel compensation, shipping and supplies. Costs incurred prior to FDA approval of RAVICTI have been recorded as research and development expense in the Company’s consolidated statement of operations. The Company expects that cost of RAVICTI sales as a percentage of revenue will increase in future periods as product manufactured prior to FDA approval, and therefore fully expensed, has been utilized. Cost of BUPHENYL sales for 2013 as a percentage of revenue was higher and not indicative of cost of sales in future periods due to the recording of the step-up value on BUPHENYL inventories acquired from Ucyclyd which is expensed to cost of sales as that inventory is sold. As of December 31, 2014, the entire fair value of acquired BUPHENYL inventory has been charged to expense, primarily cost of sales.

Foreign Currency Translations

Operations in non-U.S. entities are recorded in the functional currency of each entity. For financial reporting purposes, the functional currency of an entity is determined by a review of the source of an entity’s most predominant cash flows. The reporting and functional currency of the Company and its subsidiaries is the U.S. dollar.

Gains and losses resulting from foreign currency transactions are translated at the weighted average rate of exchange prevailing during the period. Any monetary asset or liability denominated in foreign currency and is translated at the rate of exchange in effect on the balance sheet date. Any gains and losses resulting from foreign currency translations are included in other income (expense)-net in the consolidated statements of operations. The Company does not currently utilize and has not in the past utilized any foreign currency hedging strategies to mitigate the effect of its foreign currency exposure.

Research and Development Expenses

Costs related to research and development of products are charged to expense as incurred. Research and development costs include, but are not limited to, payroll and personnel expenses, clinical trial supplies, fees for clinical trial services, consulting costs and allocated overhead, including rent, equipment, depreciation and utilities.

Stock-Based Compensation

The Company accounts for stock-based employee compensation arrangements in accordance with provisions of ASC 718, Compensation — Stock Compensation. ASC 718 requires the recognition of compensation expense, using a fair-value based method, for costs related to all share-based payments including stock options. ASC 718 requires companies to estimate the fair value of share-based payment awards on the date of grant using an option-pricing model. The Company calculates the fair value of stock options using the Black-Scholes method and expenses using the straight-line attribution approach.

Income Taxes

The Company accounts for income taxes under the liability method. Under this method, deferred tax assets and liabilities are determined based on the difference between the financial statement and tax bases of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to affect taxable income. Valuation allowances are established when necessary to reduce deferred tax assets to the amounts expected to be realized.

The Company accounts for uncertain tax positions in accordance with ASC 740-10, Accounting for Uncertainty in Income Taxes. The Company assesses all material positions taken in any income tax return, including all significant uncertain positions, in all tax years that are still subject to assessment or challenge by relevant taxing authorities. Assessing an uncertain tax position begins with the initial determination of the position’s sustainability and is measured at the largest amount of benefit that is greater than fifty percent likely of being realized upon ultimate settlement. As of each balance sheet date, unresolved uncertain tax positions must be reassessed, and the Company will determine whether (i) the factors underlying the sustainability assertion have changed and (ii) the amount of the recognized tax benefit is still appropriate. The recognition and measurement of tax benefits requires significant judgment. Judgments concerning the recognition and measurement of a tax benefit might change as new information becomes available.

Comprehensive Income (Loss)

Comprehensive income (loss) is comprised of net income (loss) and other comprehensive loss. Other comprehensive loss includes changes in stockholders’ equity that are excluded from net income (loss), specifically changes in unrealized gains and losses on the Company’s available-for-sale securities.

Net Income (Loss) per Share of Common Stock

Basic earnings per share is computed by dividing the net income (loss) by the weighted average number of shares of common stock outstanding during the periods presented. The computation of diluted earnings per share is similar to the computation of basic earnings per share, except that the denominator is increased for the assumed exercise of dilutive options and other potentially dilutive securities using the treasury stock method, unless the effect is antidilutive.

Recent Accounting Pronouncements

In July 2013, FASB issued ASU No. 2013-11, Income Taxes (Topic 740): Presentation of an unrecognized tax benefit when a net operating loss carryforward, a similar tax loss, or a tax credit carryforward exists. Under the amendments of this update an entity is required to present an unrecognized tax benefit, or a portion of an unrecognized tax benefit in the financial statements as a reduction to a deferred tax asset for a net operating loss carryforward, a similar tax loss, or a tax credit carryforward, except as follows. To the extent a net operating loss carryforward, a similar tax loss, or a tax credit carryforward is not available at the reporting date under the tax law of the applicable jurisdiction to settle any additional income taxes that would result from the disallowance of a tax position or the tax law of the applicable jurisdiction does not require the entity to use, and the entity does not intend to use, the deferred tax asset for such purpose, the unrecognized tax benefit should be presented in the financial statements as a liability and should not be combined with deferred tax assets. The assessment of whether a deferred tax asset is available is based on the unrecognized tax benefit and deferred tax asset that exist at the reporting date and should be made presuming disallowance of the tax position at the reporting date. For example, an entity should not evaluate whether the deferred tax asset expires before the statute of limitations on the tax position or whether the deferred tax asset may be used prior to the unrecognized tax benefits being settled. The provisions of this update was effective prospectively for the Company in fiscal years beginning after December 15, 2013 with early adoption and retrospective application permitted. The Company adopted this guidance on January 1, 2014. The implementation did not have an impact on the Company’s consolidated financial statements.

