10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(MARK ONE)

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

For the quarterly period ended June 30, 2016

OR

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

For the transition period from              to             

Commission File Number 001-35238

HORIZON PHARMA PUBLIC LIMITED COMPANY

(Exact name of registrant as specified in its charter)

Ireland	Not Applicable
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
Connaught House, 1st Floor 1 Burlington Road, Dublin 4, D04 C5Y6, Ireland	Not Applicable
(Address of principal executive offices)	(Zip Code)

011 353 1 772 2100

(Registrant’s telephone number, including area code)

Not applicable

(Former name, former address and former fiscal year, if changed since last report)

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  o

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 (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  x    No  o

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 definitions of “large accelerated filer,” “accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act:

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

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

Number of registrant’s ordinary shares, nominal value $0.0001, outstanding as of July 29, 2016: 160,904,874. 

HORIZON PHARMA PLC

INDEX

		Page
		No.
PART I. FINANCIAL INFORMATION
Item 1.	Financial Statements	1
	Condensed Consolidated Balance Sheets as of June 30, 2016 and as of December 31, 2015 (Unaudited)	1
	Condensed Consolidated Statements of Comprehensive Income (Loss) for the Three and Six Months Ended June 30, 2016 and 2015 (Unaudited)	2
	Condensed Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2016 and 2015 (Unaudited)	3
	Notes to Unaudited Condensed Consolidated Financial Statements	5
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	39
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	54
Item 4.	Controls and Procedures	55
PART II. OTHER INFORMATION
Item 1.	Legal Proceedings	56
Item 1A.	Risk Factors	56
Item 6.	Exhibits	100
Signatures		101

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

HORIZON PHARMA PLC

CONDENSED CONSOLIDATED BALANCE SHEETS

(UNAUDITED)

(In thousands, except share data)

	As of			As of
	June 30,			December 31,
	2016			2015
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	424,525		$	859,616
Restricted cash		3,169			1,860
Accounts receivable, net		304,382			210,437
Inventories, net		172,102			18,376
Prepaid expenses and other current assets		33,866			15,858
Total current assets		938,044			1,106,147
Property and equipment, net		21,971			14,020
Developed technology, net		1,927,713			1,609,049
In-process research and development		66,000			66,000
Other intangible assets, net		6,655			7,061
Goodwill		255,927			253,811
Deferred tax assets, net		4,992			2,278
Other assets		6,156			222
TOTAL ASSETS	$	3,227,458		$	3,058,588
LIABILITIES AND SHAREHOLDERS’ EQUITY
CURRENT LIABILITIES:
Long-term debt—current portion	$	4,000		$	4,000
Accounts payable		58,970			16,590
Accrued expenses		75,709			100,046
Accrued trade discounts and rebates		220,674			183,769
Accrued royalties—current portion		58,008			51,700
Deferred revenues—current portion		1,448			1,447
Total current liabilities		418,809			357,552
LONG-TERM LIABILITIES:
Exchangeable notes, net		290,310			282,889
Long-term debt, net, net of current		849,377			849,867
Accrued royalties, net of current		170,160			123,519
Deferred revenues, net of current		8,366			8,785
Deferred tax liabilities, net		131,587			113,400
Other long-term liabilities		20,636			9,431
Total long-term liabilities		1,470,436			1,387,891
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS’ EQUITY:
Ordinary shares, $0.0001 nominal value; 300,000,000 shares authorized;    161,126,363 and 160,069,067 shares issued at June 30, 2016 and December 31,    2015, respectively, and 160,741,997 and 159,684,701 shares outstanding at    June 30, 2016 and December 31, 2015, respectively		16			16
Treasury stock, 384,366 ordinary shares at June 30, 2016 and December 31, 2015		(4,585	)		(4,585	)
Additional paid-in capital		2,057,128			2,001,552
Accumulated other comprehensive loss		(2,737	)		(2,651	)
Accumulated deficit		(711,609	)		(681,187	)
Total shareholders’ equity		1,338,213			1,313,145
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$	3,227,458		$	3,058,588

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

1

HORIZON PHARMA PLC

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(UNAUDITED)

(In thousands, except share and per share data)

	For the Three Months Ended June 30,						For the Six Months Ended June 30,
	2016			2015			2016			2015
Net sales	$	257,378		$	172,821		$	462,068		$	285,962
Cost of goods sold		81,126			61,826			158,359			90,679
Gross profit		176,252			110,995			303,709			195,283
OPERATING EXPENSES:
Research and development		11,210			8,922			23,932			15,103
Sales and marketing		79,589			58,056			155,133			105,119
General and administrative		53,986			77,190			120,381			103,470
Total operating expenses		144,785			144,168			299,446			223,692
Operating income (loss)		31,467			(33,173	)		4,263			(28,409	)
OTHER EXPENSE, NET:
Interest expense, net		(19,228	)		(19,448	)		(38,686	)		(29,480	)
Foreign exchange gain (loss)		15			(87	)		(158	)		(924	)
Loss on induced conversion of debt and debt extinguishment		—			(67,080	)		—			(77,624	)
Other expense, net		(26	)		(9,078	)		(40	)		(10,069	)
Total other expense, net		(19,239	)		(95,693	)		(38,884	)		(118,097	)
Income (loss) before benefit for income taxes		12,228			(128,866	)		(34,621	)		(146,506	)
BENEFIT FOR INCOME TAXES		(2,756	)		(160,680	)		(4,199	)		(158,767	)
NET INCOME (LOSS)	$	14,984		$	31,814		$	(30,422	)	$	12,261
NET INCOME (LOSS) PER ORDINARY SHARE—Basic	$	0.09		$	0.21		$	(0.19	)	$	0.09
WEIGHTED AVERAGE ORDINARY SHARES    OUTSTANDING—Basic		160,468,146			150,771,902			160,186,270			138,369,537
NET INCOME (LOSS) PER ORDINARY SHARE—Diluted	$	0.09		$	0.20		$	(0.19	)	$	0.08
WEIGHTED AVERAGE ORDINARY SHARES    OUTSTANDING—Diluted		163,920,581			159,797,319			160,186,270			145,031,882
OTHER COMPREHENSIVE INCOME (LOSS), NET OF    TAX
Foreign currency translation adjustments		161			(257	)		(86	)		1,607
Other comprehensive income (loss)		161			(257	)		(86	)		1,607
COMPREHENSIVE INCOME (LOSS)	$	15,145		$	31,557		$	(30,508	)	$	13,868

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

2

HORIZON PHARMA PLC

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

(In thousands)

	For the Six Months Ended June 30,
	2016			2015
CASH FLOWS FROM OPERATING ACTIVITIES:
Net (loss) income	$	(30,422	)	$	12,261
Adjustments to reconcile net (loss) income to net cash provided by (used in)    operating activities:
Depreciation and amortization expense		102,525			50,743
Equity-settled share-based compensation		55,418			31,339
Royalty accretion		19,028			7,021
Royalty liability remeasurement		—			14,277
Loss on induced conversions of debt and debt extinguishment		—			21,581
Amortization of debt discount and deferred financing costs		8,932			7,828
Foreign exchange loss and other adjustments		159			1,023
Changes in operating assets and liabilities:
Accounts receivable		(83,932	)		(97,167	)
Inventories		13,777			10,555
Prepaid expenses and other current assets		(16,626	)		4,597
Accounts payable		42,278			1,604
Accrued trade discounts and rebates		35,480			47,596
Accrued expenses and accrued royalties		(43,527	)		16,492
Deferred revenues		(418	)		2,778
Deferred income taxes		(5,362	)		(158,873	)
Payment of original issue discount upon repayment of 2014 Term Loan Facility		—			(3,000	)
Other non-current assets and liabilities		4,174			190
Net cash provided by (used in) operating activities		101,484			(29,155	)
CASH FLOWS FROM INVESTING ACTIVITIES:
Payments for acquisitions, net of cash acquired		(520,405	)		(1,022,361	)
Proceeds from the liquidation of available-for-sale investments		—			64,623
Purchases of property and equipment		(12,776	)		(2,281	)
Change in restricted cash		(1,309	)		138
Net cash used in investing activities		(534,490	)		(959,881	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net proceeds from issuance of Exchangeable Senior Notes		—			387,181
Net proceeds from issuance of 2023 Senior Notes		—			462,340
Net proceeds from the 2015 Term Loan Facility		—			391,719
Repayment of the 2014 Term Loan Facility		—			(297,000	)
Repayment of the 2015 Term Loan Facility		(2,000	)		—
Net proceeds from the issuance of ordinary shares		—			475,627
Proceeds from the issuance of ordinary shares in connection with warrant exercises		—			14,693
Proceeds from the issuance of ordinary shares through ESPP programs		3,235			1,541
Proceeds from the issuance of ordinary shares in connection with stock option exercises		1,658			3,888
Payment of employee withholding taxes relating to share-based awards		(4,734	)		(1,956	)
Net cash (used in) provided by financing activities		(1,841	)		1,438,033
Effect of foreign exchange rate changes on cash		(244	)		(747	)
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS		(435,091	)		448,250
CASH AND CASH EQUIVALENTS, beginning of the period		859,616			218,807
CASH AND CASH EQUIVALENTS, end of the period	$	424,525		$	667,057

3

	For the Six Months Ended June 30,
	2016		2015
Supplemental cash flow information:
Cash paid for interest	$	29,791	$	11,755
Cash paid for income taxes		18,059		1,610
Fee paid for debt commitment		—		9,000
Cash paid for induced conversions		—		10,005
Cash paid for debt extinguishment		—		45,367
Supplemental non-cash flow information:
Conversion of Convertible Senior Notes to ordinary shares	$	—	$	60,985
Purchases of property and equipment included in accounts payable and accrued    expenses		2,189		182

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

4

HORIZON PHARMA PLC

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 – BASIS OF PRESENTATION AND BUSINESS OVERVIEW

Basis of Presentation

The unaudited condensed consolidated financial statements presented herein have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim financial information and in accordance with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, the financial statements do not include all of the information and notes required by GAAP for complete financial statements. In the opinion of management, all adjustments, including normal recurring adjustments, considered necessary for a fair statement of the financial statements have been included. Operating results for the three and six months ended June 30, 2016 are not necessarily indicative of the results that may be expected for the year ending December 31, 2016. The December 31, 2015 condensed consolidated balance sheet was derived from audited financial statements, but does not include all disclosures required by GAAP.

On September 19, 2014, the businesses of Horizon Pharma, Inc. (“HPI”) and Vidara Therapeutics International Public Limited Company (“Vidara”) were combined in a merger transaction (the “Vidara Merger”), accounted for as a reverse acquisition under the acquisition method of accounting for business combinations, with HPI treated as the acquiring company in the Vidara Merger for accounting purposes. As part of the Vidara Merger, a wholly-owned subsidiary of Vidara merged with and into HPI, with HPI surviving the Vidara Merger as a wholly-owned subsidiary of Vidara. Prior to the Vidara Merger, Vidara changed its name to Horizon Pharma plc (the “Company”). Upon the consummation of the Vidara Merger, the historical financial statements of HPI became the Company’s historical financial statements.

On May 7, 2015, the Company completed its acquisition of Hyperion Therapeutics Inc. (“Hyperion”) in which the Company acquired all of the issued and outstanding shares of Hyperion’s common stock for $46.00 per share in cash or approximately $1.1 billion on a fully-diluted basis. Following the completion of the acquisition, Hyperion became a wholly-owned subsidiary of the Company and was renamed as Horizon Therapeutics, Inc.

On January 13, 2016, the Company completed its acquisition of Crealta Holdings LLC (“Crealta”) for approximately $539.7 million, including cash acquired of $24.9 million. Following the completion of the acquisition, Crealta became a wholly-owned subsidiary of the Company and was renamed as Horizon Pharma Rheumatology LLC.

On May 18, 2016, the Company entered into a definitive agreement with Boehringer Ingelheim International GmbH (“Boehringer Ingelheim International”) to acquire rights to interferon gamma-1b, which Boehringer Ingelheim International currently commercializes under the trade names IMUKIN^®, IMUKINE^®, IMMUKIN^® and IMMUKINE^® in an estimated 30 countries, primarily in Europe and the Middle East. Under the terms of the agreement, the Company paid Boehringer Ingelheim International €5.0 million ($5.6 million when converted using a Euro-to-Dollar exchange rate of 1.1132) upon signing and will pay €20.0 million upon closing, for the rights for interferon gamma-1b in all territories outside of the United States, Canada and Japan, as the Company currently holds marketing rights to interferon gamma-1b in these territories. The Company currently markets interferon gamma-1b as ACTIMMUNE^® in the United States. The Company and Boehringer Ingelheim International expect to close the transaction by year-end 2016, subject to the satisfaction of closing conditions. Under the terms of a separate agreement, the Company also licensed the U.S., European and Canadian intellectual property rights for interferon gamma-1b for the treatment of Friedreich’s ataxia (“FA”). Interferon gamma-1b is currently not indicated or approved for the treatment of FA by the U.S. Food and Drug Administration (“FDA”) or any other regulatory body.

The unaudited condensed consolidated financial statements presented herein include the results of operations of the acquired businesses from the date of acquisition. See Note 3 for further details of business acquisitions.

Unless otherwise indicated or the context otherwise requires, references to the “Company”, “we”, “us” and “our” refer to Horizon Pharma plc and its consolidated subsidiaries, including its predecessor, HPI. All references to “Vidara” are references to Horizon Pharma plc (formerly known as Vidara Therapeutics International Public Limited Company) and its consolidated subsidiaries prior to the effective time of the Vidara Merger on September 19, 2014.

The unaudited condensed consolidated financial statements presented herein include the accounts of the Company and its wholly-owned subsidiaries. All inter-company transactions and balances have been eliminated.

5

Business Overview

The Company is a biopharmaceutical company focused on improving patients’ lives by identifying, developing, acquiring and commercializing differentiated and accessible medicines that address unmet medical needs. The Company markets nine medicines through its orphan, primary care and rheumatology business units. The Company’s marketed medicines are ACTIMMUNE^® (interferon gamma-1b), BUPHENYL^® (sodium phenylbutyrate) Tablets and Powder, DUEXIS^® (ibuprofen/famotidine), KRYSTEXXA^® (pegloticase), MIGERGOT^® (ergotamine tartrate and caffeine suppositories), PENNSAID^® (diclofenac sodium topical solution) 2% w/w (“PENNSAID 2%”), RAVICTI^® (glycerol phenylbutyrate) Oral Liquid, RAYOS^® (prednisone) delayed-release tablets and VIMOVO^® (naproxen/esomeprazole magnesium).

The Company developed DUEXIS and RAYOS, known as LODOTRA^® outside the United States, acquired the U.S. rights to VIMOVO from AstraZeneca AB (“AstraZeneca”) in November 2013, acquired certain rights to ACTIMMUNE as a result of the Vidara Merger in September 2014, acquired the U.S. rights to PENNSAID 2% from Nuvo Research Inc. (“Nuvo”) in October 2014, acquired RAVICTI and BUPHENYL, known as AMMONAPS^® in Europe, as a result of the acquisition of Hyperion in May 2015, and acquired KRYSTEXXA and the U.S. rights to MIGERGOT as a result of the acquisition of Crealta in January 2016.

The Company’s medicines are dispensed by retail and specialty pharmacies. Part of the Company’s commercial strategy for its primary care and rheumatology business units is to offer physicians the opportunity to have their patients fill prescriptions through pharmacies participating in the Company’s HorizonCares patient access program. This program does not involve the Company in the prescribing of medicines. The purpose of this program is solely to assist in ensuring that, when physicians determine that one of the Company’s medicines offers a potential clinical benefit to their patients and prescribe the medicine for an eligible patient, financial assistance may be available to reduce a commercial patient’s out-of-pocket costs. In the first six months of 2016, this resulted in 99.8 percent of commercial patients having co-pay amounts of $10 or less when filling prescriptions for the Company’s medicines utilizing its patient access program. For commercial patients who are prescribed the Company’s primary care medicines or RAYOS, the HorizonCares program offers co-pay assistance when a third-party payor covers a prescription but requires an eligible patient to pay a co-pay or deductible, and offers full subsidization when a third-party payor rejects coverage for an eligible patient. For patients who are prescribed the Company’s orphan medicines, the Company’s patient access programs provide reimbursement support, a clinical nurse program, co-pay and other patient assistance. The aggregate commercial value of the Company’s patient access programs for the six months ended June 30, 2016 was $816.8 million. All pharmacies that dispense prescriptions for the Company’s medicines, which the Company estimates to be about 10,000 in the first half of 2016, are fully independent, including those that participate in HorizonCares. The Company does not own or possess any option to purchase an ownership stake in any pharmacy that distributes its medicines, and the Company’s relationship with each pharmacy is non-exclusive and arm’s length. All of the Company’s medicines are dispensed through pharmacies independent of its business.

As an alternative means of ensuring access to our medicines, the Company has also begun pursuing business arrangements with pharmacy benefit managers (“PBMs”) and other payors to secure formulary status and reimbursement of the Company’s medicines, such as the Company’s recently announced arrangement with CVS Caremark. While the Company believes that, if successful, this strategy would result in broader inclusion of certain of the Company’s primary care medicines on healthcare plan formularies, and therefore increase payor reimbursement and lower the Company’s cost of providing patient access programs, these arrangements would generally require the Company to pay administrative and rebate payments to the PBMs and/or other payors.

The Company has a comprehensive compliance program in place to address adherence with various laws and regulations relating to its sales, marketing and manufacturing of its medicines, as well as certain third-party relationships, including pharmacies. Specifically with respect to pharmacies, the compliance program utilizes a variety of methods and tools to monitor and audit pharmacies, including those that participate in the HorizonCares program, to confirm their activities, adjudication and practices are consistent with the Company’s compliance policies and guidance.

The Company is a public limited company formed under the laws of Ireland. The Company operates through a number of international and U.S. subsidiaries with principal business purposes to either perform research and development or manufacturing operations, serve as distributors of the Company’s medicines, hold intellectual property assets or provide services and financial support to the Company.

Recent Accounting Pronouncements

From time to time, the Company adopts, as of the specified effective date, new accounting pronouncements issued by the FASB or other standard setting bodies. Unless otherwise discussed, the Company believes that the impact of recently issued standards that are not yet effective will not have a material impact on the Company’s financial position or results of operations upon adoption.

6

In May 2014, the FASB issued Accounting Standards Update (“ASU”) No. 2014-09, Revenue from Contracts with Customers (Subtopic 606). The new standard aims to achieve a consistent application of revenue recognition within the United States, resulting in a single revenue model to be applied by reporting companies under GAAP. Under the new model, recognition of revenue occurs when a customer obtains control of promised goods or services in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. In addition, the new standard requires that reporting companies disclose the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. The new standard is required to be applied retrospectively to each prior reporting period presented or retrospectively with the cumulative effect of initially applying it recognized at the date of initial application. In March 2016 and April 2016, the FASB issued ASU No. 2016-08 and ASU No. 2016-10, respectively, which further clarify the implementation guidance on principal versus agent considerations contained in ASU No. 2014-09. In May 2016, the FASB issued ASU 2016-12, narrow-scope improvements and practical expedients which provides clarification on assessing the collectability criterion, presentation of sales taxes, measurement date for non-cash consideration and completed contracts at transition.These standards will be effective for the Company beginning in the first quarter of 2018. Early adoption is permitted, but not before December 15, 2016, the original effective date of the standard. The Company has not yet selected a transition method nor has it determined the impact of the new standard on its consolidated financial statements.

In August 2014, the FASB issued ASU No. 2014-15, Presentation of Financial Statements — Going Concern (Subtopic 205-40): Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern. ASU No. 2014-15 is intended to define management’s responsibility to evaluate whether there is substantial doubt about an organization’s ability to continue as a going concern and to provide related footnote disclosures. Substantial doubt about an entity’s ability to continue as a going concern exists when relevant conditions and events, considered in the aggregate, indicate that it is probable that the entity will be unable to meet its obligations as they become due within one year after the date that the financial statements are issued (or available to be issued). ASU No. 2014-15 provides guidance to an organization’s management, with principles and definitions that are intended to reduce diversity in the timing and content of disclosures that are commonly provided by organizations in the financial statement footnotes. ASU No. 2014-15 is effective for annual reporting periods ending after December 15, 2016 and to annual and interim periods thereafter. Early adoption is permitted. The Company adopted ASU No. 2014-15 on April 1, 2016, and the adoption did not have a material impact on the consolidated financial statements and related disclosures.

In April 2015, the FASB issued ASU No. 2015-03, Interest-Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs. The amendments in this ASU require that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. In August 2015, the FASB issued ASU No. 2015-15, which further clarifies the implementation guidance of ASU No. 2015-03. The amendments in these ASUs are effective for the financial statements issued for fiscal years beginning after December 15, 2015, and interim periods within those fiscal years. The Company adopted ASU No. 2015-03 on January 1, 2016. The following table summarizes the adjustments made to conform prior period classifications as a result of the new guidance (in thousands):

	As of December 31, 2015
	As filed			Reclassification			As adjusted
Other non-current assets	$	8,581		$	(8,359	)	$	222
Exchangeable notes, net		(283,675	)	786				(282,889	)
Long-term debt, net, net of current		(857,440	)		7,573			(849,867	)

In April 2015, the FASB issued ASU No. 2015-05: Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Fees Paid in a Cloud Computing Arrangement which provides guidance on a customer’s accounting for fees paid in a cloud computing arrangement. Under the new standard, customers will apply the same criteria as vendors to determine whether a cloud computing arrangement contains a software license or is solely a service contract. The amendments in this ASU, which may be applied prospectively or retrospectively, are effective for annual and interim periods beginning after December 15, 2015. The Company adopted ASU No. 2015-05 on January 1, 2016 and the adoption did not have a material impact on the consolidated financial statements and related disclosures.

In July 2015, the FASB issued ASU No. 2015-11, Inventory (Topic 330): Simplifying the Measurement of Inventory. Under this new guidance, entities that measure inventory using any method other than last-in, first-out or the retail inventory method will be required to measure inventory at the lower of cost and net realizable value. The amendments in this ASU, which should be applied prospectively, are effective for annual and interim periods beginning after December 15, 2016. Early adoption is permitted. The Company adopted ASU No. 2015-11 on April 1, 2016, and the adoption did not have a material impact on the consolidated financial statements and related disclosures.

7

In September 2015, the FASB issued ASU No. 2015-16, Business Combinations(Topic 805): Simplifying the Accounting for Measurement-Period Adjustments (“ASC 805”). Under this guidance, an acquirer is required to recognize adjustments to provisional amounts that are identified during the measurement period in the reporting period in which the adjustment amounts are determined. The amendments in this ASU require that the acquirer record, in the same period’s financial statements, the effect on earnings of changes in depreciation, amortization or other income effects, if any, as a result of the change to the provisional amounts, calculated as if the accounting had been completed at the acquisition date. The amendments in this ASU require an entity to present separately on the face of the income statement or disclose in the notes the portion of the amount recorded in current-period earnings by line item that would have been recorded in previous reporting periods if the adjustment to the provisional amounts had been recognized as of the acquisition date. The amendments in this ASU, which should be applied prospectively, are effective for annual and interim periods beginning after December 15, 2015. The Company adopted ASU No. 2015-16 on January 1, 2016, and the adoption did not have a material impact on the consolidated financial statements and related disclosures.

In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842). Under ASU No. 2016-02, an entity will be required to recognize right-of-use assets and lease liabilities on its balance sheet and disclose key information about leasing arrangements. ASU No. 2016-02 offers specific accounting guidance for a lessee, a lessor and sale and leaseback transactions. Lessees and lessors are required to disclose qualitative and quantitative information about leasing arrangements to enable a user of the financial statements to assess the amount, timing and uncertainty of cash flows arising from leases. ASU No. 2016-02 is effective for annual reporting periods beginning after December 15, 2018, including interim periods within that reporting period, with early adoption permitted. At adoption, this update will be applied using a modified retrospective approach. The Company is currently in the process of evaluating the impact of adoption of ASU No. 2016-02 on its consolidated financial statements and related disclosures.

In March 2016, the FASB Issued ASU No. 2016-09, Compensation-Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting. The updated guidance will change how companies account for certain aspects of share-based payments to employees. Entities will be required to recognize the income tax effects of awards in the statement of income when the awards vest or are settled. The guidance on accounting for an employee’s use of shares to satisfy the statutory income tax withholding obligation and for forfeitures is changing, and the update requires companies to present excess tax benefits as an operating activity on the statement of cash flows rather than as a financing activity. The amendments in this update will be effective for annual periods beginning after December 15, 2016 and interim periods within those annual periods. Early adoption is permitted. The Company is currently in the process of evaluating the impact of adoption of ASU No. 2016-09 on its consolidated financial statements and related disclosures.

NOTE 2 – NET INCOME (LOSS) PER SHARE

The following table presents basic net income (loss) per share for the three and six months ended June 30, 2016 and 2015 (in thousands, except share and per share data):

	For the Three Months Ended June30,				For the Six Months Ended June 30,
	2016		2015		2016			2015
Basic net income (loss) per share calculation:
Net income (loss)	$	14,984	$	31,814	$	(30,422	)	$	12,261
Weighted average ordinary shares outstanding		160,468,146		150,771,902		160,186,270			138,369,537
Basic net income (loss) per share	$	0.09	$	0.21	$	(0.19	)	$	0.09

The following table presents diluted net income (loss) per share for the three and six months ended June 30, 2016 and 2015 (in thousands, except share and per share data):

	For the Three Months Ended June 30,				For the Six Months Ended June 30,
	2016		2015		2016			2015
Diluted net income (loss) per share    calculation:
Net income (loss)	$	14,984	$	31,814	$	(30,422	)	$	12,261
Weighted average ordinary shares outstanding		163,920,581		159,797,319		160,186,270			145,031,882
Diluted net income (loss) per share	$	0.09	$	0.20	$	(0.19	)	$	0.08

Basic net income (loss) per share is computed by dividing net income (loss) by the weighted-average number of ordinary shares outstanding during the period. Diluted net income (loss) per share reflects the potential dilution beyond shares for basic net income (loss) per share that could occur if securities or other contracts to issue ordinary shares were exercised, converted into ordinary shares, or resulted in the issuance of ordinary shares that would have shared in the Company’s earnings.

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The computation of diluted net income (loss) per share excluded 14.0 million and 13.4 million equity awards for the three and six months ended June 30, 2016, respectively, and 4.3 million and 3.4 million equity awards for the three and six months ended June 30, 2015, respectively, because their inclusion would have had an anti-dilutive effect on diluted net income (loss) per share.

The potentially dilutive impact of the Horizon Pharma Investment Limited (“Horizon Investment”), a wholly-owned subsidiary of the Company, March 2015 private placement of $400.0 million aggregate principal amount of 2.50% Exchangeable Senior Notes due 2022 (the “Exchangeable Senior Notes”) is determined using a method similar tothe treasury stock method. Under this method, no numerator or denominator adjustments arise from the principal and interest components of the Exchangeable Senior Notes because the Company has the intent and ability to settle the Exchangeable Senior Notes’ principal and interest in cash. Instead, the Company is required to increase the diluted net income (loss) per share denominator by the variable number of shares that would be issued upon conversion if it settled the conversion spread obligation with shares. For diluted net income (loss) per share purposes, the conversion spread obligation is calculated based on whether the average market price of the Company’s ordinary shares over the reporting period is in excess of the exchange price of the Exchangeable Senior Notes. The calculated spread added to the denominator for the three and six months ended June 30, 2015 was 851,500 and 294,286 ordinary shares, respectively. There was no calculated spread added to the denominator for the three and six months ended June 30, 2016.

NOTE 3 – BUSINESS ACQUISITIONS

Acquisition of Additional Rights to Interferon Gamma-1b

On May 18, 2016, the Company entered into a definitive agreement with Boehringer Ingelheim International to acquire rights to interferon gamma-1b, which Boehringer Ingelheim International currently commercializes under the trade names IMUKIN, IMUKINE, IMMUKIN and IMMUKINE in an estimated 30 countries primarily in Europe and the Middle East. Under the terms of the agreement, the Company paid Boehringer Ingelheim International €5.0 million ($5.6 million when converted using a Euro-to-Dollar exchange rate of 1.1132) upon signing and will pay €20.0 million upon closing, for the rights for interferon gamma-1b in all territories outside of the United States, Canada and Japan, as the Company currently holds marketing rights to interferon gamma-1b in these territories. The Company currently markets interferon gamma-1b as ACTIMMUNE in the United States. The €5.0 million upfront amount paid in May 2016 has been included in “other assets” in the Company’s condensed consolidated balance sheet as of June 30, 2016.

Crealta Acquisition

On January 13, 2016, the Company completed its acquisition of all the membership interests of Crealta. The acquisition added two medicines, KRYSTEXXA and MIGERGOT, to the Company’s medicine portfolio. The Crealta acquisition further diversified the Company’s portfolio of medicines and aligned with its focus of acquiring value-enhancing, clinically differentiated, long-life medicines that treat orphan diseases. The total consideration for the acquisition was approximately $539.7 million, including cash acquired of $24.9 million, and was composed of the following before and after the measurement period adjustments (in thousands):

	Before		Adjustments		After
Cash	$	536,181	$	25	$	536,206
Net settlements on the exercise of stock options and    unrestricted units		3,526		—		3,526
Total consideration	$	539,707	$	25	$	539,732

During the three and six months ended June 30, 2016, the Company incurred $1.6 million and $11.7 million, respectively, in Crealta acquisition-related costs including advisory, legal, accounting, valuation, severance, retention bonuses and other professional and consulting fees. During the three and six months ended June 30, 2016, $1.1 million and $11.0 million were accounted for as “general and administrative”, respectively, $0.3 million and $0.3 million were accounted for as “research and development”, respectively, and $0.2 million and $0.4 million were accounted for as “costs of goods sold”, respectively, in the condensed consolidated statements of comprehensive income (loss).

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Pursuant to ASC 805, the Company accounted for the Crealta acquisition as a business combination using the acquisition method of accounting. Identifiable assets and liabilities of Crealta, including identifiable intangible assets, were recorded based on their estimated fair values as of the date of the closing of the acquisition. The excess of the purchase price over the fair value of the net assets acquired was recorded as goodwill. Significant judgment was required in determining the estimated fair values of developed technology intangible assets, inventories and certain other assets and liabilities. Such preliminary valuation required estimates and assumptions including, but not limited to, estimating future cash flows and direct costs in addition to developing the appropriate discount rates and current market profit margins. The Company’s management believes the fair values recognized for the assets acquired and the liabilities assumed are based on reasonable estimates and assumptions. Accordingly, the unaudited purchase price adjustments are preliminary and are subject to further adjustments as additional information becomes available and as additional analyses are performed, and such further adjustments may be material.

During the three months ended June 30, 2016, the Company recorded measurement period adjustments related to developed technology and inventory, which resulted in a net increase in goodwill of $0.3 million. The measurement period adjustments were the result of a net working capital true-up adjustment and the alignment of Crealta’s inventory and obsolescence reserve policy to the Company’s policy.

The following table summarizes the preliminary fair values assigned to the assets acquired and the liabilities assumed by the Company, along with the resulting goodwill before and after the measurement period adjustments (in thousands): 

(Liabilities assumed) and assets acquired:	Before			Adjustments			After
Accounts payable and accrued expenses	$	(4,543	)	$	—		$	(4,543	)
Accrued trade discounts and rebates		(1,424	)		—			(1,424	)
Deferred tax liabilities		(20,835	)		—			(20,835	)
Other non-current liabilities		(6,900	)		—			(6,900	)
Contingent royalty liabilities		(51,300	)		—			(51,300	)
Cash and cash equivalents		24,893			—			24,893
Accounts receivable		10,014			—			10,014
Inventories		169,054			(1,700	)		167,354
Prepaid expenses and other current assets		1,382			—			1,382
Developed technology		417,300			1,400			418,700
Other non-current assets		275			—			275
Goodwill		1,791			325			2,116
Fair value of consideration paid	$	539,707		$	25		$	539,732

Inventories acquired included raw materials, work in process and finished goods for KRYSTEXXA and MIGERGOT. Inventories were recorded at their preliminary estimated fair values. The fair value of finished goods has been determined based on the estimated selling price, net of selling costs and a margin on the selling costs. The fair value of work in process has been determined based on estimated selling price, net of selling costs and costs to complete the manufacturing, and a margin on the selling and manufacturing costs. The fair value of raw materials was estimated to equal the replacement cost. A step up in the value of inventory of $163.6 million was originally recorded in connection with the acquisition and this was reduced to $161.9 million following the recording of $1.7 million in measurement period adjustments during the three months ended June 30, 2016. During the three and six months ended June 30, 2016, the Company amortized inventory step-up of $9.1 million and $16.5 million, respectively.

Other tangible assets and liabilities were valued at their respective carrying amounts as management believes that these amounts approximated their acquisition date fair values.

Other non-current liabilities represent an assumed $6.9 million probable contingent liability. See Note 12 for further details.

Identifiable intangible assets and liabilities acquired include developed technology and contingent royalties. The preliminary estimated fair values of the developed technology and contingent royalties represent preliminary valuations performed with the assistance of an independent appraisal firm based on management’s estimates, forecasted financial information and reasonable and supportable assumptions.

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Developed technology intangible assets reflect the estimated fair value of Crealta’s rights to its currently marketed medicines, KRYSTEXXA and MIGERGOT. The preliminary fair value of developed technology was determined using an income approach. The income approach explicitly recognizes that the fair value of an asset is premised upon the expected receipt of future economic benefits such as earnings and cash inflows based on current sales projections and estimated direct costs for Crealta’s medicines. Indications of value were developed by discounting these benefits to their acquisition-date worth at a discount rate of 27% for KRYSTEXXA and 23% for MIGERGOT.The fair value of the KRYSTEXXA and MIGERGOT developed technologies were capitalized as of the Crealta acquisition date and are subsequently being amortized over approximately 12 and 10 years, respectively, which are the periods in which over 90% of the estimated cash flows are expected to be realized.

The Company has assigned a preliminary fair value of $51.3 million to a contingent liability for royalties potentially payable under previously existing agreements related to KRYSTEXXA and MIGERGOT. The royalties for KRYSTEXXA are payable under the terms of a license agreement with Duke University (“Duke”) and Mountain View Pharmaceuticals (“MVP”). See Note 12 for details of the percentages of royalties payable under such agreements. The initial fair value of this liability  was determined using a discounted cash flow analysis incorporating the estimated future cash flows of royalty payments resulting from future sales. The discount rate used was the same as for the fair value of the developed technology.

The preliminary deferred tax liability recorded represents deferred tax liabilities assumed as part of the acquisition, net of deferred tax assets, related to net operating tax loss carryforwards of Crealta.

Goodwill represents the excess of the preliminary acquisition consideration over the estimated fair value of net assets acquired and was recorded in the condensed consolidated balance sheet as of the acquisition date. The Company does not expect any portion of this goodwill to be deductible for tax purposes.

Hyperion Acquisition

On May 7, 2015, the Company completed the acquisition of Hyperion in which it acquired all of the issued and outstanding shares of Hyperion’s common stock for $46.00 per share. The acquisition added two important medicines, RAVICTI and BUPHENYL, to the Company’s medicine portfolio. Through the acquisition, the Company leveraged as well as expanded the existing infrastructure of its orphan disease business. The total consideration for the acquisition was approximately $1.1 billion and was composed of the following (in thousands, except share and per share data):

Fully diluted equity value (21,425,909 shares at $46.00 per    share)	$	985,592
Net settlements on the exercise of stock options, restricted    stock and performance stock units		89,806
Total consideration	$	1,075,398

During the three and six months ended June 30, 2016, the Company recorded a net release of $1.0 million and $0.3 million, respectively, in Hyperion acquisition-related costs primarily due to a reduction in severance and other payroll-related payments required. During the three and six months ended June 30, 2016, a net release of $1.3 million and $0.6 million were accounted for as “general and administrative”, respectively, while a net expense of $0.2 million and $0.2 million were accounted for as “research and development”, respectively, and a net expense of $0.1 million and $0.1 million were accounted for as “costs of goods sold”, respectively, in the condensed consolidated statements of comprehensive income (loss).

During the three and six months ended June 30, 2015, the Company incurred $45.9 million and $47.9 million, respectively, in Hyperion acquisition-related costs. During the three and six months ended June 30, 2015, $36.9 million and $37.9 million were accounted for as “general and administrative expenses”, respectively, and $9.0 million and $10.0 million were accounted for as “other expenses, net”, respectively, in the condensed consolidated statements of comprehensive income (loss).

Pursuant to ASC 805, the Company accounted for the Hyperion acquisition as a business combination using the acquisition method of accounting. Identifiable assets and liabilities of Hyperion, including identifiable intangible assets, were recorded based on their estimated fair values as of the date of the closing of the acquisition. The excess of the purchase price over the fair value of the net assets acquired was recorded as goodwill. Significant judgment was required in determining the estimated fair values of developed technology intangible assets and certain other assets and liabilities. Such a valuation required estimates and assumptions including, but not limited to, estimating future cash flows and direct costs in addition to developing the appropriate discount rates and current market profit margins. The Company’s management believes the fair values recognized for the assets acquired and the liabilities assumed are based on reasonable estimates and assumptions.

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The following table summarizes the final fair values assigned to the assets acquired and the liabilities assumed by the Company (in thousands): 

(Liabilities assumed) and assets acquired:	Allocation
Deferred tax liabilities, net	$	(262,732	)
Accounts payable		(2,439	)
Accrued trade discounts and rebates		(9,792	)
Accrued expenses		(7,566	)
Contingent royalties		(86,800	)
Cash and cash equivalents		53,037
Short-term investments		39,049
Long-term investments		25,574
Accounts receivable, net		11,858
Inventory		13,498
Prepaid expenses and other current assets		2,533
Property and equipment		1,044
Other non-current assets		123
Developed technology		1,044,200
Goodwill		253,811
Fair value of consideration paid	$	1,075,398

Inventories acquired included raw materials and finished goods. Inventories were recorded at their current fair values. The fair value of finished goods has been determined based on the estimated selling price, net of selling costs and a margin on the selling costs. The fair value of raw materials was estimated to equal the replacement cost. A step up in the value of inventory of $8.7 million was recorded in connection with the acquisition and has subsequently been fully recognized in the condensed consolidated statements of comprehensive income (loss).  

Other tangible assets and liabilities were valued at their respective carrying amounts as management believes that these amounts approximated their acquisition date fair values.

Identifiable intangible assets and liabilities acquired include developed technology and contingent royalties. The fair values of the developed technology and contingent royalties represent valuations performed with the assistance of an independent appraisal firm based on management’s estimates, forecasted financial information and reasonable and supportable assumptions.

Developed technology intangible assets reflect the estimated value of Hyperion’s rights to its currently marketed medicines, RAVICTI and BUPHENYL. The fair value of developed technology was determined using an income approach. The income approach explicitly recognizes that the fair value of an asset is premised upon the expected receipt of future economic benefits such as earnings and cash inflows based on current sales projections and estimated direct costs for Hyperion’s medicines. Indications of value were developed by discounting these benefits to their acquisition-date worth at a discount rate of 8.5% that reflected the then-current return requirements of the market. The fair value of the RAVICTI and BUPHENYL developed technologies were capitalized as of the Hyperion acquisition date and are subsequently being amortized over 11 and 7 years, respectively, which are the periods in which over 90% of the estimated cash flows are expected to be realized.

The Company has assigned a fair value to a contingent liability for royalties potentially payable under previously existing agreements related to RAVICTI and BUPHENYL. The royalties are payable under the terms of an asset purchase agreement and an amended and restated collaboration agreement with Ucyclyd Pharma, Inc. (“Ucyclyd”) and a license agreement with Saul W. Brusilow, M.D. and Brusilow Enterprises Inc. (together “Brusilow”). See Note 12 for details of the percentages payable under such agreements. The initial fair value of this liability was $86.8 million and was determined using a discounted cash flow analysis incorporating the estimated future cash flows of royalty payments resulting from future sales. The discount rate used was the same as for the fair value of the developed technology.

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Deferred tax assets and liabilities arise from acquisition accounting adjustments where book values of certain assets and liabilities differ from their tax bases. Deferred tax assets and liabilities are recorded at the currently enacted rates which will be in effect at the time when the temporary differences are expected to reverse in the country where the underlying assets and liabilities are located. Hyperion’s developed technology as of the acquisition date was located primarily in the United States where a U.S. tax rate of 39% is being utilized and a significant deferred tax liability is recorded. Upon consummation of the Hyperion acquisition, Hyperion became a member of the Company’s U.S. tax consolidation group. As such, its tax assets and liabilities were considered in determining the appropriate amount (if any) of valuation allowances that should be recognized in assessing the realizability of the group’s deferred tax assets. The Hyperion acquisition adjustments resulted in the recognition of significant net deferred tax liabilities. Per ASC Topic 740, Accounting for Uncertainty in Income Taxes, future reversals of existing taxable temporary differences provide objectively verifiable evidence that should be considered as a source of taxable income to realize a tax benefit for deductible temporary differences and carryforwards. Generally, the existence of sufficient taxable temporary differences will enable the use of the tax benefit of existing deferred tax assets. As of the first quarter of 2015, the Company had significant U.S. federal and state valuation allowances. These valuation allowances were released in the second quarter of 2015 to reflect the recognition of Hyperion’s deferred tax liabilities that will provide taxable temporary differences that will be realized within the carryforward period of the Company’s U.S. tax consolidation group’s available net operating losses and other deferred tax assets. Accordingly, the Company recorded an income tax benefit of $105.1 million in the second quarter of 2015 relating to the release of existing U.S. federal and state valuation allowances.

Short-term and long-term investments included in the table above represent available-for-sale securities that were 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 were recorded at fair value and were liquidated shortly after the acquisition.

Goodwill represents the excess of the acquisition consideration over the estimated fair value of net assets acquired and was recorded in the condensed consolidated balance sheet as of the acquisition date. The Company does not expect any portion of this goodwill to be deductible for tax purposes.

Pro Forma Information

The table below represents the condensed consolidated financial information for the Company for the six months ended June 30, 2015 on a pro forma basis, assuming that the Crealta and Hyperion acquisitions occurred as of January 1, 2015. The historical financial information has been adjusted to give effect to pro forma items that are directly attributable to the Crealta and Hyperion acquisitions, and are expected to have a continuing impact on the consolidated results. These items include, among others, adjustments to record the amortization of definite-lived intangible assets, interest expense, debt discount and deferred financing costs associated with the debt in connection with the acquisitions.

The Company does not believe that the pre-acquisition operating results for Crealta during January 2016 are material to the combined entity and as such the Company did not prepare an unaudited pro forma combined statement of operations for the six months ended June 30, 2016.

Additionally, the following table sets forth unaudited financial information and has been compiled from historical financial statements and other information, but is not necessarily indicative of the results that actually would have been achieved had the transactions occurred on the dates indicated or that may be achieved in the future (in thousands):

	For the Six Months Ended June 30,
	2015
	As reported		Pro forma adjustments			Pro forma
Net sales	$	285,962	$	64,693		$	350,655
Net income (loss)		12,261		(48,941	)		(36,680	)

The Company’s unaudited condensed consolidated statements of comprehensive income (loss) for the six months ended June 30, 2016 include KRYSTEXXA and MIGERGOT net sales as a result of the acquisition of Crealta of $36.0 million and $2.0 million, respectively, and RAVICTI and BUPHENYL net sales as a result of the acquisition of Hyperion of $76.4 million and $7.8 million, respectively. The Company’s unaudited condensed consolidated statements of comprehensive income (loss) for the six months ended June 30, 2015 include RAVICTI and BUPHENYL net sales as a result of the acquisition of Hyperion of $19.0 million and $3.9 million, respectively.

Crealta and Hyperion have been fully integrated into the Company’s business and as a result of these integration efforts, the Company cannot distinguish between these operations and those of the Company’s legacy business.    

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NOTE 4 – INVENTORIES

Inventories are stated at the lower of cost or market value. Inventories consist of raw materials, work-in-process and finished goods. The Company has entered into manufacturing and supply agreements for the manufacture or purchase of raw materials and production supplies. The Company’s inventories include the direct purchase cost of materials and supplies and manufacturing overhead costs.

The components of inventories as of June 30, 2016 and December 31, 2015 consisted of the following (in thousands):

	June 30, 2016		December 31, 2015
Raw materials	$	2,145	$	6,232
Work-in-process		145,827		631
Finished goods		24,130		11,513
Inventories, net	$	172,102	$	18,376

Work-in-process at June 30, 2016 included $135.5 million of stepped-up KRYSTEXXA and MIGERGOT inventory. Finished goods at June 30, 2016 included $9.9 million of stepped-up KRYSTEXXA and MIGERGOT inventory. During the three and six months ended June 30, 2016, the Company amortized $9.1 million and $16.5 million, respectively, of the KRYSTEXXA and MIGERGOT finished goods inventory step-up.

NOTE 5 – PREPAID EXPENSES AND OTHER CURRENT ASSETS

Prepaid expenses and other current assets as of June 30, 2016 and December 31, 2015 consisted of the following (in thousands):

	June 30, 2016		December 31, 2015
Prepaid income taxes	$	14,693	$	4
Medicine samples inventory		6,268		4,697
Prepaid co-pay expenses		2,023		1,881
Rabbi trust assets		2,303		773
Other prepaid expenses		8,579		8,503
Prepaid expenses and other current assets	$	33,866	$	15,858

NOTE 6 – PROPERTY AND EQUIPMENT

Property and equipment as of June 30, 2016 and December 31, 2015 consisted of the following (in thousands):

	June 30, 2016			December 31, 2015
Machinery and equipment	$	2,843		$	2,946
Computer equipment		2,916			2,514
Software		9,593			1,360
Leasehold improvements		6,930			1,966
Other		1,689			276
		23,971			9,062
Less accumulated depreciation		(5,660	)		(3,791	)
Construction in process		1,908			3,492
Software implementation in process		1,752			5,257
Property and equipment, net	$	21,971		$	14,020

The Company capitalizes development costs associated with internal use software, including external direct costs of materials and services and payroll costs for employees devoting time to a software project. Costs incurred during the preliminary project stage, as well as costs for maintenance and training, are expensed as incurred.

Software implementation in process as of June 30, 2016 and December 31, 2015 is related to new enterprise resource planning software being implemented by the Company. The software is being implemented on a phased basis starting January 2016 and depreciation is not recorded on capitalized costs relating to a phase which has not yet entered service. Once a particular phase of the project enters service, associated capitalized costs are moved from “software implementation in process” to “software” in the table above, and depreciation commences.

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Depreciation expense was $1.1 million and $0.6 million for the three months ended June 30, 2016 and 2015, respectively, and was $2.1 million and $1.2 million for the six months ended June 30, 2016 and 2015, respectively.

NOTE 7 – GOODWILL AND INTANGIBLE ASSETS

Goodwill

The gross carrying amount of goodwill as of June 30, 2016 was as follows (in thousands):

Balance at December 31, 2015	$	253,811
Acquired during the period		2,116
Balance at June 30, 2016	$	255,927

In May 2015, the Company recognized goodwill with a value of $253.8 million in connection with the Hyperion acquisition, which represented the excess of the purchase price over the fair value of the net assets acquired.

In January 2016, the Company recognized goodwill with a preliminary value of $1.8 million in connection with the Crealta acquisition, which represented the excess of the purchase price over the fair value of the net assets acquired. During the three months ended June 30, 2016, the Company recorded measurement period adjustments related to developed technology and inventory, which resulted in a net increase in goodwill of $0.3 million.

See Note 3 for further details of goodwill acquired in business acquisitions.

As of June 30, 2016, there were no accumulated goodwill impairment losses.

Intangible Assets

The Company’s intangible assets consist of developed technology related to ACTIMMUNE, BUPHENYL, KRYSTEXXA, MIGERGOT, PENNSAID 2%, RAVICTI, RAYOS and VIMOVO in the United States, and AMMONAPS and LODOTRA in Europe, as well as in-process research and development (“IPR&D”) and customer relationships for ACTIMMUNE.

In May 2015, in connection with the acquisition of Hyperion, the Company capitalized $1,021.6 million of developed technology related to RAVICTI and $22.6 million of developed technology related to BUPHENYL.

In January 2016, in connection with the acquisition of Crealta, the Company capitalized $392.7 million of developed technology related to KRYSTEXXA and $24.6 million of developed technology related to MIGERGOT. During the three months ended June 30, 2016, the Company recorded a measurement period adjustment which increased the cost basis of MIGERGOT developed technology by $1.4 million, to $26.0 million.

See Note 3 for further details of intangible assets acquired in business acquisitions.

The Company tests its intangible assets for impairment when events or circumstances may indicate that the carrying value of these assets exceeds their fair value. The Company does not believe there have been any circumstances or events that would indicate that the carrying value of any of its intangible assets was impaired at June 30, 2016 or December 31, 2015.

As of June 30, 2016 and December 31, 2015, amortizable intangible assets consisted of the following (in thousands):

	June 30, 2016							December 31, 2015
	CostBasis		Accumulated Amortization			Net Book Value		Cost Basis		Accumulated Amortization			Net Book Value
Developed technology	$	2,211,195	$	(283,482	)	$	1,927,713	$	1,792,495	$	(183,446	)	$	1,609,049
Customer relationships		8,100		(1,445	)		6,655		8,100		(1,039	)		7,061
Total amortizable intangible assets	$	2,219,295	$	(284,927	)	$	1,934,368	$	1,800,595	$	(184,485	)	$	1,616,110

IPR&D is not amortized until successful completion of the project. IPR&D assets represent capitalized incomplete research projects related to ACTIMMUNE that the Company acquired through a business combination.

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Amortization expense for the three months ended June 30, 2016 and 2015 was $50.8 million and $31.8 million, respectively, and was $100.4 million and $49.5 million for the six months ended June 30, 2016 and 2015, respectively. As of June 30, 2016, estimated future amortization expense was as follows (in thousands):

2016 (July to December)	$	101,376
2017		202,963
2018		202,963
2019		189,971
2020		189,752
Thereafter		1,047,343
Total	$	1,934,368

NOTE 8 – ACCRUED TRADE DISCOUNTS AND REBATES

Accrued trade discounts and rebates as of June 30, 2016 and December 31, 2015 consisted of the following (in thousands):

	June 30, 2016		December 31, 2015
Accrued wholesaler fees and commercial rebates	$	25,317	$	21,112
Accrued co-pay and other patient assistance		134,467		114,201
Accrued government rebates and chargebacks		60,890		48,456
Accrued trade discounts and rebates		220,674		183,769
Invoiced wholesaler fees and commercial rebates, co-pay    and other patient assistance, and government rebates and    chargebacks in accounts payable		36,242		—
Total customer-related accruals and allowances	$	256,916	$	183,769

The following table summarizes changes in the Company’s customer-related accruals and allowances from December 31, 2015 to June 30, 2016 (in thousands):

	Wholesaler Fees			Co-Pay and			Government
	and Commercial			Other Patient			Rebates and
	Rebates			Assistance			Chargebacks			Total
Balance at December 31, 2015	$	21,112		$	114,201		$	48,456		$	183,769
Current provisions relating to sales in the six months ended    June 30, 2016		51,854			816,835			127,836			996,525
Adjustments relating to prior year sales		2,931			—			(7,191	)		(4,260	)
Payments relating to sales in the six months ended    June 30, 2016		(30,410	)		(646,622	)		(74,210	)		(751,242	)
Payments relating to sales in prior years		(20,644	)		(114,201	)		(34,455	)		(169,300	)
Crealta acquisition on January 13, 2016		492			—			932			1,424
Balance at June 30, 2016	$	25,335		$	170,213		$	61,368		$	256,916

NOTE 9 – ACCRUED EXPENSES

Accrued expenses as of June 30, 2016 and December 31, 2015 consisted of the following (in thousands):

	June 30, 2016		December 31, 2015
Payroll-related expenses	$	33,639	$	47,205
Consulting and professional services		15,097		17,160
Accrued interest		10,813		10,637
Accrued other		16,160		25,044
Accrued expenses	$	75,709	$	100,046

Accrued payroll-related expenses at June 30, 2016 include $1.7 million and $2.7 million relating to severance and related employee costs as a result of the Hyperion and Crealta acquisitions, respectively.

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NOTE 10 – ACCRUED ROYALTIES

Changes in the liability for royalties during the six months ended June 30, 2016 consisted of the following (in thousands):

Balance as of December 31, 2015	$	175,219
Assumed KRYSTEXXA and MIGERGOT accrued royalties		1,401
Assumed KRYSTEXXA and MIGERGOT contingent royalty    liabilities		51,300
Royalty payments		(18,780	)
Accretion expense		19,028
Balance as of June 30, 2016		228,168
Less: Current portion		58,008
Accrued royalties, net of current	$	170,160

The Company did not record any remeasurements of contingent royalty liabilities during the six months ended June 30, 2016, as there were no triggering events during the period.

NOTE 11 – FAIR VALUE MEASUREMENTS

The following tables and paragraphs set forth the Company’s financial instruments that are measured at fair value on a recurring basis within the fair value hierarchy. Assets and liabilities measured at fair value are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires management to make judgments and consider factors specific to the asset or liability. The following describes three levels of inputs that may be used to measure fair value:

Level 1—Observable inputs such as quoted prices in active markets for identical assets or liabilities;

Level 2—Observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities, quoted prices in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities; and

Level 3—Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

The Company utilizes the market approach to measure fair value for its money market funds. The market approach uses prices and other relevant information generated by market transactions involving identical or comparable assets or liabilities.

As of June 30, 2016, the Company’s restricted cash included bank time deposits which were measured at fair value using Level 2 inputs and their carrying values were approximately equal to their fair values. Level 2 inputs, obtained from various third-party data providers, represent quoted prices for similar assets in active markets, or these inputs were derived from observable market data, or if not directly observable, were derived from or corroborated by other observable market data.

Other current assets recorded at fair value on a recurring basis are composed of investments held in a rabbi trust related to deferred compensation arrangements. Quoted prices for these investments, primarily in mutual funds, are available in active markets. Thus, the Company’s investments related to deferred compensation arrangements are classified as Level 1 measurements in the fair value hierarchy.

The Company transfers its financial assets and liabilities between the fair value hierarchies at the end of each reporting period. There were no transfers between the different levels of the fair value hierarchy in 2016 or 2015.

Assets and liabilities measured at fair value on a recurring basis

The following table sets forth the Company’s financial assets and liabilities at fair value on a recurring basis as of June 30, 2016 and December 31, 2015 (in thousands):

	June 30, 2016
	Level 1		Level 2		Level 3		Total
Assets:
Bank time deposits	$	—	$	2,502	$	—	$	2,502
Money market funds		240,000		—		—		240,000
Other current assets		2,303		—		—		2,303
Total assets at fair value	$	242,303	$	2,502	$	—	$	244,805

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	December 31, 2015
	Level 1		Level 2		Level 3		Total
Assets:
Bank time deposits	$	—	$	1,000	$	—	$	1,000
Money market funds		280,053		—		—		280,053
Other current assets		773		—		—		773
Total assets at fair value	$	280,826	$	1,000	$	—	$	281,826

NOTE 12 – COMMITMENTS AND CONTINGENCIES

Lease Obligations

The Company has the following lease agreements in place for real properties:

Location	Approximate Square Footage		Lease Expiry Date
Dublin, Ireland		18,900	November 4, 2029
Lake Forest, Illinois (1)		160,000	March 31, 2024
Deerfield, Illinois (2)		53,500	June 30, 2018
Brisbane, California (3)		20,100	November 30, 2019
Mannheim, Germany		14,300	December 31, 2018
Chicago, Illinois		6,500	December 31, 2018
Reinach, Switzerland		3,500	May 31, 2020

(1) In connection with the Lake Forest, Illinois lease, the Company has provided a $2.0 million letter of credit to the landlord, through a commercial bank. The Company has two separate lease agreements in place for this property, one of which, consisting of approximately 15,000 square feet, was assumed by the Company as a result of its acquisition of Crealta in January 2016 and will expire on October 31, 2017.

(2) The Company vacated the premises in Deerfield, Illinois in January 2016.

(3) The Company vacated the premises in Brisbane, California in December 2015 and entered into a sublease agreement for the property with a third party.  

Purchase Commitments

In August 2007, the Company entered into a manufacturing and supply agreement with Jagotec AG (“Jagotec”). Under the agreement, Jagotec or its affiliates are required to manufacture and supply RAYOS/LODOTRA exclusively to the Company in bulk. The Company committed to a minimum purchase of RAYOS/LODOTRA tablets from Jagotec for five years from the date of first launch of RAYOS/LODOTRA in a major country, as defined in the agreement, which was April 2009. Thereafter, the agreement automatically renews on a yearly basis until either party provides two years advance written notice of termination. In April 2016 the agreement automatically renewed, therefore the earliest the agreement can expire according to this advance notice procedure is April 15, 2019, and the minimum purchase commitment is in force until April 2019. At June 30, 2016, the minimum purchase commitment based on tablet pricing in effect under the agreement was $2.1 million through April 2019.