In May 2014, FASB issued Accounting Standards Update 2014-09 (ASU 2014-09), Revenue from Contracts with Customers. ASU 2014-09 will supersede the revenue recognition requirements in Revenue Recognition (Topic 605) and requires entities to recognize revenue in a way that depicts the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled to in exchange for those goods or services. ASU 2014-09 is effective for annual reporting periods beginning after December 15, 2016, including interim periods within that reporting period, which for the Company is January 1, 2017. Early adoption is not permitted. The Company is currently evaluating the potential impact the adoption of ASU 2014-09 will have on the Company’s consolidated financial statements.

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Total Gain from BUPHENYL Acquisition (Detail) (USD $)	0 Months Ended	12 Months Ended		3 Months Ended
	May 31, 2013	Dec. 31, 2014	Dec. 31, 2013	Jun. 30, 2013
Business Acquisition [Line Items]
Amount due to Ucyclyd for BUPHENYL product rights		$ (19,000,000)
Amount due to Ucyclyd for inventory		(2,000,000)
Net payment received from Ucyclyd	11,000,000		10,962,000
Option to purchase the rights to BUPHENYL and AMMONUL	(300,000)		(283,000)
Fair value of BUPHENYL	20,400,000
Gain from settlement of retention option	31,100,000		31,079,000
BUPHENYL
Business Acquisition [Line Items]
Ucyclyd's retention option amount	32,000,000
Amount due to Ucyclyd for BUPHENYL product rights	(19,000,000)
Amount due to Ucyclyd for inventory	(2,038,000)
Net payment received from Ucyclyd	10,962,000
Option to purchase the rights to BUPHENYL and AMMONUL	(283,000)
Fair value of BUPHENYL	20,400,000
Gain from settlement of retention option	$ 31,079,000			$ 31,100,000

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Stock Option Plan - Additional Information (Detail) (USD $)	0 Months Ended	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2006
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Closing price of common stock	$ 24.00
Weighted-average grant date fair value of options granted		$ 25.99	$ 22.90	$ 6.76
Stock-based compensation		$ 7,638,000	$ 4,321,000	$ 993,000
Unrecognized compensation cost	17,000,000	17,000,000
Period of recognition for unrecognized compensation cost		2 years 6 months
Inventories
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Stock-based compensation capitalized into inventories		100,000	100,000
2006 Plan
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Shares reserved for issuance					457
Term of option					10 years
Vesting term					5 years
Aggregate intrinsic value of options exercised		4,100,000
Number of options vested and expected to vest	1,328,822	1,328,822
Options vested and expected to vest, intrinsic value	27,400,000	27,400,000
Options vested and expected to vest, weighted average exercise price	$ 3.59	$ 3.59
Options vested and expected to vest, weighted average remaining life		5 years 6 months
2006 Plan | Minimum
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Minimum exercise price as a percentage of fair market value					100.00%
Minimum vesting percentage per year					20.00%
2006 Plan | Persons Possessing 10% or More of Combined Voting Power
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Term of option					5 years
2006 Plan | Persons Possessing 10% or More of Combined Voting Power | Minimum
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Minimum exercise price as a percentage of fair market value					110.00%
Percentage of voting rights held by individual causing change in exercise price					10.00%
2012 Plan
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Shares reserved for issuance	688,842	688,842	576,760
Aggregate intrinsic value of options exercised		800,000
Number of options vested and expected to vest	1,646,570	1,646,570
Options vested and expected to vest, intrinsic value	$ 3,600,000	$ 3,600,000
Options vested and expected to vest, weighted average exercise price	$ 23.02	$ 23.02
Options vested and expected to vest, weighted average remaining life		8 years 8 months 12 days
Stock options granted		806,919	1,067,315	720,580
2012 Plan | Restricted Stock
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Restricted stock units, Granted		122,155	21,000	0
Stock units outstanding under plan	127,305	127,305	18,000
2012 Plan | Performance stock units
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Restricted stock units, Granted		8,988
Stock units outstanding under plan	8,988	8,988	0	0

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Components of Property and Equipment (Detail) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2014	Dec. 31, 2013
Property, Plant and Equipment [Line Items]
Property and equipment, gross	$ 1,756	$ 1,200
Less: Accumulated depreciation	(640)	(264)
Total property and equipment, net	1,116	936
Computers and Software
Property, Plant and Equipment [Line Items]
Property and equipment, gross	1,202	563
Furniture and Fixtures
Property, Plant and Equipment [Line Items]
Property and equipment, gross	320	320
Office Equipment
Property, Plant and Equipment [Line Items]
Property and equipment, gross	53	53
Capital work in progress
Property, Plant and Equipment [Line Items]
Property and equipment, gross	$ 181	$ 264

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Net Income (Loss) per Share of Common Stock

12 Months Ended

Dec. 31, 2014

Earnings Per Share [Abstract]