In May 2011, the Company entered into a manufacturing and supply agreement with Sanofi-Aventis U.S. LLC (“Sanofi-Aventis U.S.”), and amended the agreement effective as of September 25, 2013. Pursuant to the agreement, as amended, Sanofi-Aventis U.S. is obligated to manufacture and supply DUEXIS to the Company in final, packaged form, and the Company is obligated to purchase DUEXIS exclusively from Sanofi-Aventis U.S. for the commercial requirements of DUEXIS in North America, South America and certain countries and territories in Europe, including the European Union (“EU”) member states and Scandinavia. At June 30, 2016, the Company had a binding purchase commitment to Sanofi-Aventis U.S. for DUEXIS of $5.6 million, which is to be delivered through September 2016.

In July 2013, Vidara and Boehringer Ingelheim RCV GmbH & Co. KG (“Boehringer Ingelheim”) entered into an exclusive supply agreement, which the Company assumed as a result of the Vidara Merger and amended effective as of June 1, 2015. Under the agreement, Boehringer Ingelheim is required to manufacture and supply interferon gamma-1b (ACTIMMUNE) to the Company. The Company is required to purchase minimum quantities of finished medicine per annum through July 2020. As of June 30, 2016, the minimum binding purchase commitment to Boehringer Ingelheim was $14.6 million (converted using a Euro-to-Dollar exchange rate of 1.1108) through July 2020.

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In November 2013, the Company entered into a long-term master manufacturing services and product agreement with Patheon Pharmaceuticals Inc. (“Patheon”) pursuant to which Patheon is obligated to manufacture VIMOVO for the Company through December 31, 2019. The Company agreed to purchase a specified percentage of VIMOVO requirements for the United States from Patheon. The Company must pay an agreed price for final, packaged VIMOVO supplied by Patheon as set forth in the Patheon manufacturing agreement, subject to adjustments, including certain unilateral adjustments by Patheon, such as annual adjustments for inflation and adjustments to account for certain increases in the cost of components of VIMOVO other than active materials. The Company issues 12-month forecasts of the volume of VIMOVO that the Company expects to order. The first six months of the forecast are considered binding firm orders. At June 30, 2016, the Company had a binding purchase commitment with Patheon for VIMOVO of $2.5 million through September 2016.

In October 2014, in connection with the acquisition of the U.S. rights to PENNSAID 2% from Nuvo, the Company and Nuvo entered into an exclusive supply agreement, which was amended in February 2016. Under the supply agreement, Nuvo is obligated to manufacture and supply PENNSAID 2% to the Company. The term of the supply agreement is through December 31, 2029, but the agreement may be terminated earlier by either party for any uncured material breach by the other party of its obligations under the supply agreement or upon the bankruptcy or similar proceeding of the other party. At least 90 days prior to the first day of each calendar month during the term of the supply agreement, the Company submits a binding written purchase order to Nuvo for PENNSAID 2% in minimum batch quantities. At June 30, 2016, the Company had a binding purchase commitment with Nuvo for PENNSAID 2% of $4.4 million through September 2016.

Purchase orders relating to the manufacture of RAVICTI and BUPHENYL of $4.6 million were outstanding at June 30, 2016. 

In March 2007, Savient Pharmaceuticals, Inc. (as predecessor in interest in Crealta), entered into a commercial supply agreement with Bio-Technology General (Israel) Ltd (“BTG Israel) for the production of the bulk KRYSTEXXA medicine (“bulk medicine”). The Company assumed this agreement as part of the Crealta acquisition. Under this agreement, the Company is obligated to purchase at least 80 percent of its annual world-wide bulk medicine requirements from BTG Israel. In December 2015, Crealta received a notice of termination from BTG Israel and as a result the agreement will terminate on December 15, 2018. If the manufacture of the bulk medicine is moved out of Israel, the Company may be required to obtain the approval of the Israeli Office of the Chief Scientist (“OCS”) because certain KRYSTEXXA intellectual property was initially developed with a grant funded by the OCS. In addition, if the manufacturing is moved out of Israel, the Company may be required to pay the OCS additional amounts as a repayment for the OCS grant funding. As of the Crealta acquisition date it was probable that the manufacture of the KRYSTEXXA bulk medicine would be moved outside of Israel and the Company may be required to pay additional amounts estimated at approximately $6.9 million. The estimated obligation was recorded as an assumed contingent liability as of the Crealta acquisition date (see Note 3 for further details) and is included in “other long-term liabilities” in the condensed consolidated balance sheet. The Company issues 18-month forecasts of the volume of KRYSTEXXA that the Company expects to order. The first six months of the forecast are considered binding firm orders. At June 30, 2016, the Company had a binding purchase commitment with BTG Israel for KRYSTEXXA of $2.2 million through September 2016.

Royalty Agreements

RAYOS/LODOTRA

In connection with an August 2004 development and license agreement with SkyePharma AG (“SkyePharma”) and Jagotec, a wholly-owned subsidiary of SkyePharma, regarding certain proprietary technology and know-how owned by SkyePharma, Jagotec is entitled to receive a single digit percentage royalty on net sales of RAYOS/LODOTRA and on any sub-licensing income, which includes any payments not calculated based on the net sales of RAYOS/LODOTRA, such as license fees, lump sums and milestone payments.

VIMOVO

The Company entered into a license agreement with Pozen Inc., who subsequently entered into a business combination with Tribute Pharmaceuticals Canada Inc. to become known as Aralez Pharmaceuticals Inc. (“Aralez”). Under this agreement, the Company is required to pay Aralez a flat 10% royalty on net sales of VIMOVO and other medicines sold by the Company, its affiliates or sublicensees during the royalty term that contain gastroprotective agents in a single fixed combination oral solid dosage form with nonsteroidal anti-inflammatory drugs, subject to minimum annual royalty obligations of $7.5 million. These minimum royalty obligations will continue for each year during which one of Aralez’s patents covers such medicines in the United States and there are no competing medicines in the United States. The royalty rate may be reduced to a mid-single digit royalty rate as a result of loss of market share to competing medicines. The Company’s obligation to pay royalties to Aralez will expire upon the later of (a) expiration of the last-to-expire of certain patents covering such medicines in the United States, and (b) ten years after the first commercial sale of such medicines in the United States.

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ACTIMMUNE

Under a license agreement, as amended, with Genentech Inc. (“Genentech”), who was the original developer of ACTIMMUNE, the Company is or was obligated to pay royalties to Genentech on its net sales of ACTIMMUNE as follows:

· Through November 25, 2014, a royalty of 45% of the first $3.7 million in net sales achieved in a calendar year, and 10% on all additional net sales in that year;

· For the period from November 26, 2014 through May 5, 2018, a royalty in the 20% to 30% range for the first tier in net sales and in the 1% to 9% range for the second tier; and

· From May 6, 2018 and for so long as the Company continues to commercially sell ACTIMMUNE, an annual royalty in the low single digits as a percentage of annual net sales.

Under the terms of an assignment and option agreement with Connetics, the Company is obligated to pay royalties to Connetics on the Company’s net sales of ACTIMMUNE as follows:

· 0.25% of net sales of ACTIMMUNE, rising to 0.5% once cumulative net sales of ACTIMMUNE in the United States surpass $1.0 billion; and in the event the Company develops and receives regulatory approval for ACTIMMUNE in the indication of scleroderma, the Company will be obligated to pay a royalty of 4% on all net sales of ACTIMMUNE recorded for use in that indication.

RAVICTI

Under the terms of an asset purchase agreement with Ucyclyd, the Company is obligated to pay to Ucyclyd tiered mid to high single-digit royalties on its global net sales of RAVICTI. Under the terms of a license agreement withBrusilow, the Company is obligated to pay low single-digit royalties to Brusilow on net sales of RAVICTI that are covered by a valid claim of a licensed patent.

BUPHENYL

Under the terms of an amended and restated collaboration agreement with Ucyclyd, the Company is obligated to pay to Ucyclyd tiered mid to high single-digit royalties on its net sales in the United States of BUPHENYL to urea cycle disorder patients outside of the FDA-approved labeled age range for RAVICTI.

KRYSTEXXA

Under the terms of a license agreement with Duke and MVP, the Company is obligated to pay Duke a mid-single digit royalty on its global net sales of KRYSTEXXA and a low-double digit royalty on any global sublicense revenue. The Company is also obligated to pay MVP a mid-single digit royalty on its net sales of KRYSTEXXA outside of the United States and a low-double digit royalty on any sublicense revenue outside of the United States.

The royalty obligations described above are included in accrued royalties on the Company’s condensed consolidated balance sheets.

For all of the royalty agreements entered into by the Company, a total expense of $10.9 million and $21.4 million was recorded in cost of goods sold for the three and six months ended June 30, 2016, respectively. The total expense recorded in cost of goods sold for the three and six months ended June 30, 2015 was $19.4 million and $23.0 million, respectively.

Contingencies

The Company is subject to claims and assessments from time to time in the ordinary course of business. The Company’s management does not believe that any such matters, individually or in the aggregate, will have a material adverse effect on the Company’s business, financial condition, results of operations or cash flows. In addition, the Company from time to time has billing disputes with vendors in which amounts invoiced are not in accordance with the terms of their contracts.

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In November 2015, Express Scripts, Inc. (“Express Scripts”) filed suit against the Company in Delaware Superior Court, Newcastle County, asserting claims for breach of contract, breach of the implied covenant of good faith and fair dealing, unjust enrichment, and declaratory relief arising from the parties’ 2012 Preferred Savings Grid Rebate Program Agreement. Express Scripts is seeking damages of approximately $166.2 million for alleged unpaid rebates and administrative fees through the end of 2015, late fees, interest, and attorneys’ fees and costs. On January 11, 2016, the Company answered the complaint, denying Express Scripts’ claims and denying that it owes Express Scripts any damages or other relief. The Company also filed a counter-claim against Express Scripts for breach of contract, breach of the implied covenant of good faith and fair dealing, and declaratory relief arising from Express Scripts’ breach of the rebate agreement. On February 1, 2016, Express Scripts filed an answer to the Company’s counter-claim. The parties have commenced discovery and a bench trial in the case is currently scheduled for April 2017. Consistent with FAS 5, Accounting for Contingencies, the Company did not establish a reserve in relation to the above suit as the Company currently believes that a loss is not probable nor reasonably estimable.

In November 2015, the Company received a subpoena from the U.S. Attorney’s Office for the Southern District of New York requesting documents and information related to its patient access programs and other aspects of its marketing and commercialization activities. The Company is unable to predict how long this investigation will continue or its outcome, but it anticipates that it may incur significant costs in connection with the investigation, regardless of the outcome. The Company may also become subject to similar investigations by other governmental agencies. The investigation by the U.S. Attorney’s Office and any additional investigations of the Company’s patient access programs and sales and marketing activities may result in damages, fines, penalties or other administrative sanctions against the Company.

Indemnification

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. To date, the Company has not paid any claims or been required to defend any action related to its indemnification obligations. However, the Company may record charges in the future as a result of these indemnification obligations.

In accordance with its memorandum and articles of association, 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. Additionally, the Company has entered, and intends to continue to enter, into separate indemnification agreements with its directors and executive officers. These agreements, among other things, require the Company to indemnify its directors and executive officers for certain expenses, including attorneys’ fees, judgments, fines and settlement amounts incurred by a director or executive officer in any action or proceeding arising out of their services as one of the Company’s directors or executive officers, or any of the Company’s subsidiaries or any other company or enterprise to which the person provides services at the Company’s request. There have been no claims to date and the Company has a director and officer insurance policy that enables it to recover a portion of any amounts paid for future potential claims. Certain of the Company’s officers and directors had also entered into separate indemnification agreements with HPI prior to the Vidara Merger.

NOTE 13 – LEGAL PROCEEDINGS

On July 15, 2013, the Company received a Paragraph IV Patent Certification from Watson Laboratories, Inc.—Florida, known as Actavis Laboratories FL, Inc. (“Actavis FL”), advising that Actavis FL had filed an Abbreviated New Drug Application (“ANDA”) with the FDA for a generic version of RAYOS, containing up to 5 mg of prednisone. On August 26, 2013, the Company, together with Jagotec, filed suit in the United States District Court for the District of New Jersey against Actavis FL, Actavis Pharma, Inc., Andrx Corp., and Actavis, Inc. seeking an injunction to prevent the approval of the ANDA.

On October 1, 2015, the Company’s subsidiary Horizon Pharma Switzerland GmbH, as well as Jagotec, entered into a license and settlement agreement (the “Actavis settlement agreement”) with Actavis FL relating to the Company’s and Jagotec’s patent infringement litigation against Actavis FL. In accordance with legal requirements, the Company, Jagotec and Actavis FL agreed to submit the Actavis settlement agreement to the U.S. Federal Trade Commission (“FTC”) and the U.S. Department of Justice (“DOJ”) for review. The parties submitted the Actavis settlement agreement to the FTC and DOJ for review and no issues were raised by either. The parties agreed to file stipulations of dismissal with the court regarding the litigation and the court entered the stipulation and closed the case on December 4, 2015. The Actavis settlement agreement provides for a full settlement and release by each party of all claims that relate to the litigation or under the patents with respect to Actavis FL’s generic version of RAYOS tablets.

Under the Actavis settlement agreement, the Company and Jagotec granted Actavis FL a non-exclusive license to manufacture and commercialize Actavis FL’s generic version of RAYOS tablets in the United States after the generic entry date (as defined below) and to take steps necessary to develop inventory of, and prepare to commercialize, Actavis FL’s generic version of RAYOS tablets during certain limited periods prior to the generic entry date. The Company and Jagotec also agreed that during the 180 days after the Generic Entry Date, the license granted to Actavis FL would be exclusive with respect to any third-party generic version of RAYOS tablets.

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Under the Actavis settlement agreement, the generic entry date is December 23, 2022; however, Actavis FL may be able to enter the market earlier under certain circumstances. Such events relate to the resolution of any other third-party RAYOS patent litigation, the entry of other generic versions of RAYOS tablets or certain substantial reductions in RAYOS prescriptions over specified periods of time.

The Company and Jagotec also agreed not to sue or assert any claim against Actavis FL for infringement of any patent or patent application owned or controlled by the Company or Jagotec during the term of the Actavis settlement agreement based on Actavis FL’s generic version of RAYOS tablets in the United States. In turn, Actavis FL agreed not to challenge the validity or enforceability of the licensed patents.

If the Company or Jagotec enter into any similar agreements with other parties with respect to generic versions of RAYOS tablets, the Company and Jagotec agreed to amend the Actavis settlement agreement to provide Actavis FL with terms that are no less favorable than those provided to such other parties with respect to the license terms, generic entry date, permitted pre-market activities and notice provisions.

On November 13, 2014, the Company received a Paragraph IV Patent Certification from Watson Laboratories, Inc. (“Watson Laboratories”) advising that Watson Laboratories had filed an ANDA with the FDA for a generic version of PENNSAID 2%. On December 23, 2014, the Company filed suit in the United States District Court for the District of New Jersey against Watson Laboratories, Actavis, Inc., and Actavis plc (collectively “Actavis”) seeking an injunction to prevent the approval of the ANDA. Since then, Watson Laboratories, Inc. changed its name to Actavis Laboratories UT, Inc., and remains the current holder of the ANDA. The lawsuit alleged that Actavis has infringed U.S. Patent Nos. 8,217,078, 8,252,838, 8,546,450, 8,563,613, 8,618,164, and 8,871,809 by filing an ANDA seeking approval from the FDA to market a generic version of PENNSAID 2% prior to the expiration of certain of the Company’s patents listed in the FDA’s Orange Book (“Orange Book”). The commencement of the patent infringement lawsuit stays, or bars, FDA approval of Actavis’ ANDA for 30 months or until an earlier district court decision that the subject patents are not infringed or are invalid.

On June 30, 2015, the Company filed suit in the United States District Court for the District of New Jersey against Actavis for patent infringement of U.S. Patent No. 9,066,913. On August 11, 2015, the Company filed suit in the United States District Court for the District of New Jersey against Actavis for patent infringement of U.S. Patent No. 9,101,591. On September 17, 2015, the Company filed suit in the United States District Court for the District of New Jersey against Actavis for patent infringement of U.S. Patent No. 9,132,110. All three patents, U.S. Patent Nos. 9,066,913, 9,101,591, and 9,132,110 are listed in the Orange Book and have claims that cover PENNSAID 2%. These three cases have since been consolidated with the case filed against Actavis on December 23, 2014.

On October 27, 2015, the Company filed suit in the United States District Court for the District of New Jersey against Actavis for patent infringement of U.S. Patent Nos. 9,168,304 and 9,168,305. On February 5, 2016, the Company filed suit in the United States District Court for the District of New Jersey against Actavis for patent infringement of U.S. Patent No. 9,220,784. All three patents, U.S. Patent Nos. 9,168,304, 9,168,305, and 9,220,784 are listed in the Orange Book and have claims that cover PENNSAID 2%. All of the litigation against Actavis remains pending. No trial date for any of the Actavis actions has been set by the court.

The Company received from Actavis a Paragraph IV Patent Certification Notice Letter dated July 1, 2016, against Orange Book listed U.S. Patent Nos. 9,339,551 and 9,339,552, advising that Actavis had filed an ANDA with the FDA for a generic version of PENNSAID 2%.

On December 2, 2014, the Company received a Paragraph IV Patent Certification against Orange Book listed U.S. Patent Nos. 8,217,078, 8,252,838, 8,546,450, 8,563,613, 8,618,164, and 8,741,956 from Paddock Laboratories, LLC (“Paddock”) advising that Paddock had filed an ANDA with the FDA for a generic version of PENNSAID 2%. On January 9, 2015, the Company received from Paddock another Paragraph IV Patent Certification against newly Orange Book listed U.S. Patent No. 8,871,809. On January 13, 2015 and January 14, 2015, the Company filed suits in the United States District Court for the District of New Jersey and the United States District Court for the District of Delaware, respectively, against Paddock seeking an injunction to prevent the approval of the ANDA. The lawsuits alleged that Paddock has infringed U.S. Patent Nos. 8,217,078, 8,252,838, 8,546,450, 8,563,613, 8,618,164, and 8,871,809 by filing an ANDA seeking approval from the FDA to market generic versions of PENNSAID 2% prior to the expiration of certain of the Company’s patents listed in the Orange Book.

On May 6, 2015, the Company entered into a settlement and license agreement (the “Perrigo settlement agreement”) with Perrigo Company plc and its subsidiary Paddock (collectively, “Perrigo”), relating to the Company’s patent infringement litigation against Perrigo. The Perrigo settlement agreement provides for a full settlement and release by both the Company and Perrigo of all claims that were or could have been asserted in the litigation and that arise out of the issues that were the subject of the litigation or Perrigo’s generic version of PENNSAID 2%. The Perrigo settlement agreement also contemplated the filing of a joint stipulation of dismissal by the parties. This stipulation of dismissal was entered by the district court on May 13, 2015.

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Under the Perrigo settlement agreement, the Company granted Perrigo a non-exclusive license to manufacture and commercialize Perrigo’s generic version of PENNSAID 2% in the United States after the license effective date (as defined below) and to take steps necessary to develop inventory of, and prepare to commercialize, Perrigo’s generic version of PENNSAID 2% during certain limited periods prior to the license effective date.

Under the Perrigo settlement agreement, the license effective date is January 10, 2029; however, Perrigo may be able to enter the market earlier under certain circumstances. Such events relate to the resolution of any other third-party PENNSAID 2% patent litigation, the entry of other third-party generic versions of PENNSAID 2% or certain substantial reductions in the Company’s PENNSAID 2% shipments over specified periods of time.

Under the Perrigo settlement agreement, the Company also agreed not to sue or assert any claim against Perrigo for infringement of any patent or patent application owned or controlled by the Company during the term of the license granted in the Perrigo settlement agreement based on the manufacture, use, sale, offer for sale, or importation of Perrigo’s generic version of PENNSAID 2% in the United States.

In certain circumstances following the entry of other third-party generic versions of PENNSAID 2%, the Company may be required to supply Perrigo PENNSAID 2% as its authorized distributor of generic PENNSAID 2%, with the Company receiving specified percentages of any net sales by Perrigo. The Company also agreed that if it enters into any similar agreements with other parties with respect to generic versions of PENNSAID 2%, the Company will amend the Perrigo settlement agreement to provide Perrigo with terms that are no less favorable than those provided to such other parties.

On February 2, 2015, the Company received a Paragraph IV Patent Certification against Orange Book listed U.S. Patent Nos. 8,217,078, 8,252,838, 8,546,450, 8,563,613, 8,618,164, 8,741,956, and 8,871,809 from Taro Pharmaceuticals USA, Inc. and Taro Pharmaceutical Industries, Ltd. (collectively, “Taro”) advising that Taro had filed an ANDA with the FDA for a generic version of PENNSAID 2%. On March 13, 2015, the Company filed suit in the United States District Court for the District of New Jersey against Taro seeking an injunction to prevent the approval of the ANDA.

On September 9, 2015, certain subsidiaries of the Company (the “Horizon Subsidiaries”) entered into a settlement and license agreement with Taro (the “Taro settlement agreement”) relating to the Horizon Subsidiaries’ patent infringement litigation against Taro. In accordance with legal requirements, the Horizon Subsidiaries and Taro submitted the Taro settlement agreement to the FTC and DOJ for review, and no issues have been raised by the FTC and DOJ. The Horizon Subsidiaries and Taro have also filed stipulations of dismissal with the courts regarding the litigation, with these dismissals being entered by the district court on November 3, 2015. The Taro settlement agreement provides for a full settlement and release by both us and Taro of all claims that were or could have been asserted in the Litigation and that arise out of the issues that were subject of the litigation or Taro’s generic version of PENNSAID 2%.

Under the Taro settlement agreement, the Horizon Subsidiaries granted Taro a non-exclusive license to manufacture and commercialize Taro’s generic version of PENNSAID 2% in the United States after the license effective date and to take steps necessary to develop inventory of, and prepare to commercialize, Taro’s generic version of PENNSAID 2% during certain limited periods prior to the license effective date.

Under the Taro settlement agreement, the license effective date is January 10, 2029; however, Taro may be able to enter the market earlier under certain circumstances. Such events relate to the resolution of any other third-party PENNSAID 2% patent litigation, the entry of other third-party generic versions of PENNSAID 2% or certain substantial reductions in the Company’s PENNSAID 2% shipments over specified periods of time.

Under the Taro settlement agreement, the Horizon Subsidiaries also agreed not to sue or assert any claim against Taro for infringement of any patent or patent application owned or controlled by the Horizon Subsidiaries during the term of the license granted in the Taro settlement agreement based on the manufacture, use, sale, offer for sale, or importation of Taro’s generic version of PENNSAID 2% in the United States.

The Horizon Subsidiaries also agreed that if they enter into any similar agreements with other parties with respect to generic versions of PENNSAID 2%, the Horizon Subsidiaries will amend the Taro settlement agreement to provide Taro with terms that are no less favorable than those provided to the other parties.

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On March 18, 2015, the Company received a Paragraph IV Patent Certification against Orange Book listed U.S. Patent Nos. 8,217,078, 8,252,838, 8,546,450, 8,563,613, 8,618,164, 8,741,956, and 8,871,809 from Lupin Limited advising that Lupin Limited had filed an ANDA with the FDA for generic version of PENNSAID 2%. On April 30, 2015, the Company filed suit in the United States District Court for the District of New Jersey against Lupin Limited and Lupin Pharmaceuticals Inc. (collectively, “Lupin”), seeking an injunction to prevent the approval of the ANDA. The lawsuit alleges that Lupin has infringed U.S. Patent Nos. 8,217,078, 8,252,838, 8,546,450, 8,563,613, 8,618,164, and 8,871,809 by filing an ANDA seeking approval from the FDA to market generic versions of PENNSAID 2% prior to the expiration of certain of the Company’s patents listed in the Orange Book. The commencement of the patent infringement lawsuit stays, or bars, FDA approval of Lupin’s ANDA for 30 months or until an earlier district court decision that the subject patents are not infringed or are invalid.

On June 30, 2015, the Company filed suit in the United States District Court for the District of New Jersey against Lupin for patent infringement of U.S. Patent No. 9,066,913. On August 11, 2015, the Company filed an amended complaint in the United States District Court for the District of New Jersey against Lupin that added U.S. Patent No. 9,101,591 to the litigation with respect to U.S. Patent No. 9,066,913. On September 17, 2015, the Company filed suit in the United States District Court for the District of New Jersey against Lupin for patent infringement of U.S. Patent No. 9,132,110. All three patents, U.S. Patent Nos. 9,066,913, 9,101,591, and 9,132,110 are listed in the Orange Book and have claims that cover PENNSAID 2%.

On October 27, 2015, the Company filed suit in the United States District Court for the District of New Jersey against Lupin for patent infringement of U.S. Patent Nos. 9,168,304 and 9,168,305. On February 5, 2016, the Company filed suit in the United States District Court for the District of New Jersey against Lupin for patent infringement of U.S. Patent No. 9,220,784. All three patents, U.S. Patent Nos. 9,168,304, 9,168,305, and 9,220,784 are listed in the Orange Book and have claims that cover PENNSAID 2%. All of the infringement actions brought against Lupin remain pending. The court has not yet set a trial date for the Lupin actions.

The Company received from Teligent, Inc., formerly known as IGI Laboratories, Inc. (“Teligent”), a Paragraph IV Patent Certification dated March 24, 2015 against Orange Book listed U.S. Patent Nos. 8,217,078, 8,252,838, 8,546,450, 8,563,613, 8,618,164, 8,741,956, and 8,871,809 advising that Teligent had filed an ANDA with the FDA for a generic version of PENNSAID 2%. On May 21, 2015, the Company filed suit in the United States District Court for the District of New Jersey against Teligent seeking an injunction to prevent the approval of the ANDA. The lawsuit alleged that Teligent has infringed U.S. Patent Nos. 8,217,078, 8,252,838, 8,546,450, 8,563,613, 8,618,164, and 8,871,809 by filing an ANDA seeking approval from the FDA to market generic versions of PENNSAID 2% prior to the expiration of certain of the Company’s patents listed in the Orange Book. The commencement of the patent infringement lawsuit stays, or bars, FDA approval of Teligent’s ANDA for 30 months or until an earlier district court decision that the subject patents are not infringed or are invalid.

On June 30, 2015, the Company filed suit in the United States District Court for the District of New Jersey against Teligent for patent infringement of U.S. Patent No. 9,066,913. On August 11, 2015, the Company filed suit in the United States District Court for the District of New Jersey against Teligent for patent infringement of U.S. Patent No. 9,101,591. On September 17, 2015, the Company filed suit in the United States District Court for the District of New Jersey against Teligent for patent infringement of U.S. Patent No. 9,132,110. All three patents, U.S. Patent Nos. 9,066,913, 9,101,591, and 9,132,110 are listed in the Orange Book and have claims that cover PENNSAID 2%.

On October 27, 2015, the Company filed suit in the United States District Court for the District of New Jersey against Teligent for patent infringement of U.S. Patent Nos. 9,168,304 and 9,168,305. On February 5, 2016, the Company filed suit in the United States District Court for the District of New Jersey against Teligent for patent infringement of U.S. Patent No. 9,220,784. All three patents, U.S. Patent Nos. 9,168,304, 9,168,305, and 9,220,784 are listed in the Orange Book and have claims that cover PENNSAID 2%.

The Company entered into a settlement and license agreement with Teligent (the “Teligent settlement agreement”), effective May 9, 2016, relating to the patent infringement litigation against Teligent. In accordance with legal requirements, the Company and Teligent submitted the Teligent settlement agreement to the FTC and DOJ for review, and no issues have been raised by the FTC and DOJ. The Company and Teligent have also filed stipulations of dismissal with the district court regarding the litigation, with these dismissals having been entered by the district court on May 2, 2016. The Teligent settlement agreement provides for a full settlement and release by both the Company and Teligent of all claims that were or could have been asserted in the litigation and that arise out of the issues that were subject of the litigation or Teligent’s generic version of PENNSAID 2%.

Under the Teligent settlement agreement, the Company granted Teligent a non-exclusive license to manufacture and commercialize Teligent’s generic version of PENNSAID 2% in the United States after the license effective date (as defined below) and to take steps necessary to develop inventory of, and prepare to commercialize, Teligent’s generic version of PENNSAID 2% during certain limited periods prior to the license effective date.

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Under the Teligent settlement agreement, the license effective date is January 10, 2029; however, Teligent may be able to enter the market earlier under certain circumstances. Such events relate to the resolution of any other third-party PENNSAID 2% patent litigation, the entry of other third-party generic versions of PENNSAID 2% or certain substantial reductions in the Company’s PENNSAID 2% shipments over specified periods of time.

Under the Teligent settlement agreement, the Company also agreed not to sue or assert any claim against Teligent for infringement of any patent or patent application owned or controlled by the Company during the term of the license granted in the Teligent settlement agreement based on the manufacture, use, sale, offer for sale, or importation of Teligent’s generic version of PENNSAID 2% in the United States.

In certain circumstances following the entry of other third-party generic versions of PENNSAID 2%, the Company may be required to supply Teligent PENNSAID 2% as an authorized distributor of generic PENNSAID 2%, with the Company receiving specified percentages of any net sales by Teligent. The Company also agreed that if it enters into any similar agreements with other parties with respect to generic versions of PENNSAID 2%, the Company will amend the Teligent settlement agreement to provide Teligent with terms that are no less favorable than those provided to the other parties.

The Company received from Amneal Pharmaceuticals LLC (“Amneal”) a Paragraph IV Patent Certification dated April 2, 2015 against Orange Book listed U.S. Patent Nos. 8,217,078, 8,252,838, 8,546,450, 8,563,613, 8,618,164, 8,741,956, and 8,871,809 advising that Amneal had filed an ANDA with the FDA for a generic version of PENNSAID 2%. On May 15, 2015, the Company filed suit in the United States District Court for the District of New Jersey against Amneal seeking an injunction to prevent the approval of the ANDA. The lawsuit alleged that Amneal has infringed U.S. Patent Nos. 8,217,078, 8,252,838, 8,546,450, 8,563,613, 8,618,164, and 8,871,809 by filing an ANDA seeking approval from the FDA to market generic versions of PENNSAID 2% prior to the expiration of certain of the Company’s patents listed in the Orange Book. The commencement of the patent infringement lawsuit stays, or bars, FDA approval of Amneal’s ANDA for 30 months or until an earlier district court decision that the subject patents are not infringed or are invalid. The court has not yet set a trial date for the Amneal action.

On June 30, 2015, the Company filed suit in the United States District Court for the District of New Jersey against Amneal for patent infringement of U.S. Patent No. 9,066,913. On August 11, 2015, the Company filed suit in the United States District Court for the District of New Jersey against Amneal for patent infringement of U.S. Patent No. 9,101,591. On September 17, 2015, the Company filed suit in the United States District Court for the District of New Jersey against Amneal for patent infringement of U.S. Patent No. 9,132,110. All three patents, U.S. Patent Nos. 9,066,913, 9,101,591, and 9,132,110 are listed in the Orange Book and have claims that cover PENNSAID 2%.

On October 27, 2015, the Company filed suit in the United States District Court for the District of New Jersey against Amneal for patent infringement of U.S. Patent Nos. 9,168,304 and 9,168,305. On February 5, 2016, the Company filed suit in the United States District Court for the District of New Jersey against Amneal for patent infringement of U.S. Patent No. 9,220,784. All three patents, U.S. Patent Nos. 9,168,304, 9,168,305, and 9,220,784 are listed in the Orange Book and have claims that cover PENNSAID 2%.

On April 18, 2016, the Company entered into a settlement and license agreement (the “Amneal settlement agreement”) with Amneal relating to the Company’s patent infringement litigation against Amneal. In accordance with legal requirements, the Company and Amneal submitted the Amneal settlement agreement to the FTC and DOJ for review, and no issues have been raised by the FTC and DOJ. The Company and Amneal have also filed a stipulation of dismissal with the court regarding the litigation. The Amneal settlement agreement provides for a full settlement and release by both the Company and Amneal of all claims that were or could have been asserted in the litigation and that arise out of the issues that were the subject of the litigation or Amneal’s generic version of PENNSAID 2%.

Under the Amneal settlement agreement, the Company granted Amneal a non-exclusive license to manufacture and commercialize Amneal’s generic version of PENNSAID 2% in the United States after the license effective date (as defined below) and to take steps necessary to develop inventory of, and prepare to commercialize, Amneal’s generic version of PENNSAID 2% during certain limited periods prior to the license effective date.

Under the Amneal settlement agreement, the license effective date is January 10, 2029; however, Amneal may be able to enter the market earlier under certain circumstances. Such events relate to the resolution of any other third-party PENNSAID 2% patent litigation or the entry of other third-party generic versions of PENNSAID 2%.

Under the Amneal settlement agreement, the Company also agreed not to sue or assert any claim against Amneal for infringement of any patent or patent application owned or controlled by the Company during the term of the license granted in Amneal settlement agreement based on the manufacture, use, sale, offer for sale, or importation of Amneal’s generic version of PENNSAID 2% in the United States.

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In certain circumstances following the entry of other third-party generic versions of PENNSAID 2%, the Company may be required to supply Amneal PENNSAID 2% as a non-exclusive, authorized distributor of generic PENNSAID 2%, with the Company receiving specified percentages of any net sales by Amneal. The Company also agreed that if it enters into any similar agreements with other parties with respect to generic versions of PENNSAID 2%, the Company will amend the Amneal settlement agreement to provide Amneal with terms that are no less favorable than those provided to the other parties.

The Company received from Apotex Inc. (“Apotex”) a Paragraph IV Patent Certification Notice Letter dated April 1, 2016, against Orange Book listed U.S. Patent Nos. 8,217,078, 8,252,838, 8,546,450, 8,563,613, 8,618,164, 8,741,956, 8,871,809, 9,066,913, 9,101,591, 9,132,110, 9,168,304, 9,168,305 and 9,220,784 advising that Apotex had filed an ANDA with the FDA for a generic version of PENNSAID 2%. The Company also received from Apotex a second Paragraph IV Patent Certification Notice Letter dated June 30, 2016, against Orange Book listed U.S. Patent Nos. 9,339,551 and 9,339,552, advising that Apotex had filed an ANDA with the FDA for a generic version of PENNSAID 2%.

Currently, patent litigation is pending in the United States District Court for the District of New Jersey against four generic companies intending to market VIMOVO prior to the expiration of certain of the Company’s patents listed in the Orange Book. These cases are in the United States District Court for the District of New Jersey. They are collectively known as the VIMOVO cases, and involve the following sets of defendants: (i) Dr. Reddy’s Laboratories Inc. and Dr. Reddy’s Laboratories Ltd. (collectively, “Dr. Reddy’s”); (ii) Lupin; (iii) Mylan Pharmaceuticals Inc., Mylan Laboratories Limited, and Mylan Inc. (collectively, “Mylan”); and (iv) Actavis FL and Actavis Pharma, Inc. (collectively, “Actavis Pharma”). Patent litigation in the United States District Court for the District of New Jersey against a fifth generic company, Anchen Pharmaceuticals Inc. (“Anchen”), was dismissed on June 9, 2014 after Anchen recertified under Paragraph III. The Company understands that Dr. Reddy’s has entered into a settlement with AstraZeneca with respect to patent rights directed to Nexium for the commercialization of VIMOVO, and that according to the settlement agreement, Dr. Reddy’s is now able to commercialize VIMOVO under AstraZeneca’s Nexium patent rights. The settlement agreement, however, has no effect on the Aralez VIMOVO patents, which are still the subject of patent litigations. As part of the Company’s acquisition of the U.S. rights to VIMOVO, the Company has taken over and is responsible for the patent litigations that include the Aralez patents licensed to the Company under the amended and restated collaboration and license agreement for the United States with Aralez.

The VIMOVO cases were filed on April 21, 2011, July 25, 2011, October 28, 2011, January 4, 2013, May 10, 2013, June 28, 2013, October 23, 2013, May 13, 2015 and November 24, 2015 and collectively include allegations of infringement of U.S. Patent Nos. 6,926,907, 8,557,285, 8,852,636, and 8,858,996. On June 18, 2015, the Company amended the complaints to add a charge of infringement of U.S. Patent No. 8,865,190. On January 7, 2016, Actavis Pharma asserted a counterclaim for declaratory judgment of invalidity and non-infringement of U.S. Patent No. 8,945,621. On January 25, 2016, the Company filed a new case against Actavis Pharma including allegations of infringement of U.S. Patent Nos. 9,161,920 and 9,198,888. This case was subsequently consolidated with the Actavis Pharma case involving U.S. Patent Nos. 8,852,636, 8,858,996, and 8,865,190. On February 10, 2016, the Company amended the complaints against Dr. Reddy’s, Lupin, and Mylan to add charges of infringement of U.S. Patent Nos. 9,161,920 and 9,198,888. On February 19, 2016, Mylan asserted a counterclaim for declaratory judgment of invalidity and non-infringement of U.S. Patent. No. 9,220,698.

The cases asserting U.S. Patent Nos. 8,557,285 and 6,926,907 have been consolidated for discovery. The court has issued a claims construction order for these cases and has set a pretrial schedule, but has not yet set a trial date. On May 12, 2016, the court granted Dr. Reddy’s motion for summary judgment of non-infringement of U.S. Patent No. 6,926,907 with respect to one of Dr. Reddy’s two ANDAs.

The cases asserting U.S. Patent Nos. 8,852,636, 8,858,996, 8,865,190, 9,161,920 and 9,198,888 have been consolidated for discovery. The court has not issued a claims construction order or set a pretrial schedule.

The Company understands the cases arise from Paragraph IV Patent Certification notice letters providing notice of the filing of ANDAs with the FDA seeking regulatory approval to market generic versions of VIMOVO before the expiration of the patents-in-suit. The Company understands the Dr. Reddy’s notice letters were dated March 11, 2011, November 20, 2012 and April 20, 2015; the Lupin notice letters were dated June 10, 2011 and March 12, 2014; the Mylan notice letters were dated May 16, 2013, February 9, 2015, January 26, 2016, February 26, 2016, and July 19,2015; the Actavis Pharma notice letters were dated March 29, 2013, November 5, 2013, October 9, 2015, December 10, 2015, March 1, 2016, April 6, 2016, and July 22, 2016; and the Anchen notice letter was dated September 16, 2011.

On February 24, 2015, Dr. Reddy’s filed a Petition for inter partes review (“IPR”) of U.S. Patent No. 8,557,285, one of the patents in litigation in the above referenced VIMOVO cases. On October 9, 2015, the United States Patent and Trademark Office (the “U.S. PTO”) denied such Petition for IPR.

On May 21, 2015, the Coalition for Affordable Drugs VII LLC (“Coalition for Affordable Drugs”) filed a Petition for IPR of U.S. Patent No. 6,926,907, one of the patents in litigation in the above referenced VIMOVO cases. On December 8, 2015, the U.S. PTO denied such Petition for IPR.

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On June 5, 2015, the Coalition for Affordable Drugs filed another Petition for IPR of U.S. Patent No. 8,858,996, one of the patents in litigation in the above referenced VIMOVO cases. On December 17, 2015, the U.S. PTO denied such Petition for IPR.

On August 7, 2015, the Coalition for Affordable Drugs filed another Petition for IPR of U.S. Patent No. 8,852,636, one of the patents in litigation in the above referenced VIMOVO cases. On February 11, 2016, the U.S. PTO denied such Petition for IPR.

On August 12, 2015, the Coalition for Affordable Drugs filed another Petition for IPR of U.S. Patent No. 8,945,621, one of the patents in litigation in the above referenced VIMOVO cases. On February 22, 2016, the Patent Trial and Appeal Board (the “PTAB”) issued a decision to institute the IPR. The PTAB must issue a final written decision on the IPR of U.S. Patent No. 8,945,621 no later than February 22, 2017.

On August 19, 2015, Lupin filed Petitions for IPR of U.S. Patent Nos. 8,858,996, 8,852,636, and 8,865,190, all patents in litigation in the above referenced VIMOVO cases. On March 1, 2016, the PTAB issued decisions to institute the IPRs for U.S. Patent Nos. 8,858,996 and 8,865,190. The PTAB must issue a final written decision on the IPRs of U.S. Patent Nos. 8,858,996 and 8,865,190 no later than March 1, 2017. Also on March 1, 2016, the PTAB denied the Petition for IPR for U.S. Patent No. 8,852,636.

On March 17, 2014, Hyperion received notice from Par Pharmaceutical, Inc. (“Par Pharmaceutical”) that it had filed an ANDA with the FDA seeking approval for a generic version of the Company’s medicine RAVICTI. The ANDA contained a Paragraph IV Patent Certification alleging that two of the patents covering RAVICTI, U.S. Patent No. 8,404,215, titled “Methods of therapeutic monitoring of nitrogen scavenging drugs,” which expires in March 2032 (the “’215 patent”), and U.S. Patent No. 8,642,012, titled “Methods of treatment using ammonia scavenging drugs,” which expires in September 2030 (the “’012 patent”), are invalid and/or will not be infringed by Par Pharmaceutical’s manufacture, use or sale of the medicine for which the ANDA was submitted. Par Pharmaceutical did not challenge the validity, enforceability, or infringement of the Company’s primary composition of matter patent for RAVICTI, U.S. Patent No. 5,968,979 titled “Triglycerides and ethyl esters of phenylalkanoic acid and phenylalkanoic acid useful in treatment of various disorders,” which would have expired on February 7, 2015, but as to which Hyperion was granted an interim term of extension until February 7, 2016 and to which the U.S. PTO has granted a final term extension of 1,267 days. Hyperion filed suit in the United States District Court for the Eastern District of Texas, Marshall Division, against Par Pharmaceutical on April 23, 2014 seeking an injunction to prevent the approval of Par Pharmaceutical’s ANDA and/or to prevent Par Pharmaceutical from selling a generic version of RAVICTI, and the Company has taken over and is responsible for this patent litigation. On September 15, 2015, the Company received notice from Par Pharmaceutical that it had filed a Paragraph IV Patent Certification alleging that U.S. Patent No. 9,095,559 (the “’559 patent”) is invalid and/or will not be infringed by Par Pharmaceutical’s manufacture, use or sale of the medicine for which the ANDA was submitted. On March 14, 2016, the Company received notice from Par Pharmaceutical that it had filed a Paragraph IV Patent Certification alleging that U.S. Patent No. 9,254,278 (the “’278 patent”) is invalid and/or will not be infringed by Par Pharmaceutical’s manufacture, use or sale of the medicine for which the ANDA was submitted. On June 3, 2016, the Company received notice from Par Pharmaceutical that it had filed a Paragraph IV Patent Certification alleging that U.S. Patent No. 9,326,966 (the “’966 patent”) is invalid and/or will not be infringed by Par Pharmaceutical’s manufacture, use or sale of the medicine for which the ANDA was submitted. The Company filed suit in the United States District Court for the District of New Jersey against Par Pharmaceutical on June 30, 2016 (“the Par New Jersey action”), seeking an injunction to prevent the approval of Par Pharmaceutical’s ANDA and/or to prevent Par Pharmaceutical from selling a generic version of RAVICTI. The lawsuit alleges that Par Pharmaceutical has infringed the ’559 patent, the ’278 patent and the ’966 patent by filing an ANDA seeking approval from the FDA to market generic versions of RAVICTI prior to the expiration of the patents. The subject patents are listed in the Orange Book. The court has not yet set a trial date for the Par New Jersey action.  

On April 29, 2015, Par Pharmaceutical filed Petitions for IPR of the ’215 patent and the ’012 patent. The PTAB issued decisions instituting such IPRs on November 4, 2015. On December 14, 2015, the District Court Judge Roy Payne issued a stay pending a final written decision from the PTAB with respect to the IPRs of the ’215 patent and the ’012 patent. The PTAB must issue a final written decision on the IPRs of the ’215 patent and the ’012 patent no later than November 4, 2016.

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On September 4, 2015, the Company received notice from Lupin of Lupin’s Paragraph IV Patent Certification against the ’215 patent and the ’012 patent, advising that Lupin had filed an ANDA with the FDA for a generic version of RAVICTI. On November 6, 2015, the Company also received Notice of Lupin’s Paragraph IV Patent Certification against the ’559 patent. Lupin has not advised the Company as to the timing or status of the FDA’s review of its filing. On October 19, 2015 the Company filed suit in the United States District Court for the District of New Jersey against Lupin seeking an injunction to prevent the approval of the ANDA. The lawsuit alleges that Lupin has infringed the ’215 patent, the ’012 patent and the ’559 patent by filing an ANDA seeking approval from the FDA to market generic versions of RAVICTI prior to the expiration of the patents. The subject patents are listed in the Orange Book. On April 6, 2016, the Company filed an Amended Complaint in the United States District Court for the District of New Jersey against Lupin alleging that Lupin has infringed the ’559 patent by filing an ANDA seeking approval from the FDA to market generic versions of RAVICTI prior to expiration of the ’559 patent. The commencement of the patent infringement lawsuit stays, or bars, FDA approval of Lupin’s ANDA for 30 months or until an earlier district court decision that the subject patents are not infringed or are invalid. On April 18, 2016, the Company received notice from Lupin of Lupin’s Paragraph IV Patent Certification against the ’278 patent. On July 6, 2016, the Company received notice from Lupin of Lupin’s Paragraph IV Patent Certification against the ’966 patent. The Company filed suit in the United States District Court for the District of New Jersey against Lupin Ltd. and Lupin Pharmaceutical, Inc. on July 21, 2016, seeking an injunction to prevent the approval of Lupin’s ANDA and/or to prevent Lupin from selling a generic version of RAVICTI. The lawsuit alleges that Lupin has infringed the ’278 patent and the ’966 patent by filing an ANDA seeking approval from the FDA to market generic versions of RAVICTI prior to the expiration of the patents. The subject patents are listed in the Orange Book. The court has not yet set a trial date for the Lupin New Jersey actions.

On April 1, 2016, Lupin filed a Petition to request an IPR of the ’559 patent. The PTAB will decide whether to institute an IPR on the ’559 patent no later than October 8, 2016.

On August 3, 2015, HPI filed a lawsuit in the Superior Court of the State of California, County of Santa Clara, naming as defendants Depomed, Inc. (“Depomed”) and the members of its board of directors (the “Depomed Board”), Vicente J. Anido, Jr., Karen A. Dawes, Louis J. Lavigne, Jr., Samuel R. Saks, James A. Schoeneck, Peter D. Staple and David B. Zenoff. The lawsuit is captioned Horizon Pharma, Inc. v. Vicente J. Anido, Jr., et al., Case Number 1:15-cv-283835. The lawsuit alleges that the adoption by the Depomed Board of the Rights Agreement dated as of July 12, 2015 between Depomed and Continental Stock Transfer & Trust Company, as Rights Agent (the “Depomed Rights Agreement”), and Sections 2(b), 2(c), 2(d), and 5(d) of Depomed’s Amended and Restated Bylaws, effective July 12, 2015 (the “Depomed Bylaws”), violates the General Corporation Law of the California Corporations Code, constitutes ultra vires acts and breaches the fiduciary duties of the members of the Depomed Board. The lawsuit seeks, among other things, an order (i) declaring that the Depomed Rights Agreement and Sections 2(b), 2(c), and 2(d) of the Depomed Bylaws are invalid under California law, (ii) declaring that the members of the Depomed Board breached their fiduciary duties by enacting the Depomed Rights Agreement and Sections 2(b), 2(c), 2(d), and 5(d) of the Depomed Bylaws, (iii) enjoining the members of the Depomed Board from relying on, implementing, applying or enforcing either the Depomed Rights Agreement or Sections 2(b), 2(c), 2(d), or 5(d) of the Depomed Bylaws, (iv) enjoining the members of the Depomed Board from taking any improper action designed to impede, or which has the effect of impeding, the proposed combination with Depomed or the Company’s efforts to acquire control of Depomed and (v) compelling the members of the Depomed Board to redeem the Depomed Rights Agreement or to render it inapplicable to the Company. On November 20, 2015, following a hearing on HPI’s request for a preliminary injunction, the Superior Court denied HPI’s request for a preliminary injunction against Depomed and the Depomed Board. On April 22, 2016, HPI and Depomed settled the lawsuit with neither party admitting liability.

On August 3, 2015, Depomed filed a Complaint in the Superior Court of the State of California, County of Santa Clara, against the Company. The lawsuit is captioned Depomed, Inc. v. Horizon Pharma plc and Horizon Pharma, Inc., Case Number 1:15-cv-283834. On September 15, 2015, Depomed filed an Amended Complaint, alleging Depomed obtained the rights to a confidentiality agreement that the Company previously executed with Janssen Pharmaceuticals Inc. (“Janssen”) following Depomed’s purchase of the U.S. rights to NUCYNTA^® from Janssen. Depomed further alleges the Company breached the confidentiality agreement when developing offers for a merger with Depomed, and made fraudulent and materially misleading statements to Depomed’s shareholders. The lawsuit seeks, among other relief, an injunction (i) to prevent the Company from continuing its allegedly improper and unlawful use of confidential information relating to NUCYNTA and (ii) to prevent the Company from continuing to make and failing to correct its allegedly false and misleading statements in connection with the proposed combination with Depomed. On January 4, 2016, following a hearing on Depomed’s request for a preliminary injunction, the Superior Court entered a preliminary injunction enjoining the Company from making any further attempts to acquire Depomed or take any other action to facilitate taking control of Depomed pending final resolution of the litigation. On April 22, 2016, HPI and Depomed settled the lawsuit with neither party admitting liability.

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In November 2015, Express Scripts filed suit against the Company in Delaware Superior Court, Newcastle County, asserting claims for breach of contract, breach of the implied covenant of good faith and fair dealing, unjust enrichment, and declaratory relief arising from the parties’ 2012 Preferred Savings Grid Rebate Program Agreement. Express Scripts is seeking damages of approximately $166.2 million for alleged unpaid rebates and administrative fees through the end of 2015, late fees, interest, and attorneys’ fees and costs. On January 11, 2016, the Company answered the complaint, denying Express Scripts’ claims and denying that it owes Express Scripts any damages or other relief. The Company also filed a counter-claim against Express Scripts for breach of contract, breach of the implied covenant of good faith and fair dealing, and declaratory relief arising from Express Scripts’ breach of the rebate agreement. On February 1, 2016, Express Scripts filed an answer to the Company’s counter-claim. The parties have commenced discovery and a bench trial in the case is currently scheduled for April 2017.     

Beginning on March 8, 2016, two federal securities class-action lawsuits (captioned Schaffer v. Horizon Pharma plc, et al., Case No. 16-cv-01763-JMF and Banie v. Horizon Pharma plc, et al., Case No. 16-cv-01789-JMF) were filed in the United States District Court for the Southern District of New York against the Company and certain of the Company’s current and former officers (the “Officer Defendants”). On March 24, 2016, the court consolidated the two actions under Schaffer v. Horizon Pharma plc, et al. On June 3, 2016, the court appointed Locals 302 and 612 of the International Union of Operating Engineers-Employers Construction Industry Retirement Trust and the Carpenters Pension Trust Fund for Northern California as lead plaintiffs and Labaton Sucharow LLP as lead counsel. On July 25, 2016, lead plaintiffs and additional named plaintiff Automotive Industries Pension Trust Fund filed their consolidated complaint, including additional current and former officers, the Company’s Board of Directors (the “Director Defendants”), and underwriters involved with the Company’s April 2015 public offering (the “Underwriter Defendants”) as defendants. The plaintiffs allege that certain of the Company and the Officer Defendants violated sections 10(b) and 20(a) of the Securities Exchange Act of 1934,as amended, by making false and/or misleading statements about, among other things: (a) the Company’s financial performance, (b) the Company’s business prospects and drug-pricing practices, (c) the Company’s sales and promotional practices, and (d) the Company’s design, implementation, performance, and risks associated with the Company’s Prescriptions-Made-Easy program. The plaintiffs allege that certain of the Company, the Director Defendants and the Underwriter Defendants violated sections 11, 12(a)(2) and 15 of the Securities Act of 1933, as amended, (the “Securities Act”) in connection with the Company’s April 2015 public offering. The plaintiffs seek, among other things, an award of damages allegedly sustained by plaintiffs and the putative class, including a reasonable allowance for costs and attorneys’ fees. The defendants’ deadline to answer or otherwise respond to the consolidated complaint is September 9, 2016.

NOTE 14 – DEBT AGREEMENTS

The Company’s outstanding debt balances as of June 30, 2016 and December 31, 2015 consisted of the following (in thousands):

	June 30, 2016			December 31, 2015
2015 Term Loan Facility	$	396,000		$	398,000
2023 Senior Notes		475,000			475,000
Exchangeable Senior Notes due 2022		400,000			400,000
Total face value		1,271,000			1,273,000
Debt discount		(119,764	)		(127,885	)
Deferred financing fees		(7,549	)		(8,359	)
Total long-term debt		1,143,687			1,136,756
Less: current maturities		4,000			4,000
Long-term debt, net of current maturities	$	1,139,687		$	1,132,756

The Company adopted ASU No. 2015-03, Interest-Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs on January 1, 2016. The amendments in this ASU require that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. See Note 1 for further details of the impact this adoption has had on the financial statements.

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2015 Senior Secured Credit Facility

On May 7, 2015, HPI, the Company and certain of its subsidiaries entered into a credit agreement with Citibank, N.A., as administrative and collateral agent, and the lenders from time to time party thereto (the “credit agreement”) providing for (i) the six-year $400.0 million term loan facility (the “2015 Term Loan Facility”); (ii) an uncommitted accordion facility subject to the satisfaction of certain financial and other conditions; and (iii) one or more uncommitted refinancing loan facilities with respect to loans thereunder (the “2015 Senior Secured Credit Facility”). The initial borrower under the 2015 Term Loan Facility is HPI. The credit agreement allows for the Company and certain other subsidiaries of the Company to become borrowers under the accordion or refinancing facilities. Loans under the 2015 Term Loan Facility bear interest, at each borrower’s option, at a rate equal to either the London Inter-Bank Offer Rate (“LIBOR”), plus an applicable margin of 3.5% per year (subject to a 1.0% LIBOR floor), or the adjusted base rate plus 2.5%. The adjusted base rate is defined as the greater of (a) LIBOR (using one-month interest period) plus 1%, (b) prime rate, (c) fed funds plus ½ of 1%, and (d) 2%. The Company borrowed the full $400.0 million available under the 2015 Term Loan Facility on May 7, 2015 as a LIBOR-based borrowing.

The obligations under the credit agreement and any swap obligations and cash management obligations owing to a lender (or an affiliate of a lender) thereunder are and will be guaranteed by the Company and each of the Company’s existing and subsequently acquired or organized direct and indirect subsidiaries (other than certain immaterial subsidiaries, subsidiaries whose guarantee would result in material adverse tax consequences and subsidiaries whose guarantee is prohibited by applicable law). The obligations under the credit agreement and any such swap and cash management obligations are secured, subject to customary permitted liens and other agreed upon exceptions, by a perfected security interest in (i) all tangible and intangible assets of the borrowers and the guarantors, except for certain customary excluded assets, and (ii) all of the capital stock owned by the borrowers and guarantors thereunder (limited, in the case of the stock of certain non-U.S. subsidiaries of the borrowers, to 65% of the capital stock of such subsidiaries).

The borrowers are permitted to make voluntary prepayments at any time without payment of a premium. HPI is required to make mandatory prepayments of loans under the 2015 Term Loan Facility (without payment of a premium) with (a) net cash proceeds from certain non-ordinary course asset sales (subject to reinvestment rights and other exceptions), (b) casualty proceeds and condemnation awards (subject to reinvestment rights and other exceptions), (c) net cash proceeds from issuances of debt (other than certain permitted debt), and (d) beginning with the fiscal year ending December 31, 2016, 50% of the Company’s excess cash flow (subject to decrease to 25% or 0% if the Company’s first lien leverage ratio is less than 2.25:1 and 1.75:1, respectively). The loans under the 2015 Term Loan Facility will amortize in equal quarterly installments in an aggregate annual amount equal to 1% of the original principal amount thereof, with any remaining balance payable on the final maturity date of the loans under the 2015 Term Loan Facility.

The credit agreement contains customary representations and warranties and customary affirmative and negative covenants, including, among other things, restrictions on indebtedness, liens, investments, mergers, dispositions, prepayment of other indebtedness and dividends and other distributions, and customary events of default.

The Company was, as of June 30, 2016, and is currently in compliance with this credit agreement.

As of June 30, 2016, the fair value of the 2015 Term Loan Facility was approximately $391.1 million, categorized as a Level 2 instrument, as defined in Note 11.

2023 Senior Notes

On April 29, 2015, Horizon Financing, a wholly-owned subsidiary of the Company, completed a private placement of $475.0 million aggregate principal amount of 6.625% Senior Notes due 2023 (the “2023 Senior Notes”), to certain investment banks acting as initial purchasers who subsequently resold the 2023 Senior Notes to qualified institutional buyers as defined in Rule 144A under the Securities Act, and in offshore transactions to non-U.S. persons in reliance on Regulation S under the Securities Act.

In connection with the closing of the Hyperion acquisition on May 7, 2015, Horizon Financing merged with and into HPI and, as a result, the 2023 Senior Notes became HPI’s general unsecured senior obligations and the Company and all of the Company’s direct and indirect subsidiaries that are guarantors under the 2015 Senior Secured Credit Facility fully and unconditionally guaranteed on a senior unsecured basis HPI’s obligations under the 2023 Senior Notes.

The 2023 Senior Notes accrue interest at an annual rate of 6.625% payable semiannually in arrears on May 1 and November 1 of each year, beginning on November 1, 2015. The 2023 Senior Notes will mature on May 1, 2023, unless earlier exchanged, repurchased or redeemed.

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Except as described below, the 2023 Senior Notes may not be redeemed before May 1, 2018. Thereafter, some or all of the 2023 Senior Notes may be redeemed at any time at specified redemption prices, plus accrued and unpaid interest to the redemption date. At any time prior to May 1, 2018, some or all of the 2023 Senior Notes may be redeemed at a price equal to 100% of the aggregate principal amount thereof, plus a make-whole premium and accrued and unpaid interest to the redemption date. Also prior to May 1, 2018, up to 35% of the aggregate principal amount of the 2023 Senior Notes may be redeemed at a redemption price of 106.625% of the aggregate principal amount thereof, plus accrued and unpaid interest, with the net proceeds of certain equity offerings. In addition, the 2023 Senior Notes may be redeemed in whole but not in part at a redemption price equal to 100% of the principal amount plus accrued and unpaid interest and additional amounts, if any, to, but excluding, the redemption date, if on the next date on which any amount would be payable in respect of the 2023 Senior Notes, HPI or any guarantor is or would be required to pay additional amounts as a result of certain tax-related events.

If the Company undergoes a change of control, HPI will be required to make an offer to purchase all of the 2023 Senior Notes at a price in cash equal to 101% of the aggregate principal amount thereof plus accrued and unpaid interest to, but not including, the repurchase date. If the Company or certain of its subsidiaries engages in certain asset sales, HPI will be required under certain circumstances to make an offer to purchase the 2023 Senior Notes at 100% of the principal amount thereof, plus accrued and unpaid interest to the repurchase date.

The indenture governing the 2023 Senior Notes contains covenants that limit the ability of the Company and its restricted subsidiaries to, among other things, pay dividends or distributions, repurchase equity, prepay junior debt and make certain investments, incur additional debt and issue certain preferred stock, incur liens on assets, engage in certain asset sales, merge, consolidate with or merge or sell all or substantially all of their assets, enter into transactions with affiliates, designate subsidiaries as unrestricted subsidiaries, and allow to exist certain restrictions on the ability of restricted subsidiaries to pay dividends or make other payments to the Company. Certain of the covenants will be suspended during any period in which the notes receive investment grade ratings. The indenture also includes customary events of default.

The Company was, as of June 30, 2016, and is currently in compliance with the indenture governing the 2023 Senior Notes.

As of June 30, 2016, the fair value of the 2023 Senior Notes was approximately $441.8 million, categorized as a Level 2 instrument, as defined in Note 11.

Exchangeable Senior Notes

On March 13, 2015, Horizon Investment completed a private placement of $400.0 million aggregate principal amount of Exchangeable Senior Notes to several investment banks acting as initial purchasers who subsequently resold the Exchangeable Senior Notes to qualified institutional buyers as defined in Rule 144A under the Securities Act. The net proceeds from the offering of the Exchangeable Senior Notes were approximately $387.2 million, after deducting the initial purchasers’ discount and offering expenses payable by Horizon Investment.

The Exchangeable Senior Notes are fully and unconditionally guaranteed, on a senior unsecured basis, by the Company (the “Guarantee”). The Exchangeable Senior Notes and the Guarantee are Horizon Investment’s and the Company’s senior unsecured obligations. The Exchangeable Senior Notes accrue interest at an annual rate of 2.50% payable semiannually in arrears on March 15 and September 15 of each year, beginning on September 15, 2015. The Exchangeable Senior Notes will mature on March 15, 2022, unless earlier exchanged, repurchased or redeemed. The initial exchange rate is 34.8979 ordinary shares of the Company per $1,000 principal amount of the Exchangeable Senior Notes (equivalent to an initial exchange price of approximately $28.66 per ordinary share). The exchange rate will be subject to adjustment in some events but will not be adjusted for any accrued and unpaid interest. In addition, following certain corporate events that occur prior to the maturity date or upon a tax redemption, Horizon Investment will increase the exchange rate for a holder who elects to exchange its Exchangeable Senior Notes in connection with such a corporate event or a tax redemption in certain circumstances.

Other than as described below, the Exchangeable Senior Notes may not be redeemed by the Company.

Issuer Redemptions:

Optional Redemption for Changes in the Tax Laws of a Relevant Taxing Jurisdiction: Horizon Investment may redeem the Exchangeable Senior Notes at its option, prior to March 15, 2022, in whole but not in part, in connection with certain tax-related events.

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Provisional Redemption on or After March 20, 2019: On or after March 20, 2019, Horizon Investment may redeem for cash all or a portion of the Exchangeable Senior Notes if the last reported sale price of ordinary shares of the Company has been at least 130% of the exchange price then in effect for at least 20 trading days whether or not consecutive) during any 30 consecutive trading day period ending on, and including, the trading day immediately preceding the date on which Horizon Investment provide written notice of redemption. The redemption price will be equal to 100% of the principal amount of the Exchangeable Senior Notes to be redeemed, plus accrued and unpaid interest to, but not including, the redemption date; provided that if the redemption date occurs after a regular record date and on or prior to the corresponding interest payment date, Horizon Investment will pay the full amount of accrued and unpaid interest due on such interest payment date to the record holder of the Exchangeable Senior Notes on the regular record date corresponding to such interest payment date, and the redemption price payable to the holder who presents an Exchangeable Senior Note for redemption will be equal to 100% of the principal amount of such Exchangeable Senior Note.

Holder Exchange Rights:

Holders may exchange all or any portion of their Exchangeable Senior Notes at their option at any time prior to the close of business on the business day immediately preceding December 15, 2021 only upon satisfaction of one or more of the following conditions:

1. Exchange upon Satisfaction of Sale Price Condition – During any calendar quarter commencing after the calendar quarter ending on June 30, 2015 (and only during such calendar quarter), if the last reported sale price of ordinary shares of the Company for at least 20 trading days (whether or not consecutive) during the period of 30 consecutive trading days ending on the last trading day of the immediately preceding calendar quarter is greater than or equal to 130% of the applicable exchange price on each applicable trading day.

2. Exchange upon Satisfaction of Trading Price Condition – During the five business day period after any ten consecutive trading day period in which the trading price per $1,000 principal amount of Exchangeable Senior Notes for each trading day of such period was less than 98% of the product of the last reported sale price of ordinary shares of the Company and the applicable exchange rate on such trading day.

3. Exchange upon Notice of Redemption – Prior to the close of business on the business day immediately preceding December 15, 2021, if Horizon Investment provides a notice of redemption, at any time prior to the close of business on the second scheduled trading day immediately preceding the redemption date.

As of June 30, 2016, none of the above conditions had been satisfied and no exchange of Exchangeable Senior Notes had been triggered.

On or after December 15, 2021, a holder may exchange all or any portion of its Exchangeable Senior Notes at any time prior to the close of business on the second scheduled trading day immediately preceding the maturity date regardless of the foregoing conditions.

Upon exchange, Horizon Investment will settle exchanges of the Exchangeable Senior Notes by paying or causing to be delivered, as the case may be, cash, ordinary shares or a combination of cash and ordinary shares, at its election.

The Company recorded the Exchangeable Senior Notes under the guidance in Topic ASC 470-20, Debt with Conversion and Other Options, and separated them into a liability component and equity component. The carrying amount of the liability component of $268.9 million was determined by measuring the fair value of a similar liability that does not have an associated equity component. The carrying amount of the equity component of $119.1 million represented by the embedded conversion option was determined by deducting the fair value of the liability component of $268.9 million from the initial proceeds of $387.2 million ascribed to the convertible debt instrument as a whole. The initial debt discount of $131.1 million is being charged to interest expense over the life of the Exchangeable Senior Notes using the effective interest rate method.

As of June 30, 2016, the fair value of the Exchangeable Senior Notes was approximately $362.5 million, categorized as a Level 2 instrument, as defined in Note 11.

2014 Senior Secured Credit Facility

On June 17, 2014, the Company entered into a credit agreement with a group of lenders and Citibank, N.A., as administrative and collateral agent to provide the Company with $300.0 million in financing through a five-year senior secured credit facility (the “2014 Senior Secured Credit Facility”). Loans under the five-year $300.0 million term loan facility (“2014 Term Loan Facility”) bore interest, at each borrower’s option, at a rate equal to either the LIBOR, plus an applicable margin of 8.0% per year (subject to a 1.0% LIBOR floor), or the prime lending rate, plus an applicable margin equal to 7.0% per year. The Company borrowed the full $300.0 million available on the 2014 Term Loan Facility on September 19, 2014 as a LIBOR-based borrowing.  

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On May 7, 2015, the Company repaid the entire $300.0 million outstanding amount under the 2014 Senior Secured Credit Facility in connection with the closing of the Hyperion acquisition and recognized a $56.8 million loss on debt extinguishment as a result of the early repayment.

Convertible Senior Notes

On November 22, 2013, the Company issued $150.0 million aggregate principal amount of 5.00% Convertible Senior Notes due 2018 (“Convertible Senior Notes”), and received net proceeds of $143.6 million, after deducting fees and expenses of $6.4 million.

During 2015, the Company entered into separate, privately-negotiated conversion agreements with certain holders of the Convertible Senior Notes (“2015 Conversions”) which were on substantially the same terms as prior conversion agreements entered into by the Company. Under the 2015 Conversions, the applicable holders agreed to convert an aggregate principal amount of $61.0 million of Convertible Senior Notes held by them and the Company agreed to settle such conversions by issuing an aggregate of 11,368,921 ordinary shares. In addition, pursuant to such conversion agreements, the Company made an aggregate cash payment of $10.0 million to the applicable holders for additional exchange consideration and $0.9 million for accrued and unpaid interest, and recognized a non-cash charge of $10.1 million related to the extinguishment of debt as a result of the note conversions. Following the closings under the 2015 Conversions, there were no Convertible Senior Notes remaining outstanding.

NOTE 15 – SHAREHOLDERS’ EQUITY

During the six months ended June 30, 2016, the Company issued an aggregate of 231,807 ordinary shares in connection with the exercise of stock options and received $1.7 million in proceeds.

During the six months ended June 30, 2016, the Company issued an aggregate of 552,836 ordinary shares in net settlement of vested restricted stock units.

During the six months ended June 30, 2016, the Company issued an aggregate of 13,584 ordinary shares in net settlement of vested performance stock units.

During the six months ended June 30, 2016, the Company issued an aggregate of 261,780 ordinary shares pursuant to employee stock purchase plans and received $3.2 million in proceeds.

During the six months ended June 30, 2016, the Company made payments of $4.7 million for employee withholding taxes relating to share-based awards.

In May 2016, the Company’s board of directors authorized a share repurchase program pursuant to which the Company may repurchase up to 5,000,000 of its ordinary shares. The timing and amount of repurchases, including whether the Company decides to repurchase any shares pursuant to the authorization, will depend on a variety of factors, including the price of the Company’s ordinary shares, alternative investment opportunities, the Company’s cash resources, restrictions under the Company’s credit agreement, and market conditions. As of June 30, 2016, the Company had not purchased any of its ordinary shares under this repurchase program.  

NOTE 16 – SHARE-BASED INCENTIVE PLANS

Employee Stock Purchase Plan

2014 Employee Stock Purchase Plan. On May 17, 2014, HPI’s board of directors adopted the 2014 Employee Stock Purchase Plan (the “2014 ESPP”). On September 18, 2014, at a special meeting of the stockholders of HPI (the “Special Meeting”), HPI’s stockholders approved the 2014 ESPP. Upon consummation of the Vidara Merger, the Company assumed the 2014 ESPP. As described below, effective as of May 3, 2016, the number of ordinary shares authorized for issuance under the 2014 ESPP was reduced by 5,000,000 shares.

As of June 30, 2016, an aggregate of 4,076,279 ordinary shares were authorized and available for future issuance under the 2014 ESPP.

Share-Based Compensation Plans

2005 Stock Plan. In October 2005, HPI adopted the 2005 Stock Plan (the “2005 Plan”). Upon the signing of the underwriting agreement related to HPI’s initial public offering, on July 28, 2011, no further option grants were made under the 2005 Plan. All stock awards granted under the 2005 Plan prior to July 28, 2011 continue to be governed by the terms of the 2005 Plan. Upon consummation of the Vidara Merger, the Company assumed the 2005 Plan.

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2011 Equity Incentive Plan. In July 2010, HPI’s board of directors adopted the 2011 Equity Incentive Plan (the “2011 EIP”). In June 2011, HPI’s stockholders approved the 2011 EIP, and it became effective upon the signing of the underwriting agreement related to HPI’s initial public offering on July 28, 2011. Upon consummation of the Vidara Merger, the Company assumed the 2011 EIP, and upon the effectiveness of the Horizon Pharma Public Limited Company 2014 Equity Incentive Plan (the “2014 EIP”), no additional stock awards were or will be made under the 2011 Plan, although all outstanding stock awards granted under the 2011 Plan continue to be governed by the terms of the 2011 Plan.

2014 Equity Incentive Plan and 2014 Non-Employee Equity Plan. On May 17, 2014, HPI’s board of directors adopted the 2014 EIP and the Horizon Pharma Public Limited Company 2014 Non-Employee Equity Plan (the “2014 Non-Employee Equity Plan”). At the Special Meeting, HPI’s stockholders approved the 2014 EIP and 2014 Non-Employee Equity Plan. Upon consummation of the Vidara Merger, the Company assumed the 2014 EIP and 2014 Non-Employee Equity Plan, which serve as successors to the 2011 EIP.

The 2014 EIP provides for the grant of incentive and nonstatutory stock options, stock appreciation rights, restricted stock awards, restricted stock unit awards, performance awards and other stock awards that may be settled in cash, shares or other property to the employees of the Company (or a subsidiary company). The number of ordinary shares of the Company that were initially authorized for issuance under the 2014 EIP was no more than 22,052,130, which number consisted of (i) 15,500,000 ordinary shares of the Company; plus (ii) the number of shares available for issuance pursuant to the grant of future awards under the 2011 EIP; plus (iii) any shares subject to outstanding stock awards granted under the 2011 EIP and the 2005 Plan that expire or terminate for any reason prior to exercise or settlement or are forfeited, redeemed or repurchased because of the failure to meet a contingency or condition required to vest such shares; less (iv) 10,000,000 shares, which is the additional number of shares which were previously approved as an increase to the share reserve of the 2011 EIP. On March 23, 2015, the compensation committee of the Company’s board of directors approved amending the 2014 EIP subject to shareholder approval to, among other things, increase the aggregate number of shares authorized for issuance under the 2014 EIP by an additional 14,000,000 shares. On May 6, 2015, the shareholders of the Company approved such amendment to the 2014 EIP. On February 25, 2016, the compensation committee of the Company’s board of directors approved, subject to shareholder approval, amending the 2014 EIP to, among other things, increase the aggregate number of shares authorized for issuance under the 2014 EIP beyond those remaining available for future grant under the 2014 EIP by an additional 6,000,000 shares and also approved a reduction in the number of shares authorized under our 2014 Non-Employee Equity Plan and 2014 ESPP by 1,000,000 shares and 5,000,000 shares, respectively, contingent on shareholder approval of the amendment to the 2014 EIP. On May 3, 2016, the shareholders of the Company approved the amendment to the 2014 EIP. The Company’s board of directors has authority to suspend or terminate the 2014 EIP at any time.

The 2014 Non-Employee Equity Plan provides for the grant of nonstatutory stock options, stock appreciation rights, restricted stock awards, restricted stock unit awards and other forms of stock awards that may be settled in cash, shares or other property to the non-employee directors and consultants of the Company (or a subsidiary company). The total number of ordinary shares of the Company that were initially authorized for issuance under the 2014 Non-Employee Equity Plan is 2,500,000. As described above, effective as of May 3, 2016, the number of ordinary shares authorized for issuance under the 2014 Non-Employee Equity Plan was reduced by 1,000,000 shares. The Company’s board of directors has authority to suspend or terminate the 2014 Non-Employee Equity Plan at any time.

As of June 30, 2016, an aggregate of 7,059,814 and 963,567 ordinary shares were authorized and available for future grants under the 2014 EIP and 2014 Non-Employee Equity Plan, respectively.

Stock Options

The following table summarizes stock option activity during the six months ended June 30, 2016:

	Options			Weighted Average Exercise Price		Weighted Average Contractual Term Remaining (in years)		Aggregate Intrinsic Value (in thousands)
Outstanding as of December 31, 2015		13,385,791		$	17.73
Granted		1,741,192		$	18.13
Exercised		(231,807	)	$	7.13
Forfeited		(802,169	)	$	18.34
Expired		(42,348	)	$	9.73
Outstanding as of June 30, 2016		14,050,659		$	17.94		7.92	$	41,048
Exercisable as of June 30, 2016		5,893,946		$	14.19		6.70	$	31,063

Stock options typically have a contractual term of 10 years from grant date.

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The fair value of each stock option award is estimated on the date of grant using the Black-Scholes option pricing model. The determination of the fair value of each stock option is affected by the Company’s share price on the date of grant, as well as assumptions regarding a number of highly complex and subjective variables. These variables include, but are not limited to, the Company’s expected share price volatility over the expected life of the awards and actual and projected stock option exercise behavior. The weighted average fair value per share of stock option awards granted during the six months ended June 30, 2016 and 2015, and assumptions used to value stock options, are as follows:

	For the Six Months Ended June 30,
	2016		2015
Dividend yield		—		—
Risk-free interest rate	1.3% - 1.8%		1.3% - 2.3%
Weighted average expected volatility	73.8%		77.2%
Expected life (in years)		6.0		6.0
Weighted average grant-date fair value per share of    options granted	$	11.78	$	15.84

Dividend yield

The Company has never paid dividends and does not anticipate paying any dividends in the near future. Additionally, the 2015 Senior Secured Credit Facility (described in Note 14 above) contains covenants that restrict the Company from issuing dividends.

Risk-Free Interest Rate

The Company determined the risk-free interest rate by using a weighted average assumption equivalent to the expected term based on the U.S. Treasury constant maturity rate as of the date of grant.

Volatility

The Company used an average historical share price volatility of comparable companies to be representative of future share price volatility, as the Company did not have sufficient trading history for its ordinary shares.

Expected Term

Given the Company’s limited historical exercise behavior, the expected term of options granted was determined using the “simplified” method since the Company does not have sufficient historical exercise data to provide a reasonable basis upon which to estimate the expected term. Under this approach, the expected term is presumed to be the average of the vesting term and the contractual life of the option.

Forfeitures

As share-based compensation expense recognized in the condensed consolidated statements of comprehensive income (loss) is based on awards ultimately expected to vest, it has been reduced for estimated forfeitures based on actual forfeiture experience, analysis of employee turnover and other factors. ASC Topic 718, Compensation-Stock Compensation (“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.

Restricted Stock Units

The following table summarizes restricted stock unit activity for the six months ended June 30, 2016:

	Number of Units			Weighted Average Grant-Date Fair Value Per Unit
Outstanding as of December 31, 2015		3,361,746		$	18.71
Granted		683,844		$	17.00
Vested		(813,423	)	$	16.80
Forfeited		(260,100	)	$	19.01
Outstanding as of June 30, 2016		2,972,067		$	18.81

The grant-date fair value of restricted stock units is the closing price of the Company’s shares on the date of grant.  

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Performance Stock Units

The following table summarizes performance stock unit (“PSU”) activity for the six months ended June 30, 2016:

	Number of Units			Weighted Average Grant-Date Fair Value Per Unit		Average Illiquidity Discount			Recorded Weighted Average Fair Value Per Unit
Outstanding as of December 31, 2015		13,049,000
Granted		260,000		$	7.99		8.2	%	$	7.34
Vested		(20,000	)	$	18.97		0.0	%	$	18.97
Forfeited		(823,000	)	$	13.69		16.1	%	$	11.48
Outstanding as of June 30, 2016		12,466,000

In January 2016, the compensation committee of the Company’s board of directors approved the grant of 260,000 PSUs to certain members of the Company’s senior leadership team.     

In 2014, the Company granted 25,000 PSUs. All other outstanding PSUs were granted in 2015 and 2016 and may vest if the Company’s total compounded annual shareholder rate of return (“TSR”) over three performance measurement periods summarized below equals or exceeds a minimum of 15%.

Vesting Tranche	Percent of  Total PSU Award			Beginning of Performance Measurement Period	End of Performance Measurement Period	Length of Performance Measurement Period (Years)
Tranche One		33.3	%	March 23, 2015	December 22, 2017		2.75
Tranche Two		33.3	%	March 23, 2015	March 22, 2018		3.00
Tranche Three		33.3	%	March 23, 2015	June 22, 2018		3.25

These outstanding PSUs granted in 2015 and 2016 will vest in amounts ranging from 25% to 100% based on the achievement of the following TSR over the three performance periods:

TSR Achieved	VestingAmount
15%	25	%
30%	50	%
45%	75	%
60%	100	%

The TSR will be based on the volume weighted average trading price (“VWAP”) of the Company’s ordinary shares over the 20 trading days ending on the last day of each of the three performance measurement periods versus the VWAP of the Company’s ordinary shares over the 20 trading days ended March 23, 2015 of $21.50. These PSUs are subject to a post vesting holding period of one year for 50% of the PSUs and two years for 50% of the PSUs for those who were members of the executive committee at the date of grant, and one year for 50% of the PSUs for all others who were not executive committee members at the date of grant.

The Company accounts for the PSUs as equity-settled awards in accordance with ASC 718. Because the value of the outstanding PSUs granted in 2015 and 2016 is dependent upon the attainment of a level of TSR, it requires the impact of the market condition to be considered when estimating the fair value of the PSUs. As a result, the Monte Carlo model is applied and the most significant valuation assumptions used include:

	For the Six Months Ended June 30,
	2016		2015
Valuation date stock price	$	17.72 - 21.07	$	22.77 - 28.53
Expected volatility		76.8% - 77.6%		67.2% - 67.3%
Risk free rate		1.0% - 1.2%		1.0% - 1.1%

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The average estimated fair value of each outstanding PSU granted under the 2014 EIP is as follows (allocated between groupings based on grant-date classification):

	Number of Units		Weighted Average Fair Value Per Unit		Average Illiquidity Discount			Recorded Weighted Average Fair Value Per Unit
Executive committee members		9,173,000	$	15.18		18.3	%	$	12.40
Non-executive committee members		3,268,000	$	13.75		7.3	%	$	12.74
		12,441,000	$	14.80		15.6	%	$	12.49

For the six months ended June 30, 2016, the Company recorded $24.3 million of expense related to PSUs.

Cash Long-Term Incentive Program

On November 5, 2014, the compensation committee of the Company’s board of directors approved a performance cash long-term incentive program for the members of the Company’s executive committee and executive leadership team, including its executive officers (the “Cash Bonus Program”). Participants in the Cash Bonus Program will be eligible for a specified cash bonus. The Cash Bonus Program pool funding of approximately $16.0 million was determined based on the Company’s actual TSR over the period from November 5, 2014 to May 6, 2015, and the bonus will be earned and payable only if the TSR for the period from November 5, 2014 to November 4, 2017 is greater than 15%. The portion of the total bonus pool payable to individual participants is based on allocations established by the Company’s compensation committee. Participants must remain employed by the Company through November 4, 2017 unless a participant’s earlier departure from employment is due to death, disability, termination without cause or a change in control transaction. Bonus payments under the Cash Bonus Program, if any, will be made after November 4, 2017.

The Company accounts for the Cash Bonus Program under the liability method in accordance with ASC 718. Because vesting of the bonus pool is dependent upon the attainment of a VWAP of $18.37 or higher over the 20 trading days ending November 4, 2017, the Cash Bonus Program will be considered to be subject to a “market condition” for the purposes of ASC 718. ASC 718 requires the impact of the market condition to be considered when estimating the fair value of the bonus pool. As a result, the Monte Carlo simulation model is applied and the fair value is revalued at each reporting period. As of June 30, 2016 and December 31, 2015, the estimated fair value was $4.6 million and $6.0 million, respectively. For the six months ended June 30, 2016, the Company recorded an expense of $0.2 million to the unaudited condensed consolidated statement of comprehensive income (loss) as a result of the valuation of the Cash Bonus Program. The most significant valuation assumptions used as of June 30, 2016 include:

· Valuation Date Stock Price - $16.47.

· Expected Volatility - The expected volatility assumption of 82.35% is based on the Company’s historical volatility over the 1.35 year period ending June 30, 2016, based upon daily stock price observations.

· Risk Free Rate – 0.49%, which is based upon the yield on U.S. Treasury Separate Trading of Registered Interest and Principal Securities with a remaining term of 1.35 years as of June 30, 2016.

Share-Based Compensation Expense

The following table summarizes share-based compensation expense included in the Company’s condensed consolidated statements of operations for the six months ended June 30, 2016 and 2015 (in thousands):

	For the Six Months Ended June 30,
	2016		2015
Share-based compensation expense:
Research and development	$	4,363	$	2,670
Sales and marketing		12,610		8,536
General and administrative		38,636		20,133
Total share-based compensation expense	$	55,609	$	31,339

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No material income tax benefit has been recognized relating to share-based compensation expense and no tax benefits have been realized from exercised stock options, due to the Company’s net loss position. As of June 30, 2016, the Company estimates that pre-tax unrecognized compensation expense of $252.2 million for all unvested share-based awards, including stock options, restricted stock units and PSUs, will be recognized through the second quarter of 2020. The Company expects to satisfy the exercise of stock options and future distribution of shares for restricted stock units and PSUs by issuing new ordinary shares which have been reserved under the 2014 EIP.

NOTE 17 – INCOME TAXES

The Company accounts for income taxes based upon an asset and liability approach. Deferred tax assets and liabilities represent the future tax consequences of the differences between the financial statement carrying amounts of assets and liabilities versus the tax basis of assets and liabilities. Under this method, deferred tax assets are recognized for deductible temporary differences, and operating loss and tax credit carryforwards. Deferred tax liabilities are recognized for taxable temporary differences. Deferred tax assets are reduced by valuation allowances when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. The impact of tax rate changes on deferred tax assets and liabilities is recognized in the period in which the change is enacted.

The following table presents the benefit for income taxes for the three and six months ended June 30, 2016 and 2015 (in thousands):

	For the Three Months Ended June 30,						For the Six Months Ended June 30,
	2016			2015			2016			2015
Income (loss) before benefit for income taxes	$	12,228		$	(128,866	)	$	(34,621	)	$	(146,506	)
Benefit for income taxes		(2,756	)		(160,680	)		(4,199	)		(158,767	)
Net income (loss)	$	14,984		$	31,814		$	(30,422	)	$	12,261

During the three and six months ended June 30, 2016, the Company recorded a benefit for income taxes of $2.8 million and $4.2 million, respectively, compared to $160.7 million and $158.8 million during the three and six months ended June 30, 2015, respectively. The benefit for income taxes recorded during the three and six months ended June 30, 2016 was primarily attributable to pre-tax losses incurred in higher tax rate jurisdictions which exceeded pre-tax income in lower tax rate jurisdictions during the periods. The benefit for income taxes recorded during the three and six months ended June 30, 2015 was primarily attributable to the release of valuation allowances in the United States due to the recognition of significant deferred tax liabilities as a result of the Hyperion acquisition as well as the ability to recognize a tax benefit for the Company’s U.S. tax consolidation group losses then projected to be incurred during 2015.

Deferred tax assets and liabilities arise from acquisition accounting adjustments where book values of certain assets and liabilities differ from their tax bases. Deferred tax assets and liabilities are recorded at the currently enacted rates which will be in effect at the time when the temporary differences are expected to reverse in the country where the underlying assets and liabilities are located.

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis should be read in conjunction with our condensed consolidated financial statements and the related notes that appear elsewhere in this report. This discussion contains forward-looking statements reflecting our current expectations that involve risks and uncertainties which are subject to safe harbors under the Securities Act of 1933, as amended, or the Securities Act, and the Securities Exchange Act of 1934, as amended, or the Exchange Act. These forward-looking statements include, but are not limited to, statements concerning our strategy and other aspects of our future operations, future financial position, future revenues, projected costs, expectations regarding demand and acceptance for our medicines, growth opportunities and trends in the market in which we operate, prospects and plans and objectives of management. The words “anticipates”, “believes”, “estimates”, “expects”, “intends”, “may”, “plans”, “projects”, “will”, “would” and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words. We may not actually achieve the plans, intentions or expectations disclosed in our forward-looking statements and you should not place undue reliance on our forward-looking statements. These forward-looking statements involve risks and uncertainties that could cause our actual results to differ materially from those in the forward-looking statements, including, without limitation, the risks set forth in Part II, Item 1A, “Risk Factors” in this report and in our other filings with the Securities and Exchange Commission, or SEC. We do not assume any obligation to update any forward-looking statements.

OVERVIEW

Unless otherwise indicated or the context otherwise requires, references to the “Company”, “we”, “us” and “our” refer to Horizon Pharma plc and its consolidated subsidiaries, including its predecessor, Horizon Pharma, Inc., or HPI. All references to “Vidara” are references to Horizon Pharma plc (formerly known as Vidara Therapeutics International Public Limited Company) and its consolidated subsidiaries prior to the effective time of the merger of the businesses of HPI and Vidara on September 19, 2014, or the Vidara Merger. The disclosures in this report relating to the pre-Vidara Merger business of Horizon Pharma plc, unless noted as being the business of Vidara prior to the Vidara Merger, pertain to the business of HPI prior to the Vidara Merger.

OUR BUSINESS

We are a biopharmaceutical company focused on improving patients’ lives by identifying, developing, acquiring and commercializing differentiated and accessible medicines that address unmet medical needs. We market nine medicines through our orphan, primary care and rheumatology business units. Our marketed medicines are ACTIMMUNE^® (interferon gamma-1b), BUPHENYL^® (sodium phenylbutyrate) Tablets and Powder, DUEXIS^® (ibuprofen/famotidine), KRYSTEXXA^® (pegloticase), MIGERGOT^® (ergotamine tartrate & caffeine suppositories), PENNSAID^® (diclofenac sodium topical solution) 2% w/w, or PENNSAID 2%, RAVICTI^® (glycerol phenylbutyrate) Oral Liquid, RAYOS^® (prednisone) delayed-release tablets and VIMOVO^® (naproxen/esomeprazole magnesium).

We developed DUEXIS and RAYOS, known as LODOTRA^® outside the United States, acquired the U.S. rights to VIMOVO from AstraZeneca AB in November 2013, acquired certain rights to ACTIMMUNE as a result of the Vidara Merger in September 2014, acquired the U.S. rights to PENNSAID 2% from Nuvo Research Inc., or Nuvo, in October 2014, acquired RAVICTI and BUPHENYL, known as AMMONAPS^® in Europe, as a result of our acquisition of Hyperion Therapeutics Inc., or Hyperion, in May 2015, and acquired KRYSTEXXA and the U.S. rights to MIGERGOT as a result of our acquisition of Crealta Holdings LLC., or Crealta, in January 2016.

On May 18, 2016, we entered into a definitive agreement with Boehringer Ingelheim International GmbH, or Boehringer Ingelheim International, to acquire rights to interferon gamma-1b, which Boehringer Ingelheim International currently commercializes under the trade names IMUKIN^®, IMUKINE^®, IMMUKIN^® and IMMUKINE^® in an estimated 30 countries primarily in Europe and the Middle East. Under the terms of the agreement, we paid Boehringer Ingelheim International €5.0 million ($5.6 million when converted using a Euro-to-Dollar exchange rate of 1.1132) upon signing and will pay €20.0 million upon closing, for the rights for interferon gamma-1b in all territories outside of the United States, Canada and Japan, as we currently hold marketing rights to interferon gamma-1b in these territories. We currently market interferon gamma-1b as ACTIMMUNE in the United States. We and Boehringer Ingelheim International expect to close the transaction by year-end 2016, subject to the satisfaction of closing conditions. Under the terms of a separate agreement, we also licensed the U.S., European and Canadian intellectual property rights for interferon gamma-1b for the treatment of Friedreich’s ataxia, or FA. Interferon gamma-1b is currently not indicated or approved for the treatment of FA.

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Our medicines are dispensed by retail and specialty pharmacies. Part of our commercial strategy for our primary care and rheumatology business units is to offer physicians the opportunity to have their patients fill prescriptions through pharmacies participating in our HorizonCares patient access program. This program does not involve us in the prescribing of medicines. The purpose of this program is solely to assist in ensuring that, when physicians determine that one of our medicines offers a potential clinical benefit to their patients and prescribe the medicine for an eligible patient, financial assistance may be available to reduce a commercial patient’s out-of-pocket costs. In the first six months of 2016, this resulted in 99.8 percent of commercial patients having co-pay amounts of $10 or less when filling prescriptions for ourmedicines utilizing our patient access program. For commercial patients who are prescribed our primary care medicines or RAYOS, the HorizonCares program offers co-pay assistance when a third-party payor covers a prescription but requires an eligible patient to pay a co-pay or deductible, and offers full subsidization when a third-party payor rejects coverage for an eligible patient. For patients who are prescribed our orphan medicines, our patient access programs provide reimbursement support, a clinical nurse program, co-pay and other patient assistance. The aggregate commercial value of our patient access programs for the six months endedJune 30, 2016 was $816.8 million. All pharmacies that dispense prescriptions for our medicines, which we estimate to be about 10,000 in the first half of 2016, are fully independent, including those that participate in HorizonCares. We do not own or possess any option to purchase an ownership stake in any pharmacy that distributes our medicines, and our relationship with each pharmacy is non-exclusive and arm’s length. All of our medicines are dispensed through pharmacies independent of our business.

As an alternative means of ensuring access to our medicines, we have also begun pursuing business arrangements with pharmacy benefit managers, or PBMs, and other payors to secure formulary status and reimbursement of our medicines, such as our recently announced arrangement with CVS Caremark. While we believe that, if successful, this strategy would result in broader inclusion of certain of our primary care medicines on healthcare plan formularies, and therefore increase payor reimbursement and lower our cost of providing patient access programs, these arrangements would generally require us to pay administrative and rebate payments to the PBMs and/or other payors.

We have a compliance program in place to address adherence with various laws and regulations relating to the selling, marketing and manufacturing of our medicines, as well as certain third-party relationships, including pharmacies. Specifically with respect to pharmacies, the compliance program utilizes a variety of methods and tools to monitor and audit pharmacies, including those that participate in our access programs, to confirm their activities, adjudication and practices are consistent with our compliance policies and guidance.

We market our medicines in the United States through our field sales force, which numbered approximately 500 representatives as of June 30, 2016. Our strategy is to use the commercial strength and infrastructure we have established in creating a global biopharmaceutical company to continue the successful commercialization of our existing medicine portfolio while also expanding and leveraging these capabilities by identifying, developing, acquiring and commercializing additional differentiated and accessible medicines that address unmet medical needs.

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RESULTS OF OPERATIONS

Comparison of Three Months Ended June 30, 2016 and 2015

The table below should be referenced in connection with a review of the following discussion of our results of operations for the three months ended June 30, 2016, compared to the three months ended June 30, 2015.

	For the Three Months Ended June 30,						Increase /
	2016			2015			(Decrease)
	(in thousands)
Net sales	$	257,378		$	172,821		$	84,557
Cost of goods sold		81,126			61,826			19,300
Gross profit		176,252			110,995			65,257
Operating expenses:
Research and development		11,210			8,922			2,288
Sales and marketing		79,589			58,056			21,533
General and administrative		53,986			77,190			(23,204	)
Total operating expenses		144,785			144,168			617
Operating income (loss)		31,467			(33,173	)		64,640
Other expense, net:
Interest expense, net		(19,228	)		(19,448	)		(220	)
Foreign exchange gain (loss)		15			(87	)		(102	)
Loss on induced conversion and debt extinguishment		—			(67,080	)		(67,080	)
Other expense, net		(26	)		(9,078	)		(9,052	)
Total other expense, net		(19,239	)		(95,693	)		(76,454	)
Income (loss) before benefit for income taxes		12,228			(128,866	)		(141,094	)
Benefit for income taxes		(2,756	)		(160,680	)		(157,924	)
Net income	$	14,984		$	31,814		$	(16,830	)

Net sales. Net sales increased $84.6 million, or 49%, to $257.4 million during the three months ended June 30, 2016, from $172.8 million during the three months ended June 30, 2015.

The following table presents a summary of total net sales attributed to geographic sources for the three months ended June 30, 2016 and 2015 (in thousands):

	Three Months Ended June 30, 2016					Three Months Ended June 30, 2015
	Amount		% of Total Net Sales			Amount		% of Total Net Sales
United States	$	254,656		99	%	$	169,483		98	%
Rest of world		2,722		1	%		3,338		2	%
Total Net Sales	$	257,378				$	172,821

The following table reflects the components of net sales for the three months ended June 30, 2016 and 2015:

	Three Months Ended June 30,				Change			Change
	2016		2015		$			%
	(in thousands)
PENNSAID 2%	$	72,665	$	29,431	$	43,234			147	%
DUEXIS		45,517		44,205		1,312			3	%
RAVICTI		39,353		18,993		20,360			107	%
VIMOVO		31,420		39,805		(8,385	)		(21	%)
ACTIMMUNE		30,038		25,835		4,203			16	%
KRYSTEXXA		19,872		—		19,872		*
RAYOS		12,134		10,316		1,818			18	%
BUPHENYL		4,049		3,860		189			5	%
LODOTRA		1,195		376		819			218	%
MIGERGOT		1,135		—		1,135		*
Total Net Sales	$	257,378	$	172,821	$	84,557			49	%

* Percentage change is not meaningful.

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The increase in net sales during the three months ended June 30, 2016 was primarily due to the growth in net sales of PENNSAID 2%, the full-period recognition of RAVICTI sales in 2016, compared to a partial period recognition in 2015 following the acquisition of Hyperion in May 2015, and the recognition of KRYSTEXXA sales following the acquisition of Crealta in January 2016.

PENNSAID 2%. Net sales increased $43.2 million, or 147%, to $72.7 million during the three months ended June 30, 2016, from $29.5 million during the three months ended June 30, 2015. Net sales increased by approximately $26.7 million due to higher net pricing and $16.5 million resulting from prescription volume growth.

DUEXIS. Net sales increased $1.3 million, or 3%, to $45.5 million during the three months ended June 30, 2016, from $44.2 million during the three months ended June 30, 2015. Net sales increased by approximately $10.5 million resulting from prescription volume growth, offset by a decrease of approximately $9.2 million due to lower net pricing resulting from higher co-pay and other patient assistance.

RAVICTI. Net sales increased $20.4 million, or 107%, to $39.4 million during the three months ended June 30, 2016, from $19.0 million during the three months ended June 30, 2015. We began recognizing RAVICTI sales following the closing of the Hyperion acquisition on May 7, 2015, therefore only a partial period of RAVICTI sales were recognized during the three months ended June 30, 2015, compared with full-period recognition of sales during the three months ended June 30, 2016.

VIMOVO. Net sales decreased $8.4 million, or 21%, to $31.4 million during the three months ended June 30, 2016, from $39.8 million during the three months ended June 30, 2015. Net sales decreased by approximately $7.5 million due to lower net pricing resulting from higher co-pay and other patient assistance, and approximately $0.9 million resulting from prescription volume decreases.

ACTIMMUNE. Net sales increased $4.2 million, or 16%, to $30.0 million during the three months ended June 30, 2016, from $25.8 million during the three months ended June 30, 2015. Net sales increased by approximately $5.5 million due to higher net pricing, offset by a decrease of approximately $1.3 million resulting from prescription volume decreases.

KRYSTEXXA. Net sales were $19.9 million during the three months ended June 30, 2016. We began recognizing KRYSTEXXA sales following the acquisition of Crealta in January 2016.

RAYOS. Net sales increased $1.8 million, or 18%, to $12.1 million during the three months ended June 30, 2016, from $10.3 million during the three months ended June 30, 2015. Net sales increased by approximately $1.5 million due to higher net pricing and $0.3 million resulting from prescription volume growth.

BUPHENYL. Net sales increased $0.2 million, or 5%, to $4.1 million during the three months ended June 30, 2016, from $3.9 million during the three months ended June 30, 2015. We began recognizing BUPHENYL sales following the closing of the Hyperion acquisition on May 7, 2015, therefore only a partial period of BUPHENYL sales were recognized during the three months ended June 30, 2015, compared with full-period recognition of sales during the three months ended June 30, 2016.

LODOTRA. Net sales increased $0.8 million, or 218%, to $1.2 million during the three months ended June 30, 2016, from $0.4 million during the three months ended June 30, 2015. The increase was the result of increased medicine shipments to our European distribution partner, Mundipharma. LODOTRA shipments to Mundipharma are not linear or directly tied to Mundipharma’s in-market sales and can therefore fluctuate significantly from quarter to quarter.

MIGERGOT. Net sales were $1.1 million during the three months ended June 30, 2016. We began recognizing MIGERGOT sales following the acquisition of Crealta in January 2016.

The table below reconciles our gross to net sales for the three months ended June 30, 2016 and 2015 (in millions):

	Three Months Ended June 30, 2016						Three Months Ended June 30, 2015
	Amount			% of Gross Sales			Amount			% of Gross Sales
Gross sales	$	792.0			100.0	%	$	493.6			100.0	%
Adjustments to gross sales:
Prompt pay discounts		(16.3	)		(2.1	)%		(11.2	)		(2.3	)%
Medicine returns		(1.1	)		(0.1	)%		(4.2	)		(0.9	)%
Co-pay and other patient assistance		(428.2	)		(54.1	)%		(253.1	)		(51.2	)%
Wholesaler fees and commercial rebates		(26.5	)		(3.3	)%		(13.9	)		(2.8	)%
Government rebates and chargebacks		(62.5	)		(7.9	)%		(38.4	)		(7.8	)%
Total adjustments		(534.6	)		(67.5	)%		(320.8	)		(65.0	)%
Net sales	$	257.4			32.5	%	$	172.8			35.0	%

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During the three months ended June 30, 2016, co-pay and other patient assistance, as a percentage of gross sales, increased to 54.1% from 51.2% during the three months ended June 30, 2015. The increase was primarily due to the rollout of our HorizonCares program to all sales territories which helped ensure patient access to our medicines in the face of increased control by certain PBMs and payors. During the three months ended June 30, 2016, we recorded a net release of $4.9 million of accrued government rebates and chargebacks resulting from the receipt of lower Medicaid invoices related to the year ended December 31, 2015.

Cost of Goods Sold. Cost of goods sold increased $19.3 million to $81.1 million during the three months ended June 30, 2016, from $61.8 million during the three months ended June 30, 2015. As a percentage of net sales, cost of goods sold was 31.5% during the three months ended June 30, 2016, compared to 35.8% during the three months ended June 30, 2015. The increase in cost of goods sold was primarily attributable to an increase in intangible amortization expense of $19.0 million, a $3.2 million increase in medicine costs associated with higher sales, a $5.7 million increase in inventory step-up amortization and higher royalty accretion expense of $5.7 million, offset by the remeasurement of royalties acquired through business combinations of $14.3 million, recorded in the three months ended June 30, 2015.

The increase in intangible amortization of $19.0 million during the three months ended June 30, 2016 compared to the prior year period was due to a $9.9 million increase in amortization expense related to RAVICTI and BUPHENYL intangible assets (acquired in May 2015) and $9.1 million expense related to KRYSTEXXA and MIGERGOT intangible asset amortization (acquired in January 2016).

The increase in inventory step-up amortization of $5.7 million during the three months ended June 30, 2016 compared to the prior year period was due to $9.1 million expense recorded during the three months ended June 30, 2016 related to KRYSTEXXA and MIGERGOT (acquired in January 2016) compared to $3.4 million expense recorded during the three months ended June 30, 2015 related to RAVICTI and BUPHENYL (acquired in May 2015).

Research and Development Expenses. Research and development expenses increased $2.3 million to $11.2 million during the three months ended June 30, 2016, from $8.9 million during the three months ended June 30, 2015. The increase in research and development expenses during the three months ended June 30, 2016 was primarily associated with an increase in employee costs of $1.3 million.

Sales and Marketing Expenses. Sales and marketing expenses increased $21.5 million to $79.6 million during three months ended June 30, 2016, from $58.1 million during the three months ended June 30, 2015. The increase in sales and marketing expenses was in line with the significant growth in revenue and an increase in the number of sales representatives over the same period and was primarily attributable to an increase of $10.5 million in employee costs, including $1.2 million related to share-based compensation, resulting from increased staffing of our field sales force, an increase of $8.7 million in marketing and commercialization expenses and an increase of $2.3 million in expenses relating to the distribution of medicine samples.

General and Administrative Expenses. General and administrative expenses decreased $23.2 million to $54.0 million during the three months ended June 30, 2016, from $77.2 million during the three months ended June 30, 2015. The decrease was primarily attributable to a decrease of $38.2 million in acquisition-related general and administrative expenses, offset by an increase of $2.1 million in share-based compensation expenses and $12.9 million related to our growth in headcount and operating costs following the Hyperion and Crealta acquisitions.

Loss on Induced Conversion and Debt Extinguishment. The loss on induced conversion and debt extinguishment during the three months ended June 30, 2015 of $67.1 million was composed of $10.2 million related to the induced conversions of 5.00% Convertible Senior Notes due 2018, or Convertible Senior Notes, and $56.9 million related to the extinguishment of our prior five-year $300.0 million term loan facility, or 2014 Term Loan Facility. The loss on induced conversions consisted of $4.6 million for cash inducement payments, a $5.3 million charge for the extinguishment of debt and $0.3 million of expenses. The loss on extinguishment of the 2014 Term Loan Facility consisted of a $45.4 million early redemption premium and an $11.5 million charge for the extinguishment of debt.

Other Expense. Other expense during the three months ended June 30, 2015 totaled $9.1 million, which primarily related to the fees for the Hyperion acquisition financing commitment.

Benefit for Income Taxes. During the three months ended June 30, 2016, we recorded a benefit for income taxes of $2.8 million compared to $160.7 million during the three months ended June 30, 2015. The benefit for income taxes during the three months ended June 30, 2016 was primarily attributable to pre-tax losses incurred in higher tax rate jurisdictions which exceeded pre-tax income in lower tax rate jurisdictions. The benefit for income taxes during the three months ended June 30, 2015 was primarily attributable to the release of $105.1 million in valuation allowances in the United States due to the recognition of significant deferred tax liabilities as a result of the Hyperion acquisition.

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Comparison of Six Months Ended June 30, 2016 and 2015

The table below should be referenced in connection with a review of the following discussion of our results of operations for the six months ended June 30, 2016, compared to the six months ended June 30, 2015.

	For the Six Months Ended June 30,						Increase /
	2016			2015			(Decrease)
	(in thousands)
Net sales	$	462,068		$	285,962		$	176,106
Cost of goods sold		158,359			90,679			67,680
Gross profit		303,709			195,283			108,426
Operating expenses:
Research and development		23,932			15,103			8,829
Sales and marketing		155,133			105,119			50,014
General and administrative		120,381			103,470			16,911
Total operating expenses		299,446			223,692			75,754
Operating income (loss)		4,263			(28,409	)		32,672
Other expense, net:
Interest expense, net		(38,686	)		(29,480	)		9,206
Foreign exchange loss		(158	)		(924	)		(766	)
Loss on induced conversion and debt extinguishment		—			(77,624	)		(77,624	)
Other expense, net		(40	)		(10,069	)		(10,029	)
Total other expense, net		(38,884	)		(118,097	)		(79,213	)
Loss before benefit for income taxes		(34,621	)		(146,506	)		(111,885	)
Benefit for income taxes		(4,199	)		(158,767	)		(154,568	)
Net (loss) income	$	(30,422	)	$	12,261		$	42,683

Net sales. Net sales increased $176.1 million, or 62%, to $462.1 million during the six months ended June 30, 2016, from $286.0 million during the six months ended June 30, 2015.

The following table presents a summary of total net sales attributed to geographic sources for the six months ended June 30, 2016 and 2015 (in thousands):

	Six Months Ended June 30, 2016					Six Months Ended June 30, 2015
	Amount		% of Total Net Sales			Amount		% of Total Net Sales
United States	$	456,306		99	%	$	281,388		98	%
Rest of world		5,762		1	%		4,574		2	%
Total Net Sales	$	462,068				$	285,962

The following table reflects the components of net sales for the six months ended June 30, 2016 and 2015:

	Six Months Ended June 30,				Change			Change
	2016		2015		$			%
	(in thousands)
PENNSAID 2%	$	127,658	$	47,691	$	79,967			168	%
RAVICTI		76,423		18,993		57,430			302	%
DUEXIS		75,165		73,079		2,086			3	%
VIMOVO		56,871		72,773		(15,902	)		(22	%)
ACTIMMUNE		55,550		50,632		4,918			10	%
KRYSTEXXA		36,028		—		36,028		*
RAYOS		22,643		17,521		5,122			29	%
BUPHENYL		7,793		3,860		3,933			102	%
LODOTRA		1,895		1,413		482			34	%
MIGERGOT		2,042		—		2,042		*
Total Net Sales	$	462,068	$	285,962	$	176,106			62	%

* Percentage change is not meaningful.

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The increase in net sales during the six months ended June 30, 2016 was primarily due to the growth in net sales of PENNSAID 2%, the full-period recognition of RAVICTI sales in 2016, compared to a partial period recognition in 2015 following the acquisition of Hyperion in May 2015, and the recognition of KRYSTEXXA sales following the acquisition of Crealta in January 2016.

PENNSAID 2%. Net sales increased $80.0 million, or 168%, to $127.7 million during the six months ended June 30, 2016, from $47.7 million during the six months ended June 30, 2015. Net sales increased by approximately $51.2 million resulting from prescription volume growth and approximately $28.8 million due to higher net pricing.

RAVICTI. Net sales increased $57.4 million, or 302%, to $76.4 million during the six months ended June 30, 2016, from $19.0 million during the six months ended June 30, 2015. We began recognizing RAVICTI sales following the closing of the Hyperion acquisition on May 7, 2015, therefore only a partial period of RAVICTI sales were recognized during the six months ended June 30, 2015, compared with full-period recognition of sales during the six months ended June 30, 2016.

DUEXIS. Net sales increased $2.1 million, or 3%, to $75.2 million during the six months ended June 30, 2016, from $73.1 million during the six months ended June 30, 2015. Net sales increased by approximately $31.5 million resulting from prescription volume growth, offset by a decrease of approximately $29.4 million due to lower net pricing resulting from higher co-pay and other patient assistance.

VIMOVO. Net sales decreased $15.9 million, or 22%, to $56.9 million during the six months ended June 30, 2016, from $72.8 million during the six months ended June 30, 2015. Net sales decreased by approximately $27.9 million due to lower net pricing resulting from higher co-pay and other patient assistance, offset by an increase of approximately $12.0 million resulting from prescription volume growth.

ACTIMMUNE. Net sales increased $4.9 million, or 10%, to $55.5 million during the six months ended June 30, 2016, from $50.6 million during the six months ended June 30, 2015. Net sales increased by approximately $9.1 million due to higher net pricing, offset by a decrease of approximately $4.2 million resulting from prescription volume decreases.

KRYSTEXXA. Net sales were $36.0 million during the six months ended June 30, 2016. We began recognizing KRYSTEXXA sales following the acquisition of Crealta in January 2016.

RAYOS. Net sales increased $5.1 million, or 29%, to $22.6 million during the six months ended June 30, 2016, from $17.5 million during the six months ended June 30, 2015. Net sales increased by approximately $6.0 million resulting from prescription volume growth, offset by a decrease of approximately $0.9 million due to lower net pricing resulting from higher co-pay and other patient assistance.

BUPHENYL. Net sales increased $3.9 million, or 102%, to $7.8 million during the six months ended June 30, 2016, from $3.9 million during the six months ended June 30, 2015. We began recognizing BUPHENYL sales following the closing of the Hyperion acquisition on May 7, 2015, therefore only a partial period of BUPHENYL sales were recognized during the six months ended June 30, 2015, compared with full-period recognition of sales during the six months ended June 30, 2016.

LODOTRA. Net sales increased $0.5 million, or 34%, to $1.9 million during the six months ended June 30, 2016, from $1.4 million during the six months ended June 30, 2015. The increase was the result of increased medicine shipments to our European distribution partner, Mundipharma. LODOTRA shipments to Mundipharma are not linear or directly tied to Mundipharma’s in-market sales and can therefore fluctuate significantly from quarter to quarter.

MIGERGOT. Net sales were $2.0 million during the six months ended June 30, 2016. We began recognizing MIGERGOT sales following the acquisition of Crealta in January 2016.

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The table below reconciles our gross to net sales for the six months ended June 30, 2016 and 2015 (in millions):

	Six Months Ended June 30, 2016						Six Months Ended June 30, 2015
	Amount			% of Gross Sales			Amount			% of Gross Sales
Gross sales	$	1,484.6			100.0	%	$	793.8			100.0	%
Adjustments to gross sales:
Prompt pay discounts		(30.1	)		(2.0	)%		(16.3	)		(2.1	)%
Medicine returns		(0.2	)		(0.0	)%		(7.4	)		(0.9	)%
Co-pay and other patient assistance		(816.8	)		(55.1	)%		(397.4	)		(50.1	)%
Wholesaler fees and commercial rebates		(54.8	)		(3.7	)%		(26.9	)		(3.4	)%
Government rebates and chargebacks		(120.6	)		(8.1	)%		(59.8	)		(7.5	)%
Total adjustments		(1,022.5	)		(68.9	)%		(507.8	)		(64.0	)%
Net sales	$	462.1			31.1	%	$	286.0			36.0	%

During the six months ended June 30, 2016, co-pay and other patient assistance, as a percentage of gross sales, increased to 55.1% from 50.1% during the six months ended June 30, 2015. The increase was primarily due to the rollout of our HorizonCares program to all sales territories which helped ensure patient access to our medicines in the face of increased control by certain PBMs and payors. During the six months ended June 30, 2016, we recorded a net release of $4.3 million in accrued wholesaler fees and commercial rebates and government rebates and chargebacks resulting from the receipt of lower invoices related to the year ended December 31, 2015.

Cost of Goods Sold. Cost of goods sold increased $67.7 million to $158.4 million during the six months ended June 30, 2016, from $90.7 million during the six months ended June 30, 2015. As a percentage of net sales, cost of goods sold was 34.3% during the six months ended June 30, 2016 compared to 31.7% during the six months ended June 30, 2015. The increase in cost of goods sold was primarily attributable to an increase in intangible amortization expense of $50.9 million, higher royalty accretion expense of $12.0 million, a $10.0 million increase in inventory step-up amortization and a $9.1 million increase in medicine costs associated with higher sales, offset by a decrease related to the remeasurement of royalties acquired through business combinations of $14.3 million, recorded during the six months ended June 30, 2015.

The increase in intangible amortization of $50.9 million during the six months ended June 30, 2016 compared to the prior year period was due to a $33.9 million increase in amortization expense related to RAVICTI and BUPHENYL intangible assets (acquired in May 2015) and $17.0 million expense related to KRYSTEXXA and MIGERGOT intangible asset amortization (acquired in January 2016).

The increase in inventory step-up amortization of $10.0 million during the six months ended June 30, 2016 compared to the prior year period was due to $16.5 million expense recorded during the six months ended June 30, 2016 related to KRYSTEXXA and MIGERGOT (acquired in January 2016) compared to $3.3 million expense recorded during the six months ended June 30, 2015 related to RAVICTI and BUPHENYL (acquired in May 2015) and $3.2 million related to ACTIMMUNE (acquired in September 2014).