Net Income (Loss) per Share of Common Stock

19. Net Income (Loss) per Share of Common Stock

The following table sets forth the computation of basic and diluted net income (loss) per share of common stock for the periods indicated (in thousands, except share and per share amounts):

	Year Ended December 31,
	2014			2013		2012
Net income (loss) per share
Numerator:
Net income (loss) attributable to common stockholders	$	(6,255	)	$	16,627	$	(32,263	)
Denominator:
Weighted-average number of common shares outstanding — basic		20,470,025			19,415,822		7,256,537
Dilutive effect of stock-options and awards		—			1,315,091		—
Weighted average common shares outstanding — dilutive		20,470,025			20,730,913		7,256,537
Net income (loss) per share:
Basic	$	(0.31	)	$	0.86	$	(4.45	)
Diluted	$	(0.31	)	$	0.80	$	(4.45	)

The following outstanding potentially dilutive securities were excluded from the computation of diluted net income (loss) per share, as the effect of including them would have been antidilutive:

	Year Ended December 31,
	2014		2013		2012
Stock options		3,068,741		1,027,605		1,928,754
Common stock warrants		274		274		84,656
Total		3,069,015		1,027,879		2,013,410

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Notes Payable - Additional Information 2 (Detail) (USD $)	12 Months Ended	0 Months Ended	1 Months Ended		12 Months Ended
	Dec. 31, 2014	Jul. 18, 2014	Apr. 30, 2012	Sep. 30, 2012	Dec. 31, 2013	Dec. 31, 2012
Debt Instrument [Line Items]
Loss on extinguishment of debt	$ 600,000
Silicon Valley Bank
Debt Instrument [Line Items]
Final payment due as a percentage of principal loan amount	6.75%
Pre-payment of term loans		5,800,000
Repayment of loans, description	The Company is required to pay interest only for the first 18 months of the Term Loans, followed by 30 equal monthly payments of interest and principal.
Interest rate on loans, description	The Loan Agreement provides for an interest rate of 4.0% per year on the Term Loans and the prime rate plus 0.75% per year on the Revolving Loans, with a minimum interest requirement on the Revolving Loans.
Percentage Of Financial Instruments	75.00%
Value Of Financial Instruments	40,000,000
Debt Instrument, Covenant Description	At least the lesser of (i) seventy five percent (75%) of the dollar value of the Company and its Subsidiaries' accounts at all financial institutions or (ii) $40.0 million; provided, however, that the Company's obligation relating to foreign exchange transactions is subject to SVB providing commercially competitive exchange rates.
Silicon Valley Bank | Term Loans
Debt Instrument [Line Items]
Number of tranches		2
Loan and security agreement, maximum borrowings		16,000,000
Term loans maturity date	Jun. 30, 2018
Silicon Valley Bank | Revolving Loans
Debt Instrument [Line Items]
Loan and security agreement, maximum borrowings		5,000,000
Drew down from revolving line of credit facility		2,000,000
Term loans maturity date	Jul. 18, 2017
April 2012 Notes Payable
Debt Instrument [Line Items]
Aggregate principal amount of notes issued			10,000,000
Stated interest rate on notes			8.88%
Interest only payment period			9 months
Payment of loan principal and interest			27 months
Period for monthly financials and compliance certificate			30 days
Period for annual audited financial report			180 days
Number of warrants issued			75,974
Exercise price of warrants			$ 4.08
Final payment due as a percentage of principal loan amount			6.50%
Sale of equity securities or debt, minimum amount for term loan	30,000,000
September 2012 Notes Payable
Debt Instrument [Line Items]
Stated interest rate on notes				8.88%
Interest only payment period				9 months
Payment of loan principal and interest				27 months
Number of warrants issued				8,408
Exercise price of warrants				$ 5.05
Final payment due as a percentage of principal loan amount				6.50%
Additional borrowing				2,500,000
Percentage in addition to Treasury rate, term loan				8.50%
April 2012 and September 2012 Notes Payable and Term Loans
Debt Instrument [Line Items]
Amortization of debt discount	$ 800,000				$ 500,000	$ 400,000

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Intangible Assets and Goodwill (Tables)

12 Months Ended

Dec. 31, 2014

Goodwill and Intangible Assets Disclosure [Abstract]

Schedule of Expected Amortization Expense

Estimated aggregate amortization expense for each of the five succeeding years ending December 31 is as follows (in thousands):

	2015		2016		2017		2018		2019
Amortization expense	$	6,495	$	1,655	$	1,515	$	1,477	$	1,441

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Warrants

12 Months Ended

Dec. 31, 2014

Text Block [Abstract]

Warrants

12. Warrants

In connection with a Loan and Security Agreement entered into in October 2007, the Company issued warrants to purchase 274 shares of Series B convertible preferred stock. In June 2009, as part of the recapitalization, these warrants were converted into warrants to purchase shares of common stock. The warrants were exercisable at $1,913.05 per share and expire in October 2017 (the “October 2007 common stock warrants”). The October 2007 common stock warrants were outstanding as of December 31, 2014 and 2013.