Research and Development Expenses. Research and development expenses increased $8.8 million to $23.9 million during the six months ended June 30, 2016, from $15.1 million during the six months ended June 30, 2015. The increase in research and development expenses during the six months ended June 30, 2016 was primarily associated with an increase of $3.4 million in employee costs, including an increase of $1.7 million in share-based compensation to research and development employees, and a $2.0 million upfront fee paid for a license of a patent.

Sales and Marketing Expenses. Sales and marketing expenses increased $50.0 million to $155.1 million during six months ended June 30, 2016, from $105.1 million during the six months ended June 30, 2015. The increase in sales and marketing expenses was in line with the significant growth in revenue and an increase in the number of sales representatives over the same period and was primarily attributable to an increase of $24.6 million in employee costs, including $4.1 million related to share-based compensation resulting from increased staffing of our field sales force, an increase of $21.6 million in marketing and commercialization expenses and an increase of $3.8 million in expenses relating to the distribution of medicine samples.

General and Administrative Expenses. General and administrative expenses increased $16.9 million to $120.4 million during the six months ended June 30, 2016, from $103.5 million during the six months ended June 30, 2015. The increase was attributable to $18.5 million of share-based compensation expense, $28.3 million related to our growth in headcount and operating costs following the Hyperion and Crealta acquisitions, offset by a decrease of $29.9 million in acquisition-related general and administrative expenses.

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Interest Expense, Net. Interest expense, net, increased $9.2 million to $38.7 million during the six months ended June 30, 2016, from $29.5 million during the six months ended June 30, 2015. The increased interest expense, net, was primarily due to full-period recognition during the six months ended June 30, 2016 of the interest on higher borrowings to fund the acquisition of Hyperion in May 2015, including our $475.0 million aggregate principal amount of 6.625% Senior Notes due 2023, or the 2023 Senior Notes, six-year $400.0 million term loan facility, or the 2015 Term Loan Facility, and $400.0 million aggregate principal amount of 2.50% Exchangeable Senior Notes due 2022, or the Exchangeable Senior Notes, as compared to partial period recognition of the interest on these borrowings during the six months ended June 30, 2015 and our lower prior year borrowings under our 2014 Term Loan Facility.

Loss on Induced Conversion and Debt Extinguishment. The loss on induced conversion and debt extinguishment during the six months ended June 30, 2015 of $77.6 million was composed of $20.7 million related to the induced conversions of Convertible Senior Notes and $56.9 million related to the extinguishment of the 2014 Term Loan Facility. The loss on induced conversions consisted of $10.0 million for cash inducement payments, a $10.1 million charge for the extinguishment of debt and $0.6 million of expenses. The loss on extinguishment of the 2014 Term Loan Facility consisted of a $45.4 million early redemption premium and an $11.5 million charge for the extinguishment of debt.

Other Expense. Other expense during the six months ended June 30, 2015 totaled $10.1 million, which primarily related to the fees for the Hyperion acquisition financing commitment.

Benefit for Income Taxes. During the six months ended June 30, 2016, we recorded a benefit for income taxes of $4.2 million compared to $158.8 million during the six months ended June 30, 2015. The benefit for income taxes during the six months ended June 30, 2016 was primarily attributable to pre-tax losses incurred in higher tax rate jurisdictions which exceeded pre-tax income in lower tax rate jurisdictions. The benefit for income taxes during the six months ended June 30, 2015 was primarily attributable to the release of $105.1 million in valuation allowances in the United States due to the recognition of significant deferred tax liabilities as a result of the Hyperion acquisition.

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NON-GAAP FINANCIAL MEASURES

EBITDA, or earnings before interest, taxes, depreciation and amortization, and adjusted EBITDA are used and provided by us as non-GAAP financial measures. We provide certain other financial measures such as non-GAAP net income and non-GAAP earnings per share which include adjustments to GAAP figures. Adjusted EBITDA and non-GAAP net income are intended to provide additional information on our performance, operations and profitability. Adjustments to our GAAP figures as well as EBITDA exclude acquisition-related expenses, an upfront fee for a license of a patent, loss on debt extinguishment and loss on sale of long-term investments, as well as non-cash items such as share-based compensation, depreciation and amortization, royalty accretion, non-cash interest expense, and other non-cash adjustments. Certain other special items or substantive events may also be included in the non-GAAP adjustments periodically when their magnitude is significant within the periods incurred. We maintain an established non-GAAP cost policy that guides the determination of what costs will be excluded in non-GAAP measures. We believe that these non-GAAP financial measures, when considered together with the GAAP figures, can enhance an overall understanding of our financial and operating performance. The non-GAAP financial measures are included with the intent of providing investors with a more complete understanding of our historical and expected 2016 financial results and trends and to facilitate comparisons between periods and with respect to projected information. In addition, these non-GAAP financial measures are among the indicators our management uses for planning and forecasting purposes and measuring our performance. For example, adjusted EBITDA is used by us as one measure of management performance under certain incentive compensation arrangements. These non-GAAP financial measures should be considered in addition to, and not as a substitute for, or superior to, financial measures calculated in accordance with GAAP. The non-GAAP financial measures used by us may be calculated differently from, and therefore may not be comparable to, non-GAAP financial measures used by other companies. 

We are modifying the method of calculating non-GAAP income tax expense to align with guidance issued by the SEC on May 17, 2016. The new methodology calculates the income tax component of non-GAAP net income for each period by adjusting the GAAP tax expense (benefit) for the estimated tax impact of each non-GAAP adjustment based on the statutory income tax rate of the applicable jurisdictions for each non-GAAP adjustment. This new methodology does not reflect any use of net operating loss carryforwards that we potentially may have been able to use if our actual earnings for these periods had been the non-GAAP net income. Previously, we had calculated the income tax component of non-GAAP net income by using the estimated cash taxes that we expected to pay for the period. The non-GAAP net income and diluted net income per share amounts shown in the GAAP to non-GAAP reconciliation tables below are based on the new methodology. Full reconciliations of GAAP to non-GAAP net income and GAAP to non-GAAP diluted net income per share for the first and second quarters of 2016 and all of 2015 using both the new and prior methodology are posted to the investor relations section of our website. Information found on, or accessible through, our website is not a part of, and is not incorporated into, this Quarterly Report on Form 10-Q.

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Reconciliations of reported GAAP net income (loss) to EBITDA, adjusted EBITDA and adjusted non-GAAP net income, and the related per share amounts, are as follows (in thousands, except share and per share amounts):

	For the Three Months Ended June 30,						For the Six Months Ended June 30,
	2016			2015			2016			2015
GAAP Net Income (Loss)	$	14,984		$	31,814		$	(30,422	)	$	12,261
Depreciation		1,091			576			2,083			1,230
Amortization and accretion:
Intangible amortization expense		50,792			31,832			100,442			49,510
Amortization of deferred revenue		(213	)		(129	)		(419	)		(263	)
Accretion of royalty liabilities		9,669			3,977			19,028			7,020
Amortization of inventory step-up adjustment		9,102			3,341			16,548			6,495
Interest expense, net (including amortization of debt discount    and deferred financing costs)		19,228			19,448			38,686			29,480
Benefit for income taxes		(2,756	)		(160,680	)		(4,199	)		(158,767	)
EBITDA		101,897			(69,821	)		141,747			(53,034	)
Non-GAAP adjustments:
Remeasurement of royalties for medicines acquired through    business combinations		—			14,277			—			14,277
Acquisition-related costs		281			46,689			11,297			50,343
Upfront fee for license of global patent		—			—			2,000			—
Loss on induced conversion of debt and debt    extinguishment		—			67,080			—			77,624
Share-based compensation		27,997			24,665			55,609			31,339
Royalties for medicines acquired through business    combinations(1)		(9,095	)		(6,840	)		(17,595	)		(12,036	)
Total of non-GAAP adjustments		19,183			145,871			51,311			161,547
Adjusted EBITDA	$	121,080		$	76,050		$	193,058		$	108,513
GAAP Net Income (Loss)	$	14,984		$	31,814		$	(30,422	)	$	12,261
Non-GAAP Adjustments:
Remeasurement of royalties for medicines acquired through    business combinations		—			14,277			—			14,277
Acquisition-related costs		281			46,689			11,297			50,343
Upfront fee for license of global patent		—			—			2,000			—
Loss on induced conversion of debt and debt    extinguishment		—			67,080			—			77,624
Amortization and accretion:
Intangible amortization expense		50,792			31,832			100,442			49,510
Amortization of debt discount and deferred financing    costs		4,507			5,622			8,932			7,848
Accretion of royalty liabilities		9,669			3,977			19,028			7,020
Amortization of inventory step-up adjustment		9,102			3,341			16,548			6,495
Share-based compensation		27,997			24,665			55,609			31,339
Depreciation expense		1,091			576			2,083			1,230
Royalties for medicines acquired through business    combinations (1)		(9,095	)		(6,840	)		(17,595	)		(12,036	)
Total pre-tax non-GAAP adjustments		94,344			191,219			198,344			233,650
Income tax effect on pre-tax non-GAAP adjustments (2)		(18,064	)		(59,028	)		(35,338	)		(59,200	)
Other non-GAAP income tax adjustments (3)		—			(105,133	)		—			(105,133	)
Total non-GAAP adjustments		76,280			27,058			163,006			69,317
Non-GAAP Net Income	$	91,264		$	58,872		$	132,584		$	81,578

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	For the Three Months Ended June 30,				For the Six Months Ended June 30,
	2016		2015		2016			2015
Non-GAAP Earnings Per Share:
Weighted average shares – Basic		160,468,146		150,771,902		160,186,270			138,369,537
Non-GAAP Earnings Per Share – Basic
GAAP earnings (loss) per share – Basic	$	0.09	$	0.21	$	(0.19	)	$	0.09
Non-GAAP adjustments		0.48		0.18		1.02			0.50
Non-GAAP earnings per share – Basic	$	0.57	$	0.39	$	0.83		$	0.59
Weighted average shares – Diluted
Weighted average shares – Basic		160,468,146		150,771,902		160,186,270			138,369,537
Ordinary share equivalents		3,452,435		9,025,417		3,630,429			6,662,345
Weighted average shares – Diluted		163,920,581		159,797,319		163,816,699			145,031,882
Non-GAAP Earnings Per Share – Diluted
GAAP earnings (loss) per share – Diluted	$	0.09	$	0.20	$	(0.19	)	$	0.08
Non-GAAP adjustments		0.47		0.17		1.02			0.48
Diluted earnings per share effect of ordinary share    equivalents		—		—		(0.02	)		—
Non-GAAP earnings per share – Diluted	$	0.56	$	0.37	$	0.81		$	0.56

(1) Royalties for medicines acquired through business combinations relate to ACTIMMUNE, BUPHENYL, KRYSTEXXA, MIGERGOT, RAVICTI and VIMOVO.

(2) Adjustment to the GAAP tax expense (benefit) for the estimated tax impact of each non-GAAP adjustment based on the statutory tax rate of the applicable jurisdictions for each non-GAAP adjustment.

(3) Other non-GAAP income tax adjustments in the three and six months ended June 30, 2015 of $105.1 million related to the release of certain valuation allowances in connection with the Hyperion acquisition.

LIQUIDITY, FINANCIAL POSITION AND CAPITAL RESOURCES

We have incurred losses since our inception in June 2005 and, as of June 30, 2016, we had an accumulated deficit of $711.6 million. We expect that our sales and marketing expenses will continue to increase as a result of our commercialization of our medicines, but we believe these cost increases will be more than offset by higher net sales and gross profits. We achieved operating profitability in the year ended December 31, 2015, and we expect our current operations to achieve operating profitability in 2016, absent unusual or non-recurring items.

We have financed our operations to date through equity financings, debt financings and the issuance of convertible notes,along with cash flows from operations during the last several quarters. As of June 30, 2016, we had $424.5 million in cash and cash equivalents and total debt with a book value of $1,143.7 million and face value of $1,271.0 million. We believe our existing cash and cash equivalents and our expected cash flows from our operations will be sufficient to fund our business needs for at least the next 12 months. Part of our strategy is to expand and leverage our commercial capabilities by identifying, developing, acquiring and commercializing differentiated and accessible medicines that address unmet medical needs. To the extent we enter into transactions to acquire medicines or businesses in the future, we will most likely need to finance a significant portion of those acquisitions through additional debt, equity or convertible debt financings.

In March 2015, April 2015 and June 2015, we entered into separate, privately-negotiated conversion agreements with certain holders of the Convertible Senior Notes which were on substantially the same terms as prior conversion agreements entered into by us. Under these conversion agreements, the applicable holders agreed to convert an aggregate principal amount of $61.0 million of Convertible Senior Notes held by them and we agreed to settle such conversions by issuing an aggregate of 11,368,921 ordinary shares. In addition, pursuant to such conversion agreements, we made an aggregate cash payment of $10.0 million to the applicable holders for additional exchange consideration and $0.9 million for accrued and unpaid interest. Following these conversions, there were no Convertible Senior Notes remaining outstanding.

On March 13, 2015, Horizon Pharma Investment Limited, a wholly-owned subsidiary of Horizon Pharma plc, or Horizon Investment, completed a private placement of $400.0 million aggregate principal amount of Exchangeable Senior Notes to several investment banks acting as initial purchasers who subsequently resold the Exchangeable Senior Notes to qualified institutional buyers as defined in Rule 144A under the Securities Act. The net proceeds from the offering of the Exchangeable Senior Notes were approximately $387.2 million, after deducting the initial purchasers’ discount and offering expenses payable by Horizon Investment.

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We have fully and unconditionally guaranteed the Exchangeable Senior Notes on a senior unsecured basis, or the Guarantee. The Exchangeable Senior Notes and the Guarantee are Horizon Investment’s and our senior unsecured obligations. The Exchangeable Senior Notes accrue interest at an annual rate of 2.50% payable semiannually in arrears on March 15 and September 15 of each year, beginning on September 15, 2015. The Exchangeable Senior Notes will mature on March 15, 2022, unless earlier exchanged, repurchased or redeemed. The initial exchange rate is 34.8979 of our ordinary shares per $1,000 principal amount of the Exchangeable Senior Notes (equivalent to an initial exchange price of approximately $28.66 per ordinary share).

On April 21, 2015, we closed an underwritten public offering of 17,652,500 of our ordinary shares at a price to the public of $28.25 per share, or the 2015 Offering. The net proceeds to us from the 2015 Offering were approximately $475.6 million, after deducting underwriting discounts and other offering expenses payable by us.

On April 29, 2015, Horizon Pharma Financing Inc., our then wholly-owned subsidiary, or Horizon Financing, completed a private placement of $475.0 million aggregate principal amount of 2023 Senior Notes to certain investment banks acting as initial purchasers who subsequently resold the 2023 Senior Notes to qualified institutional buyers as defined in Rule 144A under the Securities Act and in offshore transactions to non-U.S. Persons in reliance on Regulation S under the Securities Act. The net proceeds from the 2023 Senior Notes were approximately $462.3 million.

In connection with the closing of the Hyperion acquisition on May 7, 2015, Horizon Financing merged with and into HPI and, as a result, the 2023 Senior Notes became HPI’s general unsecured senior obligations and we and all of our direct and indirect subsidiaries that are guarantors under the 2015 Senior Secured Credit Facility (as described below) fully and unconditionally guaranteed on a senior unsecured basis HPI’s obligations under the 2023 Senior Notes.

The 2023 Senior Notes accrue interest at an annual rate of 6.625% payable semiannually in arrears on May 1 and November 1 of each year, beginning on November 1, 2015. The 2023 Senior Notes will mature on May 1, 2023, unless earlier exchanged, repurchased or redeemed.

Except as described below, the 2023 Senior Notes may not be redeemed before May 1, 2018. Thereafter, some or all of the 2023 Senior Notes may be redeemed at any time at specified redemption prices, plus accrued and unpaid interest to the redemption date. At any time prior to May 1, 2018, some or all of the 2023 Senior Notes may be redeemed at a price equal to 100% of the aggregate principal amount thereof, plus a make-whole premium and accrued and unpaid interest to, but not including, the redemption date. Also prior to May 1, 2018, up to 35% of the aggregate principal amount of the 2023 Senior Notes may be redeemed at a redemption price of 106.625% of the aggregate principal amount thereof, plus accrued and unpaid interest, with the net proceeds of certain equity offerings; provided that: (1) at least 65% of the aggregate principal amount of notes originally issued under the indenture (excluding notes held by the parent and its subsidiaries) remains outstanding immediately after the occurrence of such redemption; and (2) the redemption occurs with 180 days of the date of closing such equity offering. In addition, the 2023 Senior Notes may be redeemed in whole but not in part at a redemption price equal to 100% of the principal amount plus accrued and unpaid interest and additional amounts, if any, to, but excluding, the redemption date, if on the next date on which any amount would be payable in respect of the 2023 Senior Notes, HPI or any guarantor is or would be required to pay additional amounts as a result of certain tax-related events.

If we undergo a change of control, HPI will be required to make an offer to purchase all of the 2023 Senior Notes at a price in cash equal to 101% of the aggregate principal amount thereof plus accrued and unpaid interest to, but not including, the repurchase date. If we or certain of our subsidiaries engage in certain asset sales, HPI will be required under certain circumstances to make an offer to purchase the 2023 Senior Notes at 100% of the principal amount thereof, plus accrued and unpaid interest to the repurchase date.

On May 7, 2015, we, HPI, and certain of our subsidiaries entered into a credit agreement with Citibank N.A., as administrative agent and collateral agent, and the lenders from time to time party thereto, or the credit agreement, providing for (i) the six-year $400.0 million 2015 Term Loan Facility; (ii) an uncommitted accordion facility subject to the satisfaction of certain financial and other conditions; and (iii) one or more uncommitted refinancing loan facilities with respect to loans thereunder, or the 2015 Senior Secured Credit Facility. The initial borrower under the 2015 Term Loan Facility is HPI. The credit agreement allows for us and certain of our other subsidiaries to become borrowers under the accordion or refinancing facilities. Loans under the 2015 Term Loan Facility bear interest, at each borrower’s option, at a rate equal to either the London Inter-Bank Offer Rate, or LIBOR, plus an applicable margin of 3.5% per year (subject to a 1.0% LIBOR floor), or the adjusted base rate plus 2.5%. The adjusted base rate is defined as the greater of (a) LIBOR (using one-month interest period) plus 1%, (b) prime rate, (c) fed funds plus ½ of 1% and (d) 2%. We borrowed the full $400.0 million available under the 2015 Term Loan Facility on May 7, 2015 as a LIBOR-based borrowing. The net proceeds from the 2015 Term Loan Facility were approximately $391.7 million.

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The obligations under the credit agreement and any swap obligations and cash management obligations owing to a lender (or an affiliate of a lender) thereunder are and will be guaranteed by our and each of our existing and subsequently acquired or organized direct and indirect subsidiaries (other than certain immaterial subsidiaries, subsidiaries whose guarantee would result in material adverse tax consequences and subsidiaries whose guarantee is prohibited by applicable law). The obligations under the credit agreement and any such swap and cash management obligations are secured, subject to customary permitted liens and other agreed upon exceptions, by a perfected security interest in (i) all tangible and intangible assets of the borrowers and the guarantors, except for certain customary excluded assets, and (ii) all of the capital stock owned by the borrowers and guarantors thereunder (limited, in the case of the stock of certain non-U.S. subsidiaries of the borrowers, to 65% of the capital stock of such subsidiaries).

We are permitted to make voluntary prepayments at any time without payment of a premium. We are required to make mandatory prepayments of loans under the 2015 Term Loan Facility (without payment of a premium) with (a) net cash proceeds from certain non-ordinary course asset sales (subject to reinvestment rights and other exceptions), (b) casualty proceeds and condemnation awards (subject to reinvestment rights and other exceptions), (c) net cash proceeds from issuances of debt (other than certain permitted debt), and (d) beginning with the fiscal year ending December 31, 2016, 50% of our excess cash flow (subject to decrease to 25% or 0% if our first lien leverage ratio is less than 2.25:1 and 1.75:1, respectively). The loans under the 2015 Term Loan Facility will amortize in equal quarterly installments in an aggregate annual amount equal to 1% of the original principal amount thereof, with any remaining balance payable on the final maturity date of the loans under the 2015 Term Loan Facility.

We used the net proceeds from the 2015 Offering, the offering of the 2023 Senior Notes, borrowings under the 2015 Term Loan Facility and existing cash to fund our acquisition of Hyperion, repay the $300.0 million outstanding amounts under the 2014 Term Loan Facility plus the related $45.4 million make-whole fee, and pay prepayment premiums, fees and expenses in connection with the foregoing.

We have a significant amount of debt outstanding on a consolidated basis. This substantial level of debt could have important consequences to our business, including, but not limited to: making it more difficult for us to satisfy our obligations; requiring a substantial portion of our cash flows from operations to be dedicated to the payment of principal and interest on our indebtedness, therefore reducing our ability to use our cash flows to fund acquisitions, capital expenditures, and future business opportunities; limiting our ability to obtain additional financing, including borrowing additional funds; increasing our vulnerability to, and reducing our flexibility to respond to, general adverse economic and industry conditions; limiting our flexibility in planning for, or reacting to, changes in our business and the industry in which we operate; and placing us at a disadvantage as compared to our competitors, to the extent that they are not as highly leveraged. We may not be able to generate sufficient cash to service all of our indebtedness and may be forced to take other actions to satisfy our obligations under our indebtedness.

In addition, the indenture governing the 2023 Senior Notes and the credit agreement related to the 2015 Senior Secured Credit Facility impose various covenants that limit our ability and/or our restricted subsidiaries’ ability to, among other things, pay dividends or distributions, repurchase equity, prepay junior debt and make certain investments, incur additional debt and issue certain preferred stock, incur liens on assets, engage in certain asset sales or merger transactions, enter into transactions with affiliates, designate subsidiaries as unrestricted subsidiaries; and allow to exist certain restrictions on the ability of restricted subsidiaries to pay dividends or make other payments to us.

During the six months ended June 30, 2016, we issued an aggregate of 231,807 ordinary shares in connection with the exercise of stock options and received $1.7 million in proceeds.

During the six months ended June 30, 2016, we issued an aggregate of 552,836 ordinary shares in net settlement of vested restricted stock units.

During the six months ended June 30, 2016, we issued an aggregate of 13,584 ordinary shares in net settlement of vested performance stock units.

During the six months ended June 30, 2016, we issued an aggregate of 261,780 ordinary shares pursuant to employee stock purchase plans and received $3.2 million in proceeds.

During the six months ended June 30, 2016, we made payments of $4.7 million for employee withholding taxes relating to share-based awards.

In May 2016, our board of directors authorized a share repurchase program pursuant to which we may repurchase up to 5,000,000 of our ordinary shares. The timing and amount of repurchases, including whether we decide to repurchase any shares pursuant to the authorization, will depend on a variety of factors, including the price of our ordinary shares, alternative investment opportunities, our cash resources, restrictions under our credit agreement, and market conditions. As of June 30, 2016, we had not purchased any of our ordinary shares under this repurchase program.  

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Sources and Uses of Cash

The following table provides a summary of our cash position and cash flows as of and for the six months ended June 30, 2016 and 2015 (in thousands):

	2016			2015
Cash and cash equivalents	$	424,525		$	667,057
Cash provided by (used in):
Operating activities		101,484			(29,155	)
Investing activities		(534,490	)		(959,881	)
Financing activities		(1,841	)		1,438,033

Operating Cash Flows

During the six months ended June 30, 2016, net cash provided by operating activities was $101.5 million compared to net cash used in operating activities of $29.2 million during the six months ended June 30, 2015. The increase in net cash provided by operating activities was primarily attributable to higher cash collections from accounts receivable balances as a result of an increase in sales of medicines, partially offset by higher cash outlays for contractual allowances, patient access programs and government rebates and chargebacks. This contrasted with the six months ended June 30, 2015, when net cash used in operating activities was reported due to the growth in working capital for accounts receivable and higher funding levels for patient co-pays and the payment of a $45.4 million early redemption premium related to the 2014 Term Loan Facility.

Cash provided by operating activities was negatively impacted during the six months ended June 30, 2016 due to cash payments of $22.6 million for costs related to acquisitions, $29.8 million for interest payments made on our 2015 Term Loan Facility, 2023 Senior Notes and Exchangeable Senior Notes, $18.1 million of cash paid for income taxes and $2.0 million of cash paid for an upfront fee for a license of a global patent. During the six months ended June 30, 2015, we made cash payments of $36.7 million for costs related to acquisitions, $11.8 million for interest payments, $55.4 million for induced conversions and debt extinguishment and related expenses, $9.0 million for fees relating to a debt commitment and $1.6 million for income taxes.

Investing Cash Flows

During the six months ended June 30, 2016 and 2015, net cash used in investing activities was $534.5 million and $959.9 million, respectively. The net cash used in investing activities during the six months ended June 30, 2016 was primarily associated with $514.8 million of payments for the acquisition of Crealta, net of cash acquired, a $5.6 million (€5.0 million) initial payment for rights to interferon gamma-1b and $12.8 million of payments for purchases of property and equipment. The net cash used in investing activities during the six months ended June 30, 2015 was primarily associated with payments for the acquisition of Hyperion in May 2015 of $1,022.4 million, net of cash acquired, less $64.6 million in proceeds from the liquidation of available-for-sale investments.

Financing Cash Flows

During the six months ended June 30, 2016, net cash used in financing activities was $1.8 million compared to net cash provided by financing activities of $1,438.0 million during the six months ended June 30, 2015. The decrease in net cash provided by financing activities during the six months ended June 30, 2016 was primarily attributable to the absence of any new financings during the six months ended June 30, 2016. Net cash provided by financing activities during the six months ended June 30, 2015 was primarily attributable to $475.6 million of net proceeds from the 2015 Offering, $462.3 million of net proceeds from the issuance of the 2023 Senior Notes, $391.7 million of net proceeds from the 2015 Term Loan Facility, $387.2 million of net proceeds received from borrowings under the Exchangeable Senior Notes, and was negatively impacted by the repayment of $297.0 million of the 2014 Term Loan Facility.

Financial Condition as of June 30, 2016 compared to December 31, 2015

Accounts receivable, net. Accounts receivable, net, increased $94.0 million, from $210.4 million as of December 31, 2015 to $304.4 million as of June 30, 2016. The increase is due to growth in gross sales of our medicines.

Inventories, net. Inventories, net, increased $153.7 million, from $18.4 million as of December 31, 2015 to $172.1 million as of June 30, 2016. This increase is primarily due to $145.4 million of stepped-up KRYSTEXXA and MIGERGOT inventory at June 30, 2016 recorded as a result of the Crealta acquisition in January 2016.

Prepaid expenses and other current assets. Prepaid expenses and other current assets increased $18.0 million, from $15.9 million as of December 31, 2015 to $33.9 million as of June 30, 2016. The increase is primarily due to $11.5 million of quarterly estimated income tax installments paid at June 30, 2016, an increase of $1.6 million in medicine samples inventory and an additional $1.5 million of rabbi trust assets held at June 30, 2016.

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Developed technology, net. Developed technology, net, increased $318.7 million, from $1,609.0 million as of December 31, 2015 to $1,927.7 million as of June 30, 2016. The increase is primarily due to $418.7 million of KRYSTEXXA and MIGERGOT developed technology acquired in the Crealta acquisition, offset by amortization of $100.0 million during the six months ended June 30, 2016.

Other assets. Other assets increased $6.0 million, from $0.2 million as of December 31, 2015 to $6.2 million as of June 30, 2016. This increase is primarily due to an upfront payment of $5.6 million (€5.0 million) to Boehringer Ingelheim International upon the signing of a definitive agreement to acquire worldwide rights to interferon gamma-1b.

Accounts payable. Accounts payable increased $42.4 million, from $16.6 million as of December 31, 2015 to $59.0 million as of June 30, 2016. This increase is due to $36.2 million of trade discounts and rebates included within accounts payable as of June 30, 2016 and timing of payments.

Accrued expenses. Accrued expenses decreased $24.3 million, from $100.0 million as of December 31, 2015 to $75.7 million as of June 30, 2016. This is due to decreases in payroll-related accruals as a result of payments made for 2015 incentive bonuses and Hyperion severance, and decreases in accruals for our sales and marketing and research and development functions.

Accrued trade discounts and rebates. Accrued trade discounts and rebates increased $36.9 million, from $183.8 million as of December 31, 2015 to $220.7 million as of June 30, 2016. This is due to a $4.2 million increase in accrued wholesaler fees and commercial rebates, a $20.3 million increase in accrued co-pay and other patient assistance and a $12.4 million increase in accrued government rebates and chargebacks. These increases are in line with the increase in gross sales during the period.

Accrued royalties, net of current. Accrued royalties, net of current, increased $46.7 million, from $123.5 million as of December 31, 2015 to $170.2 million as of June 30, 2016. This increase is primarily due to the assumption of KRYSTEXXA and MIGERGOT contingent royalties of $51.3 million at June 30, 2016 as a result of the Crealta acquisition in January 2016.

Deferred tax liabilities, net. Deferred tax liabilities, net, increased $18.2 million, from $113.4 million as of December 31, 2015 to $131.6 million as of June 30, 2016. The increase primarily resulted from the recording of deferred tax liabilities in connection with the acquisition of Crealta in January 2016.

Other long-term liabilities. Other long-term liabilities increased $11.2 million, from $9.4 million as of December 31, 2015 to $20.6 million as of June 30, 2016. The increase is primarily due to a $6.9 million contingent liability assumed as a result of the Crealta acquisition, an increase of $1.5 million in long-term deferred compensation plan liabilities and $1.4 million of increased tax liabilities.

Contractual Obligations

During the six months ended June 30, 2016, there were no material changes outside of the ordinary course of business to our contractual obligations as previously disclosed in Part II, Item 7 of our Annual Report on Form 10-K for the fiscal year ended December 31, 2015.

CRITICAL ACCOUNTING POLICIES

The preparation of financial statements in accordance with U.S. GAAP principles requires the use of estimates and assumptions that affect the reported amounts of assets and liabilities and the reported amounts of revenue and expenses. Certain of these policies are considered critical as these most significantly impact a company’s financial condition and results of operations and require the most difficult, subjective or complex judgments, often as a result of the need to make estimates about the effect of matters that are inherently uncertain. Actual results may vary from these estimates. A summary of our significant accounting policies is included in Note 2 to our Annual Report on Form 10-K for the year ended December 31, 2015. There have been no significant changes in our application of our critical accounting policies during the six months ended June 30, 2016.

OFF-BALANCE SHEET ARRANGEMENTS

Since our inception, we have not engaged in any off-balance sheet arrangements, including the use of structured finance, special purpose entities or variable interest entities, other than the indemnification agreements discussed in Note 12, “Commitments and Contingencies” in the notes to our condensed consolidated financial statements included in this report.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We are exposed to various market risks, which include potential losses arising from adverse changes in market rates and prices, such as interest rates and foreign exchange fluctuations. We do not enter into derivatives or other financial instruments for trading or speculative purposes.

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Interest Rate Risk. We are subject to interest rate fluctuation exposure through our borrowings under the 2015 Term Loan Facility and our investment in money market accounts which bear a variable interest rate. Loans under the 2015 Term Loan Facility bear interest, at our option, at a rate equal to either the LIBOR rate, plus an applicable margin of 3.5% per annum (subject to a 1.00% LIBOR floor), or the adjusted base rate plus 2.5%. The adjusted base rate is defined as the greater of (a) LIBOR (using one-month interest period) plus 1%, (b) prime rate, (c) fed funds plus ½ of 1% and (d) 2%. Since drawing the full $400.0 million available in May 2015, our borrowings have been based on LIBOR. Since current LIBOR rates are below the 1.0% LIBOR floor, the interest rate on our borrowings has been 4.5% per annum. An increase in the LIBOR of 100 basis points above the 1.0% LIBOR floor would increase our interest expense by $4.0 million per year.

The goals of our investment policy are associated with the preservation of capital, fulfillment of liquidity needs and fiduciary control of cash. To achieve our goal of maximizing income without assuming significant market risk, we maintain our excess cash and cash equivalents in money market funds. Because of the short-term maturities of our cash equivalents, we do not believe that a decrease in interest rates would have any material negative impact on the fair value of our cash equivalents.

Foreign Currency Risk. Our purchase cost of ACTIMMUNE under our contract with Boehringer Ingelheim RCV GmbH & Co. KG as well as our sales contracts relating to LODOTRA are principally denominated in Euros and are subject to foreign currency risk. We also incur certain operating expenses in currencies other than the U.S. dollar in relation to our Irish operations and foreign subsidiaries, including Horizon Pharma Switzerland GmbH; therefore, we are subject to volatility in cash flows due to fluctuations in foreign currency exchange rates, particularly changes in the Euro. To date, we have not entered into any hedging contracts since exchange rate fluctuations have had minimal impact on our results of operations and cash flows.

Inflation Risk. We do not believe that inflation has had a material impact on our business or results of operations during the periods for which the condensed consolidated financial statements are presented in this report.

Credit Risk. Historically, our accounts receivable balances have been highly concentrated with a select number of customers consisting primarily of large wholesale pharmaceutical distributors who, in turn, sell the medicines to pharmacies, hospitals and other customers. For the six months ended June 30, 2016, our top five customers, AmerisourceBergen, Cardinal Health, Inc., CVS Caremark, McKesson Corporation and Rochester Drug Company accounted for approximately 88% of total consolidated gross sales. For the six months ended June 30, 2015, our top five customers, American Specialty Pharmacy, Inc., AmerisourceBergen, Cardinal Health, Inc., McKesson Corporation and Rochester Drug Company accounted for approximately 83% of total consolidated gross sales.

In addition, five customers, AmerisourceBergen, Cardinal Health, Inc., CVS Caremark, McKesson Corporation and Rochester Drug Company accounted for approximately 96% of our total outstanding accounts receivable balances at June 30, 2016. Five customers, American Specialty Pharmacy, Inc., AmerisourceBergen, Cardinal Health, Inc., McKesson Corporation and Rochester Drug also accounted for approximately 90% of our total outstanding accounts receivable balances at June 30, 2015. Historically, we have not experienced any significant losses related to our accounts receivable balances.

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures. As required by paragraph (b) of Rules 13a-15 and 15d-15 promulgated under the Exchange Act, our management, including our Chief Executive Officer and Chief Financial Officer, conducted an evaluation as of the end of the period covered by this report of the effectiveness of our disclosure controls and procedures as defined in Exchange Act Rules 13a-15(e) and 15d-15(e). Based on that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective as of June 30, 2016, the end of the period covered by this report.

Changes in Internal Control Over Financial Reporting. As discussed above, on January 13, 2016, we completed the Crealta acquisition. The results of operations of the acquired Crealta business are included in our results of operations beginning on January 13, 2016. We are currently in the process of evaluating and integrating Crealta’s historical internal controls over financial reporting with ours.

We are in the process of implementing new enterprise resource planning software, SAP, as part of a plan to integrate and upgrade our systems and processes. The implementation of this global software is scheduled to continue in phases over a number of years. During the first and second quarters of 2016, we migrated certain areas of our business to SAP, including financial reporting, financial planning and analysis, supply chain and treasury. As the phased implementation of this system occurs, we are experiencing certain changes to our processes and procedures which, in turn, result in changes to our internal control over financial reporting. While we expect SAP to strengthen our internal financial controls by automating certain manual processes and standardizing business processes and reporting across our organization, management will continue to evaluate and monitor our internal controls as processes and procedures in each of the affected areas evolve.

During the three months ended June 30, 2016, other than continuing changes to our internal control processes resulting from the Crealta acquisition and new enterprise resource planning software, as discussed above, there have been no material changes to our internal control over financial reporting, as defined in Rules 13a-15(f) and 15d-15(f), that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

For a description of our legal proceedings, see Note 13, Legal Proceedings, of the Notes to Condensed Consolidated Financial Statements, included in Item 1 of this Quarterly Report on Form 10-Q.

ITEM 1A: RISK FACTORS

You should consider carefully the risks described below, together with all of the other information included in this report, and in our other filings with the Securities and Exchange Commission, or SEC, before deciding whether to invest in or continue to hold our ordinary shares. The risks described below are all material risks currently known, expected or reasonably foreseeable by us. If any of these risks actually occurs, our business, financial condition, results of operations or cash flow could be seriously harmed. This could cause the trading price of our ordinary shares to decline, resulting in a loss of all or part of your investment.

The risk factors set forth below with an asterisk (*) next to the title are new risk factors or risk factors containing changes, including any material changes, from the risk factors previously disclosed in Item 1A of our annual report on Form 10-K for the year ended December 31, 2015, as filed with the SEC.

Risks Related to Our Business and Industry

Our ability to generate revenues from our medicines is subject to attaining significant market acceptance among physicians, patients and healthcare payors.*

Our current medicines, and other medicines or medicine candidates that we may develop or acquire, may not attain market acceptance among physicians, patients, healthcare payors or the medical community. We have a limited history of commercializing medicines and most of our medicines have not been on the market for an extensive period of time, which subjects us to numerous risks as we attempt to increase our market share. We believe that the degree of market acceptance and our ability to generate revenues from our medicines will depend on a number of factors, including:

· timing of market introduction of our medicines as well as competitive medicines;

· efficacy and safety of our medicines;

· continued projected growth of the markets in which our medicines compete;

· prevalence and severity of any side effects;

· if and when we are able to obtain regulatory approvals for additional indications for our medicines;

· acceptance by patients, primary care physicians and key specialists, including rheumatologists, orthopedic surgeons, pain specialists, podiatrists, medical geneticists and specialists in pediatric immunology, allergy, infectious diseases and hematology/oncology;

· availability of coverage and adequate reimbursement and pricing from government and other third-party payors;

· potential or perceived advantages or disadvantages of our medicines over alternative treatments, including cost of treatment and relative convenience and ease of administration;

· strength of sales, marketing and distribution support;

· the price of our medicines, both in absolute terms and relative to alternative treatments;

· impact of past and limitation of future medicine price increases;

· our ability to maintain a continuous supply of medicine for commercial sale;

· the effect of current and future healthcare laws;

· the performance of third-party distribution partners, over which we have limited control; and

· medicine labeling or medicine insert requirements of the U.S. Food and Drug Administration, or FDA, or other regulatory authorities.

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With respect to DUEXIS and VIMOVO, studies indicate that physicians do not commonly co-prescribe gastrointestinal, or GI, protective agents to high-risk patients taking nonsteroidal anti-inflammatory drugs, or NSAIDs. We believe this is due in part to a lack of awareness among physicians prescribing NSAIDs regarding the risk of NSAID-induced upper GI ulcers, in addition to the inconvenience of prescribing two separate medications and patient compliance issues associated with multiple prescriptions. If physicians remain unaware of, or do not otherwise believe in, the benefits of combining GI protective agents with NSAIDs, our market opportunity for DUEXIS and VIMOVO will be limited. Some physicians may also be reluctant to prescribe DUEXIS or VIMOVO due to the inability to vary the dose of ibuprofen and naproxen, respectively, or if they believe treatment with NSAIDs or GI protective agents other than those contained in DUEXIS and VIMOVO, including those of its competitors, would be more effective for their patients. With respect to each of DUEXIS, PENNSAID 2% w/w, or PENNSAID 2%, RAYOS/LODOTRA, VIMOVO and BUPHENYL, their higher cost compared to the generic or branded forms of their active ingredients alone may limit adoption by physicians, patients and healthcare payors. With respect to ACTIMMUNE, while it is the only FDA-approved treatment for chronic granulomatous disease, or CGD, and severe, malignant osteopetrosis, or SMO, they are very rare conditions and, as a result, our ability to grow ACTIMMUNE sales will depend on our ability to further penetrate this limited market and obtain marketing approval for additional indications. With respect to RAVICTI, which is also approved to treat a very limited patient population, our ability to grow sales will depend in large part on our ability to transition urea cycle disorder, or UCD, patients from BUPHENYL or generic equivalents, which are comparatively much less expensive, to RAVICTI. With respect to KRYSTEXXA, our ability to grow sales will be affected by the success of our sales and marketing strategies and life cycle management, including studies designed to test reduction of immunogenicity in KRYSTEXXA which could expand the patient population and usage of KRYSTEXXA. With respect to MIGERGOT, our ability to sustain sales will depend on the management of inventory levels and the continued awareness of its benefits among physicians. If our current medicines or any other medicine that we may seek approval for or acquire fail to attain market acceptance, we may not be able to generate significant revenue to achieve or sustain profitability, which would have a material adverse effect on our business, results of operations, financial condition and prospects (including, possibly, the value of our ordinary shares).

Our future prospects are highly dependent on our ability to successfully formulate and execute commercialization strategies for each of our medicines. Failure to do so would adversely impact our financial condition and prospects.*

A substantial majority of our resources are focused on the commercialization of our current medicines. Our ability to generate significant medicine revenues and to achieve commercial success in the near-term will initially depend almost entirely on our ability to successfully commercialize these medicines in the United States. While DUEXIS was approved for marketing in the United Kingdom, or U.K., such approval sunset in March 2016. DUEXIS is not approved in any other countries in Europe and we do not expect the opportunity for DUEXIS in Europe to be material. Therefore, we expect that our ability to successfully commercialize DUEXIS will depend on our sales and marketing efforts in the United States. Following our acquisition of the U.S. rights to VIMOVO in November 2013 and PENNSAID 2% in October 2014, our strategy has included bringing both medicines’ pricing in-line with DUEXIS and other branded NSAIDs, thereby significantly increasing the value we realize per prescription, and also increasing sales and marketing support to drive volume growth in prescriptions. We cannot guarantee that this strategy will continue to be effective generally, due to negative reactions to price increases or otherwise. Our strategy for RAYOS is to solely focus on the rheumatology indications approved for RAYOS where our Phase 3 clinical trial data supports our commercial plans. Our strategy with respect to ACTIMMUNE includes pursuing label expansion for additional indications, such as Friedreich’s ataxia, or FA, and price increases but we cannot be certain that our pricing strategy will not result in downward pressure on sales or that we will be able to successfully complete clinical trials and obtain regulatory approvals in additional indications. Although LODOTRA is approved for marketing in countries outside the United States, to date it has only been marketed in a limited number of countries. While we anticipate that LODOTRA will be marketed in additional countries as our distribution partner, Mundipharma International Corporation Limited, or Mundipharma, formulates its reimbursement strategy, the ability to market LODOTRA in additional countries will depend on Mundipharma’s ability to obtain reimbursement approvals in these countries.

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Our strategy with respect to RAVICTI includes accelerating the transition of UCD patients from BUPHENYL or generic equivalents to RAVICTI, increasing the diagnosis of UCD and treatment of untreated UCD patients through patient and physician outreach, and increasing the price of the medicine. Part of our success in our strategy will depend on obtaining approval of RAVICTI for the treatment of UCD in patients less than two years of age, and we cannot guarantee that this will occur on our anticipated timeline or at all. On June 29, 2016, we submitted a supplemental new drug application, or sNDA, with the FDA for RAVICTI to expand the age range for chronic management of UCDs from two years of age and older to two months of age and older. Subject to positive data from on-going studies, we have targeted an sNDA submission in the first quarter of 2018 in relation to UCD patients during the first two months of life. In November 2015, we received approval of the Committee for Medicinal Products for Human Use of the European Medicines Agency, or EMA, for RAVICTI for use as an adjunctive therapy for chronic management of adult and pediatric UCD patients greater than two months of age. This authorizes us to market RAVICTI in all 28 Member States of the European Union, or EU, and will form the basis for recognition by the Member States of the European Economic Area, namely Norway, Iceland and Liechtenstein, for the medicine to be placed on the market. In June 2016, we partnered with Clinigen Group plc’s Idis managed access division to initiate a managed access program in selected European countries. While we expect to commercially launch RAVICTI in Europe in 2017, we cannot guarantee we will be able to successfully implement our commercial plans for RAVICTI in Europe. Our strategy with respect to KRYSTEXXA includes the expansion of our sales force, the planned enhancement of the KRYSTEXXA marketing campaign with improved immunogenicity data, continued volume growth and pricing optimization.

In order to increase adoption and sales of our medicines, we will need to continue developing our commercial organization as well as recruit and retain qualified sales representatives.*

Part of our strategy is to continue to build a biopharmaceutical company to successfully execute the commercialization of our medicines in the U.S. market, and in selected markets in Europe where we have commercial rights. We may not be able to successfully commercialize our medicines in the United States or in any other territories where we have commercial rights. Prior to our commercial launch of DUEXIS in the United States in December 2011, we did not have any experience commercializing medicines on our own. In order to commercialize any approved medicines, we must continue to build our sales, marketing, distribution, managerial and other non-technical capabilities. Although we had expanded our sales force to approximately 500 sales representatives as of June 30, 2016, consisting of approximately 15 orphan disease sales representatives, 395 primary care sales representatives and 90 rheumatology sales specialists, we currently have limited resources compared to some of our competitors, and the continued development of our own commercial organization to market our medicines and any additional medicines we may acquire will be expensive and time-consuming. We also cannot be certain that we will be able to continue to successfully develop this capability.

As a result of the evolving role of various constituents in the prescription decision making process, we adjusted the profile of the sales representatives we hire for our primary care and rheumatology business units from those with traditional pharmaceutical sales experience to those with successful business to business experience. For example, we have faced challenges due to pharmacists increasingly switching a patient’s intended prescription from DUEXIS and VIMOVO to a generic or over-the-counter brand of their active ingredients. We have faced similar challenges for RAYOS, BUPHENYL and PENNSAID 2% with respect to generic brands. While we believe the profile of our representatives is better suited for this evolving environment, we cannot be certain that our representatives will be able to successfully protect our market for DUEXIS, PENNSAID 2%, RAYOS, BUPHENYL and VIMOVO or that we will be able to continue attracting and retaining sales representatives with our desired profile and skills. We will also have to compete with other pharmaceutical and biotechnology companies to recruit, hire, train and retain commercial personnel. To the extent we rely on additional third parties to commercialize any approved medicines, we may receive less revenue than if we commercialized these medicines ourselves. In addition, we may have little or no control over the sales efforts of any third parties involved in our commercialization efforts. In the event we are unable to successfully develop and maintain our own commercial organization or collaborate with a third-party sales and marketing organization, we may not be able to commercialize our medicines and medicine candidates and execute on our business plan.

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If we are unable to effectively train and equip our sales force, our ability to successfully commercialize our medicines in the United States will be harmed.

As we recently acquired additional medicines through acquisition transactions, the members of our sales force may have limited experience promoting these medicines. To the extent we have retained the sales forces promoting recently-acquired medicines, we may not be successful in continuing to retain these employees and we otherwise have limited experience marketing these medicines under our commercial organization. As a result, we are required to expend significant time and resources to train our sales force to be credible and persuasive in convincing physicians to prescribe and pharmacists to dispense our medicines. In addition, we must train our sales force to ensure that a consistent and appropriate message about our medicines is being delivered to our potential customers. Our sales representatives may also experience challenges promoting multiple medicines when we call on physicians and their office staff. We have experienced, and may continue to experience, turnover of the sales representatives that we hired or will hire, requiring us to train new sales representatives. If we are unable to effectively train our sales force and equip them with effective materials, including medical and sales literature to help them inform and educate physicians about the benefits of our medicines and their proper administration and label indication, as well as our access programs, our efforts to successfully commercialize our medicines could be put in jeopardy, which could have a material adverse effect on our financial condition, share price and operations.

If we cannot successfully implement our patient access programs or enter into formulary and reimbursement agreements with pharmacy benefit managers in the face of increasing pressure to reduce the price of medications, the adoption of our medicines by physicians, patients and payors may decline.*

There continues to be immense pressure from healthcare payors and pharmacy benefit managers, or PBMs, to use less expensive generics or over-the-counter brands instead of branded medicines. For example, two of the largest PBMs have placed DUEXIS and VIMOVO on their formulary exclusion lists. Additional healthcare plans, including those that contract with these PBMs but use different formularies, may also choose to exclude our medicines from their formularies or restrict coverage to situations where a generic or over-the-counter medicine has been tried first. Many payors and PBMs also require patients to make co-payments for branded medicines, including many of our medicines, in order to incentivize the use of generic or other lower-priced alternatives instead. Legislation enacted in most states in the United States allows, or in some instances mandates, that a pharmacist dispenses an available generic equivalent when filling a prescription for a branded medicine, in the absence of specific instructions from the prescribing physician. Because our medicines (other than BUPHENYL) do not currently have FDA-approved generic equivalents in the United States, we do not believe our medicines should be subject to mandatory generic substitution laws. However, we understand that some pharmacies may attempt to obtain physician authorization to switch prescriptions for DUEXIS or VIMOVO to prescriptions for multiple generic medicines with similar active pharmaceutical ingredients, or APIs, to ensure payment for the medicine if the physician’s prescription for the branded medicine is not immediately covered by the payor, despite such substitution being off-label in the case of DUEXIS. If these limitations in coverage and other incentives result in patients refusing to fill prescriptions or being dissatisfied with the out-of-pocket costs of their medications, or if pharmacies otherwise seek and receive physician authorization to switch prescriptions, not only would we lose sales on prescriptions that are ultimately not filled, but physicians may be dissuaded from writing prescriptions for our medicines in the first place in order to avoid potential patient non-compliance or dissatisfaction over medication costs, or to avoid spending the time and effort of responding to pharmacy requests to switch prescriptions.

Part of our commercial strategy to increase adoption and access to our medicines in the face of these incentives to use generic alternatives is to offer physicians the opportunity to have patients fill prescriptions through independent pharmacies participating in our HorizonCares access program. Through HorizonCares, financial assistance may be available to reduce eligible patients’ out-of-pocket costs for prescriptions filled. Because of this assistance, eligible patients’ out-of-pocket cost for our medicines when dispensed through HorizonCares may be significantly lower than such costs when our medicines are dispensed outside of the HorizonCares program. However, to the extent physicians do not direct prescriptions currently filled through traditional pharmacies, including those associated with or controlled by PBMs, to pharmacies participating in our HorizonCares program, we may experience a significant decline in DUEXIS, VIMOVO and PENNSAID 2% prescriptions as a result of formulary exclusions, co-payment requirements or other incentives to use lower-priced alternatives to our medicines. Our ability to increase utilization of our access programs will depend on physician and patient awareness and comfort with the programs, and we have limited ability to influence whether physicians use our access programs to prescribe our medicines or whether patients will agree to receive our medicines through the HorizonCares program. In addition, the HorizonCares program is not available to federal health care program (such as Medicare and Medicaid) beneficiaries. We have also begun to pursue the additional strategy of contracting with PBMs and other payors to secure formulary status and reimbursement for certain of our primary care medicines, which would generally require us to pay administrative fees and rebates to the PBMs and other payors for qualifying prescriptions. While we recently announced a business relationship with one of the largest PBMs, CVS Caremark, that has resulted in DUEXIS and VIMOVO being removed from the CVS Caremark 2017 exclusion list and that we believe will secure formulary status for these medicines, we cannot guarantee that we will be able to agree to terms with other PBMs and other payors, or that such terms will be commercially reasonable to us. If we are unable to increase adoption of HorizonCares for filling prescriptions of our medicines or to secure formulary status and reimbursement through arrangements with PBMs and other payors, our ability to maintain or increase prescriptions for our medicines could be impaired.

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There has been recent negative publicity regarding the use of specialty pharmacies and drug pricing. Our patient access programs are not involved in the prescribing of medicines and are solely to assist in ensuring that when a physician determines one of our medicines offers a potential clinical benefit to their patients and they prescribe one for an eligible patient, financial assistance may be available to reduce the patient’s out-of-pocket costs. In addition, all pharmacies that fill prescriptions for our medicines are fully independent, including those that participate in HorizonCares. We do not own or possess any option to purchase an ownership stake in any pharmacy that distributes our medicines, and our relationship with each pharmacy is non-exclusive and arm’s length. All of our sales are processed through pharmacies independent of us. Despite this, the recent negative publicity regarding specialty pharmacies may result in physicians being less willing to participate in our patient access programs and thereby limit our ability to increase patient access and adoption of our medicines.

We may also encounter difficulty in forming and maintaining relationships with pharmacies that participate in our patient access programs. We currently depend on a limited number of pharmacies participating in HorizonCares to fulfill patient prescriptions under the HorizonCares program. If these HorizonCares participating pharmacies are unable to process and fulfill the volume of patient prescriptions directed to them under the HorizonCares program, our ability to maintain or increase prescriptions for our medicines will be impaired. The commercialization of our medicines and our operating results could be affected should any of the HorizonCares participating pharmacies choose not to continue participation in our HorizonCares program or by any adverse events at any of those HorizonCares participating pharmacies. For example, pharmacies that dispense our medicines could lose contracts that they currently maintain with managed care organizations, or MCOs, including PBMs.  Pharmacies often enter into agreements with MCOs. They may be required to abide by certain terms and conditions to maintain access to MCO networks, including terms and conditions that could limit their ability to participate in patient access programs like ours. Failure to comply with the terms of their agreements with MCOs could result in a variety of penalties, including termination of their agreement, which could negatively impact the ability of those pharmacies to dispense our medicines and collect reimbursement from MCOs for such medicines.

The HorizonCares program may implicate certain state laws related to, among other things, unlawful schemes to defraud, excessive fees for services, tortious interference with patient contracts and statutory or common law fraud. We have a compliance program in place to address adherence with various laws and regulations relating to the selling, marketing and manufacturing of our medicines, as well as certain third-party relationships, including pharmacies. Specifically with respect to pharmacies, the compliance program utilizes a variety of methods and tools to monitor and audit pharmacies, including those that participate in the HorizonCares program, to confirm their activities, adjudication and practices are consistent with our compliance policies and guidance. Despite our compliance efforts, to the extent the HorizonCares program is found to be inconsistent with applicable laws or the pharmacies that participate in our patient access programs do not comply with applicable laws, we may be required to restructure or discontinue such programs, terminate our relationship with certain pharmacies, or be subject to other significant penalties. In November 2015, we received a subpoena from the U.S. Attorney’s Office for the Southern District of New York requesting documents and information related to our patient access programs and other aspects of our marketing and commercialization activities. We are unable to predict how long this investigation will continue or its outcome, but we anticipate that we may incur significant costs in connection with the investigation, regardless of the outcome. We may also become subject to similar investigations by other governmental agencies. The investigation by the U.S. Attorney’s Office and any additional investigations of our patient access programs and sales and marketing activities may result in damages, fines, penalties or other administrative sanctions against us.

Even if we are successful in increasing the use our patient access programs, these programs may become too costly for us to maintain if we are unable to maintain or enhance payor reimbursement of our medicines. The aggregate commercial value of our patient access programs for the six months ended June 30, 2016 was $816.8 million. If additional formularies place our medicines on their exclusion lists or increase the co-payments applicable to our medicines, our cost of ensuring that patients have low-cost access to our medicines will increase and our profitability could decline. If the cost of maintaining our patient access programs increases relative to our sales revenues, we could be forced to reduce the amount of patient financial assistance that we offer or otherwise scale back or eliminate such programs, which could in turn have a negative impact on physicians’ willingness to prescribe and patients’ willingness to fill prescriptions of our medicines. As an alternative means of ensuring access to our medicines, we have also begun pursuing business arrangements with PBMs and other payors to secure formulary status and reimbursement of our medicines, such as our recently announced arrangement with CVS Caremark. While we believe that, if successful, this strategy would result in broader inclusion of certain of our primary care medicines on healthcare plan formularies, and therefore increase payor reimbursement and lower our cost of providing patient access programs, these arrangements would generally require the drug manufacturer to pay administrative and rebate payments to the PBMs and/or other payors. To the extent that we enter into arrangements with PBMs and other payors, we will owe rebate payments not only on prescriptions under plans that currently exclude certain of our medicines from their formulary and for which we provide significant patient assistance to ensure access, but also on prescriptions that are reimbursed by applicable healthcare plans. If our arrangement with CVS Caremark and any additional PBMs and other payors that we enter into business arrangements with do not result in increased prescriptions and reductions in our costs to provide our patient access programs that are sufficient to offset the administrative fees and rebate payments to the PBMs and/or other payors, our net revenues may decline.

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If we are unable to successfully implement our commercial plans and facilitate adoption by patients and physicians of any approved medicines through our sales, marketing and commercialization efforts, then we will not be able to generate sustainable revenues from medicine sales which will have a material adverse effect on our business and prospects.

We are solely dependent on third parties to commercialize certain of our medicines outside the United States. Failure of these third parties or any other third parties to successfully commercialize our medicines and medicine candidates in the applicable jurisdictions could have a material adverse effect on our business.*

We rely on Mundipharma for commercialization of LODOTRA in various European countries and certain Asian, Latin American, Middle Eastern, African and other countries. We rely on other third-party distributors for commercialization of BUPHENYL in certain territories outside the United States for which we currently have rights. We have limited contractual rights to force these third parties to invest significantly in commercialization of LODOTRA or BUPHENYL in our markets. In the event that Mundipharma or our current ex-U.S. distributors for BUPHENYL or any other third-party with any future commercialization rights to any of our medicines or medicine candidates fail to adequately commercialize those medicines or medicine candidates because they lack adequate financial or other resources, decide to focus on other initiatives or otherwise, our ability to successfully commercialize our medicines or medicine candidates in the applicable jurisdictions would be limited, which would adversely affect our business, financial condition, results of operations and prospects. We have had disagreements with Mundipharma under our European agreements and may continue to have disagreements, which could harm commercialization of LODOTRA in Europe or result in the termination of our agreements with Mundipharma. We also rely on Mundipharma’s ability to obtain regulatory approval for LODOTRA in certain Asian, Latin American, Middle Eastern, African and other countries. In addition, our agreements with Mundipharma and our agreements with our current ex-U.S. distributors for BUPHENYL may be terminated by either party in the event of a bankruptcy of the other party or upon an uncured material breach by the other party. If these third parties terminated their agreements, we may not be able to secure an alternative distributor in the applicable territory on a timely basis or at all, in which case our ability to generate revenues from the sale of LODOTRA or BUPHENYL outside the United States would be materially harmed.

Our medicines are subject to extensive regulation, and we may not obtain additional regulatory approvals for our medicines.*

The clinical development, manufacturing, labeling, packaging, storage, recordkeeping, advertising, promotion, export, marketing and distribution and other possible activities relating to our medicines and our medicine candidates are, and will be, subject to extensive regulation by the FDA and other regulatory agencies. Failure to comply with FDA and other applicable regulatory requirements may, either before or after medicine approval, subject us to administrative or judicially imposed sanctions.

To market any drugs or biologics outside of the United States, we and current or future collaborators must comply with numerous and varying regulatory and compliance related requirements of other countries. Approval procedures vary among countries and can involve additional medicine testing and additional administrative review periods, including obtaining reimbursement and pricing approval in select markets. The time required to obtain approval in other countries might differ from that required to obtain FDA approval. The regulatory approval process in other countries may include all of the risks associated with FDA approval as well as additional, presently unanticipated, risks. Regulatory approval in one country does not ensure regulatory approval in another, but a failure or delay in obtaining regulatory approval in one country may negatively impact the regulatory process in others.

Applications for regulatory approval, including a marketing authorization application for marketing new drugs in Europe, must be supported by extensive clinical and preclinical data, as well as extensive information regarding chemistry, manufacturing and controls, or CMC, to demonstrate the safety and effectiveness of the applicable medicine candidate. The number and types of preclinical studies and clinical trials that will be required for regulatory approval varies depending on the medicine candidate, the disease or the condition that the medicine candidate is designed to target and the regulations applicable to any particular medicine candidate. Despite the time and expense associated with preclinical and clinical studies, failure can occur at any stage, and we could encounter problems that cause us to repeat or perform additional preclinical studies, CMC studies or clinical trials. Regulatory authorities could delay, limit or deny approval of a medicine candidate for many reasons, including because they:

· may not deem a medicine candidate to be adequately safe and effective;

· may not find the data from preclinical studies, CMC studies and clinical trials to be sufficient to support a claim of safety and efficacy;

· may interpret data from preclinical studies, CMC studies and clinical trials significantly differently than we do;

· may not approve the manufacturing processes or facilities associated with our medicine candidates;

· may conclude that we have not sufficiently demonstrated long-term stability of the formulation for which we are seeking marketing approval;

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· may change approval policies (including with respect to our medicine candidates’ class of drugs) or adopt new regulations; or 

· may not accept a submission due to, among other reasons, the content or formatting of the submission.

Even if we believe that data collected from our preclinical studies, CMC studies and clinical trials of our medicine candidates are promising and that our information and procedures regarding CMC are sufficient, our data may not be sufficient to support marketing approval by regulatory authorities, or regulatory interpretation of these data and procedures may be unfavorable. Even if approved, medicine candidates may not be approved for all indications requested and such approval may be subject to limitations on the indicated uses for which the medicine may be marketed, restricted distribution methods or other limitations. Our business and reputation may be harmed by any failure or significant delay in obtaining regulatory approval for the sale of any of our medicine candidates. We cannot predict when or whether regulatory approval will be obtained for any medicine candidate we develop.

While we anticipate that LODOTRA will be marketed in additional countries as Mundipharma formulates its reimbursement strategy, the ability to market LODOTRA in additional countries will depend on Mundipharma’s ability to obtain regulatory and reimbursement approvals in these countries.

Hyperion Therapeutics Inc., or Hyperion, submitted a New Drug Submission to Health Canada, or HC, for approval to market RAVICTI in Canada. In March 2016, HC issued a Notice of Compliance for RAVICTI for use as an adjunctive therapy for chronic management of adult and pediatric patients two years of age and older with UCDs, and we plan to launch RAVICTI in Canada during 2016. However, if we are unable to obtain any further approvals for RAVICTI outside the United States, Canada and Europe, or determine that commercializing RAVICTI outside the United States, Canada and Europe is not economically viable, the market potential of RAVICTI will be limited.

Our limited history of commercial operations makes evaluating our business and future prospects difficult and may increase the risk of any investment in our ordinary shares.*

We face considerable risks and difficulties as a company with limited commercial operating history, particularly as a global consolidated entity with operating subsidiaries that also have limited operating histories. If we do not successfully address these risks, our business, prospects, operating results and financial condition will be materially and adversely harmed. Our limited commercial operating history, including our limited history commercializing our current medicines, makes it particularly difficult for us to predict our future operating results and appropriately budget for our expenses. In the event that actual results differ from our estimates or we adjust our estimates in future periods, our operating results and financial position could be materially affected. For example, we may underestimate the resources we will require to successfully integrate recent or future medicine or company acquisitions, or to commercialize our medicines, or not realize the benefits we expect to derive from our recent or future acquisitions. In addition, we have a limited history implementing our commercialization strategy focused on patient access, and we cannot guarantee that we will be able to successfully implement this strategy or that it will represent a viable strategy over the long term.

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We have rights to medicines in certain jurisdictions but have no control over third parties that have rights to commercialize those medicines in other jurisdictions, which could adversely affect our commercialization of these medicines.*

Boehringer Ingelheim RCV GmbH & Co. KG, or Boehringer Ingelheim, currently has rights to commercialize ACTIMMUNE, known as IMUKIN, outside the United States, Canada and Japan. On May 18, 2016, we entered into a definitive agreement with Boehringer Ingelheim International GmbH, or Boehringer Ingelheim International, to acquire rights to IMUKIN in an estimated 30 countries primarily in Europe and the Middle East. We expect to close the transaction by year-end 2016, subject to the satisfaction of closing conditions. AstraZeneca AB, or AstraZeneca, has retained its existing rights to VIMOVO in territories outside of the United States, including the right to use the VIMOVO name and related trademark. While we have the worldwide rights to BUPHENYL, the marketing and distribution rights are licensed to Swedish Orphan Biovitrum AB, or SOBI, through the end of 2016. Similarly, Nuvo Research Inc., or Nuvo, has retained its rights to PENNSAID 2% in territories outside of the United States and has announced its intention to seek commercialization partners outside the United States. We have little or no control over Boehringer Ingelheim’s activities with respect to IMUKIN outside the United States, Canada and Japan, over AstraZeneca’s activities with respect to VIMOVO outside of the United States, over SOBI’s activities with respect to BUPHENYL in Europe, certain Asian, Latin American, Middle Eastern, North African and other countries or over Nuvo’s or its future commercial partners’ activities with respect to PENNSAID 2% outside of the United States, even though those activities could impact our ability to successfully commercialize ACTIMMUNE, VIMOVO, BUPHENYL and PENNSAID 2%. For example, AstraZeneca or its assignees or Nuvo or its assignees can make statements or use promotional materials with respect to VIMOVO or PENNSAID 2%, respectively, outside of the United States that are inconsistent with our positioning of the medicines in the United States, and could sell VIMOVO or PENNSAID 2%, respectively, in foreign countries, including Canada, at prices that are dramatically lower than the prices we charge in the United States. These activities and decisions, while occurring outside of the United States, could harm our commercialization strategy in the United States, in particular because AstraZeneca is continuing to market VIMOVO outside the United States under the same VIMOVO brand name that we are using in the United States. In addition, medicine recalls or safety issues with ACTIMMUNE, VIMOVO, BUPHENYL or PENNSAID 2% outside the United States, even if not related to the commercial medicine we sell in the United States, could result in serious damage to the brand in the United States and impair our ability to successfully market ACTIMMUNE, VIMOVO, BUPHENYL and PENNSAID 2%. We also rely on Boehringer Ingelheim, AstraZeneca, SOBI and Nuvo or their assignees to provide us with timely and accurate safety information regarding the use of ACTIMMUNE, VIMOVO, BUPHENYL or PENNSAID 2%, respectively, outside of the United States (and outside of Canada and Japan with regards to Boehringer Ingelheim), as we have or will have limited access to this information ourselves.

We rely on third parties to manufacture commercial supplies of all of our medicines, and we currently intend to rely on third parties to manufacture commercial supplies of any other approved medicines. The commercialization of any of our medicines could be stopped, delayed or made less profitable if those third parties fail to provide us with sufficient quantities of medicine or fail to do so at acceptable quality levels or prices or fail to maintain or achieve satisfactory regulatory compliance.*

The facilities used by our third-party manufacturers to manufacture our medicines and medicine candidates must be approved by the applicable regulatory authorities. We do not control the manufacturing processes of third-party manufacturers and are currently completely dependent on our third-party manufacturing partners. In addition, we are required to obtain AstraZeneca’s consent prior to engaging any third-party manufacturers for esomeprazole, one of the APIs in VIMOVO, other than the third-party manufacturer(s) used by AstraZeneca or its affiliates or licensees. To the extent such manufacturers are unwilling or unable to manufacture esomeprazole for us on commercially acceptable terms, we cannot guarantee that AstraZeneca would consent to our use of alternate sources of supply.

We rely on an exclusive supply agreement with Boehringer Ingelheim for manufacturing and supply of ACTIMMUNE. However, Boehringer Ingelheim also currently manufactures interferon gamma-1b to supply its own commercial needs in its licensed territory, and this may lead to capacity allocation issues and supply constraints to our company. On May 18, 2016, we entered into a definitive agreement with Boehringer Ingelheim International to acquire their rights to interferon gamma-1b, which we expect to close by year-end 2016, subject to the satisfaction of closing conditions. ACTIMMUNE is manufactured by starting with cells from working cell bank samples which are derived from a master cell bank. We and Boehringer Ingelheim separately store multiple vials of the master cell bank. In the event of catastrophic loss at our or Boehringer Ingelheim’s storage facility, it is possible that we could lose multiple cell banks and have the manufacturing capacity of ACTIMMUNE severely impacted by the need to substitute or replace the cell banks. In addition, a key excipient used in PENNSAID 2% as a penetration enhancer is dimethyl sulfoxide, or DMSO. We and Nuvo, our exclusive supplier of PENNSAID 2%, rely on a sole proprietary form of DMSO for which we maintain a substantial safety stock. However, should this supply become inadequate, damaged, destroyed or unusable, we and Nuvo may not be able to qualify a second source. We rely on NOF Corporation, or NOF, as our exclusive supplier of the PEGylation agent that is a critical raw material in the manufacture of KRYSTEXXA. If NOF failed to supply such PEGylation agent, it may lead to KRYSTEXXA supply constraints.

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If any of our third-party manufacturers cannot successfully manufacture material that conforms to our specifications and the applicable regulatory authorities’ strict regulatory requirements, or pass regulatory inspection, they will not be able to secure or maintain regulatory approval for the manufacturing facilities. In addition, we have no control over the ability of third-party manufacturers to maintain adequate quality control, quality assurance and qualified personnel. If the FDA or any other applicable regulatory authorities do not approve these facilities for the manufacture of our medicines or if they withdraw any such approval in the future, or if our suppliers or third-party manufacturers decide they no longer want to supply our primary active ingredients or manufacture our medicines, we may need to find alternative manufacturing facilities, which would significantly impact our ability to develop, obtain regulatory approval for or market our medicines. To the extent any third-party manufacturers that we engage with respect to our medicines are different from those currently being used for commercial supply in the United States, the FDA will need to approve the facilities of those third-party manufacturers used in the manufacture of our medicines prior to our sale of any medicine using these facilities.

Although we have entered into supply agreements for the manufacture of our medicines, our manufacturers may not perform as agreed or may terminate their agreements with us. Under our manufacturing and supply agreement with Sanofi-Aventis U.S. LLC, or Sanofi-Aventis U.S., either we or Sanofi-Aventis U.S. may terminate the agreement upon an uncured breach by the other party or without cause upon two years prior written notice. Under our master manufacturing services and medicine agreement with Patheon Pharmaceuticals Inc., or Patheon, for finished VIMOVO medicine, either we or Patheon may terminate the agreement for uncured material breach by the other party or upon the other party’s bankruptcy or insolvency, we may terminate the agreement if any regulatory authority takes any action or raises any objection that prevents us from commercializing the VIMOVO medicine and Patheon may terminate the agreement if we assign our rights or obligations under the agreement to a competitor of Patheon or to a party that, in the reasonable opinion of Patheon, is not a credit worthy substitute for us, or in certain other circumstances where we assign the agreement without Patheon’s consent. Our manufacturing agreement with Boehringer Ingelheim has a term that runs until July 31, 2020, but the agreement may be terminated earlier by either us or Boehringer Ingelheim for an uncured material breach by the other party or upon the other party’s bankruptcy or insolvency. Under our manufacturing and supply agreement with Jagotec AG, or Jagotec, either we or Jagotec may terminate the agreement in the event of an insolvency, liquidation or bankruptcy of the other party or upon an uncured breach by the other party. While we have the right to receive a continuing supply of RAYOS/LODOTRA from Jagotec for a period of 24 months after termination, we would need to move our manufacturing to our alternate supplier of RAYOS/ LODOTRA, Bayer Pharma AG, in such an event and we may have to qualify a new back-up manufacturer. The term of our supply agreement with Nuvo for PENNSAID 2% is through December 31, 2029, but the agreement may be terminated earlier by either party for any uncured material breach by the other party of its obligations under the supply agreement or upon the bankruptcy or similar proceeding of the other party. With respect to BUPHENYL, our supply agreement with Pharmaceutics International, Inc., or PII, is in place until April 1, 2017, however, the agreement may be terminated earlier by either party. The term of our manufacturing agreement with Halo Pharmaceutical, Inc. for RAVICTI runs until July 4, 2018, however, the agreement may be terminated earlier in the case of breach by either party if the other party is in material breach of any provision of the agreement and the other party fails to remedy such a breach within thirty days, or by us at any time for any reason. Our master services agreement with Lyne Laboratories, Inc., or Lyne, for RAVICTI runs until February 1, 2017, with provision for 12 monthly auto renewals thereafter, unless 6 months’ written notice is provided by either party. The agreement may be terminated earlier, on 30 days’ notice, in case of breach by either party. Our manufacturing and supply agreement with Bio-Technology General (Israel) Ltd., or BTG Israel, for KRYSTEXXA bulk medicine terminates on December 15, 2018, and we are seeking a new manufacturer. Under the terms of the agreement BTG Israel has the obligation to convey all the know-how, licensed improvements, and other information related to the processing of the bulk medicine sufficient to enable us to manufacture the medicine. BTG Israel also has an obligation not to compete against KRYSTEXXA for a period of 30 months subsequent to the termination of the agreement. If we determine to move the manufacture of the bulk medicine out of Israel, we may be required to pay additional costs and to obtain the approval of the Office of the Chief Scientist (Israel), or OCS, because certain KRYSTEXXA intellectual property was developed with a grant funded by OCS. Under the terms of our agreement, BTG Israel must help us obtain such consent, but we can provide no assurance that the OCS will grant us approval to move the manufacturing outside of Israel. If we are unable to obtain such consent and we do not select a different supplier located in Israel, we may be required to pay additional amounts as repayment for the OCS grant funding. We rely on safety stock to mitigate the risk of our current suppliers electing to cease producing bulk drug medicine or ceasing to do so at acceptable prices and quality. However, we can provide no assurance that such safety stocks would be sufficient to avoid supply shortfalls in the event we have to identify and qualify new contract manufacturers.

In addition, we do not have the capability to package any of our medicines for distribution. Under our master manufacturing services agreement with Patheon, we have entered into a medicine agreement for packaging of RAYOS/LODOTRA. Valeant Pharmaceuticals International, Inc. manufactures and supplies DUEXIS to us in final, packaged form for the United States as well as any additional countries as may be agreed to by the parties. Patheon supplies final, packaged VIMOVO medicine pursuant to the master manufacturing services and product agreement we executed in connection with our acquisition of the U.S. rights to VIMOVO. Boehringer Ingelheim supplies final, packaged ACTIMMUNE to us and Nuvo supplies final, packaged PENNSAID 2% to us, in each case under exclusive supply agreements. We have clinical and commercial supplies of BUPHENYL finished medicine manufactured for us by PII on a purchase order basis. We have clinical and commercial supplies of RAVICTI finished drug medicine manufactured by Lyne under a commercial supply agreement and have an agreement in place with Halo Pharmaceutical, Inc. to serve as a finished drug medicine supplier for RAVICTI in the EU. Sigma Tau PharmaSource Inc. supplies final, packaged KRYSTEXXA to us for the United States. G & W Laboratories, Inc. manufactures and supplies MIGERGOT to us in final, packaged form for the United States.

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The manufacture of medicines requires significant expertise and capital investment, including the development of advanced manufacturing techniques and process controls. Manufacturers of medicines often encounter difficulties in production, particularly in scaling up and validating initial production. These problems include difficulties with production costs and yields, quality control, including stability of the medicine, quality assurance testing, shortages of qualified personnel, as well as compliance with strictly enforced federal, state and foreign regulations. Furthermore, if microbial, viral or other contaminations are discovered in the medicines or in the manufacturing facilities in which our medicines are made, such manufacturing facilities may need to be closed for an extended period of time to investigate and remedy the contamination. We cannot assure you that issues relating to the manufacture of any of our medicines will not occur in the future. Additionally, our manufacturers may experience manufacturing difficulties due to resource constraints or as a result of labor disputes or unstable political environments. If our manufacturers were to encounter any of these difficulties, or otherwise fail to comply with their contractual obligations, our ability to commercialize our medicines in the United States or provide any medicine candidates to patients in clinical trials would be jeopardized.

Any delay or interruption in our ability to meet commercial demand for our medicines will result in the loss of potential revenues and could adversely affect our ability to gain market acceptance for these medicines. In addition, any delay or interruption in the supply of clinical trial supplies could delay the completion of clinical trials, increase the costs associated with maintaining clinical trial programs and, depending upon the period of delay, require us to commence new clinical trials at additional expense or terminate clinical trials completely.

Failures or difficulties faced at any level of our supply chain could materially adversely affect our business and delay or impede the development and commercialization of any of our medicines or medicine candidates and could have a material adverse effect on our business, results of operations, financial condition and prospects.

We have experienced recent growth and expanded the size of our organization substantially in connection with our recent acquisition transactions, and we may experience difficulties in managing this growth as well as potential additional growth in connection with future medicine or company acquisitions.*

As of December 31, 2010 and prior to the commercial launch of DUEXIS, we employed approximately 40 full-time employees as a consolidated entity. As of June 30, 2016, we employed approximately 915 full-time employees, including approximately 500 sales representatives, representing a substantial change to the size of our organization over a relatively short period of time. We have also experienced, and may continue to experience, turnover of the sales representatives that we hired or will hire in connection with the commercialization of our medicines, requiring us to hire and train new sales representatives. Our management, personnel, systems and facilities currently in place may not be adequate to support this recent and anticipated growth, and we may not be able to retain or recruit qualified personnel in the future due to competition for personnel among pharmaceutical businesses.

As our commercialization plans and strategies continue to develop, we will need to continue to recruit and train sales and marketing personnel and expect to need to expand the size of our employee base for managerial, operational, financial and other resources as a result of our recent acquisitions. Our ability to manage any future growth effectively may require us to, among other things:

· continue to manage and expand the sales and marketing efforts for our existing medicines;

· enhance our operational, financial and management controls, reporting systems and procedures;

· expand our international resources;

· successfully identify, recruit, hire, train, maintain, motivate and integrate additional employees;

· establish and increase our access to commercial supplies of our medicines and medicine candidates;

· expand our facilities and equipment; and

· manage our internal development efforts effectively while complying with our contractual obligations to licensors, licensees, contractors, collaborators, distributors and other third parties.

In particular, the merger of our business with the business of Vidara Therapeutics International plc, or Vidara, is subject to numerous uncertainties and risks and will continue to require significant efforts and expenditures. For example, we have transitioned from a standalone public Delaware corporation to being part of a combined company organized in Ireland. This combination as well as our other recent acquisitions have resulted in many changes, including significant changes in the corporate business and legal entity structure, the integration of other companies and their personnel with us, and changes in systems. We are currently undertaking numerous complex transition activities associated with our recent acquisitions, and we may encounter unexpected difficulties or incur unexpected costs, including:

· difficulties in achieving growth prospects from combining third party businesses with our business;

· difficulties in the integration of operations and systems;

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· difficulties in the assimilation of employees and corporate cultures; 

· challenges in preparing financial statements and reporting timely results at both a statutory level for multiple entities and jurisdictions and at a consolidated level for public reporting;

· challenges in keeping existing physician prescribers and patients and increasing adoption of acquired medicines;

· difficulties in achieving anticipated cost savings, synergies, business opportunities and growth prospects from the combination;

· potential unknown liabilities, adverse consequences and unforeseen increased expenses associated with the transaction; and

· challenges in attracting and retaining key personnel.

If any of these factors impair our ability to continue to integrate our operations with those of any companies or businesses we acquire, we may not be able to realize the business opportunities, growth prospects and anticipated tax synergies from combining the businesses. In addition, we may be required to spend additional time or money on integration that otherwise would be spent on the development and expansion of our business.

Our management may also have to divert a disproportionate amount of its attention away from day-to-day activities and toward managing these growth and integration activities. Our future financial performance and our ability to execute on our business plan will depend, in part, on our ability to effectively manage any future growth and our failure to effectively manage growth could have a material adverse effect on our business, results of operations, financial condition and prospects.

We face significant competition from other biotechnology and pharmaceutical companies, including those marketing generic medicines and our operating results will suffer if we fail to compete effectively.*

The biotechnology and pharmaceutical industries are intensely competitive. We have competitors both in the United States and international markets, including major multinational pharmaceutical companies, biotechnology companies and universities and other research institutions. Many of our competitors have substantially greater financial, technical and other resources, such as larger research and development staff, experienced marketing and manufacturing organizations and well-established sales forces. Additional consolidations in the biotechnology and pharmaceutical industries may result in even more resources being concentrated in our competitors and we will have to find new ways to compete and may have to potentially merge with or acquire other businesses to stay competitive. Competition may increase further as a result of advances in the commercial applicability of technologies and greater availability of capital for investment in these industries. Our competitors may succeed in developing, acquiring or in-licensing on an exclusive basis, medicines that are more effective and/or less costly than our medicines.

DUEXIS and VIMOVO face competition from other NSAIDs, including Celebrex^® which is marketed by Pfizer Inc., and is also a generic medicine known as celecoxib and marketed by other pharmaceutical companies. DUEXIS and VIMOVO also face significant competition from the separate use of NSAIDs for pain relief and GI protective medications to reduce the risk of NSAID-induced upper GI ulcers. Both NSAIDs and GI protective medications are available in generic form and may be less expensive to use separately than DUEXIS or VIMOVO. PENNSAID 2% faces competition from generic versions of diclofenac sodium topical solutions that are priced significantly less than the price we charge for PENNSAID 2%, and Voltaren Gel, marketed by Endo Pharmaceuticals Solutions Inc., which is the market leader in the topical NSAID category. Legislation enacted in most states in the United States allows, or in some instances mandates, that a pharmacist dispense an available generic equivalent when filling a prescription for a branded medicine, in the absence of specific instructions from the prescribing physician. Because pharmacists often have economic and other incentives to prescribe lower-cost generics, if physicians prescribe DUEXIS, PENNSAID 2% or VIMOVO, those prescriptions may not result in sales. If physicians do not complete prescriptions through our HorizonCares program or otherwise provide prescribing instructions prohibiting the substitution of generic ibuprofen and famotidine separately as a substitution for DUEXIS or generic naproxen and branded Nexium^® (esomeprazole) as a substitute for VIMOVO or generic diclofenac sodium topical solutions as a substitute for PENNSAID 2%, sales of DUEXIS, PENNSAID 2% and VIMOVO may suffer despite any success we may have in promoting DUEXIS, PENNSAID 2% or VIMOVO to physicians. In addition, other medicine candidates that contain ibuprofen and famotidine in combination or naproxen and esomeprazole in combination, while not currently known or FDA approved, may be developed and compete with DUEXIS or VIMOVO, respectively, in the future. While KRYSTEXXA faces limited direct competition, a number of competitors have drugs in Phase 1 or Phase 2 trials. On December 22, 2015, AstraZeneca secured approval from the FDA for ZURAMPIC (lesinurad) 200mg tablets in combination with a xanthine oxidase inhibitor, or XOI, for the treatment of hyperuricemia associated with gout in patients who have not achieved target serum uric acid (sUA) levels with an XOI alone. In April 2016, the U.S. rights to ZURAMPIC were licensed to Ironwood Pharmaceuticals Inc. Although ZURAMPIC is not a direct competitor because it has not been approved for refractory gout, this therapy could be used prior to use of KRYSTEXXA and if effective, could reduce the target patient population for KRYSTEXXA.

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We have also entered into settlement and license agreements that may allow certain of our competitors to sell generic versions of certain of our medicines in the United States, subject to the terms of such agreements. On August 21, 2013, we entered into a settlement agreement, or the Par settlement agreement, and license agreement, or the Par license agreement, with Par Pharmaceutical, Inc. and Par Pharmaceutical Companies, Inc., or collectively Par, relating to our patent infringement litigation with Par. Under the Par license agreement, we granted Par a non-exclusive license (that is only royalty-bearing in some circumstances), or the License, to manufacture and commercialize Par’s generic version of DUEXIS in the United States after the generic entry date (as defined below) and to take steps necessary to develop inventory of, and obtain regulatory approval for, but not commercialize, Par’s generic version of DUEXIS prior to the generic entry date. Under the Par license agreement, the generic entry date is January 1, 2023; however, Par may be able to enter the market earlier under certain circumstances. Such events relate to the resolution of potential future third-party DUEXIS patent litigation, the entry of other third-party generic versions of DUEXIS or certain specific changes in DUEXIS market conditions. Only in the event that Par enters the DUEXIS market due to the specified changes in DUEXIS market conditions will the License become royalty-bearing, with the royalty obligations ceasing upon the occurrence of one of the other events that would have allowed Par to enter the DUEXIS market.

On October 1, 2015, we, as well as Jagotec, entered into a license and settlement agreement, or the Actavis settlement agreement, with Actavis Laboratories FL, Inc. (formerly known as Watson Laboratories, Inc. – Florida), or Actavis FL, relating to patent infringement litigation with Actavis FL. Under the Actavis settlement agreement, we and Jagotec granted Actavis FL a non-exclusive license to manufacture and commercialize Actavis FL’s generic version of RAYOS tablets in the United States after the generic entry date (as defined below) and to take steps necessary to develop inventory of, and prepare to commercialize, Actavis FL’s generic version of RAYOS tablets during certain limited periods prior to the generic entry date. We and Jagotec also agreed that during the 180 days after the Generic Entry Date, the license granted to Actavis FL would be exclusive with respect to any third-party generic version of RAYOS tablets. Under the Actavis settlement agreement, the generic entry date is December 23, 2022; however, Actavis FL may be able to enter the market earlier under certain circumstances. Such events relate to the resolution of any other third-party RAYOS patent litigation, the entry of other generic versions of RAYOS tablets or certain substantial reductions in RAYOS prescriptions over specified periods of time. If we or Jagotec enter into any similar agreements with other parties with respect to generic versions of RAYOS tablets, we and Jagotec agreed to amend the Actavis settlement agreement to provide Actavis FL with terms that are no less favorable than those provided to the other parties with respect to the license terms, generic entry date, permitted pre-market activities and notice provisions.

On May 6, 2015, we entered into a settlement and license agreement, or the Perrigo settlement agreement, with Perrigo Company plc and its subsidiary Paddock Laboratories, LLC, or collectively Perrigo, relating to patent infringement litigation with Perrigo. Under the Perrigo settlement agreement, we granted Perrigo a non-exclusive license to manufacture and commercialize Perrigo’s generic version of PENNSAID 2% in the United States after the license effective date (as defined below) and to take steps necessary to develop inventory of, and prepare to commercialize, Perrigo’s generic version of PENNSAID 2% during certain limited periods prior to the license effective date. Under the Perrigo settlement agreement, the license effective date is January 10, 2029; however, Perrigo may be able to enter the market earlier under certain circumstances. Such events relate to the resolution of any other third-party PENNSAID 2% patent litigation, the entry of other third-party generic versions of PENNSAID 2% or certain substantial reductions in our PENNSAID 2% shipments over specified periods of time. In certain circumstances following the entry of other third-party generic versions of PENNSAID 2%, we may be required to supply PENNSAID 2% to Perrigo as our authorized distributor of generic PENNSAID 2%, with us receiving specified percentages of any net sales by Perrigo. We also agreed that if we enter into any similar agreements with other parties with respect to generic versions of PENNSAID 2%, we will amend the Perrigo settlement agreement to provide Perrigo with terms that are no less favorable than those provided to the other parties.

On September 9, 2015, we entered into a settlement and license agreement, or the Taro settlement agreement, with Taro Pharmaceuticals USA, Inc. and Taro Pharmaceutical Industries, Ltd., or collectively Taro, relating to patent infringement litigation with Taro. Under the Taro settlement agreement, we granted Taro a non-exclusive license to manufacture and commercialize Taro’s generic version of PENNSAID 2% in the United States after the license effective date (as defined below) and to take steps necessary to develop inventory of, and prepare to commercialize, Taro’s generic version of PENNSAID 2% during certain limited periods prior to the license effective date. Under the Taro settlement agreement, the license effective date is January 10, 2029; however, Taro may be able to enter the market earlier under certain circumstances. Such events relate to the resolution of any other third-party PENNSAID 2% patent litigation, the entry of other third-party generic versions of PENNSAID 2% or certain substantial reductions in our PENNSAID 2% shipments over specified periods of time. We also agreed that if we enter into any similar agreements with other parties with respect to generic versions of PENNSAID 2%, we will amend the Taro settlement agreement to provide Taro with terms that are no less favorable than those provided to the other parties.

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On April 18, 2016, we entered into a settlement and license agreement, or the Amneal settlement agreement, with Amneal Pharmaceuticals LLC, or Amneal, relating to patent infringement litigation with Amneal. Under the Amneal settlement agreement, we granted Amneal a non-exclusive license to manufacture and commercialize Amneal’s generic version of PENNSAID 2% in the United States after the license effective date (as defined below) and to take steps necessary to develop inventory of, and prepare to commercialize, Amneal’s generic version of PENNSAID 2% during certain limited periods prior to the license effective date. Under the Amneal settlement agreement, the license effective date is January 10, 2029; however, Amneal may be able to enter the market earlier under certain circumstances. Such events relate to the resolution of any other third-party PENNSAID 2% patent litigation or the entry of other third-party generic versions of PENNSAID 2%. In certain circumstances following the entry of other third-party generic versions of PENNSAID 2%, we may be required to supply PENNSAID 2% to Amneal as our non-exclusive, authorized distributor of generic PENNSAID 2%, with us receiving specified percentages of any net sales by Amneal. We also agreed that if we enter into any similar agreements with other parties with respect to generic versions of PENNSAID 2%, we will amend the Amneal settlement agreement to provide Amneal with terms that are no less favorable than those provided to the other parties.

On May 9, 2016, we entered into a settlement and license agreement, or the Teligent settlement agreement, with Teligent, Inc., or Teligent, relating to patent infringement litigation with Teligent. Under the Teligent settlement agreement, we granted Teligent a non-exclusive license to manufacture and commercialize Taro’s generic version of PENNSAID 2% in the United States after the license effective date (as defined below) and to take steps necessary to develop inventory of, and prepare to commercialize, Teligent’s generic version of PENNSAID 2% during certain limited periods prior to the license effective date. Under the Teligent settlement agreement, the license effective date is January 10, 2029; however, Teligent may be able to enter the market earlier under certain circumstances. Such events relate to the resolution of any other third-party PENNSAID 2% patent litigation, the entry of other third-party generic versions of PENNSAID 2% or certain substantial reductions in our PENNSAID 2% shipments over specified periods of time. We also agreed that if we enter into any similar agreements with other parties with respect to generic versions of PENNSAID 2%, we will amend the Teligent settlement agreement to provide Taro with terms that are no less favorable than those provided to the other parties.

Patent litigation is currently pending in the United States District Court for the District of New Jersey against several companies intending to market a generic version of PENNSAID 2% prior to the expiration of certain of our patents listed in the Orange Book. These cases are collectively known as the PENNSAID 2% cases, and involve the following sets of defendants: (i) Actavis Laboratories UT, Inc., formerly known as Watson Laboratories, Inc., Actavis, Inc. and Actavis plc, or collectively “Actavis”; (ii) Lupin Limited (“Lupin”) and (iii) Amneal Pharmaceuticals LLC (“Amneal”), with the Amneal case being settled and awaiting dismissal. These cases arise from Paragraph IV Patent Certification notice letters from each of Actavis, Lupin and Amneal advising each had filed an ANDA with the FDA seeking approval to market a generic version of PENNSAID 2% before the expiration of the patents-in-suit. No trial date has been set by the court in these actions.

The Company received from Actavis a Paragraph IV Patent Certification Notice Letter dated July 1, 2016, against Orange Book listed U.S. Patent Nos. 9,339,551 and 9,339,552, advising that Actavis had filed an ANDA with the FDA for a generic version of PENNSAID 2%.  

The Company received from Apotex Inc., or Apotex, a Paragraph IV Patent Certification Notice Letter dated April 1, 2016, against Orange Book listed U.S. Patent Nos. 8,217,078, 8,252,838, 8,546,450, 8,563,613, 8,618,164, 8,741,956, 8,871,809, 9,066,913, 9,101,591, 9,132,110, 9,168,304, 9,168,305 and 9,220,784, advising that Apotex had filed an ANDA with the FDA for a generic version of PENNSAID 2%. The Company also received from Apotex a second Paragraph IV Patent Certification Notice Letter dated June 30, 2016, against Orange Book listed U.S. Patent Nos. 9,339,551 and 9,339,552, advising that Apotex had filed an ANDA with the FDA for a generic version of PENNSAID 2%.  

Patent litigation is currently pending in the United States District Court for the District of New Jersey against several companies intending to market a generic version of VIMOVO before the expiration of certain of our patents listed in the FDA’s Orange Book, or Orange Book. These cases are collectively known as the VIMOVO cases, and involve the following sets of defendants: (i) Dr. Reddy’s Laboratories Inc. and Dr. Reddy’s Laboratories Ltd., or collectively Dr. Reddy’s; (ii) Lupin Limited and Lupin Pharmaceuticals Inc., or collectively Lupin; (iii) Mylan Pharmaceuticals Inc., Mylan Laboratories Limited, and Mylan Inc., or collectively Mylan; and (iv) Actavis FL and Actavis Pharma, Inc., or collectively Actavis Pharma. The cases arise from Paragraph IV Patent Certification notice letters from each of Dr. Reddy’s, Lupin, Mylan and Actavis Pharma advising each had filed an Abbreviated New Drug Application, or ANDA, with the FDA seeking approval to market generic versions of VIMOVO before the expiration of the patents-in-suit.

Patent litigation is currently pending in the United States District Court for the Eastern District of Texas against Par Pharmaceutical and in the United States District Court for the District of New Jersey against Par Pharmaceutical and against Lupin, who are each intending to market generic versions of RAVICTI prior to the expiration of certain of our patents listed in the Orange Book. These cases are collectively known as the RAVICTI cases and arise from Paragraph IV Patent Certification notice letters from each of Par Pharmaceutical and Lupin advising each had filed an ANDA with the FDA seeking approval to market a generic version of RAVICTI before the expiration of the patents-in-suit.

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If we are unsuccessful in any of the VIMOVO cases or PENNSAID 2% cases, we will likely face generic competition with respect to VIMOVO and/or PENNSAID 2% and sales of VIMOVO and/or PENNSAID 2% will be substantially harmed. If we are unsuccessful in any of the RAVICTI cases, RAVICTI would likely face generic competition in the United States when its orphan exclusivity expires (currently scheduled to occur in February 2020), and its sales would likely materially decline.

ACTIMMUNE is the only medicine currently approved by the FDA specifically for the treatment of CGD and SMO. While there are additional or alternative approaches used to treat patients with CGD and SMO, there are currently no medicines on the market that compete directly with ACTIMMUNE. A widely accepted protocol to treat CGD in the United States is the use of concomitant “triple prophylactic therapy” comprising ACTIMMUNE, an oral antibiotic agent and an oral antifungal agent. However, the FDA-approved labeling for ACTIMMUNE does not discuss this “triple prophylactic therapy,” and physicians may choose to prescribe one or both of the other modalities in the absence of ACTIMMUNE. Because of the immediate and life-threatening nature of SMO, the preferred treatment option for SMO is often to have the patient undergo a bone marrow transplant which, if successful, will likely obviate the need for further use of ACTIMMUNE in that patient. Likewise, the use of bone marrow transplants in the treatment of patients with CGD is becoming more prevalent, which could have a material adverse effect on sales of ACTIMMUNE and its profitability. We are aware of a number of research programs investigating the potential of gene therapy as a possible cure for CGD. Additionally, other companies may be pursuing the development of medicines and treatments that target the same diseases and conditions which ACTIMMUNE is currently approved to treat. As a result, it is possible that our competitors may develop new medicines that manage CGD or SMO more effectively, cost less or possibly even cure CGD or SMO. In addition, U.S. healthcare legislation passed in March 2010 authorized the FDA to approve biological products, known as biosimilars, that are similar to or interchangeable with previously approved biological products, like ACTIMMUNE, based upon potentially abbreviated data packages. Biosimilars are likely to be sold at substantially lower prices than branded medicines because the biosimilar manufacturer would not have to recoup the research and development and marketing costs associated with the branded medicine. Though we are not currently aware of any biosimilar under development, the development and commercialization of any competing medicines or the discovery of any new alternative treatment for CGD or SMO could have a material adverse effect on sales of ACTIMMUNE and its profitability.

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. 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 Pharma, or Lucane, received marketing approval from the EMA 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. We believe Lucane is also seeking approval via an 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. 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 BUPHENYL and RAVICTI. If this occurs, sales of BUPHENYL and/or RAVICTI could be materially reduced, but we would nevertheless be required to make royalty payments to Ucyclyd Pharma, Inc., or Ucyclyd, and another external party, at the same royalty rates. While Ucyclyd and its affiliates are generally contractually prohibited from developing or commercializing new medicines, anywhere in the world, for the treatment of UCD or HE, which are chemically similar to RAVICTI, they may still develop and commercialize medicines that compete with RAVICTI. For example, medicines approved for indications other than UCD and HE may still compete with RAVICTI if physicians prescribe such medicines off-label for UCD or HE. We are also aware that Orphan Europe SARL, or Orphan Europe, is conducting a clinical trial of carglumic acid to treat some of the UCD enzyme deficiencies for which RAVICTI was approved. Promethera Biosciences SA 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. Carglumic acid is approved for maintenance therapy for chronic hyperammonemia and to treat hyperammonenic 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, RAVICTI would face additional competition from this compound.

The availability and price of our competitors’ medicines could limit the demand, and the price we are able to charge, for our medicines. We will not successfully execute on our business objectives if the market acceptance of our medicines is inhibited by price competition, if physicians are reluctant to switch from existing medicines to our medicines, or if physicians switch to other new medicines or choose to reserve our medicines for use in limited patient populations.

In addition, established pharmaceutical companies may invest heavily to accelerate discovery and development of novel compounds or to acquire novel compounds that could make our medicines obsolete. Our ability to compete successfully with these companies and other potential competitors will depend largely on our ability to leverage our experience in clinical, regulatory and commercial development to:

· develop and acquire medicines that are superior to other medicines in the market;

· attract qualified clinical, regulatory, and sales and marketing personnel;

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· obtain patent and/or other proprietary protection for our medicines and technologies; 

· obtain required regulatory approvals; and

· successfully collaborate with pharmaceutical companies in the discovery, development and commercialization of new medicine candidates.

If we are unable to maintain or realize the benefits of orphan drug exclusivity for RAVICTI for the treatment of UCD or KRYSTEXXA for the treatment of chronic refractory gout in the United States, we may face increased competition.*

Under the Orphan Drug Act of 1983, the FDA may designate a medicine 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. 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 May 2020, seven years from the date of its approval. KRYSTEXXA has also been granted orphan drug exclusivity in February 2011, which we expect will provide the drug with orphan drug marketing exclusivity in the United States until February 2018. However, despite orphan drug exclusivity, the FDA can still approve another drug containing the same active ingredient and used for the same orphan indication if it determines that a subsequent drug is safer, more effective or makes a major contribution to patient care, and orphan exclusivity can be lost if the orphan drug manufacturer is unable to ensure 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. 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 orphan drug exclusivity is lost and we were unable to successfully enforce any remaining patents covering RAVICTI or KRYSTEXXA, we could be subject to generic competition and revenues from RAVICTI or KRYSTEXXA could decrease materially. In addition, if a subsequent drug is approved for marketing for the same or a similar indication as RAVICTI or KRYSTEXXA despite orphan drug exclusivity, we may face increased competition and lose market share with respect to RAVICTI or KRYSTEXXA. KRYSTEXXA does not have orphan drug exclusivity in the EU or other regions of the world. RAVICTI will benefit from a period of 10 years of orphan market exclusivity in the EU, concurrently applied to each of the approved six sub-types of the UCDs. This will run concurrently with its marketing exclusivity status.

Our business operations may subject us to numerous commercial disputes, claims and/or lawsuits.*

Operating in the pharmaceutical industry, particularly the commercialization of medicines, involves numerous commercial relationships, complex contractual arrangements, uncertain intellectual property rights, potential product liability and other aspects that create heightened risks of disputes, claims and lawsuits. In particular, we may face claims related to the safety of our medicines, intellectual property matters, employment matters, tax matters, commercial disputes, competition, sales and marketing practices, environmental matters, personal injury, insurance coverage and acquisition or divestiture-related matters. Any commercial dispute, claim or lawsuit may divert management’s attention away from our business, we may incur significant expenses in addressing or defending any commercial dispute, claim or lawsuit, and we may be required to pay damage awards or settlements or become subject to equitable remedies that could adversely affect our operations and financial results.

We are currently in litigation with multiple generic drug manufacturers regarding intellectual property infringement. For example, we are currently involved in Hatch Waxman litigation with generic drug manufacturers related to VIMOVO, PENNSAID 2% and RAVICTI.

Similarly, from time to time we are involved in disputes with distributors, PBMs and licensing partners regarding our rights and performance of obligations under contractual arrangements. For example, we are currently in litigation with Express Scripts, Inc., or Express Scripts, regarding the payment of certain rebates and administrative fees Express Scripts claims we owe under a previous agreement. Express Scripts is seeking damages of approximately $166.2 million for alleged unpaid rebates and administrative fees through the end of 2015, late fees, interest, and attorneys’ fees and costs. Based upon the terms of the agreement and Express Scripts’ actions, we believe that Express Scripts’ claims are without merit and we intend to vigorously defend against them. However, we cannot predict the outcome of this litigation.

Litigation related to these disputes may be costly and time-consuming and could materially and adversely impact our financial position and results of operations if resolved against us.

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On June 12, 2014, Hyperion acquired Andromeda Biotech Ltd, or Andromeda, an Israeli company developing DiaPep277^® for the treatment of recent onset Type 1 diabetes, from Clal Biotechnology Industries Ltd., or CBI. On September 8, 2014, Hyperion announced the termination of further development of DiaPep277 beyond completion of the ongoing clinical trial as a result of evidence Hyperion uncovered that certain employees of Andromeda engaged in serious misconduct that compromised clinical trial results. Hyperion subsequently terminated the Andromeda employees involved in the misconduct and became involved in a legal dispute with CBI related to Andromeda. On February 16, 2015, Hyperion reached a settlement agreement with CBI and Yeda Research and Development Company Ltd., or Yeda, the company from which Andromeda licenses the underlying DiaPep277 technology, to resolve DiaPep277-related claims against one another, and Hyperion granted CBI an option to acquire all of the outstanding stock of Andromeda, or if CBI does not exercise the option, CBI agreed to pay Hyperion $400,000. On September 30, 2015, which was the end of the option exercise period, CBI chose not to exercise its option to acquire all of the outstanding stock of Andromeda. In connection with the settlement agreement, the parties appointed a steering committee to oversee the completion of the clinical trial of DiaPep277 until September 30, 2015, with representatives of CBI and Yeda and a non-voting member appointed by Hyperion. Also on February 16, 2015, Hyperion entered into a release with Evotec International GmbH, or Evotec, pursuant to which Evotec released its previously asserted claims that it was entitled to a milestone payment from Hyperion in connection with Hyperion’s 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 Hyperion. In connection with the settlement agreement, CBI transferred to Hyperion beneficial ownership of 96,612 shares of Hyperion common stock. The voluntary liquidation process of Andromeda was approved by the board of its immediate parent Horizon Pharma Israel Holding Corp. Limited in December 2015. In June 2016, the withholding tax certificate was provided to CBI and in July 2016, CBI completed the transfer of shares to Hyperion and made the $400,000 cash payment.

Although the Andromeda release agreements resolved the disputes among the parties relating to DiaPep277, we cannot be certain that additional legal disputes will not arise with respect to Andromeda, including in connection with the completed Phase 3 clinical trial of DiaPep277, the termination of DiaPep277 development by us and the return of related intellectual property to Yeda following CBI’s decision to not exercise its option. Further, under the terms of the release agreement, Hyperion 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. In addition to these potential liabilities, we may incur currently unknown liabilities related to Hyperion’s 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.

A variety of risks associated with operating our business and marketing our medicines internationally could materially adversely affect our business.*

In addition to our U.S. operations, we have operations in Ireland, Bermuda, the Grand Duchy of Luxembourg, or Luxembourg, Switzerland, Germany, Canada and in Israel (through Andromeda). Moreover, LODOTRA is currently being marketed in a limited number of countries outside the United States, and Mundipharma is in the process of obtaining pricing and reimbursement approval for, and preparing to market, LODOTRA in other European countries, as well as in certain Asian, Latin American, Middle Eastern and African countries. Also, Grünenthal S.A. is in the registration process for the commercialization of DUEXIS in Latin America. BUPHENYL is currently marketed in various territories outside the United States by third-party distributors. RAVICTI received marketing approval in the EU in November 2015 and we plan to begin commercializing RAVICTI in Europe in 2017. We face risks associated with our international operations, including possible unfavorable regulatory, pricing and reimbursement, political, tax and labor conditions, which could harm our business. We are subject to numerous risks associated with international business activities, including:

· compliance with differing or unexpected regulatory requirements for our medicines;

· compliance with Irish laws and the maintenance of our Irish tax residency with respect to our overall corporate structure and administrative operations, including the need to generally hold meetings of our board of directors and make decisions in Ireland, which may make certain corporate actions more cumbersome, costly and time-consuming;

· difficulties in staffing and managing foreign operations;

· in certain circumstances, including with respect to the commercialization of LODOTRA in Europe and certain Asian, Latin American, Middle Eastern and African countries, commercialization of BUPHENYL in select countries throughout Europe, the Middle East, and the Asia-Pacific region, commercialization of RAVICTI in select countries throughout Europe and commercialization of DUEXIS in Latin America, increased dependence on the commercialization efforts and regulatory compliance of third-party distributors or strategic partners;

· compliance with German laws with respect to our Horizon Pharma GmbH subsidiary through which Horizon Pharma Switzerland GmbH conducts most of its European operations;

· foreign government taxes, regulations and permit requirements;

· U.S. and foreign government tariffs, trade restrictions, price and exchange controls and other regulatory requirements;

· anti-corruption laws, including the Foreign Corrupt Practices Act, or the FCPA;

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· economic weakness, including inflation, natural disasters, war, events of terrorism or political instability in particular foreign countries; 

· fluctuations in currency exchange rates, which could result in increased operating expenses and reduced revenues, and other obligations related to doing business in another country;

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

· 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;

· changes in diplomatic and trade relationships; and

· challenges in enforcing our contractual and intellectual property rights, especially in those foreign countries that do not respect and protect intellectual property rights to the same extent as the United States.

Our business activities outside of the United States are subject to the FCPA and similar anti-bribery or anti-corruption laws, regulations or rules of other countries in which we operate, including the U.K.’s Bribery Act 2010, or the U.K. Bribery Act. The FCPA and similar anti-corruption laws generally prohibit offering, promising, giving, or authorizing others to give anything of value, either directly or indirectly, to non-U.S. government officials in order to improperly influence any act or decision, secure any other improper advantage, or obtain or retain business. The FCPA also requires public companies to make and keep books and records that accurately and fairly reflect the transactions of the company and to devise and maintain an adequate system of internal accounting controls. The U.K. Bribery Act prohibits giving, offering, or promising bribes to any person, including non-U.K. government officials and private persons, as well as requesting, agreeing to receive, or accepting bribes from any person. In addition, under the U.K. Bribery Act, companies which carry on a business or part of a business in the U.K. may be held liable for bribes given, offered or promised to any person, including non-U.K. government officials and private persons, by employees and persons associated with the company in order to obtain or retain business or a business advantage for the company. Liability is strict, with no element of a corrupt state of mind, but a defense of having in place adequate procedures designed to prevent bribery is available. Furthermore, under the U.K. Bribery Act there is no exception for facilitation payments. As described above, our business is heavily regulated and therefore involves significant interaction with public officials, including officials of non-U.S. governments. Additionally, in many other countries, the health care providers who prescribe pharmaceuticals are employed by their government, and the purchasers of pharmaceuticals are government entities; therefore, any dealings with these prescribers and purchasers may be subject to regulation under the FCPA. Recently the SEC and the U.S. Department of Justice have increased their FCPA enforcement activities with respect to pharmaceutical companies. In addition, under the Dodd–Frank Wall Street Reform and Consumer Protection Act, private individuals who report to the SEC original information that leads to successful enforcement actions may be eligible for a monetary award. We are engaged in ongoing efforts that are designed to ensure our compliance with these laws, including due diligence, training, policies, procedures and internal controls. However, there is no certainty that all employees and third-party business partners (including our distributors, wholesalers, agents, contractors, and other partners) will comply with anti-bribery laws. In particular, we do not control the actions of manufacturers and other third-party agents, although we may be liable for their actions. Violation of these laws may result in civil or criminal sanctions, which could include monetary fines, criminal penalties, and disgorgement of past profits, which could have a material adverse impact on our business and financial condition.

These and other risks associated with our international operations may materially adversely affect our business, financial condition and results of operations.

If we fail to develop or acquire other medicine candidates or medicines, our business and prospects would be limited.

A key element of our strategy is to develop or acquire and commercialize a portfolio of other medicines or medicine candidates in addition to our current medicines, through business or medicine acquisitions. Because we do not engage in proprietary drug discovery, the success of this strategy depends in large part upon the combination of our regulatory, development and commercial capabilities and expertise and our ability to identify, select and acquire approved or clinically enabled medicine candidates for therapeutic indications that complement or augment our current medicines, or that otherwise fit into our development or strategic plans on terms that are acceptable to us. Identifying, selecting and acquiring promising medicines or medicine candidates requires substantial technical, financial and human resources expertise. Efforts to do so may not result in the actual acquisition or license of a particular medicine or medicine candidate, potentially resulting in a diversion of our management’s time and the expenditure of our resources with no resulting benefit. If we are unable to identify, select and acquire suitable medicines or medicine candidates from third parties or acquire businesses at valuations and on other terms acceptable to us, or if we are unable to raise capital required to acquire businesses or new medicines, our business and prospects will be limited.

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Moreover, any medicine candidate we acquire may require additional, time-consuming development or regulatory efforts prior to commercial sale or prior to expansion into other indications, including preclinical studies if applicable, and extensive clinical testing and approval by the FDA and applicable foreign regulatory authorities. All medicine candidates are prone to the risk of failure that is inherent in pharmaceutical medicine development, including the possibility that the medicine candidate will not be shown to be sufficiently safe and/or effective for approval by regulatory authorities. In addition, we cannot assure you that any such medicines that are approved will be manufactured or produced economically, successfully commercialized or widely accepted in the marketplace or be more effective or desired than other commercially available alternatives.

In addition, if we fail to successfully commercialize and further develop our medicines, there is a greater likelihood that we will fail to successfully develop a pipeline of other medicine candidates to follow our existing medicines or be able to acquire other medicines to expand our existing portfolio, and our business and prospects would be harmed.

Our recent medicine and company acquisitions and any other strategic transactions that we may pursue in the future could have a variety of negative consequences, and we may not realize the benefits of such transactions or attempts to engage in such transactions.*

We have recently completed multiple medicine and company acquisitions and our strategy is to engage in additional strategic transactions with third parties, such as acquisitions of companies or divisions of companies and asset purchases of medicines, medicine candidates or technologies that we believe will complement or augment our existing business. We may also consider a variety of other business arrangements, including spin-offs, strategic partnerships, joint ventures, restructurings, divestitures, business combinations and other investments. Any such transaction may require us to incur non-recurring and other charges, increase our near and long-term expenditures, pose significant integration challenges, create additional tax, legal, accounting and operational complexities in our business, require additional expertise, result in dilution to our existing shareholders and disrupt our management and business, which could harm our operations and financial results. For example, in connection with our acquisition of the U.S. rights to VIMOVO, we assumed primary responsibility for the existing patent infringement litigation with respect to VIMOVO, and have also agreed to reimburse certain legal expenses of Pozen Inc., who subsequently entered into a business combination with Tribute Pharmaceuticals Canada Inc. to become known as Aralez Pharmaceuticals Inc., or Aralez, with respect to its continued involvement in such litigation. We also assumed responsibility for the existing patent infringement litigation with respect to RAVICTI upon the closing of the acquisition of Hyperion and have assumed responsibility for completing post-marketing clinical trials of RAVICTI that are required by the FDA and are ongoing. We expect that the RAVICTI litigation will result in substantial on-going expenses and potential distractions to our management team. Moreover, we face significant competition in seeking appropriate strategic transaction opportunities and the negotiation process for any strategic transaction can be time-consuming and complex. In addition, we may not be successful in our efforts to engage in certain strategic transactions because our financial resources may be insufficient and/or third parties may not view our commercial and development capabilities as being adequate. We may not be able to expand our business or realize our strategic goals if we do not have sufficient funding or cannot borrow or raise additional capital. There is no assurance that following any of our recent acquisition transactions or any other strategic transaction, we will achieve the anticipated revenues, net income, tax or other benefits that we believe justify such transactions. In addition, any failures or delays in entering into strategic transactions anticipated by analysts or the investment community could seriously harm our consolidated business, financial condition, results of operations or cash flow.

Our parent company may not be able to successfully maintain its current advantageous tax status and resulting tax rates, which could adversely affect our business and financial condition, results of operations and growth prospects.*

Our parent company is incorporated in Ireland and maintains subsidiaries in multiple jurisdictions, including Ireland, the U.K, the United States, Switzerland, Luxembourg, Germany, Canada and Bermuda. Prior to the acquisition of Vidara, Vidara was able to achieve a favorable tax rate through the performance of certain functions and ownership of certain assets in tax-efficient jurisdictions, including Ireland and Bermuda, together with intra-group service and transfer pricing agreements, each on an arm’s length basis. We are continuing a substantially similar structure and arrangements. Taxing authorities, such as the U.S. Internal Revenue Service, or IRS, actively audit and otherwise challenge these types of arrangements, and have done so in the pharmaceutical industry. We expect that these challenges will continue as a result of the recent increase in scrutiny and political attention on corporate tax structures. The IRS may challenge our structure and transfer pricing arrangements through an audit or lawsuit. Responding to or defending such a challenge could be expensive and consume time and other resources, and divert management’s time and focus from operating our business. We cannot predict whether taxing authorities will conduct an audit or file a lawsuit challenging this structure, the cost involved in responding to any such audit or lawsuit, or the outcome. If we are unsuccessful in defending such a challenge, we may be required to pay taxes for prior periods, interest, fines or penalties, and may be obligated to pay increased taxes in the future, any of which could require us to reduce our operating expenses, decrease efforts in support of our medicines or seek to raise additional funds, all of which could have a material adverse effect on our business, financial condition, results of operations and growth prospects.

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The IRS may not agree with our conclusion that our parent company should be treated as a foreign corporation for U.S. federal income tax purposes following the combination of the businesses of Horizon Pharma, Inc. and Vidara Therapeutics International plc.*

Although our parent company is incorporated in Ireland, the IRS may assert that it should be treated as a U.S. corporation (and, therefore, a U.S. tax resident) for U.S. federal income tax purposes pursuant to Section 7874 of the Internal Revenue Code of 1986, as amended, or the Code. A corporation is generally considered a tax resident in the jurisdiction of its organization or incorporation for U.S. federal income tax purposes. Because our parent company is an Irish incorporated entity, it would generally be classified as a foreign corporation (and, therefore, a non-U.S. tax resident) under these rules. Section 7874 provides an exception pursuant to which a foreign incorporated entity may, in certain circumstances, be treated as a U.S. corporation for U.S. federal income tax purposes.

Under Section 7874, a foreign corporation will be treated as a U.S. corporation for U.S. federal tax purposes if, due to an acquisition of a U.S. corporation, at least 80 percent of its stock (by vote or value) is held by former stockholders of the acquired U.S. corporation. We believe that we should be treated as a foreign corporation because the former stockholders of Horizon Pharma, Inc., or HPI, owned (within the meaning of Section 7874) less than 80 percent (by both vote and value) of the combined entity’s stock immediately after the acquisition of Vidara. However, there can be no assurance that there will not exist in the future a subsequent change in the facts or in law which might cause our parent company to be treated as a domestic corporation for U.S. federal income tax purposes, including with retroactive effect.

Further, there can be no assurance that the IRS will agree with the position that the ownership test was satisfied. There is limited guidance regarding the application of Section 7874 of the Code, including with respect to the provisions regarding the application of the ownership test. If our parent company were unable to be treated as a foreign corporation for U.S. federal income tax purposes, one of our significant strategic reasons for completing the acquisition of Vidara would be nullified and we may not be able to recoup the significant investment in completing the transaction.

Future changes to U.S. and non-U.S. tax laws could materially adversely affect our company.*

Under current law, we expect our parent company to be treated as a foreign corporation for U.S. federal income tax purposes. However, changes to the rules in Section 7874 of the Code or regulations promulgated thereunder or other guidance issued by the U.S. Department of the Treasury, or the U.S. Treasury, or the IRS could adversely affect our parent company’s status as a foreign corporation for U.S. federal income tax purposes, and any such changes could have prospective or retroactive application. If our parent company is treated as a domestic corporation, more of our income will be taxed by the United States which may substantially increase our effective tax rate.

On April 4, 2016, the U.S. Treasury and the IRS issued temporary regulations that expand the scope of transactions subject to the rules designed to eliminate the U.S. tax benefits of inversions. Under the temporary regulations, the former stockholders of U.S. corporations acquired by a foreign corporation within 36 months of the signing date of the last such acquisition are aggregated for the purpose of determining whether the foreign corporation will be treated as a domestic corporation for U.S. federal tax purposes because at least 80 percent of the stock of the foreign corporation is held by former stockholders of a U.S. corporation. The requirement to aggregate the stockholders in such acquisitions for the purpose of determining whether the 80 percent threshold is met may limit our ability to use our stock to acquire U.S. corporations or their assets in the future.      

The U.S. Treasury and the IRS also issued proposed regulations on April 4, 2016 that address whether an interest in a related corporation is debt or equity. The proposed regulations would treat certain inter-company debt issued on or after that date as equity including, subject to certain exceptions, inter-company debt issued in certain distributions, acquisitions of related party stock and asset reorganizations. As drafted, the proposed regulations would limit the ability of our U.S. group to deduct interest on such new inter-company debt. The proposed regulations could also result in recharacterization of inter-company debt to equity for inter-company debt incurred to provide funding for an acquisition by the U.S. group if, and to the extent of, certain cash or property transfers by our U.S. group to the foreign affiliates within 36 months before or after these inter-company borrowings. These limitations could result in more of our future income being taxed by the United States and thereby increase our effective tax rate.

In July 2015, the International Tax Bipartisan Tax Working Group of the United States Senate Committee on Finance, or the Finance Committee, issued its report on international tax reform. The Finance Committee’s co-chairs concluded that it will be necessary to limit earnings stripping by foreign multinationals through interest deductions on inter-company debt in order to eliminate a competitive advantage that foreign multinationals would otherwise have over domestic multinational companies. This and other international tax reforms proposed by the Finance Committee could result in more of our income being taxed by the United States and thereby increase our effective tax rate.

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In addition, the Organization for Economic Co-operation and Development released its Base Erosion and Profit Shifting project final report on October 5, 2015. This report provides the basis for international standards for corporate taxation that are designed to prevent, among other things, the artificial shifting of income to tax havens and low-tax jurisdictions, the erosion of the tax base through interest deductions on inter-company debt and the artificial avoidance of permanent establishments (i.e., tax nexus with a jurisdiction). Legislation to adopt these standards has been enacted or is currently under consideration in a number of jurisdictions. As a result, our income may be taxed in jurisdictions where it is not currently taxed and at higher rates of tax than it is currently taxed, which may substantially increase our effective tax rate.

If we are not successful in attracting and retaining highly qualified personnel, we may not be able to successfully implement our business strategy.*

Our ability to compete in the highly competitive biotechnology and pharmaceuticals industries depends upon our ability to attract and retain highly qualified managerial, scientific and medical personnel. We are highly dependent on our management, sales and marketing and scientific and medical personnel, including our executive committee composed of our Chairman, President and Chief Executive Officer, Timothy P. Walbert; our Executive Vice President, Chief Business Officer, Robert F. Carey; our Executive Vice President, Chief Financial Officer, Paul W. Hoelscher; our Executive Vice President, Company Secretary and Managing Director, Ireland, David G. Kelly; our Executive Vice President, Chief Operating Officer, Barry J. Moze; our Executive Vice President, Research and Development and Chief Medical Officer, Jeffrey W. Sherman, M.D., FACP; our Executive Vice President, General Counsel, Brian K. Beeler; our Executive Vice President, Strategy and Investor Relations, John B. Thomas; our Executive Vice President, Global Orphan Business Unit, Primary Care and International Operations, George Hampton; our Senior Vice President, Commercial Operations, Timothy J. Ackerman; and our Senior Vice President, Corporate Communications, Geoffrey M. Curtis. In order to retain valuable employees at our company, in addition to salary and cash incentives, we provide performance stock units, or PSUs, and stock options and restricted stock units that vest over time. The value to employees of PSUs, stock options and restricted stock units will be significantly affected by movements in our share price that are beyond our control, and may at any time be insufficient to counteract more lucrative offers from other companies.

Despite our efforts to retain valuable employees, members of our management, sales and marketing, regulatory affairs, clinical development, medical affairs and development teams may terminate their employment with us on short notice. Although we have written employment arrangements with all of our employees, these employment arrangements generally provide for at-will employment, which means that our employees can leave our employment at any time, with or without notice. The loss of the services of any of our executive officers or other key employees and our inability to find suitable replacements could potentially harm our business, financial condition and prospects. We do not maintain “key man” insurance policies on the lives of these individuals or the lives of any of our other employees. Our success also depends on our ability to continue to attract, retain and motivate highly skilled junior, mid-level, and senior managers as well as junior, mid-level, and senior sales and marketing and scientific and medical personnel.

Many of the other biotechnology and pharmaceutical companies with whom we compete for qualified personnel have greater financial and other resources, different risk profiles and longer histories in the industry than we do. They also may provide more diverse opportunities and better chances for career advancement. Some of these characteristics may be more appealing to high quality candidates than that which we have to offer. If we are unable to continue to attract and retain high quality personnel, the rate and success at which we can develop and commercialize medicines and medicine candidates will be limited.

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We are, with respect to our current medicines, and will be, with respect to any other medicine or medicine candidate for which we obtain FDA approval or which we acquire, subject to ongoing FDA obligations and continued regulatory review, which may result in significant additional expense. Additionally, any other medicine candidate, if approved by the FDA, could be subject to labeling and other restrictions and market withdrawal, and we may be subject to penalties if we fail to comply with regulatory requirements or experience unanticipated problems with our medicines.*

Any regulatory approvals that we obtain for our medicine candidates may also be subject to limitations on the approved indicated uses for which the medicine may be marketed or to the conditions of approval, or contain requirements for potentially costly post-marketing testing, including Phase 4 clinical trials and surveillance to monitor the safety and efficacy of the medicine candidate. In addition, with respect to our current FDA-approved medicines (and with respect to our medicine candidates, if approved), the manufacturing processes, labeling, packaging, distribution, adverse event reporting, storage, advertising, promotion and recordkeeping for the medicine are subject to extensive and ongoing regulatory requirements. These requirements include submissions of safety and other post-marketing information and reports, registration, as well as continued compliance with current good manufacturing practices, or cGMPs, good clinical practices, or GCPs, international conference on harmonization regulations, or ICH regulations, and good laboratory practices, which are regulations and guidelines enforced by the FDA for all of our medicines in clinical development, for any clinical trials that we conduct post-approval. In connection with our November 2013 acquisition of the U.S. rights to VIMOVO, we assumed responsibility for completing an ongoing Pediatric Research Equity Act post-marketing requirement study in children 12 years to 16 years and 11 months of age with Juvenile RA. This report was submitted to the FDA in December 2015. With respect to RAVICTI, 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 two months to two 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. On June 29, 2016, we submitted an sNDA with the FDA for RAVICTI to expand the age range for chronic management of UCDs from two years of age and older to two months of age and older. Subject to positive data from on-going studies, we have targeted an sNDA submission in the first quarter of 2018 in relation to UCD patients during the first two months of life. In connection with our acquisition of Crealta Holdings LLC, or Crealta, in January 2016, we assumed responsibility for an observational study related to KRYSTEXXA. Thus far in this study there have been no new safety signals and the reported safety results parallel those in the KRYSTEXXA product label. We are continuing to screen and enroll patients in the near term.

In addition, the FDA closely regulates the marketing and promotion of drugs and biologics. The FDA does not regulate the behavior of physicians in their choice of treatments. The FDA does, however, restrict manufacturers’ promotional communications. A significant number of pharmaceutical companies have been the target of inquiries and investigations by various U.S. federal and state regulatory, investigative, prosecutorial and administrative entities in connection with the promotion of medicines for off-label uses and other sales practices. These investigations have alleged violations of various U.S. federal and state laws and regulations, including claims asserting antitrust violations, violations of the Food, Drug and Cosmetic Act, false claims laws, the Prescription Drug Marketing Act, anti-kickback laws, and other alleged violations in connection with the promotion of medicines for unapproved uses, pricing and Medicare and/or Medicaid reimbursement.

Later discovery of previously unknown problems with a medicine, including adverse events of unanticipated severity or frequency, or with our third-party manufacturers or manufacturing processes, or failure to comply with regulatory requirements, may result in, among other things:

· restrictions on the marketing or manufacturing of the medicine, withdrawal of the medicine from the market, or voluntary or mandatory medicine recalls;

· fines, warning letters or holds on clinical trials;

· refusal by the FDA to approve pending applications or supplements to approved applications filed by us or our strategic partners, or suspension or revocation of medicine license approvals;

· medicine seizure or detention, or refusal to permit the import or export of medicines; and

· injunctions, the imposition of civil or criminal penalties, or exclusion, debarment or suspension from government healthcare programs.

If we are not able to maintain regulatory compliance, we may lose any marketing approval that we may have obtained and we may not achieve or sustain profitability, which would have a material adverse effect on our business, results of operations, financial condition and prospects.

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Coverage and reimbursement may not be available, or reimbursement may be available at only limited levels, for our medicines, which could make it difficult for us to sell our medicines profitably or to successfully execute planned medicine price increases.*

Market acceptance and sales of our medicines will depend in large part on global coverage and reimbursement policies and may be affected by future healthcare reform measures, both in the United States and other key international markets. Successful commercialization of our medicines will depend in part on the availability of governmental and third-party payor reimbursement for the cost of our medicines. Government health administration authorities, private health insurers and other organizations generally provide reimbursement for healthcare. In particular, in the United States, private health insurers and other third-party payors often provide reimbursement for medicines and services based on the level at which the government (through the Medicare or Medicaid programs) provides reimbursement for such treatments. In the United States, the EU and other significant or potentially significant markets for our medicines and medicine candidates, government authorities and third-party payors are increasingly attempting to limit or regulate the price of medicines and services, particularly for new and innovative medicines and therapies, which has resulted in lower average selling prices. Further, the increased scrutiny of prescription drug pricing practices and emphasis on managed healthcare in the United States and on country and regional pricing and reimbursement controls in the EU will put additional pressure on medicine pricing, reimbursement and usage, which may adversely affect our medicine sales and results of operations. These pressures can arise from rules and practices of managed care groups, judicial decisions and governmental laws and regulations related to Medicare, Medicaid and healthcare reform, pharmaceutical reimbursement policies and pricing in general. These pressures may create negative reactions to any medicine price increases, or limit the amount by which we may be able to increase our medicine prices, which may adversely affect our medicine sales and results of operations.

Patients are unlikely to use our medicines unless coverage is provided and reimbursement is adequate to cover a significant portion of the cost of our medicines. Third-party payors may limit coverage to specific medicines on an approved list, also known as a formulary, which might not include all of the FDA-approved medicines for a particular indication. Moreover, a third-party payor’s decision to provide coverage for a medicine does not imply that an adequate reimbursement rate will be approved. Additionally, one third-party payor’s decision to cover a particular medicine does not ensure that other payors will also provide coverage for the medicine, or will provide coverage at an adequate reimbursement rate. Even though we have contracts with some PBMs in the United States, that does not guarantee that they will perform in accordance with the contracts, nor does that preclude them from taking adverse actions against us, which could materially adversely affect our operating results. In addition, the existence of such PBM contracts does not guarantee coverage by such PBM’s contracted health plans or adequate reimbursement to their respective providers for our medicines. For example, two significant PBMs placed DUEXIS and VIMOVO on their exclusion lists beginning in 2015, which has resulted in a loss of coverage for patients whose healthcare plans have adopted these PBM lists. While DUEXIS and VIMOVO were removed from the CVS Caremark 2017 exclusion list, we cannot guarantee that CVS Caremark will not later add these medicines back to its exclusion list or that we will be able to otherwise expand formulary access for DUEXIS and VIMOVO under health plans that contract with CVS Caremark. Also, as noted above, we are currently in an ongoing contract and rebate dispute with a U.S. PBM involving VIMOVO and DUEXIS, the outcome of which we cannot at this time determine, which has the potential to negatively impact our relationship with that PBM, and which could affect its coverage and/or reimbursement treatment of our other medicines and our ability to enter into new arrangements with respect to DUEXIS and VIMOVO. Additional healthcare plan formularies may also exclude our medicines from coverage due to the actions of certain PBMs, future price increases we may implement, our use of the HorizonCares program or any other co-pay programs, or other reasons. If our strategies to mitigate formulary exclusions are not effective, these events may reduce the likelihood that physicians prescribe our medicines and increase the likelihood that prescriptions for our medicines are not filled.

Outside of the United States, the success of our medicines, including LODOTRA, BUPHENYL and RAVICTI, will depend largely on obtaining and maintaining government coverage, because in many countries patients are unlikely to use prescription drugs that are not covered by their government healthcare programs. To date, reimbursement for LODOTRA has been obtained in Germany, Italy, Sweden and Switzerland. Mundipharma is seeking coverage for LODOTRA in a number of countries and currently sells LODOTRA without coverage in a limited number of countries. BUPHENYL is marketed in select countries throughout Europe, the Middle East and the Asia-Pacific region. With respect to RAVICTI, we expect to begin commercializing the medicine in Europe in 2017. Negotiating coverage and reimbursement with governmental authorities can delay commercialization by 12 months or more. Coverage and reimbursement policies may adversely affect our ability to sell our medicines on a profitable basis. In many international markets, governments control the prices of prescription pharmaceuticals, including through the implementation of reference pricing, price cuts, rebates, revenue-related taxes and profit control, and we expect prices of prescription pharmaceuticals to decline over the life of the medicine or as volumes increase. Many countries in the EU have increased the amount of discounts required on medicines, which we believe has impacted the reimbursement rates and timing to launch for LODOTRA to date, and we expect these discounts to continue as countries attempt to manage healthcare expenditures, especially in light of current economic conditions. As a result of these pricing practices, it may become difficult to achieve or sustain profitability or expected rates of growth in revenue or results of operations. Any shortfalls in revenue could adversely affect our business, financial condition and results of operations.

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In light of such policies and the uncertainty surrounding proposed regulations and changes in the coverage and reimbursement policies of governments and third-party payors, we cannot be sure that coverage and reimbursement will be available for any of our medicines in any additional markets or for any other medicine candidates that we may develop. Also, we cannot be sure that reimbursement amounts will not reduce the demand for, or the price of, our medicines. If coverage and reimbursement are not available or are available only at limited levels, we may not be able to successfully commercialize our medicines.

We expect to experience pricing pressures in connection with the sale of our medicines due to the trend toward managed healthcare, the increasing influence of health maintenance organizations and additional legislative proposals relating to outcomes and quality. For example, in March 2016, the Centers for Medicare & Medicaid Services, or CMS, announced a Proposed Rule that would test new payment models for Medicare Part B prescription drugs, and provider services incident to, or otherwise related to, such drugs. Generally, the Proposed Rule includes payment models that are designed on quality and value propositions and include incentives to drive utilization of efficient therapies and make payments based on clinical outcomes. The Proposed Rule greatly differs from the current reimbursement methodology for Medicare Part B drugs. The comment period for the Proposed Rule closed on May 9, 2016. Since the closing of the comment period, the Proposed Rule has been subject to significant and ongoing discussion among stakeholders including industry, payors, healthcare providers and other interested organizations. The Proposed Rule would not take effect until CMS considers the comments received and issues a Final Rule.

There may be additional pressure by payors, healthcare providers, and members of Congress, to use generic drugs that contain the active ingredients found in our medicines or any other medicine candidates that we may develop or acquire. If we fail to successfully secure and maintain coverage and adequate reimbursement for our medicines or are significantly delayed in doing so, we will have difficulty achieving market acceptance of our medicines and expected revenue and profitability which would have a material adverse effect on our business, results of operations, financial condition and prospects.

We may also experience pressure from payors concerning certain promotional approaches that we may implement such as our HorizonCares program or any other co-pay or free medicine programs whereby we assist qualified patients with certain out-of-pocket expenditures for our medicine. If we are unsuccessful with our HorizonCares program or any other co-pay initiatives or free medicine programs, or we alternatively are unable to secure expanded formulary access through additional arrangements with PBMs or other payors, we would be at a competitive disadvantage in terms of pricing versus preferred branded and generic competitors. We may also experience financial pressure in the future which would make it difficult to support investment levels in areas such as managed care contract rebates, HorizonCares and other access tools.

We are subject to federal, state and foreign healthcare laws and regulations and implementation or changes to such healthcare laws and regulations could adversely affect our business and results of operations.*

The U.S. and some foreign jurisdictions are considering or have enacted a number of legislative and regulatory proposals to regulate and to change the healthcare system in ways that could affect our ability to sell our medicines profitably. In the United States and elsewhere, there is significant interest in promoting changes in healthcare systems with the stated goals of containing healthcare costs (including a number of proposals pertaining to prescription drugs, specifically), improving quality and/or expanding access. In the United States, the pharmaceutical industry has been a particular focus of these efforts and has been significantly affected by major legislative initiatives.

If we are found to be in violation of any of these laws or any other federal or state regulations, we may be subject to civil and/or criminal penalties, damages, fines, exclusion from federal health care programs and the restructuring of our operations. Any of these could have a material adverse effect on our business and financial results. Since many of these laws have not been fully interpreted by the courts, there is an increased risk that we may be found in violation of one or more of their provisions. Any action against us for violation of these laws, even if we ultimately are successful in our defense, will cause us to incur significant legal expenses and divert our management’s attention away from the operation of our business.

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We expect that the Patient Protection and Affordable Care Act, as amended by the Health Care and Education Reconciliation Act, or collectively the ACA, as well as other healthcare reform measures that may be adopted in the future, may result in more rigorous coverage criteria and in additional downward pressure on the price that we may receive for any approved medicine. An expansion in the government’s role in the U.S. healthcare industry may cause general downward pressure on the prices of prescription medicines, lower reimbursements for providers using our medicines, reduce medicine utilization and adversely affect our business and results of operations. It is unclear whether and to what extent, if at all, other potential developments resulting from the ACA, such as an increase in the number of people with health insurance and an increased focus on preventive medicine, may provide us with additional revenue to offset the annual excise tax (on certain medicine sales) enacted under the ACA, subject to limited exceptions. It is possible that the tax burden, if ours is not excepted, would adversely affect our financial performance, which in turn could cause the price of our ordinary shares to decline. The ACA, among other things, also established a Medicare Part D coverage gap discount program, in which manufacturers must agree to offer 50 percent point-of-sale discounts off negotiated prices of applicable brand drugs to eligible beneficiaries during their coverage gap period, as a condition for the manufacturer’s outpatient drugs to be covered under Medicare Part D. Further, certain hospitals and other providers, or covered entities, may access the 340B Drug Pricing Program, administered by the Health Resources and Services Administration, or HRSA, to obtain discounted prices on “covered outpatient drugs” (prescription drugs and biologics other than vaccines) from drug manufacturers. Generally, manufacturers must offer 340B discounts to these covered entities as a prerequisite to Medicaid reimbursement for the drugs. The discount amount to “patients” (as defined by HRSA) of covered entities is significant. The number of covered entities that may access the 340B prices has been growing and includes certain free-standing cancer hospitals.  

Moreover, certain politicians, including presidential candidates, have announced plans to regulate the prices of medicines. The majority of our medicines are purchased by private payors, and we do not believe that any such legislation, if enacted, would have a material effect on us or our business. However, we cannot know what form any such legislation may take or the market’s perception of how such legislation would affect us. Any reduction in reimbursement from 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 current medicines and/or those for which we may receive regulatory approval in the future.

We are subject, directly or indirectly, to federal and state healthcare fraud and abuse and false claims laws and regulations. Prosecutions under such laws have increased in recent years and we may become subject to such litigation. If we are unable to comply, or have not fully complied, with such laws, we could face substantial penalties.

In the United States, we are subject directly, or indirectly through our customers, to various state and federal fraud and abuse laws, including, without limitation, the federal Anti-Kickback Statute, the federal False Claims Act, civil monetary penalty statutes prohibiting beneficiary inducements, and similar state laws, federal and state privacy and security laws, sunshine laws, government price reporting laws, and other fraud laws. These laws may impact, among other things, our current and proposed sales, marketing and educational programs, as well as other possible relationships with customers, pharmacies, physicians, payors, and patients.

Compliance with these laws, including the development of a comprehensive compliance program, is difficult, costly and time consuming. Because of the breadth of these laws and the narrowness of available statutory and regulatory exemptions, it is possible that some of our business activities could be subject to challenge under one or more of such laws. These risks may be increased where there are evolving interpretations of applicable regulatory requirements, such as those applicable to manufacturer co-pay initiatives. Pharmaceutical manufacturer co-pay initiatives and free medicine programs are the subject of ongoing litigation (involving other manufacturers and to which we are not a party) and evolving interpretations of applicable regulatory requirements and certain state laws, and any change in the regulatory or enforcement environment regarding such programs could impact our ability to offer such programs. If we are unsuccessful with our HorizonCares programs, any other co-pay initiatives or free medicine programs, we would be at a competitive disadvantage in terms of pricing versus preferred branded and generic competitors, or be subject to significant penalties. We are engaged in various business arrangements with current and potential customers, and we can give no assurance that such arrangements would not be subject to scrutiny under such laws, despite our efforts to properly structure such arrangements. Even if we structure our programs with the intent of compliance with such laws, there can be no certainty that we would not need to defend our business activities against enforcement or litigation. Further, we cannot give any assurances that prior business activities or arrangements of other companies that we acquire will not be scrutinized or subject to enforcement or litigation.

There has also been a recent trend of increased federal and state regulation of payments made to physicians and other healthcare providers. The ACA, among other things, imposed new reporting requirements on drug manufacturers for payments made by them to physicians and teaching hospitals, as well as ownership and investment interests held by physicians and their immediate family members. Failure to submit required information may result in significant civil monetary penalties.

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We are unable to predict whether we could be subject to actions under any of these or other healthcare laws, or the impact of such actions. If we are found to be in violation of, or to encourage or assist the violation by third parties of any of the laws described above or other applicable state and federal fraud and abuse laws, we may be subject to penalties, including administrative, civil and criminal penalties, damages, fines, withdrawal of regulatory approval, imprisonment, exclusion from government healthcare reimbursement programs, contractual damages, reputational harm, diminished profits and future earnings, injunctions and other associated remedies, or private “qui tam” actions brought by individual whistleblowers in the name of the government, and the curtailment or restructuring of our operations, all of which could have a material adverse effect on our business and results of operations. Any action against us for violation of these laws, even if we successfully defend against it, could cause us to incur significant legal expenses and divert our management’s attention from the operation of our business.

Our medicines or any other medicine candidate that we develop may cause undesirable side effects or have other properties that could delay or prevent regulatory approval or commercialization, result in medicine re-labeling or withdrawal from the market or have a significant impact on customer demand.*

Undesirable side effects caused by any medicine candidate that we develop could result in the denial of regulatory approval by the FDA or other regulatory authorities for any or all targeted indications, or cause us to evaluate the future of our development programs. In our two Phase 3 clinical trials with DUEXIS, the most commonly reported treatment-emergent adverse events were nausea, dyspepsia, diarrhea, constipation and upper respiratory tract infection. In Phase 3 endoscopic registration clinical trials with VIMOVO, the most commonly reported treatment-emergent adverse events were erosive gastritis, dyspepsia, gastritis, diarrhea, gastric ulcer, upper abdominal pain, nausea and upper respiratory tract infection. The most common side effects observed in pivotal trials for ACTIMMUNE were “flu-like” or constitutional symptoms such as fever, headache, chills, myalgia and fatigue. The most commonly reported treatment-emergent adverse events in the Phase 3 clinical trials with RAYOS/LODOTRA included flare in rheumatoid arthritis related symptoms, abdominal pain, nasopharyngitis, headache, flushing, upper respiratory tract infection, back pain and weight gain. The most common adverse events reported in a Phase 2 clinical trial of PENNSAID 2% were application site reactions, such as dryness, exfoliation, erythema, pruritus, pain, induration, rash and scabbing. With respect to BUPHENYL, the most common side effects are change in the frequency of breathing, lack of or irregular menstruation, lower back, side, or stomach pain, mood or mental changes, muscle pain or twitching, nausea or vomiting, nervousness or restlessness, swelling of the feet or lower legs, unpleasant taste and unusual tiredness or weakness. With respect to RAVICTI, the most common side effects are diarrhea, nausea, decreased appetite, gas, vomiting, high blood levels of ammonia, headache, tiredness and dizziness. With respect to KRYSTEXXA, the most commonly reported serious adverse reactions in the pivotal trial were gout flares, infusion reactions, nausea, contusion or ecchymosis, nasopharyngitis, constipation, chest pain, anaphylaxis, exacerbation of pre-existing congestive heart failure and vomiting. With respect to MIGERGOT, the most commonly reported adverse reactions are ischemia, cyanosis, absence of pulse, cold extremities, gangrene, precordial distress and pain, electrocardiogram change, muscle pain, nausea and vomiting, rectal or anal ulcer, parathesias, numbness weakness, vertigo, localized edemas and itching.

The FDA or other regulatory authorities may also require, or we may undertake, additional clinical trials to support the safety profile of our medicines or medicine candidates.

In addition, if we or others identify undesirable side effects caused by our medicines or any other medicine candidate that we may develop that receives marketing approval, or if there is a perception that the medicine is associated with undesirable side effects:

· regulatory authorities may require the addition of labeling statements, such as a “black box” warning or a contraindication;

· regulatory authorities may withdraw their approval of the medicine or place restrictions on the way it is prescribed;

· we may be required to change the way the medicine is administered, conduct additional clinical trials or change the labeling of the medicine or implement a risk evaluation and mitigation strategy; and

· we may be subject to increased exposure to product liability and/or personal injury claims.

If any of these events occurred with respect to our medicines, our ability to generate significant revenues from the sale of these medicines would be significantly harmed.

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We rely on third parties to conduct our preclinical and clinical trials. If these third parties do not successfully carry out their contractual duties or meet expected deadlines or if they experience regulatory compliance issues, we may not be able to obtain regulatory approval for or commercialize our medicine candidates and our business could be substantially harmed.*

We have agreements with third-party contract research organizations, or CROs, to conduct our clinical programs, including those required for post-marketing commitments, and we expect to continue to rely on CROs for the completion of on-going and planned clinical trials. We may also have the need to enter into other such agreements in the future if we were to develop other medicine candidates or conduct clinical trials in additional indications for our existing medicines. In connection with our on-going Phase 3 study to evaluate ACTIMMUNE for the treatment of FA, we are working with the Clinical Trials Coordination Center, an academic research organization, or ARO, that is part of the Center for Human Experimental Therapeutics at the University of Rochester as well as collaborating with the Friedreich’s Ataxia Research Alliance, or FARA, and select investigators of FARA’s Collaborative Clinical Research Network in FA. In connection with the investigator-initiated study to evaluate ACTIMMUNE in combination with PD-1/PD-L1 inhibitors in various forms of cancer including advanced urothelial carcinoma (bladder cancer) and renal cell carcinoma, we are collaborating with Fox Chase Cancer Center. In connection with our ongoing study to evaluate RAYOS/LODOTRA on the fatigue experienced by systemic lupus erythematosus patients, we are collaborating with the Alliance for Lupus Research. We rely heavily on these parties for the execution of our clinical studies and control only certain aspects of their activities. Nevertheless, we are responsible for ensuring that each of our studies is conducted in accordance with the applicable protocol. We, our CROs and our ARO are required to comply with current GCP or ICH regulations. The FDA enforces these GCP or ICH regulations through periodic inspections of trial sponsors, principal investigators and trial sites. If we or our CROs or collaborators fail to comply with applicable GCP or ICH regulations, the data generated in our clinical trials may be deemed unreliable and our submission of marketing applications may be delayed or the FDA may require us to perform additional clinical trials before approving our marketing applications. We cannot assure you that, upon inspection, the FDA will determine that any of our clinical trials comply or complied with GCP or ICH regulations. In addition, our clinical trials must be conducted with product produced under cGMP regulations, and may require a large number of test subjects. Our failure to comply with these regulations may require us to repeat clinical trials, which would delay the regulatory approval process. Moreover, our business may be implicated if any of our CROs or collaborators violates federal or state fraud and abuse or false claims laws and regulations or healthcare privacy and security laws. We must also obtain certain third-party institutional review board, or IRB, and ethics committee approvals in order to conduct our clinical trials. Delays by IRBs and ethics committees in providing such approvals may delay our clinical trials.

If any of our relationships with these third-party CROs or collaborators terminate, we may not be able to enter into similar arrangements on commercially reasonable terms, or at all. If CROs or collaborators do not successfully carry out their contractual duties or obligations or 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 regulatory requirements or for other reasons, our clinical trials may be extended, delayed or terminated and we may not be able to obtain regulatory approval for or successfully commercialize our medicines and medicine candidates. As a result, our results of operations and the commercial prospects for our medicines and medicine candidates would be harmed, our costs could increase and our ability to generate revenues could be delayed.

Switching or adding additional CROs or collaborators can involve substantial cost and require extensive management time and focus. In addition, there is a natural transition period when a new CRO or collaborator commences work. As a result, delays may occur, which can materially impact our ability to meet our desired clinical development timelines. Though we carefully manage our relationships with our CROs and collaborators, there can be no assurance that we will not encounter similar challenges or delays in the future or that these delays or challenges will not have a material adverse impact on our business, financial condition or prospects.

In addition, in connection with our November 2013 acquisition of the U.S. rights to VIMOVO, we assumed responsibility for completing an ongoing Pediatric Research Equity Act post-marketing requirement study in children 12 years to 16 years and 11 months of age with Juvenile RA. This report was submitted to the FDA in December 2015. We have also assumed Hyperion’s post-marketing obligations and commitments to conduct studies in UCD patients during the first two months of life and from two months to two years of age. Although we are committed to carrying out these commitments, there are challenges in conducting studies in pediatric patients including availability of study sites, patients, and obtaining parental informed consent. On June 29, 2016, we submitted an sNDA with the FDA for RAVICTI to expand the age range for chronic management of UCDs from two years of age and older to two months of age and older. Subject to positive data from on-going studies, we have targeted an sNDA submission in the first quarter of 2018 in relation to UCD patients during the first two months of life. In connection with our acquisition of Crealta in January 2016, we assumed responsibility for an observational study related to KRYSTEXXA. Thus far in this study there have been no new safety signals and the reported safety results parallel those in the KRYSTEXXA product label. We are continuing to screen and enroll patients in the near term.

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Clinical development of drugs and biologics involves a lengthy and expensive process with an uncertain outcome, and results of earlier studies and trials may not be predictive of future trial results.*

Clinical testing is expensive and can take many years to complete, and its outcome is uncertain. Failure can occur at any time during the clinical trial process. The results of preclinical studies and early clinical trials of potential medicine candidates may not be predictive of the results of later-stage clinical trials. Medicine candidates in later stages of clinical trials may fail to show the desired safety and efficacy traits despite having progressed through preclinical studies and initial clinical testing.

With respect to our on-going Phase 3 clinical trial to evaluate ACTIMMUNE for the treatment of FA, and the investigator-initiated study to evaluate ACTIMMUNE in combination with OPDIVO^® nivolumab in advanced solid tumors and to the extent that we are required to conduct additional clinical development of any of our existing or later acquired medicines or we conduct clinical development of earlier stage medicine candidates or for other additional indications for RAYOS/LODOTRA, we may experience delays in these clinical trials or investigator-initiated studies. We do not know whether any additional clinical trials will be initiated in the future, begin on time, need to be redesigned, enroll patients on time or be completed on schedule, if at all. Clinical trials can be delayed for a variety of reasons, including delays related to:

· obtaining regulatory approval to commence a trial;

· reaching agreement on acceptable terms with prospective CROs and clinical trial sites, the terms of which can be subject to extensive negotiation and may vary significantly among different CROs and trial sites;

· obtaining IRB or ethics committee approval at each site;

· recruiting suitable patients to participate in a trial;

· having patients complete a trial or return for post-treatment follow-up;

· clinical sites dropping out of a trial;

· adding new sites; or

· manufacturing sufficient quantities of medicine candidates for use in clinical trials.

Patient enrollment, a significant factor in the timing of clinical trials, is affected by many factors including the size and nature of the patient population, the proximity of patients to clinical sites, the eligibility criteria for the trial, the design of the clinical trial, competing clinical trials and clinicians’ and patients’ perceptions as to the potential advantages of the medicine candidate being studied in relation to other available therapies, including any new drugs or biologics that may be approved for the indications we are investigating. Furthermore, we rely and expect to rely on CROs and clinical trial sites to ensure the proper and timely conduct of our future clinical trials and while we have and intend to have agreements governing their committed activities, we will have limited influence over their actual performance.

We could encounter delays if prescribing physicians encounter unresolved ethical issues associated with enrolling patients in clinical trials of our medicine candidates in lieu of prescribing existing treatments that have established safety and efficacy profiles. Further, a clinical trial may be suspended or terminated by us, our collaborators, the FDA or other regulatory authorities due to a number of factors, including failure to conduct the clinical trial in accordance with regulatory requirements or our clinical protocols, inspection of the clinical trial operations or trial site by the FDA or other regulatory authorities resulting in the imposition of a clinical hold, unforeseen safety issues or adverse side effects, failure to demonstrate a benefit from using a medicine candidate, changes in governmental regulations or administrative actions or lack of adequate funding to continue the clinical trial. If we experience delays in the completion of, or if we terminate, any clinical trial of our medicine candidates, the commercial prospects of our medicine candidates will be harmed, and our ability to generate medicine revenues from any of these medicine candidates will be delayed. In addition, any delays in completing our clinical trials will increase our costs, slow down our medicine development and approval process and jeopardize our ability to commence medicine sales and generate revenues.

Moreover, principal investigators for our clinical trials may serve as scientific advisors or consultants to us from time to time and receive compensation in connection with such services. Under certain circumstances, we may be required to report some of these relationships to the FDA. The FDA may conclude that a financial relationship between us and a principal investigator has created a conflict of interest or otherwise affected interpretation of the study. The FDA may therefore question the integrity of the data generated at the applicable clinical trial site and the utility of the clinical trial itself may be jeopardized. This could result in a delay in approval, or rejection, of our marketing applications by the FDA and may ultimately lead to the denial of marketing approval of one or more of our medicine candidates.

Any of these occurrences may harm our business, financial condition, results of operations and prospects significantly. In addition, many of the factors that cause, or lead to, a delay in the commencement or completion of clinical trials may also ultimately lead to the denial of regulatory approval of our medicine candidates.

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Business interruptions could seriously harm our future revenue and financial condition and increase our costs and expenses.

Our operations could be subject to earthquakes, power shortages, telecommunications failures, water shortages, floods, hurricanes, typhoons, fires, extreme weather conditions, medical epidemics and other natural or man-made disasters or business interruptions. While we carry insurance for certain of these events and have implemented disaster management plans and contingencies, the occurrence of any of these business interruptions could seriously harm our business and financial condition and increase our costs and expenses. We conduct significant management operations at both our global headquarters located in Dublin, Ireland and our U.S. office located in Lake Forest, Illinois. If our Dublin or Lake Forest offices were affected by a natural or man-made disaster or other business interruption, our ability to manage our domestic and foreign operations could be impaired, which could materially and adversely affect our results of operations and financial condition. We currently rely, and intend to rely in the future, on third-party manufacturers and suppliers to produce our medicines and third-party logistics partners to ship our medicines. Our ability to obtain commercial supplies of our medicines could be disrupted and our results of operations and financial condition could be materially and adversely affected if the operations of these third-party suppliers or logistics partners were affected by a man-made or natural disaster or other business interruption. The ultimate impact of such events on us, our significant suppliers and our general infrastructure is unknown.

We are dependent on information technology systems, infrastructure and data, which exposes us to data security risks.

We are dependent upon information technology systems, infrastructure and data, including mobile technologies, to operate our business. The multitude and complexity of our computer systems make them inherently vulnerable to service interruption or destruction, malicious intrusion and random attack. Likewise, data privacy or security breaches by employees or others may pose a risk that sensitive data, including our intellectual property, trade secrets or personal information of our employees, patients, customers or other business partners may be exposed to unauthorized persons or to the public. Cyber-attacks are increasing in their frequency, sophistication and intensity. Cyber-attacks could include the deployment of harmful malware, denial-of-service, social engineering and other means to affect service reliability and threaten data confidentiality, integrity and availability. Our business partners face similar risks and any security breach of their systems could adversely affect our security posture. A security breach or privacy violation that leads to disclosure or modification of or prevents access to patient information, including personally identifiable information or protected health information, could harm our reputation, compel us to comply with federal and/or state breach notification laws and foreign law equivalents, subject us to mandatory corrective action, require us to verify the correctness of database contents and otherwise subject us to liability under laws and regulations that protect personal data, any of which could disrupt our business and/or result in increased costs or loss of revenue. Moreover, the prevalent use of mobile devices that access confidential information increases the risk of data security breaches, which could lead to the loss of confidential information, trade secrets or other intellectual property. While we have invested, and continue to invest, in the protection of our data and information technology infrastructure, there can be no assurance that our efforts will prevent service interruptions, or identify breaches in our systems, that could adversely affect our business and operations and/or result in the loss of critical or sensitive information, which could result in financial, legal, business or reputational harm to us. In addition, our liability insurance may not be sufficient in type or amount to cover us against claims related to security breaches, cyber-attacks and other related breaches. 

If product liability lawsuits are brought against us, we may incur substantial liabilities and may be required to limit commercialization of our medicines.*

We face an inherent risk of product liability as a result of the commercial sales of our medicines and the clinical testing of our medicine candidates. For example, we may be sued if any of our medicines or medicine candidates allegedly causes injury or is found to be otherwise unsuitable during clinical testing, manufacturing, marketing or sale. Any such product liability claims may include allegations of defects in manufacturing, defects in design, a failure to warn of dangers inherent in the medicine, negligence, strict liability or a breach of warranties. Claims could also be asserted under state consumer protection acts. If we cannot successfully defend ourselves against product liability claims, we may incur substantial liabilities or be required to limit commercialization of our medicines and medicine candidates. Even a successful defense would require significant financial and management resources. Regardless of the merits or eventual outcome, liability claims may result in:

· decreased demand for our medicines or medicine candidates that we may develop;

· injury to our reputation;

· withdrawal of clinical trial participants;

· initiation of investigations by regulators;

· costs to defend the related litigation;

· a diversion of management’s time and resources;

· substantial monetary awards to trial participants or patients;

· medicine recalls, withdrawals or labeling, marketing or promotional restrictions;

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· loss of revenue; 

· exhaustion of any available insurance and our capital resources; and

· the inability to commercialize our medicines or medicine candidates.

Our inability to obtain and retain sufficient product liability insurance at an acceptable cost to protect against potential product liability claims could prevent or inhibit the commercialization of medicines we develop. We currently carry product liability insurance covering our clinical studies and commercial medicine sales in the amount of $75 million in the aggregate. Although we maintain such insurance, any claim that may be brought against us could result in a court judgment or settlement in an amount that is not covered, in whole or in part, by our insurance or that is in excess of the limits of our insurance coverage. If we determine that it is prudent to increase our product liability coverage due to the on-going commercialization of our current medicines in the United States, and/or the potential commercial launches of any of our medicines in additional markets or for additional indications, we may be unable to obtain such increased coverage on acceptable terms or at all. Our insurance policies also have various exclusions, and we may be subject to a product liability claim for which we have no coverage. We will have to pay any amounts awarded by a court or negotiated in a settlement that exceed our coverage limitations or that are not covered by our insurance, and we may not have, or be able to obtain, sufficient capital to pay such amounts.

Our business involves the use of hazardous materials, and we and our third-party manufacturers must comply with environmental laws and regulations, which can be expensive and restrict how we do business.

Our third-party manufacturers’ activities involve the controlled storage, use and disposal of hazardous materials owned by us, including the components of our medicine candidates and other hazardous compounds. We and our manufacturers are subject to federal, state and local as well as foreign laws and regulations governing the use, manufacture, storage, handling and disposal of these hazardous materials. Although we believe that the safety procedures utilized by our third-party manufacturers for handling and disposing of these materials comply with the standards prescribed by these laws and regulations, we cannot eliminate the risk of accidental contamination or injury from these materials. In the event of an accident, state, federal or foreign authorities may curtail the use of these materials and interrupt our business operations. We do not currently maintain hazardous materials insurance coverage. If we are subject to any liability as a result of our third-party manufacturers’ activities involving hazardous materials, our business and financial condition may be adversely affected. In the future we may seek to establish longer-term third-party manufacturing arrangements, pursuant to which we would seek to obtain contractual indemnification protection from such third-party manufacturers potentially limiting this liability exposure.

Our employees, independent contractors, principal investigators, consultants, vendors, distributors and CROs may engage in misconduct or other improper activities, including noncompliance with regulatory standards and requirements.

We are exposed to the risk that our employees, independent contractors, principal investigators, consultants, vendors, distributors and CROs may engage in fraudulent or other illegal activity. Misconduct by these parties could include intentional, reckless and/or negligent conduct or unauthorized activities that violate FDA regulations, including those laws that require the reporting of true, complete and accurate information to the FDA, manufacturing standards, federal and state healthcare fraud and abuse laws and regulations, and laws that require the true, complete and accurate reporting of financial information or data. In particular, sales, marketing and business arrangements in the healthcare industry are subject to extensive laws and regulations intended to prevent fraud, misconduct, kickbacks, self-dealing and other abusive practices. These laws and regulations may restrict or prohibit a wide range of pricing, discounting, marketing and promotion, sales commission, customer incentive programs and other business arrangements. Misconduct by our employees and other third parties may also include the improper use of information obtained in the course of clinical trials, which could result in regulatory sanctions and serious harm to our reputation. We have adopted a Code of Business Conduct and Ethics, but it is not always possible to identify and deter misconduct by our employees and other third parties, and the precautions we take to detect and prevent this activity may not be effective in controlling unknown or unmanaged risks or losses or in protecting us from governmental investigations or other actions or lawsuits stemming from a failure to be in compliance with such laws or regulations. If any such actions are instituted against us, and we are not successful in defending ourselves or asserting our rights, those actions could have a significant impact on our business, including the imposition of significant civil and criminal penalties, damages, fines, the curtailment or restructuring of our operations, the exclusion from participation in federal and state healthcare programs and imprisonment.

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Risks Related to our Financial Position and Capital Requirements

In the past we have incurred significant operating losses, and we recently achieved operating profitability.*

We have a limited operating history and even less history operating as a combined organization following the acquisitions of Vidara, Hyperion and Crealta. We have financed our operations primarily through equity and debt financings and have incurred significant operating losses in the past. We had operating income of $4.3 million and $55.4 million for the six months ended June 30, 2016 and the year ended December 31, 2015, respectively, and operating losses of $8.5 million and $42.9 million for the years ended December 31, 2014 and 2013, respectively. We had a net loss of $30.4 million and a net income of $39.5 million for the six months ended June 30, 2016 and the year ended December 31, 2015, respectively, and net losses of $263.6 million and $149.0 million for the years ended December 31, 2014 and 2013, respectively. As of June 30, 2016, we had an accumulated deficit of $711.6 million. Our prior losses have resulted principally from costs incurred in our development activities for our medicines and medicine candidates, commercialization activities related to our medicines, costs associated with our acquisition transactions and costs associated with derivative liability accounting. Our prior losses, combined with possible future losses, have had and will continue to have an adverse effect on our shareholders’ deficit and working capital. While we anticipate that we will continue to generate operating profits in the future, whether we can sustain this will depend on the revenues we generate from the sale of our medicines being sufficient to cover our operating expenses.

We have limited sources of revenues and significant expenses. We cannot be certain that we will sustain profitability, which would depress the market price of our ordinary shares and could cause our investors to lose all or a part of their investment.

Our ability to sustain profitability depends upon our ability to generate sales of our medicines. We have a limited history of commercializing our medicines as a company, and commercialization has been primarily in the United States. We may never be able to successfully commercialize our medicines or develop or commercialize other medicines in the United States, which we believe represents our most significant commercial opportunity. Our ability to generate future revenues depends heavily on our success in:

· continued commercialization of our existing medicines and any other medicine candidates for which we obtain approval;

· obtaining FDA approvals for additional indications for ACTIMMUNE and RAVICTI;

· securing additional foreign regulatory approvals for our medicines in territories where we have commercial rights; and

· developing, acquiring and commercializing a portfolio of other medicines or medicine candidates in addition to our current medicines.

Even if we do generate additional medicine sales, we may not be able to sustain profitability on a quarterly or annual basis. Our failure to remain profitable would depress the market price of our ordinary shares and could impair our ability to raise capital, expand our business, diversify our medicine offerings or continue our operations.

We may need to obtain additional financing to fund additional acquisitions.*

Our operations have consumed substantial amounts of cash since inception. We expect to continue to spend substantial amounts to:

· commercialize our existing medicines in the United States, including the substantial expansion of our sales force in recent years, and our planned commercial launch of RAVICTI in Europe in 2017;

· complete the regulatory approval process, and any future required clinical development related thereto, for our medicines and medicine candidates;

· potentially acquire other businesses or additional complementary medicines or medicines that augment our current medicine portfolio, including costs associated with refinancing debt of acquired companies; and

· conduct clinical trials with respect to potential additional indications, as well as conduct post-marketing requirements and commitments, with respect to our medicines and medicines we acquire.

While we believe that our existing cash and cash equivalents will be sufficient to fund our operations based on our current expectations of continued revenue growth, we may need to raise additional funds if we choose to expand our commercialization or development efforts more rapidly than presently anticipated, if we develop or acquire additional medicines or acquire companies, or if our revenue does not meet expectations.

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We cannot be certain that additional funding will be available on acceptable terms, or at all. If we are unable to raise additional capital in sufficient amounts or on terms acceptable to us, we may have to significantly delay, scale back or discontinue the development or commercialization of one or more of our medicines or medicine candidates or one or more of our other research and development initiatives, or delay, cut back or abandon our plans to grow the business through acquisition. We also could be required to:

· seek collaborators for one or more of our current or future medicine candidates at an earlier stage than otherwise would be desirable or on terms that are less favorable than might otherwise be available; or

· relinquish or license on unfavorable terms our rights to technologies or medicine candidates that we would otherwise seek to develop or commercialize ourselves.

In addition, if we are unable to secure financing to support future acquisitions, our ability to execute on a key aspect of our overall growth strategy would be impaired.

Any of the above events could significantly harm our business, financial condition and prospects and cause the price of our ordinary shares to decline.

We have incurred a substantial amount of debt, which could adversely affect our business, including by restricting our ability to engage in additional transactions or incur additional indebtedness.*

As of June 30, 2016, we had $1,143.7 million book value, or $1,271.0 million principal amount, of indebtedness, including $400.0 million in secured indebtedness. In connection with the acquisition of Hyperion, we issued $475.0 million aggregate principal amount of 6.625% Senior Notes due 2023, or the 2023 Senior Notes, in April 2015 and borrowed $400.0 million in principal amount of secured loans pursuant to a credit agreement we entered into in May 2015 with Citibank, N.A. as administrative and collateral agent, and the lenders from time to time party thereto, or the credit agreement, providing for (i) a six-year $400.0 million term loan facility; (ii) an uncommitted accordion facility subject to the satisfaction of certain financial and other conditions; and (iii) one or more uncommitted refinancing loan facilities with respect to loans thereunder, or the 2015 Senior Secured Credit Facility. We repaid $1.0 million in principal amount from this facility quarterly from the third quarter of 2015 to the second quarter of 2016. Accordingly, we have a significant amount of debt outstanding on a consolidated basis.

This substantial level of debt could have important consequences to our business, including, but not limited to:

· reducing the benefits we expect to receive from our recent and any future acquisition transactions;

· making it more difficult for us to satisfy our obligations;

· requiring a substantial portion of our cash flows from operations to be dedicated to the payment of principal and interest on our indebtedness, therefore reducing our ability to use our cash flows to fund acquisitions, capital expenditures, and future business opportunities;

· exposing us to the risk of increased interest rates to the extent of any future borrowings, including borrowings under our 2015 Senior Secured Credit Facility, at variable rates of interest;

· making it more difficult for us to satisfy our obligations with respect to our indebtedness, including our outstanding notes, our 2015 Senior Secured Credit Facility, and any failure to comply with the obligations of any of our debt instruments, including restrictive covenants and borrowing conditions, could result in an event of default under the agreements governing such indebtedness;

· limiting our ability to obtain additional financing for working capital, capital expenditures, debt service requirements, acquisitions, and general corporate or other purposes;

· limiting our flexibility in planning for, or reacting to, changes in our business or market conditions and placing us at a competitive disadvantage compared to our competitors who are less highly leveraged and who, therefore, may be able to take advantage of opportunities that our leverage may prevent us from exploiting; and

· restricting us from pursuing certain business opportunities.

The indenture governing the 2023 Senior Notes and the credit agreement impose, and the terms of any future indebtedness may impose, various covenants that limit our ability and/or our restricted subsidiaries’ ability to, among other things, pay dividends or distributions, repurchase equity, prepay junior debt and make certain investments, incur additional debt and issue certain preferred stock, incur liens on assets, engage in certain asset sales, merge, consolidate with or merge or sell all or substantially all of our assets, enter into transactions with affiliates, designate subsidiaries as unrestricted subsidiaries, and allow to exist certain restrictions on the ability of restricted subsidiaries to pay dividends or make other payments to us.

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Our ability to obtain future financing and engage in other transactions may be restricted by these covenants. In addition, any credit ratings will impact the cost and availability of future borrowings and our cost of capital. Our ratings at any time will reflect each rating organization’s then opinion of our financial strength, operating performance and ability to meet our debt obligations. There can be no assurance that we will achieve a particular rating or maintain a particular rating in the future. A reduction in our credit ratings may limit our ability to borrow at acceptable interest rates. If our credit ratings were downgraded or put on watch for a potential downgrade, we may not be able to sell additional debt securities or borrow money in the amounts, at the times or interest rates or upon the more favorable terms and conditions that might otherwise be available. Any impairment of our ability to obtain future financing on favorable terms could have an adverse effect on our ability to refinance any of our then-existing debt and may severely restrict our ability to execute on our business strategy, which includes the continued acquisition of additional medicines or businesses.

We may not be able to generate sufficient cash to service all of our indebtedness and may be forced to take other actions to satisfy our obligations under our indebtedness, which may not be successful.

Our ability to make scheduled payments under or to refinance our debt obligations depends on our financial condition and operating performance, which is subject to prevailing economic and competitive conditions and to certain financial, business and other factors beyond our control. Our ability to generate cash flow to meet our payment obligations under our debt may also depend on the successful implementation of our operating and growth strategies. Any refinancing of our debt could be at higher interest rates and may require us to comply with more onerous covenants, which could further restrict our business operations.

If our cash flows and capital resources are insufficient to fund our debt service obligations, we may be forced to reduce or delay capital expenditures, sell assets or business operations, seek additional capital or restructure or refinance our indebtedness. We cannot ensure that we would be able to take any of these actions, that these actions would be successful and permit us to meet our scheduled debt service obligations or that these actions would be permitted under the terms of existing or future debt agreements, including the indentures that govern our outstanding notes and the credit agreement. In addition, any failure to make payments of interest and principal on our outstanding indebtedness on a timely basis would likely result in a reduction of our credit rating, which could harm our ability to incur additional indebtedness.

If we cannot make scheduled payments on our debt, we will be in default and, as a result:

· our debt holders could declare all outstanding principal and interest to be due and payable;

· the lenders under the credit agreement could foreclose against the assets securing the borrowings then outstanding; and

· we could be forced into bankruptcy or liquidation.

We generally have broad discretion in the use of our cash and may not use it effectively.*

Our management has broad discretion in the application of our cash, and investors will be relying on the judgment of our management regarding the use of our cash. Our management may not apply our cash in ways that ultimately increase the value of any investment in our securities. We expect to use our existing cash to fund commercialization activities for our medicines, to potentially fund additional medicine or business acquisitions, to potentially fund additional regulatory approvals of certain of our medicines, to potentially fund development, life cycle management or manufacturing activities of our medicines for other indications, to potentially fund share repurchases, and for working capital, capital expenditures and general corporate purposes. We may also invest our cash in short-term, investment-grade, interest-bearing securities. These investments may not yield a favorable return to our shareholders. If we do not invest or apply our cash in ways that enhance shareholder value, we may fail to achieve expected financial results, which could cause the price of our ordinary shares to decline.

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Our ability to use net operating loss carryforwards and certain other tax attributes may be limited.*

Under Sections 382 and 383 of the Code, if a corporation undergoes an “ownership change” (generally defined as a greater than 50 percent change (by value) in its equity ownership over a three year period), the corporation’s ability to use pre-change net operating loss carryforwards and other pre-change tax attributes to offset post-change income may be limited. In September 2014, the acquisition of Vidara triggered an “ownership change” limitation and, as a result, we are subject to annual limits on our ability to use the net operating loss carryforwards of Horizon Pharma Inc. and its subsidiaries. We estimate this will result in annual limits of approximately $90 million in the years from 2016 through to 2031. Furthermore, we continue to carry forward our annual limitation resulting from an ownership change date of August 2, 2012. The limitation on pre-change net operating losses incurred prior to the August 2, 2012 change date is approximately $20 million for 2016, $15 million for 2017 and $8 million in the years from 2018 through to 2028. During the second quarter of 2015, we also recognized additional net operating losses and federal and state tax credits as a result of the Hyperion acquisition on May 7, 2015 in the amount of approximately $31 million of federal net operating losses, state operating losses of approximately $68 million (net of federal effect) and approximately $30 million of federal and state tax credits. We continue to carry forward the annual limitation related to Hyperion of $50 million resulting from the last ownership change date in 2014. Further, as a result of the acquisition of Crealta in the first quarter of 2016, we have recognized an additional estimated net operating loss carryforward of approximately $4 million. The net operating loss carryforward limitation is cumulative such that any use of the carryforwards below the limitations in one year will result in a corresponding increase in the limitations for the subsequent tax year.

Following certain acquisitions of a U.S. corporation by a foreign corporation, Section 7874 of the Code limits the ability of the acquired U.S. corporation and its U.S. affiliates to utilize U.S. tax attributes such as net operating losses to offset U.S. taxable income resulting from certain transactions. Based on the limited guidance available, we expect this limitation is applicable following the acquisition of Vidara. As a result, it is not currently expected that we or our other U.S. affiliates will be able to utilize their U.S. tax attributes to offset their U.S. taxable income, if any, resulting from certain taxable transactions following the acquisition of Vidara. Notwithstanding this limitation, we expect that we will be able to fully use our U.S. net operating losses prior to their expiration. As a result of this limitation, however, it may take HPI longer to use its net operating losses. Moreover, contrary to these expectations, it is possible that the limitation under Section 7874 of the Code on the utilization of U.S. tax attributes could prevent us from fully utilizing our U.S. tax attributes prior to their expiration if we do not generate sufficient taxable income.

Any limitation on our ability to use our net operating loss and tax credit carryforwards, including the carryforwards of companies that we acquire, will likely increase the taxes we would otherwise pay in future years if we were not subject to such limitations.

Unstable market and economic conditions may have serious adverse consequences on our business, financial condition and share price.*

As widely reported, global credit and financial markets have experienced extreme disruptions in the past several years, including severely diminished liquidity and credit availability, declines in consumer confidence, declines in economic growth, increases in unemployment rates, and uncertainty about economic stability. While there has been some recent improvement in some of these financial metrics, there can be no assurance that further deterioration in credit and financial markets and confidence in economic conditions will not occur. Our general business strategy may be adversely affected by any such economic downturn, volatile business environment and continued unpredictable and unstable market conditions. If the current equity and credit markets deteriorate again, or do not improve, it may make any necessary debt or equity financing more difficult to complete, more costly, and more dilutive. Failure to secure any necessary financing in a timely manner and on favorable terms could have a material adverse effect on our growth strategy, financial performance and share price and could require us to delay or abandon commercialization or development plans. There is a risk that one or more of our current service providers, manufacturers and other partners may not survive these difficult economic times, which could directly affect our ability to attain our operating goals on schedule and on budget. Additionally, the SEC has proposed new rules on U.S. domiciled money market funds due to come into effect in the fourth quarter of 2016, which may temporarily suspend redemptions or impose liquidity fees on investors withdrawing assets during volatile periods, and this may adversely affect our investment strategy and/or liquidity.

At June 30, 2016, we had $424.5 million of cash and cash equivalents consisting of cash and money market funds. While we are not aware of any downgrades, material losses, or other significant deterioration in the fair value of our cash equivalents since June 30, 2016, no assurance can be given that further deterioration in conditions of the global credit and financial markets would not negatively impact our current portfolio of cash equivalents or our ability to meet our financing objectives. Further dislocations in the credit market may adversely impact the value and/or liquidity of marketable securities owned by us.

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Changes in accounting rules or policies may affect our financial position and results of operations.*

U.S. generally accepted accounting principles, or GAAP, and related implementation guidelines and interpretations can be highly complex and involve subjective judgments. Changes in these rules or their interpretation, the adoption of new guidance or the application of existing guidance to changes in our business could significantly affect our financial position and results of operations. In addition, our operation as an Irish company with multiple subsidiaries in different jurisdictions adds additional complexity to the application of GAAP and this complexity will be exacerbated further if we complete additional strategic transactions. Changes in the application of existing rules or guidance applicable to us or our wholly-owned subsidiaries could significantly affect our consolidated financial position and results of operations.

Covenants under the indenture governing our outstanding notes and the credit agreement restrict our business and operations in many ways, and if we do not effectively manage our covenants, our financial conditions and results of operations could be adversely affected.

The credit agreement and the indenture governing the 2023 Senior Notes impose various covenants that limit our ability and/or our restricted subsidiaries’ ability to, among other things:

· pay dividends or distributions, repurchase equity, prepay junior debt and make certain investments;

· incur additional debt and issue certain preferred stock;

· incur liens on assets;

· engage in certain asset sales;

· merge, consolidate with or merge or sell all or substantially all of our assets;

· enter into transactions with affiliates;

· designate subsidiaries as unrestricted subsidiaries; and

· allow to exist certain restrictions on the ability of restricted subsidiaries to pay dividends or make other payments to us.

These covenants may:

· limit our ability to borrow additional funds for working capital, capital expenditures, acquisitions or other general business purposes;

· limit our ability to use our cash flow or obtain additional financing for future working capital, capital expenditures, acquisitions or other general business purposes;

· require us to use a substantial portion of our cash flow from operations to make debt service payments;

· limit our flexibility to plan for, or react to, changes in our business and industry;

· place us at a competitive disadvantage compared to less leveraged competitors; and

· increase our vulnerability to the impact of adverse economic and industry conditions.

If we are unable to successfully manage the limitations and decreased flexibility on our business due to our significant debt obligations, we may not be able to capitalize on strategic opportunities or grow our business to the extent we would be able to without these limitations.

Our failure to comply with any of the covenants could result in a default under the credit agreement or the indenture governing the 2023 Senior Notes, which could permit the administrative agent or the trustee, as applicable, or permit the lenders or the holders of the 2023 Senior Notes to cause the administrative agent or the trustee, as applicable, to declare all or part of any outstanding loans or the notes to be immediately due and payable or to exercise any remedies provided to the administrative agent or the trustee, including, in the case of the credit agreement proceeding against the collateral granted to secure our obligations under the credit agreement. An event of default under either the credit agreement or the indenture governing the 2023 Senior Notes could also lead to an event of default under the terms of the other agreement and the indentures governing our outstanding 2.50% Exchangeable Senior Notes due 2022, or the Exchangeable Senior Notes. Any such event of default or any exercise of rights and remedies by our creditors could seriously harm our business.

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If intangible assets that we have recorded in connection with our acquisition transactions become impaired, we could have to take significant charges against earnings.

In connection with the accounting for our various acquisition transactions, we have recorded significant amounts of intangible assets. Under GAAP, we must assess, at least annually and potentially more frequently, whether the value of goodwill and other indefinite-lived intangible assets has been impaired. Amortizing intangible assets will be assessed for impairment in the event of an impairment indicator. Any reduction or impairment of the value of goodwill or other intangible assets will result in a charge against earnings, which could materially adversely affect our results of operations and shareholders’ equity in future periods.

Risks Related to Our Intellectual Property

If we are unable to obtain or protect intellectual property rights related to our medicines and medicine candidates, we may not be able to compete effectively in our markets.*

We rely upon a combination of patents, trade secret protection and confidentiality agreements to protect the intellectual property related to our medicines and medicine candidates. The strength of patents in the biotechnology and pharmaceutical field involves complex legal and scientific questions and can be uncertain. The patent applications that we own may fail to result in issued patents with claims that cover our medicines in the United States or in other foreign countries. If this were to occur, early generic competition could be expected against our current medicines and other medicine candidates in development. There is no assurance that all potentially relevant prior art relating to our patents and patent applications has been found, which prior art can invalidate a patent or prevent a patent from issuing based on a pending patent application. In particular, because the APIs in DUEXIS, VIMOVO and RAYOS/LODOTRA have been on the market as separate medicines for many years, it is possible that these medicines have previously been used off-label in such a manner that such prior usage would affect the validity of our patents or our ability to obtain patents based on our patent applications. In addition, 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., where 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.

Even if patents do successfully issue, third parties may challenge their validity, enforceability or scope, which may result in such patents being narrowed or invalidated.

Patent litigation is currently pending in the United States District Court for the District of New Jersey against several companies intending to market a generic version of VIMOVO before the expiration of certain of our patents listed in the Orange Book. These cases are collectively known as the VIMOVO cases, and involve the following sets of defendants: (i) Dr. Reddy’s; (ii) Lupin; (iii) Mylan; and (iv) Actavis Pharma. The cases arise from Paragraph IV Patent Certification notice letters from each of Dr. Reddy’s, Lupin, Mylan and Actavis Pharma advising each had filed an ANDA with the FDA seeking approval to market generic versions of VIMOVO before the expiration of the patents-in-suit.

On February 24, 2015, Dr. Reddy’s Laboratories, Inc. filed a Petition for inter partes review, or IPR, of U.S. Patent No. 8,557,285, one of the patents in litigation in the above referenced VIMOVO cases. On October 9, 2015, the United States Patent and Trademark Office, or the U.S. PTO, denied such Petition for IPR.

On May 21, 2015, the Coalition for Affordable Drugs VII LLC, or the Coalition for Affordable Drugs, filed a Petition for IPR of U.S. Patent No. 6,926,907, one of the patents in litigation in the above referenced VIMOVO cases. On December 8, 2015, the U.S. PTO denied such Petition for IPR.

On June 5, 2015, the Coalition for Affordable Drugs filed another Petition for IPR of U.S. Patent No. 8,858,996, one of the patents in litigation in the above referenced VIMOVO cases. On December 17, 2015, the U.S. PTO denied such Petition for IPR.

On August 7, 2015, the Coalition for Affordable Drugs filed another Petition for IPR of U.S. Patent No. 8,852,636, one of the patents in litigation in the above referenced VIMOVO cases. On February 11, 2016, the U.S. PTO denied such Petition for IPR.

On August 12, 2015, the Coalition for Affordable Drugs filed another Petition for IPR of U.S. Patent No. 8,945,621, one of the patents in litigation in the above referenced VIMOVO cases. On February 22, 2016, the Patent Trial and Appeal Board, or the PTAB, issued a decision to institute the IPR.

On August 19, 2015, Lupin filed Petitions for IPR of U.S. Patent Nos. 8,858,996, 8,852,636, and 8,865,190, all patents in litigation in the above referenced VIMOVO cases. On March 1, 2016, the PTAB issued decisions to institute the IPRs for U.S. Patent Nos. 8,858,996 and 8,865,190. Also on March 1, 2016, the PTAB denied the Petition for IPR for U.S. Patent No. 8,852,636.

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Patent litigation is currently pending in the United States District Court for the District of New Jersey against several companies intending to market a generic version of PENNSAID 2% prior to the expiration of certain of our patents listed in the Orange Book. These cases are collectively known as the PENNSAID 2% cases, and involve the following sets of defendants: (i)  Actavis; (ii) Lupin Limited; and (iii) Amneal (settled, awaiting dismissal). These cases arise from Paragraph IV Patent Certification notice letters from each of Actavis, Lupin Limited and Amneal advising each had filed an ANDA with the FDA seeking approval to market a generic version of PENNSAID 2% before the expiration of the patents-in-suit. The status of these cases is as set forth above.

The Company received from Actavis a Paragraph IV Patent Certification Notice Letter dated July 1, 2016, against Orange Book listed U.S. Patent Nos. 9,339,551 and 9,339,552, advising that Actavis had filed an ANDA with the FDA for a generic version of PENNSAID 2%.  

The Company has received from Apotex two Paragraph IV Patent Certification Notice Letters dated April 1, 2016, and June 30, 2016, against Orange Book listed U.S. Patent Nos. 8,217,078, 8,252,838, 8,546,450, 8,563,613, 8,618,164, 8,741,956, 8,871,809, 9,066,913, 9,101,591, 9,132,110, 9,168,304, 9,168,305, 9,220,784, 9,339,551 and 9,339,552, advising that Apotex had filed an ANDA with the FDA for a generic version of PENNSAID 2%.  

Patent litigation is currently pending in the United States District Court for the Eastern District of Texas against Par Pharmaceutical and in the United States District Court for the District of New Jersey against Lupin and against Par Pharmaceutical, who are each intending to market generic versions of RAVICTI prior to the expiration of certain of our patents listed in the Orange Book. These cases are collectively known as the RAVICTI cases, and arise from Paragraph IV Patent Certification notice letters from each of Par Pharmaceutical and Lupin advising each had filed an ANDA with the FDA seeking approval to market a generic version of RAVICTI before the expiration of the patents-in-suit.

On April 29, 2015, Par Pharmaceutical filed Petitions for IPR of U.S. Patent No. 8,404,215 and U.S. Patent No. 8,642,012, two of the patents involved in the above mentioned RAVICTI cases. On November 4, 2015, the PTAB issued decisions instituting such IPRs and on December 14, 2015, the District Court Judge Roy Payne issued a stay pending a final written decision from the PTAB with respect to such IPRs. The PTAB must issue a final written decision on the IPRs for such patents no later than November 4, 2016.

On April 1, 2016, Lupin filed a Petition for IPR of U.S. Patent No. 9,095,559, or the ’559 patent, the patent currently at issue in the Lupin RAVICTI case. The PTAB will decide whether to institute an IPR on the ’559 patent no later than October 8, 2016.

We intend to vigorously defend our intellectual property rights relating to our medicines, but we cannot predict the outcome of the VIMOVO cases, the PENNSAID 2% cases, the RAVICTI cases or the IPRs. Any adverse outcome in these matters or any new generic challenges that may arise could result in one or more generic versions of our medicines being launched before the expiration of the listed patents, which could adversely affect our ability to successfully execute our business strategy to increase sales of our medicines, and would negatively impact our financial condition and results of operations, including causing a significant decrease in our revenues and cash flows.

Furthermore, even if they are unchallenged, our patents and patent applications may not adequately protect our intellectual property or prevent others from designing around our claims. If the patent applications we hold with respect to our medicines fail to issue or if their breadth or strength of protection is threatened, it could dissuade companies from collaborating with us to develop them and threaten our ability to commercialize our medicines. We cannot offer any assurances about which, if any, patents will issue or whether any issued patents will be found not invalid and not unenforceable or will go unthreatened by third parties. Since patent applications in the United States and most other countries are confidential for a period of time after filing, and some remain so until issued, we cannot be certain that we were the first to file any patent application related to our medicines or any other medicine candidates. Furthermore, if third parties have filed such patent applications, an interference proceeding in the United States can be provoked by a third-party or instituted by us to determine who was the first to invent any of the subject matter covered by the patent claims of our applications.

With respect to RAVICTI, the composition of matter patent we hold would have expired in the United States in February 2015 without term extension. However, Hyperion applied for a term extension of approximately four years for this patent under the Drug Price Competition and Patent Term Restoration Act. Hyperion recently received notice that the U.S. PTO has determined that the length of the extension is 1,267 days. We cannot guarantee that pending patent applications related to RAVICTI will result in additional patents or that other existing and future patents related to RAVICTI will be held valid and enforceable or will be sufficient to deter generic competition in the United States. Therefore, it is possible that upon expiration of the RAVICTI composition of matter patent, we would need to rely on forms of regulatory exclusivity, to the extent available, to protect against generic competition.

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In addition to the protection afforded by patents, we rely on trade secret protection and confidentiality agreements to protect proprietary know-how that is not patentable, processes for which patents are difficult to enforce and any other elements of our drug discovery and development processes that involve proprietary know-how, information or technology that is not covered by patents. Although we expect all of our employees to assign their inventions to us, and all of our employees, consultants, advisors and any third parties who have access to our proprietary know-how, information or technology to enter into confidentiality agreements, we cannot provide any assurances that all such agreements have been duly executed or that our trade secrets and other confidential proprietary information will not be disclosed or that competitors will not otherwise gain access to our trade secrets or independently develop substantially equivalent information and techniques.

Our ability to obtain patents is highly uncertain because, to date, some legal principles remain unresolved, there has not been a consistent policy regarding the breadth or interpretation of claims allowed in patents in the United States and the specific content of patents and patent applications that are necessary to support and interpret patent claims is highly uncertain due to the complex nature of the relevant legal, scientific and factual issues. Changes in either patent laws or interpretations of patent laws in the United States and other countries may diminish the value of our intellectual property or narrow the scope of our patent protection. For example, on September 16, 2011, the Leahy-Smith America Invents Act, or the Leahy-Smith Act, was signed into law. The Leahy-Smith Act includes a number of significant changes to U.S. patent law. These include provisions that affect the way patent applications will be prosecuted and may also affect patent litigation. The U.S. PTO has developed new and untested regulations and procedures to govern the full implementation of the Leahy-Smith Act, and many of the substantive changes to patent law associated with the Leahy-Smith Act, and in particular, the first to file provisions, only became effective in March 2013. The Leahy-Smith Act has also introduced procedures making it easier for third-parties to challenge issued patents, as well as to intervene in the prosecution of patent applications. Finally, the Leahy-Smith Act contains new statutory provisions that still require the U.S. PTO to issue new regulations for their implementation and it may take the courts years to interpret the provisions of the new statute. Accordingly, it is too early to tell what, if any, impact the Leahy-Smith Act will have on the operation of our business and the protection and enforcement of our intellectual property. However, the Leahy-Smith Act and its implementation could increase the uncertainties and costs surrounding the prosecution of our patent applications and the enforcement or defense of our issued patents. In addition, the ACA allows applicants seeking approval of biosimilar or interchangeable versions of biological products such as ACTIMMUNE to initiate a process for challenging some or all of the patents covering the innovator biological product used as the reference product. This process is complicated and could result in the limitation or loss of certain patent rights. An inability to obtain, enforce and defend patents covering our proprietary technologies would materially and adversely affect our business prospects and financial condition.

Further, the laws of some foreign countries do not protect proprietary rights to the same extent or in the same manner as the laws of the United States. As a result, we may encounter significant problems in protecting and defending our intellectual property both in the United States and abroad. For example, if the issuance, in a given country, of a patent to us, covering an invention, is not followed by the issuance, in other countries, of patents covering the same invention, or if any judicial interpretation of the validity, enforceability, or scope of the claims in, or the written description or enablement in, a patent issued in one country is not similar to the interpretation given to the corresponding patent issued in another country, our ability to protect our intellectual property in those countries may be limited. Changes in either patent laws or in interpretations of patent laws in the United States and other countries may materially diminish the value of our intellectual property or narrow the scope of our patent protection. If we are unable to prevent material disclosure of the non-patented intellectual property related to our technologies to third parties, and there is no guarantee that we will have any such enforceable trade secret protection, we may not be able to establish or maintain a competitive advantage in our market, which could materially adversely affect our business, results of operations and financial condition.

Third-party claims of intellectual property infringement may prevent or delay our development and commercialization efforts.

Our commercial success depends in part on us avoiding infringement of the patents and proprietary rights of third parties. There is a substantial amount of litigation, both within and outside the United States, involving patent and other intellectual property rights in the biotechnology and pharmaceutical industries, including patent infringement lawsuits, interferences, oppositions and inter party reexamination proceedings before the U.S. PTO. Numerous U.S. and foreign issued patents and pending patent applications, which are owned by third parties, exist in the fields in which our collaborators are developing medicine candidates. As the biotechnology and pharmaceutical industries expand and more patents are issued, the risk increases that our medicine candidates may be subject to claims of infringement of the patent rights of third parties.

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Third parties may assert that we are employing their proprietary technology without authorization. There may be third-party patents or patent applications with claims to materials, formulations, methods of manufacture or methods for treatment related to the use or manufacture of our medicines and/or any other medicine candidates. Because patent applications can take many years to issue, there may be currently pending patent applications, which may later result in issued patents that our medicine candidates may infringe. In addition, third parties may obtain patents in the future and claim that use of our technologies infringes upon these patents. If any third-party patents were held by a court of competent jurisdiction to cover the manufacturing process of any of our medicine candidates, any molecules formed during the manufacturing process or any final medicine itself, the holders of any such patents may be able to block our ability to commercialize such medicine candidate unless we obtained a license under the applicable patents, or until such patents expire. Similarly, if any third-party patent were held by a court of competent jurisdiction to cover aspects of our formulations, processes for manufacture or methods of use, including combination therapy, the holders of any such patent may be able to block our ability to develop and commercialize the applicable medicine candidate unless we obtained a license or until such patent expires. In either case, such a license may not be available on commercially reasonable terms or at all.

Parties making claims against us may obtain injunctive or other equitable relief, which could effectively block our ability to further develop and commercialize one or more of our medicine candidates. Defense of these claims, regardless of their merit, would involve substantial litigation expense and would be a substantial diversion of employee resources from our business. In the event of a successful claim of infringement against us, we may have to pay substantial damages, including treble damages and attorneys’ fees for willful infringement, obtain one or more licenses from third parties, pay royalties or redesign our infringing medicines, which may be impossible or require substantial time and monetary expenditure. We cannot predict whether any such license would be available at all or whether it would be available on commercially reasonable terms. Furthermore, even in the absence of litigation, we may need to obtain licenses from third parties to advance our research or allow commercialization of our medicine candidates, and we have done so from time to time. We may fail to obtain any of these licenses at a reasonable cost or on reasonable terms, if at all. In that event, we would be unable to further develop and commercialize one or more of our medicine candidates, which could harm our business significantly. We cannot provide any assurances that third-party patents do not exist which might be enforced against our medicines, resulting in either an injunction prohibiting our sales, or, with respect to our sales, an obligation on our part to pay royalties and/or other forms of compensation to third parties.

If we fail to comply with our obligations in the agreements under which we license rights to technology from third parties, we could lose license rights that are important to our business.*

We are party to a number of technology licenses that are important to our business and expect to enter into additional licenses in the future. For example, we hold an exclusive license to SkyePharma AG’s, or SkyePharma, proprietary technology and know-how covering the delayed-release of corticosteroids relating to RAYOS/LODOTRA. If we fail to comply with our obligations under our agreement with SkyePharma or our other license agreements, or if we are subject to a bankruptcy, the licensor may have the right to terminate the license, in which event we would not be able to market medicines covered by the license, including RAYOS/ LODOTRA.

In connection with our November 2013 acquisition of the U.S. rights to VIMOVO, we (i) received the benefit of a covenant not to sue under AstraZeneca’s patent portfolio with respect to Nexium (which shall automatically become a license under such patent portfolio if and when AstraZeneca reacquires control of such patent portfolio from Merck Sharp & Dohme Corp. and certain of its affiliates), (ii) were assigned AstraZeneca’s amended and restated collaboration and license agreement for the United States with Aralez, under which AstraZeneca has in-licensed exclusive rights under certain of Aralez’s patents with respect to VIMOVO, and (iii) acquired AstraZeneca’s co-ownership rights with Aralez with respect to certain joint patents covering VIMOVO, all for the commercialization of VIMOVO in the United States. If we fail to comply with our obligations under our agreements with AstraZeneca or if we fail to comply with our obligations under our agreements with Aralez, our rights to commercialize VIMOVO in the United States may be adversely affected or terminated by AstraZeneca or Aralez.

We also license rights to patents, know-how and trademarks for ACTIMMUNE from Genentech Inc., or Genentech, under an agreement that remains in effect for so long as we continue to commercialize and sell ACTIMMUNE. However, Genentech may terminate the agreement upon our material default, if not cured within a specified period of time. Genentech may also terminate the agreement in the event of our bankruptcy or insolvency. Upon such a termination of the agreement, all intellectual property rights conveyed to us under the agreement, including the rights to the ACTIMMUNE trademark, revert to Genentech. If we fail to comply with our obligations under this agreement, we could lose the ability to market and distribute ACTIMMUNE, which would have a material adverse effect on our business, financial condition and results of operations.

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We rely on a license from Ucyclyd with respect to technology developed by Ucyclyd in connection with the manufacturing of RAVICTI. The purchase agreement under which Hyperion purchased the worldwide rights to RAVICTI contains obligations 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 Hyperion acquired BUPHENYL under a restated collaboration agreement with Ucyclyd, Hyperion received a license to use some of the manufacturing technology developed by Ucyclyd in connection with the manufacturing of BUPHENYL. The restated collaboration agreement also contains obligations to pay Ucyclyd regulatory and sales milestone payments, as well as royalties on net sales of BUPHENYL. If we fail to make a required payment to Ucyclyd and do not cure the failure within the required time period, Ucyclyd may be able to terminate the license to use its manufacturing technology for RAVICTI and BUPHENYL. If we lose access to the Ucyclyd manufacturing technology, we cannot guarantee that an acceptable alternative method of manufacture could be developed or acquired. Even if alternative technology could be developed or acquired, the loss of the Ucyclyd technology could still result in substantial costs and potential periods where we would not be able to market and sell RAVICTI and/or BUPHENYL. We also license intellectual property necessary for commercialization of RAVICTI from an external party. This party may be entitled to terminate the license if we breach the agreement, including failure to pay required royalties on net sales of RAVICTI, or we do not meet specified diligence obligations in our development and commercialization of RAVICTI, and we do not cure the failure within the required time period. If the license is terminated, it may be difficult or impossible for us to continue to commercialize RAVICTI, which would have a material adverse effect on our business, financial condition and results of operations.

We also hold an exclusive license to patents and technology from Duke University, or Duke, and Mountain View Pharmaceuticals, Inc., or MVP, covering KRYSTEXXA. Duke and MVP may terminate the license if we commit fraud or for our willful misconduct or illegal conduct. Duke and MVP may also terminate the license upon our material breach of the agreement, if not cured within a specified period of time, or upon written notice if we have committed two or more material breaches under the agreement. Duke and MVP may also terminate the license in the event of our bankruptcy or insolvency. If the license is terminated, it may be impossible for us to continue to commercialize KRYSTEXXA, which would have a material adverse effect on our business, financial condition and results of operations.

We may be involved in lawsuits to protect or enforce our patents or the patents of our licensors, which could be expensive, time consuming and unsuccessful.

Competitors may infringe our patents or the patents of our licensors. To counter infringement or unauthorized use, we may be required to file infringement claims, which can be expensive and time-consuming. In addition, in an infringement proceeding, a court may decide that one of our patents, or a patent of one of our licensors, is not valid or is unenforceable, or may refuse to stop the other party from using the technology at issue on the grounds that our patents do not cover the technology in question. An adverse result in any litigation or defense proceedings could put one or more of our patents at risk of being invalidated or interpreted narrowly and could put our patent applications at risk of not issuing.

There are numerous post grant review proceedings available at the U.S. PTO (including IPR, post-grant review and ex-parte reexamination) and similar proceedings in other countries of the world that could be initiated by a third-party that could potentially negatively impact our issued patents.

Interference proceedings provoked by third parties or brought by us may be necessary to determine the priority of inventions with respect to our patents or patent applications or those of our collaborators or licensors. An unfavorable outcome could require us to cease using the related technology or to attempt to license rights to it from the prevailing party. Our business could be harmed if the prevailing party does not offer us a license on commercially reasonable terms. Our defense of litigation or interference proceedings may fail and, even if successful, may result in substantial costs and distract our management and other employees. We may not be able to prevent, alone or with our licensors, misappropriation of our intellectual property rights, particularly in countries where the laws may not protect those rights as fully as in the United States.

Furthermore, because of the substantial amount of discovery required in connection with intellectual property litigation, there is a risk that some of our confidential information could be compromised by disclosure during this type of litigation. There could also be public announcements of the results of hearings, motions or other interim proceedings or developments. If securities analysts or investors perceive these results to be negative, it could have a material adverse effect on the price of our ordinary shares.

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Obtaining and maintaining our patent protection depends on compliance with various procedural, document submission, fee payment and other requirements imposed by governmental patent agencies, and our patent protection could be reduced or eliminated for non-compliance with these requirements.

Periodic maintenance fees on any issued patent are due to be paid to the U.S. PTO and foreign patent agencies in several stages over the lifetime of the patent. The U.S. PTO and various foreign governmental patent agencies require compliance with a number of procedural, documentary, fee payment and other similar provisions during the patent application process. While an inadvertent lapse can in many cases be cured by payment of a late fee or by other means in accordance with the applicable rules, there are situations in which noncompliance can result in abandonment or lapse of the patent or patent application, resulting in partial or complete loss of patent rights in the relevant jurisdiction. Non-compliance events that could result in abandonment or lapse of a patent or patent application include, but are not limited to, failure to respond to official actions within prescribed time limits, non-payment of fees and failure to properly legalize and submit formal documents. If we or licensors that control the prosecution and maintenance of our licensed patents fail to maintain the patents and patent applications covering our medicine candidates, our competitors might be able to enter the market, which would have a material adverse effect on our business.

We may be subject to claims that our employees, consultants or independent contractors have wrongfully used or disclosed confidential information of third parties.

We employ individuals who were previously employed at other biotechnology or pharmaceutical companies. We may be subject to claims that we or our employees, consultants or independent contractors have inadvertently or otherwise used or disclosed confidential information of our employees’ former employers or other third parties. We may also be subject to claims that former employers or other third parties have an ownership interest in our patents. Litigation may be necessary to defend against these claims. There is no guarantee of success in defending these claims, and if we are successful, litigation could result in substantial cost and be a distraction to our management and other employees.

Risks Related to Ownership of Our Ordinary Shares

The market price of our ordinary shares historically has been volatile and is likely to continue to be volatile, and you could lose all or part of any investment in our ordinary shares.

The trading price of our ordinary shares has been volatile and could be subject to wide fluctuations in response to various factors, some of which are beyond our control. In addition to the factors discussed in this “Risk Factors” section and elsewhere in this report, these factors include:

· our failure to successfully execute our commercialization strategy with respect to our approved medicines, particularly our commercialization of our medicines in the United States;

· actions or announcements by third-party or government payors with respect to coverage and reimbursement of our medicines;

· disputes or other developments relating to intellectual property and other proprietary rights, including patents, litigation matters and our ability to obtain patent protection for our medicines and medicine candidates;

· unanticipated serious safety concerns related to the use of our medicines;

· adverse regulatory decisions;

· changes in laws or regulations applicable to our business, medicines or medicine candidates, including but not limited to clinical trial requirements for approvals or tax laws;

· inability to comply with our debt covenants and to make payments as they become due;

· inability to obtain adequate commercial supply for any approved medicine or inability to do so at acceptable prices;

· developments concerning our commercial partners, including but not limited to those with our sources of manufacturing supply;

· our decision to initiate a clinical trial, not to initiate a clinical trial or to terminate an existing clinical trial;

· adverse results or delays in clinical trials;

· our failure to successfully develop and/or acquire additional medicine candidates or obtain approvals for additional indications for our existing medicine candidates;

· introduction of new medicines or services offered by us or our competitors;

· overall performance of the equity markets, including the pharmaceutical sector, and general political and economic conditions;

· failure to meet or exceed revenue and financial projections that we may provide to the public;

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· actual or anticipated variations in quarterly operating results; 

· failure to meet or exceed the estimates and projections of the investment community;

· inaccurate or significant adverse media coverage;

· publication of research reports about us or our industry or positive or negative recommendations or withdrawal of research coverage by securities analysts;

· our inability to successfully enter new markets;

· the termination of a collaboration or the inability to establish additional collaborations;

· announcements of significant acquisitions, strategic partnerships, joint ventures or capital commitments by us or our competitors;

· our inability to maintain an adequate rate of growth;

· ineffectiveness of our internal controls or our inability to otherwise comply with financial reporting requirements;

· adverse U.S. and foreign tax exposure;

· additions or departures of key management, commercial or regulatory personnel;

· issuances of debt or equity securities;

· significant lawsuits, including patent or shareholder litigation;

· changes in the market valuations of similar companies to us;

· sales of our ordinary shares by us or our shareholders in the future;

· trading volume of our ordinary shares;

· effects of natural or man-made catastrophic events or other business interruptions; and

· other events or factors, many of which are beyond our control.

In addition, the stock market in general, and The NASDAQ Global Select Market and the stock of biotechnology companies 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 adversely affect the market price of our ordinary shares, regardless of our actual operating performance.

We have never declared or paid dividends on our share capital and we do not anticipate paying dividends in the foreseeable future.

We have never declared or paid any cash dividends on our ordinary shares. 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 for the foreseeable future, including due to limitations that are currently imposed by the 2015 Senior Secured Credit Facility. Any return to shareholders will therefore be limited to the increase, if any, of our ordinary share price.

We have incurred and will continue to incur significant increased costs as a result of operating as a public company and our management will be required to devote substantial time to new compliance initiatives.*

As a public company, we have incurred and will continue to incur significant legal, accounting and other expenses that we did not incur as a private company. In particular, the Sarbanes-Oxley Act of 2000, or the Sarbanes-Oxley Act, as well as rules subsequently implemented by the SEC and the NASDAQ Stock Market, Inc., or NASDAQ, impose significant requirements on public companies, including requiring establishment and maintenance of effective disclosure and financial controls and changes in corporate governance practices. These rules and regulations have substantially increased our legal and financial compliance costs and have made some activities more time-consuming and costly. These effects are exacerbated by our transition to an Irish company and the integration of numerous acquired businesses and operations into our historical business and operating structure. If these requirements divert the attention of our management and personnel from other business concerns, they could have a material adverse effect on our business, financial condition and results of operations. The increased costs will continue to decrease our net income or increase our net loss, and may require us to reduce costs in other areas of our business or increase the prices of our medicines or services. For example, these rules and regulations make it more difficult and more expensive for us to obtain and maintain director and officer liability insurance. We cannot predict or estimate the amount or timing of additional costs that we may incur to respond to these requirements. The impact of these requirements could also make it more difficult for us to attract and retain qualified persons to serve on our board of directors, our board committees or as executive officers. If we fail to comply with the continued listing requirements of NASDAQ, our ordinary shares could be delisted from The NASDAQ Global Select Market, which would adversely affect the liquidity of our ordinary shares and our ability to obtain future financing.

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The Sarbanes-Oxley Act requires, among other things, that we maintain effective internal controls for financial reporting and disclosure controls and procedures. In particular, we are required to perform annual system and process evaluation and testing of our internal controls over financial reporting to allow management to report on the effectiveness of our internal controls over financial reporting, as required by Section 404 of the Sarbanes-Oxley Act, or Section 404. Our independent registered public accounting firm is also required to deliver a report on the effectiveness of our internal control over financial reporting. Our testing, or the testing by our independent registered public accounting firm, may reveal deficiencies in our internal controls over financial reporting that are deemed to be material weaknesses. Our compliance with Section 404 requires that we incur substantial expense and expend significant management efforts, particularly because of our Irish parent company structure and international operations. In particular, prior to the acquisition of Crealta, Crealta and its affiliated entities were not subject to the requirements of the Sarbanes-Oxley Act. We are taking measures to establish or implement an internal control environment at these entities aimed at successfully adopting the requirements of Section 404. However, it is possible that we may experience delays in implementing or be unable to implement the required internal controls over financial reporting and other disclosure controls and procedures. If we are not able to comply with the requirements of Section 404 or if we or our independent registered public accounting firm identify deficiencies in our internal controls over financial reporting that are deemed to be material weaknesses, the market price of our ordinary shares could decline and we could be subject to sanctions or investigations by NASDAQ, the SEC or other regulatory authorities, which would require additional financial and management resources.

New laws and regulations as well as changes to existing laws and regulations affecting public companies, including the provisions of the Sarbanes-Oxley Act and rules adopted by the SEC and by NASDAQ, would likely result in increased costs as we respond to their requirements.

Sales of a substantial number of our ordinary shares in the public market could cause our share price to decline.

If our existing shareholders sell, or indicate an intention to sell, substantial amounts of our ordinary shares in the public market, the trading price of such ordinary shares could decline. In addition, our ordinary shares that are either subject to outstanding options or reserved for future issuance under our employee benefit plans are or may become eligible for sale in the public market to the extent permitted by the provisions of various vesting schedules and Rule 144 and Rule 701 under the Securities Act of 1933, as amended, or the Securities Act. If these additional ordinary shares are sold, or if it is perceived that they will be sold, in the public market, the trading price of our ordinary shares could decline.

Certain holders of our ordinary shares are entitled to rights with respect to the registration of their shares under 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 purchased by our affiliates. For example, we are subject to a registration rights agreement with certain former Vidara shareholders that acquired our ordinary shares in connection with our acquisition of Vidara. Pursuant to this agreement, we filed and are required to maintain a registration statement covering the resale of ordinary shares held by these shareholders and in certain circumstances, these holders can require us to participate in an underwritten public offering of their ordinary shares. Any sales of securities by these shareholders or a public announcement of such sales could have a material adverse effect on the trading price of our ordinary shares.

In addition, any conversion or exchange of our Exchangeable Senior Notes, whether pursuant to their terms or pursuant to privately negotiated transactions between the issuer and/or us and a holder of such securities, could depress the market price for our ordinary shares.

Future sales and issuances of our ordinary shares, securities convertible into our ordinary shares or rights to purchase ordinary shares or convertible securities could result in additional dilution of the percentage ownership of our shareholders and could cause our share price to decline.*

Additional capital may be needed in the future to continue our planned operations. To the extent we raise additional capital by issuing equity securities or securities convertible into or exchangeable for ordinary shares, our shareholders may experience substantial dilution. We may sell ordinary shares, and we may sell convertible or exchangeable securities or other equity securities in one or more transactions at prices and in a manner we determine from time to time. If we sell such ordinary shares, convertible or exchangeable securities or other equity securities in subsequent transactions, existing shareholders may be materially diluted. New investors in such subsequent transactions could gain rights, preferences and privileges senior to those of holders of ordinary shares. We also maintain equity incentive plans, including our Amended and Restated 2014 Equity Incentive Plan, 2014 Non-Employee Equity Plan and 2014 Employee Share Purchase Plan, and intend to grant additional ordinary share awards under these and future plans, which will result in additional dilution to our existing shareholders.

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Irish law differs from the laws in effect in the United States and may afford less protection to holders of our securities.

It may not be possible to enforce court judgments obtained in the United States against us in Ireland based on the civil liability provisions of the U.S. federal or state securities laws. In addition, there is some uncertainty as to whether the courts of Ireland would recognize or enforce judgments of U.S. courts obtained against us or our directors or officers based on the civil liabilities provisions of the U.S. federal or state securities laws or hear actions against us or those persons based on those laws. We have been advised that the U.S. currently does not have a treaty with Ireland providing for the reciprocal recognition and enforcement of judgments in civil and commercial matters. Therefore, a final judgment for the payment of money rendered by any U.S. federal or state court based on civil liability, whether or not based solely on U.S. federal or state securities laws, would not automatically be enforceable in Ireland.

As an Irish company, we are governed by the Irish Companies Acts, which differ in some material respects from laws generally applicable to U.S. corporations and shareholders, including, among others, differences relating to interested director and officer transactions and shareholder lawsuits. Likewise, the duties of directors and officers of an Irish company generally are owed to the company only. Shareholders of Irish companies generally do not have a personal right of action against directors or officers of the company and may exercise such rights of action on behalf of the company only in limited circumstances. Accordingly, holders of our securities may have more difficulty protecting their interests than would holders of securities of a corporation incorporated in a jurisdiction of the United States.

Provisions of our articles of association could delay or prevent a takeover of us by a third-party.

Our articles of association could delay, defer or prevent a third-party from acquiring us, despite the possible benefit to our shareholders, or otherwise adversely affect the price of our ordinary shares. For example, our articles of association:

· permit our board of directors to issue one or more series of preferred shares with rights and preferences designated by our board of directors;

· impose advance notice requirements for shareholder proposals and nominations of directors to be considered at shareholder meetings;

· stagger the terms of our board of directors into three classes; and

· require the approval of a supermajority of the voting power of the shares of our share capital entitled to vote generally at a meeting of shareholders to amend or repeal our articles of association.

In addition, several mandatory provisions of Irish law could prevent or delay an acquisition of us. For example, Irish law does not permit shareholders of an Irish public limited company to take action by written consent with less than unanimous consent. We are also subject to various provisions of Irish law relating to mandatory bids, voluntary bids, requirements to make a cash offer and minimum price requirements, as well as substantial acquisition rules and rules requiring the disclosure of interests in our ordinary shares in certain circumstances.

These provisions may discourage potential takeover attempts, discourage bids for our ordinary shares at a premium over the market price or adversely affect the market price of, and the voting and other rights of the holders of, our ordinary shares. These provisions could also discourage proxy contests and make it more difficult for you and our other shareholders to elect directors other than the candidates nominated by our board of directors, and could depress the market price of our ordinary shares.

A transfer of our ordinary shares may be subject to Irish stamp duty.

In certain circumstances, the transfer of shares in an Irish incorporated company will be subject to Irish stamp duty, which is a legal obligation of the buyer. This duty is currently charged at the rate of 1.0 percent of the price paid or the market value of the shares acquired, if higher. Because our ordinary shares are traded on a recognized stock exchange in the United States, an exemption from this stamp duty is available to transfers by shareholders who hold ordinary shares beneficially through brokers which in turn hold those shares through the Depositary Trust Company, or DTC, to holders who also hold through DTC. However, a transfer by or to a record holder who holds ordinary shares directly in his, her or its own name could be subject to this stamp duty. We, in our absolute discretion and insofar as the Companies Acts or any other applicable law permit, may, or may provide that one of our subsidiaries will pay Irish stamp duty arising on a transfer of our ordinary shares on behalf of the transferee of such ordinary shares. If stamp duty resulting from the transfer of ordinary shares which would otherwise be payable by the transferee is paid by us or any of our subsidiaries on behalf of the transferee, then in those circumstances, we will, on our behalf or on behalf of such subsidiary (as the case may be), be entitled to (i) seek reimbursement of the stamp duty from the transferee, (ii) set-off the stamp duty against any dividends payable to the transferee of those ordinary shares and (iii) claim a first and permanent lien on the ordinary shares on which stamp duty has been paid by us or such subsidiary for the amount of stamp duty paid. Our lien shall extend to all dividends paid on those ordinary shares.

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Dividends paid by us may be subject to Irish dividend withholding tax.

In certain circumstances, as an Irish tax resident company, we will be required to deduct Irish dividend withholding tax (currently at the rate of 20%) from dividends paid to our shareholders. Shareholders that are resident in the United States, EU countries (other than Ireland) or other countries with which Ireland has signed a tax treaty (whether the treaty has been ratified or not) generally should not be subject to Irish withholding tax so long as the shareholder has provided its broker, for onward transmission to our qualifying intermediary or other designated agent (in the case of shares held beneficially), or our or its transfer agent (in the case of shares held directly), with all the necessary documentation by the appropriate due date prior to payment of the dividend. However, some shareholders may be subject to withholding tax, which could adversely affect the price of our ordinary shares.

If securities or industry analysts do not publish research or publish inaccurate or unfavorable research about our business, our share price and trading volume could decline.

The trading market for our ordinary shares will depend in part on the research and reports that securities or industry analysts publish about us or our business. If one or more of the analysts who cover us downgrade our rating or publish inaccurate or unfavorable research about our business, our share price could decline. If one or more of these analysts cease coverage of our company or fail to publish reports on our company regularly, demand for our ordinary shares could decrease, which might cause our share price and trading volume to decline.

We may become involved in securities class action litigation that could divert our management’s attention and harm our business and could subject us to significant liabilities.*

The stock markets have from time to time experienced significant price and volume fluctuations that have affected the market prices for the equity securities of pharmaceutical companies. These broad market fluctuations may cause the market price of our ordinary shares to decline. In the past, securities class action litigation has often been brought against a company following a decline in the market price of its securities. This risk is especially relevant for us because biotechnology and biopharmaceutical companies have experienced significant stock price volatility in recent years. For example, following a decline in our stock price, in March 2016 two federal securities class action lawsuits were filed against us and certain of our current and former officers alleging violations of the Securities Exchange Act of 1934, as amended. Subsequently, the two actions were consolidated and claims under the Securities Act of 1933, as amended, and additional defendants were added. Even if we are successful in defending against this or any similar claims that may be brought in the future, litigation could result in substantial costs and may be a distraction to our management, and may lead to an unfavorable outcome that could adversely impact our financial condition and prospects.

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ITEM 6. EXHIBITS

The exhibits listed on the Index to Exhibits following the signature page are filed as part of this Quarterly Report on Form 10-Q.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	HORIZON PHARMA PLC
Date: August 8, 2016	By:	/s/ Timothy P. Walbert
		Timothy P. Walbert
		Chairman, President and Chief Executive Officer (Principal Executive Officer)
Date: August 8, 2016	By:	/s/ Paul W. Hoelscher
		Paul W. Hoelscher
		Executive Vice President, Chief Financial Officer (Principal Financial Officer)

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INDEX TO EXHIBITS

Exhibit Number	Description of Document
2.1(1)	Transaction Agreement and Plan of Merger, dated March 18, 2014, by and among Horizon Pharma, Inc., Vidara Therapeutics Holdings LLC, Vidara Therapeutics International Ltd. (now known as Horizon Pharma Public Limited Company), Hamilton Holdings (USA), Inc. and Hamilton Merger Sub, Inc.†
2.2(2)	First Amendment to Transaction Agreement and Plan of Merger, dated June 12, 2014, by and between Horizon Pharma, Inc. and Vidara Therapeutics Holdings LLC.
2.3(3)	Agreement and Plan of Merger, dated March 29, 2015, by and among Horizon Pharma, Inc., Ghrian Acquisition Inc. and Hyperion Therapeutics, Inc.†
2.4(4)*	Agreement and Plan of Merger, dated December 10, 2015, by and among Horizon Pharma USA, Inc., HZNP Limited, Criostail LLC, Crealta Holdings LLC and the other parties thereto.††
3.1(5)	Memorandum and Articles of Association of Horizon Pharma Public Limited Company, as amended.
4.1(6)**	Form of Warrant issued by Horizon Pharma, Inc. pursuant to the Securities Purchase Agreement, dated February 28, 2012, by and among Horizon Pharma, Inc. and the Purchasers and Warrant Holders listed therein.
4.2(7)**	Form of Warrant issued by Horizon Pharma, Inc. in Public Offering of Units.
4.3(8)	Indenture, dated March 13, 2015, by and among Horizon Pharma Public Limited Company, Horizon Pharma Investment Limited and U.S. Bank National Association.
4.4(8)	Form of 2.50% Exchangeable Senior Note due 2022 (included in Exhibit 4.3).
4.5(9)	Indenture, dated April 29, 2015, by and between Horizon Pharma Financing Inc. and U.S. Bank National Association.
4.6(9)	Form of 6.625% Senior Note due 2023 (included in Exhibit 4.5).
4.7(10)	First Supplemental Indenture, dated May 7, 2015, by and among Horizon Pharma Public Limited Company, certain subsidiaries of Horizon Pharma Public Limited Company and U.S. Bank National Association.
10.1+(11)	Executive Employment Agreement, effective as of February 26, 2016, by and among Horizon Pharma Inc., Horizon Pharma USA, Inc. and Timothy J. Ackerman.
10.2+(11)	Executive Employment Agreement, effective as of February 26, 2016, by and among Horizon Pharma Inc., Horizon Pharma USA, Inc. and Geoffrey M. Curtis.
10.3+(12)	Horizon Pharma Public Limited Company 2014 Equity Incentive Plan, as amended, and Form of Option Agreement, Form of Stock Option Grant Notice, Form of Restricted Stock Unit Agreement and Form of Restricted Stock Unit Grant Notice thereunder.
10.4+(12)	Horizon Pharma Public Limited Company 2014 Non-Employee Equity Plan, as amended, and Form of Option Agreement, Form of Stock Option Grant Notice, Form of Restricted Stock Unit Agreement and Form of Restricted Stock Unit Grant Notice thereunder.
10.5+(12)	Horizon Pharma Public Limited Company 2014 Employee Share Purchase Plan, as amended.
10.6+	Horizon Pharma Public Limited Company Share Clog Program Trust Deed, as amended, and Form of Clog Letter.
10.7*	Amendment No. 2 to the Consolidated Supply Agreement, effective as of June 1, 2015, by and between Horizon Pharma Ireland Limited (as successor in interest to Vidara Therapeutics Research Limited) and Boehringer Ingelheim Biopharmaceuticals GmbH (as successor in interest to Boehringer Ingelheim RCV GmbH & Co KG).
10.8	Commercial Supply Agreement, dated March 20, 2007, by and between Crealta Pharmaceuticals LLC (as successor in interest to Savient Pharmaceuticals, Inc.) and Bio-Technology General (Israel) Ltd.
10.9	Commercial Supply Agreement, dated October 16, 2008, by and between Crealta Pharmaceuticals LLC (as successor in interest to Savient Pharmaceuticals, Inc.) and Sigma-Tau PharmaSource, Inc. (as successor in interest to Enzon Pharmaceuticals, Inc.).
31.1	Certification of Principal Executive Officer pursuant to Rule 13a-14(a) or 15d-14(a) of the Exchange Act.
31.2	Certification of Principal Financial Officer pursuant to Rule 13a-14(a) or 15d-14(a) of the Exchange Act.

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Exhibit Number	Description of Document
32.1	Certification of Principal Executive Officer pursuant to Rule 13a-14(b) or 15d-14(b) of the Exchange Act and 18 U.S.C. Section 1350.
32.2	Certification of Principal Financial Officer pursuant to Rule 13a-14(b) or 15d-14(b) of the Exchange Act and 18 U.S.C. Section 1350.
101.INS	XBRL Instance Document
101.SCH	XBRL Taxonomy Extension Schema Document
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document
101.LAB	XBRL Taxonomy Extension Label Linkbase Document
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document

+ Indicates management contract or compensatory plan.

† Schedules have been omitted pursuant to Item 601(b)(2) of Regulation S-K. Horizon Pharma Public Limited Company undertakes to furnish supplemental copies of any of the omitted schedules upon request by the Securities and Exchange Commission.

†† Schedules have been omitted pursuant to Item 601(b)(2) of Regulation S-K. Horizon Pharma Public Limited Company undertakes to furnish supplemental copies of any of the omitted schedules upon request by the Securities and Exchange Commission; provided, however, that Horizon Pharma Public Limited Company may request confidential treatment pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended, for any schedule so furnished.

* Confidential treatment has been requested with respect to certain portions of this exhibit. Omitted portions have been filed separately with the Securities and Exchange Commission.

** Indicates an instrument, agreement or compensatory arrangement or plan assumed by Horizon Pharma Public Limited Company in the merger transaction with Vidara Therapeutics International Public Limited Company and no longer binding on Horizon Pharma, Inc.

(1) Incorporated by reference to Horizon Pharma, Inc.’s Current Report on Form 8-K, filed on March 20, 2014.

(2) Incorporated by reference to Horizon Pharma, Inc.’s Current Report on Form 8-K, filed on June 18, 2014.

(3) Incorporated by reference to Horizon Pharma Public Limited Company’s Amendment No. 1 to Current Report on Form 8-K, filed on April 9, 2015.

(4) Incorporated by reference to Horizon Pharma Public Limited Company’s Annual Report on Form 10-K, filed on February 29, 2016.

(5) Incorporated by reference to Horizon Pharma Public Limited Company’s Registration Statement on Form S-8, filed on May 4, 2016.

(6) Incorporated by reference to Horizon Pharma, Inc.’s Current Report on Form 8-K, filed on March 1, 2012.

(7) Incorporated by reference to Horizon Pharma, Inc.’s Current Report on Form 8-K, filed on September 20, 2012.

(8) Incorporated by reference to Horizon Pharma Public Limited Company’s Current Report on Form 8-K, filed on March 13, 2015.

(9) Incorporated by reference to Horizon Pharma Public Limited Company’s Current Report on Form 8-K, filed on April 29, 2015.

(10) Incorporated by reference to Horizon Pharma Public Limited Company’s Current Report on Form 8-K, filed on May 11, 2015.

(11) Incorporated by reference to Horizon Pharma Public Limited Company’s Quarterly Report on Form 10-Q, filed on May 9, 2016.

(12) Incorporated by reference to Horizon Pharma Public Limited Company’s Current Report on Form 8-K, filed on May 4, 2016.

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EX-10.6

Exhibit 10.6

DATED 18 SEPTEMBER 2015

BETWEEN

HORIZON PHARMA PUBLIC LIMITED COMPANY

AND

GOODBODY TRUSTEES LIMITED

HORIZON PHARMA PUBLIC LIMITED COMPANY

DIRECTOR SHARE CLOG PROGRAM

This TRUST DEED is made on 18 September 2015.

BETWEEN

(1) Horizon Pharma Public Limited Company having its registered office at Connaught House, 1st Floor, 1 Burlington Road, Dublin 4, Ireland, with company registration number 507678 (the “Company”); and

(2) Goodbody Trustees Limited having its registered office at IFSC, 25-28 North Wall Quay, Dublin 1 and established in Ireland under company registration number 118057 (the “Trustee”).

WHEREAS:

A. The Company has granted restricted stock unit awards (“RSUs”) to its non-employee directors under the terms of the Company’s equity incentive plans.

B. By entry into the Clog Letter and into this Deed (together being, and hereinafter referred to as, the “Clog Program”) the Company now wishes to impose a restriction on the manner in which the Restricted Shares (as defined below) acquired by Participants in connection with the vesting and settlement of the RSUs, can be dealt with by the Participants for the duration of the Restricted Period (as defined below).

C. As part of the Clog Program the Company wishes to appoint the Trustee as the initial trustee of the Clog Program and the Trustee has consented to act which consent is signified by its execution of this Deed.

D. This Trust is established by the Company pursuant to a resolution of the compensation committee of the board of the Company passed on 5 August 2015.

E. By entry into the Clog Letter, each Participant shall be deemed to have consented to the terms of this Deed and to the appointment of the Trustee.

IT IS HEREBY AGREED as follows:

1 DEFINITIONS

1.1 In this Agreement:

Act	the Taxes Consolidation Act, 1997;
Articles	the Articles of Association of the Company as amended from time to time;
Acquisition Date	the date on which Restricted Shares are acquired by the Trustee on behalf of a Participant pursuant to the Clog Program being the date or dates the Restricted Shares were issued in settlement of the RSU;
Clog Letter	means each letter executed by the Company and acknowledged and accepted by each Participant (through the execution of the Acceptance Form contained at Schedule 1 to the Clog Letter) noting specific contractual terms restricting each Participant’s ability to deal with or realise value in the Restricted Shares during each Participant’s designated Restricted Period;
EEA Member State	means Austria, Belgium, Bulgaria, Croatia, Republic of Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, Netherlands, Poland, Portugal, Romania, Slovakia, Slovenia, Spain, Sweden, the UK, Iceland, Liechtenstein and Norway or such other countries that are deemed EEA Member States from time to time;
Group Company	means the Company and all its Subsidiaries;
Listing Rules	the rules and codes of any stock exchange under which the Shares may be regulated;
Market Value	in relation to any Share, the meaning assigned to it by Section 548 of the Act;
Participant	means a non-employee director of the Company who has elected to participate in the Clog Program including, where the context so permits, the legal personal representatives of a deceased Participant as evidenced to the Trustee by a grant of probate or letters of administration;
Restricted Period	means, in relation to each individual Participant, the particular period of time set out in each Participant’s Clog Letter where each Participant is restricted from dealing with or realising value in the Restricted Shares and such Restricted Shares must remain in this trust;
Restricted Shares	means the RSU shares which the Participant agrees are subject to the Clog Program, as specified in the Clog Letter
Subsidiaries	means any subsidiary of the Company which is controlled by the Company, control being construed in accordance with section 432 of the Act;
Shares	the Ordinary Shares of US$0.0001 each in the capital of the Company issuable or transferable to each Participant under the terms of the RSU, which expression shall include (i) any additional or substituted securities derived fi-om or distributed in respect of such shares after the date hereof including, without limitation, by virtue of a bonus issue or capitalisation, scrip issue, subdivision, re-organisation, consolidation or other alteration in the capital structure of the Company or the purchase of shares pursuant to any pre-emption rights and/or the proceeds of any redemption or purchase of such shares; and (ii) such further Ordinary Shares of US$0.0001 each in the capital of the Company that the Trustee holds subject to the terms of this Deed;
Taxation	any tax obligation, levies, social security obligations, charges or duties of any kind arising in any jurisdiction under Irish or foreign law;

Taxable Value	the Market Value of a Share on the Acquisition Date on which the Restricted Shares are acquired less any abatement of their value pursuant to the provisions of Section 128D of the Act or otherwise allowed by the Revenue Commissioners in writing as a result of restrictions in their disposal imposed by the Clog Prop-am;
Trust	the trust established by this Deed (as amended from time to time);
Trustee Director	director of the Trustee;
‘Trust Period	the period commencing on the establishment of the Trust and ending on its termination in accordance with Clause 18; and
Trustee	means the trustee that is party to this Deed or any additional or replacement trustee from time to time of the Trust.

1.2 Clause and paragraph headings shall not affect the interpretation of this Deed.

1.3 A person includes a natural person, corporate or unincorporated body (whether or not having a separate legal personality).

1.4 A reference to a company shall include any company, corporation or other body corporate, wherever and however incorporated or established.

1.5 Unless the context otherwise requires, words in the singular shall include the plural and in the plural shall include the singular.

1.6 Unless the context otherwise requires, a reference to one gender shall include a reference to the other genders.

1.7 A reference to a statute or statutory provision is a reference to it as amended, extended or re-enacted from time to time.

1.8 A reference to a statute or statutory provision shall include all subordinate legislation made from time to time under that statute or statutory provision.

1.9 A reference to writing or written includes fax and email.

1.10 Any obligation on a party not to do something includes an obligation not to allow that thing to be done.

1.11 A reference to this Deed or to any other agreement or document referred to in this deed is a reference to this Deed or such other agreement or document as varied or novated (in each case, other than in breach of the provisions of this Deed) from time to time.

1.12 References to Clauses are to the Clauses of this Deed.

1.13 Any words following the terms including, include, in particular, for example or any similar expression shall be construed as illustrative and shall not limit the sense of the words, description, definition, phrase or term preceding those terms.

2 ESTABLISHMENT OF THE CLOG PROGRAM

2.1 The Company established the Clog Program and hereby appoints the Trustee as the Trustee of the Clog Program from the date hereof.

3 DECLARATION OF TRUST

3.1 The Trustee HEREBY DECLARES that all of the Restricted Shares held by it for the purposes of the Clog Program shall be held on trust on behalf of and for the exclusive benefit of the Participants entitled thereto under the Clog Program subject to and in accordance with the terms of this Deed and the Clog Letter. Furthermore, (a) any Participant who is subject to U.S. federal income tax with respect to the receipt of Shares obtained in connection with an RSU on the Acquisition Date (a “U.S. Participant”) shall be deemed, for U.S. tax purposes only, to have transferred unencumbered Shares to the Trustee to be held by the Trustee pursuant to the terms of this Deed and the applicable Clog Letter, (b) this Deed shall be deemed to have created a separate trust with respect to each such U.S. Participant and (c) each such separate trust shall be treated as a “grantor trust” within the meaning of Section 671 of the Internal Revenue Code of 1986, as amended with the U.S. Participant as the deemed owner of the Restricted Shares held in such separate trust for the benefit of the U.S. Participant.

3.2 The Trustee shall stand registered as the legal owner of the Restricted Shares in the Register of Members of the Company during the Restricted Period.

3.3 The Trust shall be operated and administered in accordance with this Deed and for the Trust Period.

3.4 The Company has no ownership or beneficial interest in the Restricted Shares or the Trust, and neither the Restricted Shares nor the Trust assets are subject to the claims of the Company’s creditors under any circumstances. The Restricted Shares may only be delivered by the Trustee to the Participant or otherwise in accordance with the Participant’s instructions as further provided herein, and shall not be delivered to the Company or any creditor thereof.

4 TRUSTEE’S DUTIES RELATING TO THE CLOG PROGRAM

4.1 The Trustee shall hold Restricted Shares upon trust in respect of the Participants in accordance with the terms of the Clog Program.

4.2 On the vesting of an award under the RSU where some or all of the Shares subject to that award have been designated as Restricted Shares, the Company shall allot and issue, or transfer, the Restricted Shares issuable or transferable to the relevant Participant in connection therewith in the name of (or in accordance with the directions of) the Trustee and write up the Company’s Register of Members accordingly.

4.3 As soon as may be practicable after any Restricted Shares have been acquired by the Trustee on behalf of a Participant in accordance with Clause 4.2 the Trustee shall give the Participant notice in writing of the acquisition specifying the number and description of the Restricted Shares so acquired and stating their Taxable Value and the end of the relevant Restricted Period.

4.4 During the Restricted Period, the Trustee shall not permit the Restricted Shares held by it on behalf of a Participant to be assigned, charged, pledged as security for a loan or other debt, transferred or otherwise disposed of (whether by transfer to the Participant or otherwise) otherwise than pursuant to the exceptions to the Restricted Period as noted in the Clog Letter and in accordance with Section 128D of the Act. At the expiry of the Restricted Period, the Trustee shall have the power to dispose of or transfer the Restricted Shares at the sole direction of the Participant. It shall be the responsibility of the Participant to ensure that such sale or transfer is made in accordance with applicable laws or regulations.

4.5 The Trustee acknowledges that all cash dividends, cash distributions and other monies accruing to and received by the Trustee pursuant to or in respect of the Restricted Shares shall be the property of and belong to the Participants and shall pay over to the Participants any money or money’s worth received by the Trustee on or after the relevant Acquisition Date by reference to any Restricted Shares in respect of which the Participant holds the beneficial interest except:

4.5.1 where the Participant has directed that the proceeds of any disposal of rights arising under a rights issue be re-invested in the exercise of other rights accruing to the Participant’s Restricted Shares;

4.5.2 where the money’s worth consists of new shares arising from a company reconstruction or rights issue

PROVIDED THAT (a) such direction set forth in Clause 4.5.1 does not breach the requirements of Section 128D of the Act, and (b) the Trustee may deduct from such monies the amount of any brokerage fees, stamp duty, bankers’ charges or other vouched costs and expenses incurred by them in connection with the realisation of any such money or money’s worth.

4.6 Subject to Clauses 4.4 and 6.2, the Trustee shall deal with any rights conferred in respect of any Restricted Shares held on behalf of the Participant to be allotted other shares, securities or rights of any description as the Participant shall direct.

4.7 The Trustee shall maintain such records as may be necessary to enable the Trustee to carry out its obligations under the Act and this Agreement. The Trustee shall inform each Participant in writing of any facts known to the Trustee which the Trustee or the Participant reasonably considers to be relevant to determining the liability (if any) of that Participant to any Irish taxes as a result of the Participant’s participation in the Clog Program.

4.8 Subject to Clause 4.4 no Restricted Shares shall be transferred directly or indirectly to or for the benefit of a Participant unless the Trustee is satisfied that such arrangements have been made by or on behalf of the Participant as the Trustee or the Company may from time to time reasonably require (with notice to the Participant ) to ensure that any liability to taxation whatsoever and howsoever arising will be discharged or reimbursed to the Trustee and/or (as the case may be) the Company which has or will have to account for such liability.

4.9 The Trustee shall, notwithstanding anything to the contrary in this Deed, act in accordance with any obligations imposed on it as a shareholder under the Articles for the time being.

4.10 In the event of a Participant’s death, the Trustee shall transfer the relevant Participant’s Restricted Shares (i) to that Participant’s personal representatives upon production of evidence satisfactory to the Trustee of the appointment of the personal representatives as such or (ii) to such other person or entity as directed by the Participant prior to the Participant’s death and in accordance with a procedure adopted by the Trustee for such purpose.

5 POWERS OF TRUSTEE

5.1 In addition to the powers vested in the Trustee by the provisions of Clog Program and otherwise by law or statute, the Trustee shall have all additional powers necessary to perform its functions and duties as set out in the Clog Program such powers only to be used in accordance with the purpose for which they were granted and in accordance with the Clog Program and in particular the following powers:

(a) Power to place any trust monies on deposit or in a current account with any bank, building society or other licensed deposit taking institution carrying on business in Ireland, Europe or the US whether or not associated in business with the Trustee and the Trustee shall not be obliged to earn interest in respect of such money.

(b) Power to enter into any agreement with any party for the sale or other disposition or for the purchase of Restricted Shares to the extent that this is provided for by the Clog Program.

(c) Power to manage and deal with the Restricted Shares and exercise the rights incident to those Restricted Shares.

(d) Power to provide for any Restricted Shares to be registered in the name of an appointed nominee or custodian provided that such Restricted Shares shall be registered in a designated account. Such registration shall not divest the Trustee of its responsibilities under the Clog Program.

(e) Power from time to time to appoint such secretarial or executive officers or staff as the Trustee considers desirable, on such terms as the Trustee thinks fit, for the proper administration and management of the Trust.

(f) Subject to the prior consent of the Company, such consent not to be unreasonably withheld or delayed, power to delegate from time to time any business and the exercise of any of the trusts, powers, discretions and duties imposed on the Trustee under the Trust to any person (whether being a Trustee or not) or persons or fluctuating body of persons, and such delegation may be made upon such terms and conditions, including power to sub-delegate, and subject to such regulations as the Trustee may think fit, and the Trustee will not be bound to supervise the proceedings of any such delegate or sub-delegate, but notwithstanding any such delegation the Trustee will be and remain responsible for the administration of the Trust and for the acts of such persons to whom the Trustee may delegate duties in connection with the Trust, subject to Clause 15 hereof.

(g) Power to employ and pay for the service of such registrars, solicitors or other professional or business advisers or agents generally as they consider desirable to advise on or transact or concur in transacting any business to be done for the proper administration and management of the Trust or otherwise in connection therewith.

5.2 The Trustee may at any time revoke any delegation or arrangement under this Clause 5 and/or require any trust property held by another person to be returned to the Trustee.

5.3 Any costs, charges or expenses incurred by the Trustee in accordance with this Clause 5 will form part of the costs, charges and expenses necessarily incurred by the Trustee in the execution of the Trust.

6 DEALING WITH THE RESTRICTED SHARES

6.1 Save as otherwise provided for by the Clog Program, the Trustee shall not sell or otherwise dispose of the Restricted Shares.

6.2 The Participant shall have the right to vote the Restricted Shares. The Trustee shall obey any voting instructions and any other lawful directions given by a Participant in accordance with the Clog Program in relation to his/her Restricted Shares and any rights and income relating to those Restricted Shares. In the absence of any such direction, or provision by the Clog Program, the Trustee shall not vote in respect of the Restricted Shares unless the Trustee determines that it shall seek voting directions from the Participant where circulars or other shareholder documents contain information that may have a material impact on a Participant’s Restricted Shares in which case the Trustee may take such action as it may consider reasonable.

6.3 Save in cases of fraud, wilful misconduct or gross negligence by the Trustee, any Trustee Director or any of their respective agents or employees, neither the Trustee nor any Trustee Director shall be liable for:

(a) any loss or damage which may happen to the Restricted Shares as a result of an act or omission of the Trustee or authorised by the Trustee Directors;

(b) any act or omission of any agent employed by the Trustee, even where such employment was not strictly necessary or expedient; or

(c) any mistake or omission made in good faith by the Trustee or any Trustee Director.

6.4 The Trustee will on request from a Participant provide the Participant with copies of circulars and other documents sent to holders of Restricted Shares which the Trustee has received and otherwise shall have discretion whether to send shareholder notices and circulars to Participants.

7 RIGHTS ISSUES

7.1 In the event of the Company making an offer or invitation conferring any rights upon its members to acquire against payment additional securities or rights of any description in the Company, the Trustee shall seek each Participant’s directions and shall act on any instructions received within the deadline for responses set by the Trustee provided such instructions do not breach the requirements of Section 128D of the Act and the Trustee will not be required to exercise any such rights except to the extent that they have been provided with the full amount payable on such exercise either by the relevant Participant or (with his authority) out of the net proceeds of the sale, nil paid, of another part of the rights attributable to that Participant’s Restricted Shares.

7.2 If the Trustee receives any such offer or invitation as is referred to in Clause 7.1, the Trustee shall notify each Participant of the rights which are attributable to his Restricted Shares. In the event that the Trustee receives no directions in accordance with Clause 7.1 in respect of such notification, the Trustee may at it’s discretion determine that:

7.2.1. the Trustee will take no action in respect of the rights; or

7.2.2. the Trustee will sell enough of the rights to enable the subscription of the balance of such rights,

provided that the Trustee’s actions shall not breach Section 128D of the Act.

8 CAPITALISATION ISSUES

In the event of the Company allotting any new securities by way of capitalisation to the Trustee in respect of a Participant’s Restricted Shares, such new securities will, subject to the Act, form part of the Participant’s Restricted Shares and will be deemed to have been acquired at the same time as, and will be held by the Trustee on the same terms as, the Restricted Shares to which such new securities relate.

9 TAKEOVERS AND OTHER TRANSACTIONS AFFECTING SHARES

9.1 In the event that:

9.1.1 an offer is made to acquire a Participant’s Restricted Shares (in this sub-clause referred to as original shares) in circumstances such that acceptance thereof will result in a new holding (as defined in section 584 of the Act) being equated with such original shares for the purposes of capital gains tax;

9.1.2. an offer is made to acquire a Participant’s Restricted Shares as part of a general offer made to holders of shares of the same class as the Restricted Shares or of shares in the Company for a cash consideration, with or without other assets, and is also made in the first instance on a condition such that, if it is satisfied, the person making the offer will have control of the Company (within the meaning of section 432 of the Act); or

9.1.3. a transaction is proposed which affects a Participant’s Restricted Shares or such of them as may be of a particular class and such transaction would be entered into pursuant to a compromise, arrangement or scheme applicable to or affecting all the shares of the Company or, as the case may be, all the Shares of the class in question;

then, notwithstanding any other provision of the Clog Program, the Trustee may, at the direction of the relevant Participant, accept such offer or, as the case may be, agree to such compromise arrangement or plan in respect of his Restricted Shares.

9.2 In the event that any offer is made or compromise, arrangement or plan proposed affecting any of a Participant’s Restricted Shares which does not fall within Clause 9.1, then the relevant Participant may only direct the Trustee to accept or agree thereto to the extent that implementation thereof would not result in a breach of Clause 4.4 or of Section 128D of the Act.

9.3 The Trustee will promptly take all reasonable steps using information supplied by the Company to notify each Participant of the principal terms of any offer, compromise or plan falling within this Clause 9 and in the absence of any direction from a Participant concerning how the Trustee should act thereon in respect of that Participant’s Restricted Shares the Trustee shall not take any action in respect thereof.

9.4 In any of the following events:

9.4.1. if the Company ceases to carry on business and another body corporate, person or firm (whether in contemplation of or after such cessation of business) enters into an agreement with the Trustee to perform the obligations of the Company under the Trust Deed;

9.4.2. if the business or a part of the business of the Company is acquired by or vested in any other body corporate, person or firm and such other body corporate, person or firm enters into an agreement with the Trustee or is bound by virtue of or pursuant to any statutory provision or instrument made thereunder or any order of a Court or otherwise to perform the said obligations;

9.4.3. if the Company is dissolved by virtue of or pursuant to any statutory provision or any order of the Court made thereunder or otherwise, and another body corporate, person or firm is bound by virtue of or pursuant to any statutory provision or any order of the Court made thereunder or otherwise to perform the said obligations;

9.4.4. if the Company amalgamates or enters into any arrangement having the effect of amalgamation with any other body corporate, person or firm; or

9.4.5. if the Company desires to be discharged of its duties as the Company and any other body corporate, person or firm enters into an agreement with the Trustee to perform the said obligations;

then in any such event, (provided no breach of Section 128D of the Act results) by deed supplemental hereto in such form as the Company and the Trustee require the Company shall be thereby released from all the said obligations, and such other body corporate, person or firm as aforesaid shall be deemed to be substituted for the Company as the person liable to perform the said obligations, and the Deed and the Clog Letter shall henceforth have effect as if such other body corporate, person or firm had been a party to and had executed the Deed in place of the Company and as if the reference to the Company in the Deed were references to such other body corporate, person or firm (save where the context requires otherwise).

10 APPOINTMENT AND REMOVAL OF TRUSTEE

10.1 The Company hereby declares and confirms the independence of the Trustee in the exercise of all of its functions and obligations under the Clog Program and undertakes that it shall not seek to influence the Trustee in any matter. Notwithstanding the foregoing the Company will have the power (which may be exercised by resolution of the board of the Company or any committee of the board of the Company or by Deed) to remove such Trustee as Trustee of the Clog Program and appoint a new or additional trustee in the place of the removed Trustee and in any other case where the office of the Trustee has been vacated, the Company may appoint a new trustee in place of the former Trustee.

PROVIDED ALWAYS that the power conferred by this Clause 10 shall only be operative and capable of taking effect 42 days (or such other period as the Company and the Trustee may agree) from the date on which the first mentioned Trustee (if still in existence) receives notice in writing of such removal or replacement and the new trustee accepts office as such new trustee which may be evidenced in each case by the relevant Trustee executing the deed removing or appointing him.

10.2 Any Trustee may, upon the expiry of 42 days’ (or such shorter period as the Company may allow) prior notice in writing given to the Company and the remaining Trustee (if any), resign as Trustee and thereupon cease to be a Trustee and will not be responsible for any costs incurred by such retirement.

10.3 At all times throughout the Trust Period the Trustee shall comprise a single corporate Trustee:

(a) which is established in an EEA Member State and the Trustee of which shall be resident in an EEA Member State; and

(b) whose Memorandum of Association permits such company to exercise, and is not inconsistent with, the powers conferred on the Trustee under this Deed.

10.4 Except for the statutory power of the High Court to appoint a new or additional Trustee(s), the statutory power of appointing new or additional Trustee(s) shall not apply to the Trust.

10.5 An outgoing Trustee shall do all such acts or things and shall execute such documents or deeds as may be required or as may be necessary for vesting the Restricted Shares in the new Trustee or placing the Restricted Shares under the control of the new Trustee and shall be bound and entitled to assume that any new Trustee is a fit and proper person to have been appointed in accordance with this Clause 10.

PROVIDED THAT where an outgoing Trustee is liable as a Trustee for any duties or taxes then that Trustee shall not be required to transfer the Restricted Shares unless reasonable security is provided for indemnifying the outgoing Trustee against such liability.

10.6 The Company hereby declares and confirms the independence of the Trustee and subject only to the express provisions to the contrary in the Clog Program or by applicable law, every power or discretion conferred on the Trustee shall be an absolute and uncontrolled power or discretion and, save in cases of the Trustee’s or the Trustee Director’s fraud, wilful misconduct or gross negligence, neither the Trustee nor any Trustee Director shall be held liable for any loss or damage occurring as a result of the Trustee concurring or refusing or failing to concur in an exercise or proposed exercise of such power or discretion and neither the Trustee nor any Trustee Director shall be obliged to give any Participant (or any person who would, but for the exercise of any such power or discretion, be a Participant) any reason or justification for any exercise or non-exercise of any such power or discretion.

11 REMUNERATION OF TRUSTEE

11.1 The Trustee shall be entitled to be paid by the Company all professional or proper charges for work done by it in connection with the trusts declared in this Deed at the rates and otherwise on the terms agreed with the Company, whether in the ordinary course of its business or not, including acts which a trustee, not being in any profession or business, could have done personally.

11.2 Subject to the approval of the Company, not to be unreasonably withheld or delayed, the Trustee may employ any banker, solicitor, stockbroker, auditor or investment advisor or other agent or professional adviser in relation to the trusts declared in this Deed, any company, form or enterprise associated with it

PROVIDED THAT such agent is authorised by its constitution to undertake such business and that is, in fact, ordinarily so engaged and that all charges made by it for work done or services provided in connection with the trusts declared in this Deed are reasonable and normal.

11.3 The Trustee shall be entitled to be repaid or recompensed for such reasonable expenses as may be incurred in the performance of his duties as Trustee without being liable to account for same. The Company shall be liable for the costs referred to in Clause 11.2 above.

12 CONFLICTS OF INTEREST

12.1 No decision of, or exercise of a power by, the Trustee shall be invalidated or questioned on the grounds that the Trustee or any individual Trustee Director has an interest in a personal or fiduciary capacity in the result of any decision or in the exercising of any power

PROVIDED THAT where such interest arises other than from the employment of the Trustee or individual Trustee Director by a Group Company, such interest shall have been disclosed to the Trustee except where the disclosure is being made by the Trustee itself and any such person shall have absented himself in the deliberations or vote in respect thereof and shall not be taken into account for the purposes of a quorum.

12.2 Subject to compliance with the obligations in Chapter 5 of the Companies Act, 2014 (and, where appropriate, the Listing Rules of any stock exchange under which Shares or other securities of the Company may be regulated) a Trustee Director shall not be precluded from acquiring, holding or dealing with any debentures, debenture stock, shares or securities whatsoever of the Company or any Subsidiary or from entering into any contract or other transaction with the Company or such Subsidiary or being interested in any such contract or transaction and none of the Trustee Directors shall in any manner whatsoever be liable to account to the Company or Participants for any profits made or benefits obtained by them thereby or in connection therewith.

13 COMPANY COVENANTS

The Company covenants with the Trustee to pay to the Trustee such sums as pursuant to this Deed are required to be paid to the Trustee and to carry out, or procure to be carried out, such other covenants as pursuant to this Deed are required of the Company.

14 INFORMATION SUPPLIED BY THE COMPANY

14.1 The Trustee shall be entitled to rely and act on, without further enquiry, on all information supplied to it by the Company in connection with its duties as Trustee declared in this Deed and in particular, but without prejudice to the generality of the foregoing, any notice given by the Company to the Trustee in respect of the eligibility of any person to become or remain a Participant shall be conclusive in favour of the Trustee’s determination.

14.2 The Company shall supply the Trustee in writing with any information reasonably required by the Trustee for the purposes of the Trust. The Trustee may call for and shall be entitled and is hereby authorised to rely upon and accept as sufficient evidence of any fact or matter (upon which the Trustee may in exercise of any of the trusts, powers and provisions vested in the Trustee under the Trust require to be satisfied or to have information) a notification or certificate given on behalf of the Company as to any fact or matter prima facie within the knowledge of the Company, and the Trustee may rely and act upon any instruction received from the board or committee of the board of the Company as evidenced by a copy of the appropriate resolution signed or purporting to be signed by the secretary or any director of the Company and the Trustee will in no way be bound to call for further evidence or be responsible for any loss that may be occasioned by acting on such notification, certificate or instruction.

14.3 In particular, but without prejudice to the generality of the foregoing, any written statement signed by a person being of at least a managerial level in the personnel department of the Company, or such other person as is notified to the Trustee from time to time by the Company, as to any circumstance affecting a person believed by the Trustee to be or not to be a Participant may be treated by the Trustee as conclusive evidence of the matters therein stated.

14.4 Except as herein expressly provided, the Trustee will be and is hereby authorised to assume without enquiry in the absence of knowledge by or express notice to the Trusteeto the contrary that the Company is duly performing and observing all the covenants and provisions contained in these presents to be performed and observed, and, notwithstanding any knowledge by or notice to the Trustee of any breach of covenant or obligation by the Company it will be in the discretion of the Trustee whether to take any action or proceedings as to enforce the performance thereof, and in any case in which the Trustee decides to take any action or proceedings or to enforce the performance thereof the Trustee shall first be indemnified to the Trustee’s satisfaction by the Company against all proceedings, claims and demands to which the Trustee may thereby become liable and all costs, charges, expenses and liabilities which may thereby be incurred.

15 TRUSTEE’S LIABILITY

15.1 In the professed execution of the trusts and powers contained in this Deed:

(a) save in cases of fraud, wilful misconduct or gross negligence by the Trustee, any Trustee Director or any of their respective agents or employees, the Trustee shall not be liable for any loss arising by reason of any act, mistake or omission made by it;

(b) save in cases of fraud, wilful misconduct or gross negligence by the Trustee Director himself, no Trustee Director shall be liable for any loss arising by reason of any act, mistake or omission by him or by reason of any other matter or thing including fraud, negligence or default of another Trustee Director, agent, nominee, officer or other delegate or employee of the Trustee.

15.2 The Company hereby covenants with the Trustee and Trustee Directors that it will at all times keep them and their successors in title as Trustee or Trustee Directors (as the case may be) fully indemnified and held harmless against all claims, losses, demands, actions, proceedings, charges, expenses, costs, damages, taxes, duties and other liabilities that may be suffered or incurred by it or them or by any of them in connection with the execution of the trusts, powers and discretions vested in them by this Deed or otherwise arising howsoever out of or in connection with the preparation, administration of, operation or termination of the Deed other than liabilities arising as a consequence of the Trustee’s or the Trustee Director’s own fraud, wilful misconduct or gross negligence (including in the case of the Trustee, that of its agents or employees).

15.3 In addition the Trustee will have the benefit of indemnities conferred on trustees generally by law.

15.4 The Trustee will not be liable to satisfy any monetary obligations under the Trust (including, but without prejudice to the generality of the foregoing, any monetary obligations to a Participant) beyond the sums of money (including income (if any) arising from the investment thereof) from time to time in their hands or under their control as Trustee of the Trust and properly applicable for that purpose.

16 EFFECT OF THE CLOG PROGRAM

16.1 Any entitlement a Participant may have under this Trust is a matter entirely separate from any pension right or entitlement he/she may have and from his/her terms and conditions of service to the Company and it shall not in any respect whatsoever affect in any way a Participant’s entitlements or terms and conditions of service. Without prejudice to the generality of the foregoing, the provisions of the Clog Program shall not form part of any contract of services between any Participant and the Company and neither shall it be taken into account for the purpose of calculating any payment, settlement or award from or on behalf of the Company or any other Group Company to a Participant, including but not limited to any redundancy or unfair dismissal payment or wrongful dismissal payment and it shall not confer on any Participant any legal or equitable rights whatsoever against the Company or any Group Company.

16.2 Any entitlements a Participant may have under the Clog Program shall have effect subject to the Articles so that in the event of any inconsistency or conflict between the provisions of this Deed, the Clog Letter and the Articles, the provisions of the Articles shall prevail.

17 ARBITRATION

17.1 All disputes and differences arising out of the Clog Program or otherwise in connection therewith may be referred by the Company or Trustee to arbitration pursuant to the provisions of the Arbitration Act, 2010 and the Company, the Trustee and any Participant so affected shall submit to arbitration.

18 TERMINATION

18.1 The Parties acknowledge and agree that the Trust shall be deemed to terminate on the date on which the Company has resolved to wind up the Clog Program and which the Company and the Trustee may by deed declare to be the end of the Trust Period (the “Termination Date”).

18.2 For the avoidance of doubt the parties to the Clog Program agree and shall procure that the Termination Date shall not be a date earlier that the day after the last day of the Restricted Period applicable to any Participant under the Clog Program.

19 INVALIDITY AND ENFORCEABILITY

19.1 It is the intention of the parties hereto that this Deed shall be enforceable to the fullest extent allowed by law. In the event that a court having jurisdiction holds any provision of this Deed to be invalid or unenforceable, in whole or in part, the parties hereto agree that, if allowed by law, that provision shall be reduced to the degree necessary to render it valid and enforceable without affecting the rest of this Deed.

20 VARIATION

20.1 The terms of this Deed may be amended, revoked or extended by deed supplemental hereto executed by the Company and Trustee, provided, however, that no such amendment or variation may adversely affect any then existing Participant without such Participant’s advance written consent. Any such amendment or variation will be binding on Participants but no amendments shall be made that will prevent the Restricted Shares according with Section 128D of the Act.

21 DATA PROTECTION

21.1 The Trustee agrees that it will not use or disclose to third parties the Company’s data and the personal data of the Participants obtained in connection with the Clog Program, other than for the purpose of the Clog Program. The Company agrees that the Trustee may disclose the Company’s data and the personal data of the Participants to its professional advisers, industry bodies, regulatory and other authorities and insurers, amongst others, in connection with these purposes. The Company agrees to keep the Trustee updated of any changes to the Company’s data and the personal data of the Participants.

21.2 The Company has the right to access the Company’s data and the personal data of the Participants held about the Company and/or the Participants by the Trustee at any time by sending a written request to the Trustee. The Company also has the right to require the Trustee to correct any inaccuracies in such information.

22 NOTICES AND CONSENTS

22.1 Unless the Trustee, the Company and the Participant shall, in each case, otherwise agree any notices and consents required or permitted to be given:

(a) to the Trustee shall be sent in writing (i) by post or by hand delivery to the address set out for the Trustee in this Deed or to such other address as the Trustee may notify to the Company; (ii) via email to the email address notified to the Company from time to time and the Company hereby undertakes to notify the Trustee promptly of any change of address or email address of the Company; or (iii) by facsimile to a designated number which will be notified to the Company from time to time.

(b) to the Company shall be sent in writing (i) by post or hand delivery to the address set out for the Company in this Deed or such other addresses as the Company may notify to the Trustee; (ii) via email to the email address notified to the Trustee from time to time and the Company hereby undertakes to notify the Trustee promptly of any change of address or email address of the Company; or (iii) by facsimile to a designated number which will be notified to the Trustee from time to time.

(c) to the Participant shall be sent in writing (i) by post or hand delivery to the address set out for the Participant in the Clog Letter or such other addresses as the Participant may notify to the Trustee; (ii) via email to the email address notified to the Trustee from time to time and the Participant hereby undertakes to notify the Trustee promptly of any change of address or email address of the Participant; or (iii) by facsimile to a designated number which will be notified to the Trustee from time to time.

22.2 Notices and consents shall be deemed to have been served forty eight (48) hours after despatch and in proving service of notice to the Company it shall be sufficient to show that such notice was placed in an envelope addressed to the Company at the address set out above (or such address notified in accordance with this Clause 22) and despatched by pre-paid post or hand delivery. Any such matter sent by email shall be deemed to have been delivered at the time of receipt of the email. Any such matter sent by facsimile shall be deemed to have been served once a successful facsimile transmission report has issued to the transmitter. All notices or other documentation sent by the Trustee to the Company are sent at the Company’s own risk.

23 STAMP DUTY

23.1 Any stamp duty or other expenses involved in any transfer of Restricted Shares by the Trustee shall be payable:

(a) in the case of a transfer by the Trustee into the name of the Participant concerned, by the Participant; and

(b) in any other case, by the transferee concerned.

24 COUNTERPARTS

24.1 This Deed may be executed in any number of counterparts and by the different parties hereto on separate counterparts each of which when executed and delivered shall constitute an original all such counterparts together constituting one and the same instrument, but shall not be effective until each party has executed at least one counterpart.

25 GOVERNING LAW

25.1 This Deed and any dispute or claim arising out of or in connection with it or its subject matter or formation (including non-contractual disputes or claims) shall be governed by and construed in accordance with the laws of Ireland.

26 JURISDICTION

26.1 Each party irrevocably agrees that the courts of Ireland shall have exclusive jurisdiction to settle any dispute or claim arising out of or in connection with this deed or its subject matter or formation (including non-contractual disputes or claims).

26.2 Each party irrevocably consents to any process in any legal action or proceedings under Clause 26.1 being served on it in accordance with the provisions of this deed relating to service of notices. Nothing contained in this deed shall affect the right to serve process in any other manner permitted by law.

IN WITNESS whereof this Deed was executed the day and year first above written.

GIVEN under the Common Seal of

Horizon Pharma Public Limited

Company and this DEED has been

DELIVERED:

/s/ Timothy P. Walbert

Director

/s/ David G. Kelly

Director/Secretary

GIVEN under the Common Seal of

Goodbody Trustees Limited

and this DEED has been

DELIVERED:

/s/ illegible

Director

/s/ illegible

Director/Secretary

[            ]

CLOG LETTER

[            ]

c/o Horizon Pharma plc

Connaught House

1 Burlington Road

Dublin 4

Re: Clog Letter in respect of an award of RSUs which may vest in accordance with the terms of the Company’s 2014 Non-Employee Equity Plan (the Plan) on [            ]

Dear [            ],

This letter applies to a maximum of [            ] shares in Horizon Pharma plc (the Company) which may vest to you on [            ] in accordance with the Plan.

You are required to contractually agree to retain such vested shares in Horizon Pharma plc (the Shares) for the specified period of [            ] (the Restricted Period). During the Restricted Period Goodbody Trustees Limited (the Trustee) will hold the legal title to the Shares and will retain the share certificate relevant to the Shares pursuant to the terms of a Deed of Trust executed between the Trustee and the Company on 18 September 2015. During the Restricted Period the Shares will be subject to the Retention Condition (commonly known as a “Clog”) set out in the next paragraph. Please note that the precise number of Shares vesting to you and the Restricted Period will be advised to you on the relevant vesting date of the Shares. The Restricted Period will commence on the date the award of RSUs vests in accordance with the provisions of the Plan and will apply to the Shares issuable or transferable to you at vesting.

Retention Condition attached to the Shares

You shall not assign, charge, pledge as security for a loan or other debt, transfer or otherwise dispose of all or any interest in the Shares in any circumstances during the Restricted Period.

You agree that the Trustee and the Company shall be entitled to treat any attempt to assign, charge, pledge as security for a loan or other debt, transfer or otherwise dispose of all or any interest in the Shares during the Restricted Period, other than where permitted under the Exceptions to the Retention Condition as set out below as null and void.

Please note that by executing and returning the Acceptance Form set out in Schedule 1 to this Letter to the Company you are consenting to and agree to be bound by the Retention Condition which will inhibit your freedom to deal with or realise value from the Shares during the Restricted Period. Please note that your agreement and consent to be bound by the Retention Condition may cause financial loss for which the Company does accept any responsibility.

Connaught House, 1st Floor, 1 Burlington Road, Dublin 4, Ireland

www.horizonpharma.com

Horizon Pharma Public Limited Company Registered in Ireland No, 507678

T: +353 (0) 1 772 2100 | F: +353 (0) 1 772 2101

Registered Office: Connaught House, 1st Floor, 1 Burlington Road, Dublin 4, Ireland

Directors: T. Walbert {U.S.}, M. Grey {U.S./UK}, L Daniel {IRE}, J. Himawan {U.S.}, V. Nohria {UK}, R. Pauli {U.S.}, G. Santini {U.S./IT}, T. Watkins {U.S.}

Exceptions to the Retention Condition

Notwithstanding that you are bound to adhere to the Retention Condition during the Retricted Period you may transfer, assign, charge, pledge as security for a loan or other debt, or otherwise dispose of the Shares in accordance with Section 128D(3)(c) of the Taxes Consolidation Act, 1997 as amended (the Act) which are on the occurrence of the following events:

upon your death, or

as a consequence of you agreeing to

accept an offer for the Shares if the acceptance or agreement would result in a new holding (within the meaning of section 584 of the Act) being equated with the Shares for the purposes of capital gains tax,

a transaction affecting the Shares or such number of the Shares as are of a particular class if the transaction would be entered into pursuant to a compromise, arrangement or scheme applicable to or affecting all the ordinary share capital of Horizon Pharma plc or, as the case may be, all the shares of the same class as the Shares acquired by you, or

accept an offer of cash, with or without other assets, for the Shares if the offer forms part of a general offer made to holders of shares of the same class as the Shares acquired by you or of shares in the same company and made in the first instance on a condition such that if it is satisfied the person making the offer will have control (within the meaning of section 432 of the Act) of that company.

Compulsory Acquisition

It should be noted that if an offer were to be made to acquire the entire issued share capital of the Company, the offeror can, subject to receiving the specified level of acceptances, compulsorily acquire the shares held by those persons who do not accept the offer. If this were to happen, the restriction on disposal of the Shares during the Restricted Period cannot prevent a compulsory acquisition of the Shares. Should the Shares subject to the Restricted Period be disposed of in such circumstances some of the tax relief afforded will be clawed back and due for payment to the Revenue Commissioners.

Taxation

Ireland

The vesting of RSUs will give rise to a gain that is subject to income tax, the Universal Social Charge (USC) and Social Security (if applicable) at your marginal rates. Acceptance of the terms set out in this letter will result in a reduction in the amount of this gain that will be subject to income tax, USC and Social Security (if applicable) but it will not result in the deferral of the resultant tax and Social Security liabilities. The Company is obliged to collect the income tax (PAYE), USC and employee Social Security (if applicable) due by you through payroll deductions via the PAYE system. You may also have tax filing obligations under the self assessment system of “pay and file”.

It is your responsibility to seek taxation advice relevant to your particular circumstances. The Company accepts no responsibility to provide you with such tax advice or for any tax consequences for you for being awarded the Shares.

Normally, the taxable amount of the gain arising on the award of shares will equal the difference between the market value of the shares acquired less any amount paid. However, under Section 128D of the Act, the taxable amount is reduced by [            ]% of the market value of the shares where the Restricted Period is for a period of [            ].

Miscellaneous

This Letter constitutes the entire agreement between you and the Company and supersedes and extinguishes all previous agreements, promises, assurances, warranties, representations and understandings between you and the Company, whether written or oral, relating to the Shares.

This Letter and the Acceptance Form contained in Schedule 1 to this Letter shall be governed by and construed in accordance with Irish law.

2

Acknowledgement and Consent

By returning the Acceptance Form you signify your acceptance of the arrangement in respect of the Shares issuable or transferable to you on vesting of the Restricted Stock Units under the Plan and the Retention Condition applicable to the Shares during the Restricted Period.

Please return the completed Acceptance Form to the Company on or before [            ].

Signed by:                                                              

On behalf of (the Company)

Date:

3

SCHEDULE 1

Acceptance Form

To:	Horizon Pharma plc
	Connaught House
	1 Burlington Road
	Dublin 4
To:	Goodbody Trustees Limited
	IFSC
	15-28 North Wall Quay
	Dublin 1

I, [            ], hereby absolutely, irrevocably and unconditionally

(i) acknowledge and accept the terms outlined in the Clog Letter dated [            ] concerning the Shares which may be issuable or transferable to me on [            ] on the vesting of my RSU award and agree to be bound by its terms including this Acceptance Form and the trust deed relating to the trust in which my Shares will be held for the Restricted Period; and

(ii) agree to be bound by the Retention Condition applicable to the Shares during the Restricted Period which will cease on [            ].

(iii) agree that in the absence of any other direction from me, on a rights issue by the Company during the Restricted Period, I hereby direct the Trustee to sell sufficient of my rights to enable the Trustee to finance the subscription of the balance;

(iv) agree that in the absence of any other direction from me, in the event of a general offer to acquire the shares of the Company or another offer for such share capital affecting the Shares during the Restricted Period, I hereby direct the Trustee to accept such offer.

(v) agree that the Company and/or the Trustee may send communications regarding my Shares in hard copy and/or by way of electronic communications and that communications and information may be delivered to me by providing me with details of where I can access the same on a website or intranet site.

(vi) agree that I will provide the Company with such information as may be required from time to lime by the Company or the Trustees for the effective operation of the Restricted Share Plan, including any record keeping and tax reporting obligations that may arise. For the avoidance of doubt such information may include, but is not limited to, the following: current address, marital/civil partnership status, tax residency status, citizenship and information as to your legal capacity. I undertake to inform the Company and the Trustee should any such information previously provided by you change.

Data Protection

By signing this Acceptance Form you consent to the collection, holding, processing and transfer of personal data to, by and between the Company, Trustee and any other party (the Entities) for all purposes in connection with the Plan and the Horizon Pharma plc Director Share Clog Program. Such personal data may be held by the Entities and retained after the end of the Restricted Period.

You acknowledge that this may involve the transfer of personal data outside Ireland to countries outside the European Economic Area where further processing of the data for the purposes outlined above may occur. You acknowledge that countries outside the European Economic Area may not have the same data protection laws and safeguards as are in operation in Ireland.

For the purpose of this consent to the transfer and disclosure of personal data the data involved may include, but is not limited to: name, address, telephone and fax numbers, e-mail addresses, gender, emergency contact, employee number, PPS number, wage and bonus information, participation levels, personal bank account number and tax related information.

You note that you have a reasonable right of access to the personal data that the Entities hold about you and that you can request access to this data and rectify this data (if necessary) via the Company’s HR department. You acknowledge that the processing and transfer of your personal data is necessary for the administration of the Restricted Share Plan.

4

Terms defined in this Acceptance Form shall, unless the context otherwise requires, have the same meaning as in the Clog Letter or, if not so defined, in the trust deed relating to the Restricted Share Plan.

Signature:	Date :
PPS Number:

5

Dated 22nd day of February 2016

HORIZON PHARMA PUBLIC LIMITED COMPANY

One Part

GOODBODY TRUSTEES LIMITED

Second Part

DEED OF AMENDMENT

to the

HORIZON PHARMA PUBLIC LIMITED COMPANY DIRECTOR SHARE CLOG PROGRAM

A & L Goodbody

25-28 North Wall Quay

IFSC

Dublin 1

THIS DEED OF AMENDMENT made the 22^nd day of February, 2016

BETWEEN:

HORIZON PHARMA PUBLIC LIMITED COMPANY, a company incorporated in Ireland and whose registered office is at Connaught House, 1^st floor, 1 Burlington Road, Dublin 4 (the Company) of the first part; and

GOODBODY TRUSTEES LIMITED, a company incorporated in Ireland and whose registered office is at IFSC, 25-28 North Wall Quay, Dublin 1 (the Trustee) of the second part.

IS SUPPLEMENTAL TO:

A Trust Deed dated 18 September 2015 (the Principal Deed) between the Company and the Trustee establishing the Horizon Pharma Public Limited Company Director Share Clog Program (the Clog Program).

WHEREAS: -

A. Clause 20 of the Principal Deed permits the Company and the Trustee to alter by supplemental deed any provisions of the Principal Deed as therein set out.

B. The Company (with the consent of the Trustee as is testified by their execution of this Deed) wishes to amend the Principal Deed as hereinafter set out.

NOW THIS DEED WITNESSES and it is hereby agreed as follows:-

1. The word “Director” shall be deleted from the name of the Clog Program, which from the date of this Deed shall be known as the Horizon Pharma Public Limited Company Share Clog Program.

2. Recital A of the Principal Deed shall be deleted and replaced with the following:

“The Company has granted equity awards with respect to its Shares (as defined below) to employees and non-employee directors under the terms of the Company’s equity incentive plans.”

3. Recital B of the Principal Deed shall be deleted and replaced with the following:

“By entry into the Clog Letter and into this Deed (together being, and hereinafter referred to as, the “Clog Program”) the Company now wishes to impose a restriction on the manner in which the Restricted Shares (as defined below) acquired by Participants in connection with the grant, vesting, exercise or settlement, as the case may be, of their awards granted under the Company’s equity incentive plans, can be dealt with by the Participants for the duration of the Restricted Period (as defined below).”

4. The definition of Acquisition Date shall be deleted and replaced with the following:

“Acquisition Date the date on which Restricted Shares are acquired by the Trustee on behalf of a Participant pursuant to the Clog Program being the date or dates the Restricted Shares are issued in settlement of the Participant’s award under the terms of one of the Company’s equity incentive plans;”

5. The definition of Participant shall be deleted and replaced with the following:

“Participant means an employee or director of a Group Company who has elected to participate in the Clog Program including, where the context so permits, the legal personal representatives of a deceased Participant as evidenced to the Trustee by a grant or probate or letters of administration;”

6. The definition of Restricted Shares shall be deleted and replaced with the following:

“Restricted Shares means the Shares which the Participant agrees are subject to the Clog Program, as specified in the Clog Letter;”

7 The definition of Shares shall be deleted and replaced with the following:

“Shares the ordinary shares of US$0.0001 each in the capital of the Company issuable or transferable to each Participant under the terms of equity awards granted under one of the Company’s equity incentive plans, which expression shall include (i) any additional or substituted securities derived from or distributed in respect of such shares after the date hereof including, without limitation, by virtue of a bonus issue or capitalisation, scrip issue, subdivision, re-organisation, consolidation or other alteration in the capital structure of the Company or the purchase of shares pursuant to any pre-emption rights and/or the proceeds of any redemption or purchase of such shares; and (ii) such further ordinary shares of US$0.0001 each in the capital of the Company that the Trustee holds subject to the terms of this Deed;”

8. The words “obtained in connection with an RSU” shall be deleted from clause 3.1.

9. Clause 4.2 shall be deleted and replaced with the following:

“On the acquisition of Shares in connection with the grant, vesting, exercise or settlement (as the case may be) of an equity award granted under one of the Company’s equity incentive plans where some or all of the Shares subject to that award have been designated as Restricted Shares, the Company shall allot and issue, or transfer, the Restricted Shares issuable or transferable to the relevant Participant in connection therewith in the name of (or in accordance with the directions of) the Trustee and write up the Company’s register of members accordingly.”

10. Clause 16.1 shall be deleted and replaced with the following:

“Any entitlement a Participant may have under this Trust is a matter entirely separate from any pension right or entitlement he/she may have and from his/her terms and conditions of service to or employment with any Group Company and it shall not in any respect whatsoever affect in any way a Participant’s entitlements or terms and conditions of service or employment. Without prejudice to the generality of the foregoing, the provisions of the Clog Program shall not form part of any contract of services or employment between a Participant and any Group Company and neither shall it be taken into account for the purpose of calculating any payment, settlement or award from or on behalf of the Company or any other Group Company to a Participant, including but not limited to any redundancy or unfair dismissal payment or wrongful dismissal payment and it shall not confer on any Participant any legal or equitable rights whatsoever against the Company or any Group Company.

11. Unless the context otherwise admits or requires all capitalised terms in this Deed shall have the same meaning as in the Principal Deed.

12. This Deed may be executed in more than one counterpart, and by the parties to it on separate counterparts, but shall not be effective until each party has executed at least one counterpart, with the same effect as if the parties to this Deed executing in the several counterparts had all executed one document.

13. This Deed shall be governed by and construed in accordance with the law of the Republic of Ireland.

IN WITNESS whereof this Deed has been duly executed by the parties hereto the day and year first above written.

GIVEN under the Common Seal of

HORIZON PHARMA PUBLIC LIMITED COMPANY

/s/ Liam Daniel

Director

/s/ David Kelly

Director/Secretary

GIVEN under the Common Seal of

GOODBODY TRUSTEES LIMITED

/s/ James Somerville

Director

/s/ James Grennan

Director/Secretary

EX-10.7

Exhibit 10.7

***Text Omitted and Filed Separately

with the Securities and Exchange Commission.

Confidential Treatment Requested

Under 17 C.F.R. Sections 200.80(b)(4)

and 240.24b-2.

Confidential

Amendment No. 2
(hereinafter the “Amendment No. 2”)

to the Consolidated Supply Agreement
effective 31 July 2013,
(hereinafter the “AGREEMENT”)

between

Horizon Pharma Ireland Limited

Connaught House

1 Burlington Road, Dublin 4

Ireland

(formerly known as Vidara Therapeutics Research Limited, hereinafter called “VIDARA” or “HORIZON”)

and

Boehringer Ingelheim Biopharmaceuticals GmbH

Binger Straße 173,

55216 Ingelheim am Rhein

Germany

(hereinafter called “BI”)

-      each party also hereinafter referred to as “Party” or jointly as “Parties”      -

Except as otherwise indicated, defined terms in this Amendment No. 2 have the same
meaning as in the AGREEMENT.

This Amendment No. 2 to the AGREEMENT shall be effective as of 1 June 2015 (“Effective Date of Amendment No. 2”).

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Confidential

I.Preamble

Whereas, the AGREEMENT, effective as of 31 July 2013 was concluded between VIDARA and Boehringer Ingelheim RCV GmbH & Co. KG (“BI RCV”), an AFFILIATE of BI, having its registered office at Dr. Boehringer Gasse 5-11, 1121, Vienna, Austria;

Whereas, the AGREEMENT has been assigned from BI RCV to its AFFILIATE BI, effective as of 1 January 2014, via an assignment letter acknowledged by VIDARA on 13 December 2013. All references to BI in the AGREEMENT shall refer to BI RCV until 1 January 2014;

Whereas, the AGREEMENT was amended (“Amendment No. 1”) effective as of 5 September 2014. Amendment No. 1 covered the manufacturing of a single batch of bulk biological substance (2014 BBS Batch as defined below) to secure HORIZON’s commercial supply of PRODUCT and for use in certain specified development activities;

Whereas, on 5 November 2014, VIDARA provided BI with written notice that Vidara Therapeutics Research Limited was renamed Horizon Pharma Ireland Limited;

Whereas, the Parties wish for Amendment No. 2 to replace and supersede Amendment No. 1 and thus for the 2014 BBS Batch (as defined below in Section 2.1), originally covered by Amendment No. 1, to be regulated by Amendment No. 2 as of the Effective Date of Amendment No. 2.

Whereas, the 2014 BBS Batch shall secure HORIZON’s commercial supply of PRODUCT in […***…], and support the ongoing validation of the MANUFACTURING PROCESS (Exhibit 1a) as per the FDA approved comparability protocol for the use of […***…] and, as may be required, may be used for certain clinical and development activities to be agreed on between the Parties;

Whereas, BI has manufactured a BBS batch in 2016 in order to secure HORIZON’s commercial supply of PRODUCT in […***…] under the AGREEMENT (“1st 2016 BBS Batch”);

Whereas, HORIZON wishes for and BI has agreed to manufacture a further BBS batch (2^nd 2016 BBS Batch as defined below in Section 2.2) to secure HORIZON’s commercial supply of PRODUCT in […***…];

Whereas, HORIZON and BI have agreed to harmonise the current MANUFACTURING PROCESS (Exhibit 1a, 1b) for BBS manufacture in order to implement changes of certain materials no longer supplied by vendors as agreed between the Parties and to optimise yield and incorporate other desired process changes and apply such process to both the PRODUCT and the BI PRODUCT (Imukin^®) and subsequently re-validate the HARMONISED MANUFACTURING PROCESS (as defined in Section 3.1 below);

Whereas, Boehringer Ingelheim International GmbH (“BII”), an Affiliate of BI and HORIZON entered into the asset purchase agreement effective as of 18 May 2016, under which HORIZON shall acquire all right, title and interest from BII to the BI PRODUCT (Imukin^®) as and from 31 December 2016.

Whereas, the Parties acknowledge and agree that these Whereas-Clauses are legally binding.

Therefore, the Parties agree as follows:

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Confidential

II.Amendment

1.Definitions

1.1A new Section 1.46 shall be added to the AGREEMENT:

“1.46 EXCESS MATERIAL shall mean any excess BBS material (drug substance) from BBS batches manufactured by BI for the supply of PRODUCT (and BI PRODUCT as the case may be) to HORIZON to be determined by BI after HORIZON’s annual commercial purchase obligations for each commercial year under the AGREEMENT have been met.”

2.Market Supply Security: […***…]

(BBS Batches Manufactured According To the Current Manufacturing Process)

2.1.2014 BBS Batch

In Amendment No. 1, the Parties agreed on BI’s manufacture of a single BBS batch according to the current MANUFACTURING PROCESS. The Parties hereby agree that the following regulation shall supersede Amendment No. 1 in its entirety as of the Effective Date of Amendment No. 2:

The Parties agree that the single BBS batch (Batch […***…]; hereinafter referred to as “2014 BBS Batch”) manufactured by BI under Amendment No.1 according to the current MANUFACTURING PROCESS shall first and foremost be used for fulfilling HORIZON’s commercial requirements of PRODUCT in the TERRITORY, in accordance with Sections 3.2 and 3.3 of the AGREEMENT, for the commercial years […***…]. HORIZON shall pay to BI for the ordered vials (vial price) in accordance with Section 4 of the AGREEMENT.

BI agrees to store the 2014 BBS Batch at its or its AFFILIATES’ facilities and maintain it for its intended purposes as set out herein for the duration of BBS shelf life […***…] and in accordance with cGMP and BI’s internal SOPs for the storage of biopharmaceutical products.

[…***…] with regards to the 2014 BBS Batch, it is hereby agreed that EXCESS MATERIAL from said 2014 BBS Batch shall be provided to HORIZON […***…] solely for HORIZON’s development purposes, reflecting the prior understandings and agreement of the Parties, and that HORIZON shall not use such EXCESS MATERIAL from the 2014 BBS Batch for commercial purposes without BI’s agreement.

HORIZON acknowledges and agrees that it is BI’s sole responsibility to manufacture the 2014 BBS Batch according to the BULK SPECIFICATIONS. Accordingly, the 2014 BBS Batch may fall below the […***…], and HORIZON may not reject the 2014 BBS Batch meeting the BULK SPECIFICATIONS but not said […***…].

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Confidential

2.2.2016 BBS Batches

In order to secure the commercial supply of PRODUCT to HORIZON in […***…] and, depending on the yield of the 2016 BBS Batches (as defined below), in […***…], BI has manufactured one (1) BBS batch in 2016 from one (1) fermentation run (“1^st 2016 BBS Batch”) according to the current MANUFACTURING PROCESS and the Parties now agree that in order to secure the commercial supply of PRODUCT in […***…] arising from increased commercial demand and/or delay in the completion and regulatory approval of the HARMONISED MANUFACTURING PROCESS, BI shall manufacture a second BBS batch in 2016 from this fermentation run (“2^nd 2016 BBS Batch”) (1^st and 2^nd 2016 BBS Batch are hereinafter referred to collectively as “2016 BBS Batches”) in accordance with the current MANUFACTURING PROCESS and as outlined in Exhibit 1a.

The Parties agree that the 2016 BBS Batches shall first and foremost be used for fulfilling HORIZON’s commercial requirements of PRODUCT in the TERRITORY, in accordance with Sections 3.2 and 3.3 of the AGREEMENT, for the commercial years […***…]. HORIZON shall pay BI for the ordered PRODUCT (vial price) in accordance with Section 4 of the AGREEMENT. In the event that the 2nd 2016 BBS Batch is not required for manufacture of commercial PRODUCT, HORIZON shall purchase […***…] of BBS from this batch as EXCESS MATERIAL as described herein.

HORIZON acknowledges and agrees that it is BI’s sole responsibility to manufacture the 2016 BBS Batches according to the BULK SPECIFICATIONS. Accordingly, the 2016 BBS Batches may fall below the […***…], and HORIZON may not reject the 2016 BBS Batches meeting the BULK SPECIFICATIONS but not said […***…].

2.3.The Parties agree that only in the unlikely event that the 2014 BBS Batch and the 2016 BBS Batches should not suffice to fulfil the requirements for the commercial years as set forth above, BI shall supply and HORIZON shall purchase PRODUCT from the HARMONISED MANUFACTURING PROCESS (as defined below under Section 3.1 herein) to fulfil said commercial requirements subject to successful regulatory approval. Further, the Parties agree that BI will supply PRODUCT using BBS from said 2014 BBS Batch and the 2016 BBS Batches from the earliest manufacturing date, i.e. first-in first-out.

2.4.The Parties agree that non-GMP material from […***…] shall be used for work packages outlined in Exhibit 2, or development purposes or supplied to HORIZON […***…].

2.5.2016 BBS Batches EXCESS MATERIAL

2.5.1.  In the event of EXCESS MATERIAL from successful manufacturing of the 2016 BBS Batches BI agrees to supply any EXCESS MATERIAL from the 2016 BBS Batches, which is not required to fulfil the requirements for the commercial years set forth under 2.2. above, to HORIZON in accordance with Section 3.8 of the AGREEMENT (as added to the AGREEMENT under Section 4.1 of this Amendment No. 2). As consideration for such EXCESS MATERIAL HORIZON shall pay BI as set forth in Exhibit 2 hereto. EXCESS MATERIAL from the 2016 BBS Batches shall be used for development and clinical activities, including but not limited to new PRODUCT applications.

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Confidential

3.Harmonisation of the Current Manufacturing Process

3.1 The Parties agree that BI shall provide certain services, as set forth in Exhibit 4 of this Amendment No. 2, for harmonising the MANUFACTURING PROCESS, and subsequently re-validating, for both BI PRODUCT (Imukin^®) and PRODUCT (Actimmune^®), cf. Exhibit 1a and 1b hereto into one (1) manufacturing process, cf. Exhibit 1c hereto. Upon successful establishment and registration of the harmonised manufacturing process, (cf. Exhibit 1c), hereinafter referred to as the “HARMONISED MANUFACTURING PROCESS”, the HARMONISED MANUFACTURING PROCESS shall replace the current MANUFACTURING PROCESS. Consequently, Exhibit 1c of this Amendment No. 2 shall replace Exhibit 5 of the AGREEMENT.

3.2 Notwithstanding the foregoing Section 3.1, HORIZON acknowledges that these services are experimental in nature and that no favourable or useful results can be assured by BI. In the event that BI does not succeed in harmonising the MANUFACTURING PROCESS, the Parties shall via the STEERING COMMITTEE and in good faith agree on a path forward.

3.3 The Parties agree that all BBS and PRODUCT manufactured during the harmonisation process activities, as set forth in Exhibit 4 hereto, shall be paid for or have already been paid, as applicable (cf. billing plan in Exhibit 6 hereto), under the terms of Exhibit 4 and thereafter be the property of HORIZON and shall first and foremost be used for the successful implementation and validation of the HARMONISED MANUFACTURING PROCESS, including but not limited to the scope outlined in Exhibit 4 hereto and future scope changes, if any.

3.4 The Parties agree that subject to the requirements of Section 3.3. above, the BBS and PRODUCT manufactured from the process and performance qualification (“PPQ”) activities specified in Exhibit 4 hereto shall, provided the HARMONISED MANUFACTURING PROCESS has been approved by the regulatory authorities, be used to provide HORIZON’s commercial requirements of PRODUCT in the TERRITORY, in accordance with Sections 3.2 and 3.3 of the AGREEMENT, for the commercial years […***…], and the Parties acknowledge that such PRODUCT from PPQ fill and finish batches will be paid for as per the billing plan of Exhibit 6 and supplied […***…] to HORIZON as set forth under Task 3.8 in Exhibit 4. BI shall perform additional fill and finish runs using BBS manufactured under Exhibit 4 and HORIZON shall pay for the fill and finish services only, such price to be agreed upon in good faith by the Parties. For the avoidance of doubt, such fill and finish services as set forth in this Section 3.4 shall only apply in the event described herein. Further, for the sake of clarity, BI’s routine manufacture due to compliance requirements, i.e. every other year, shall remain unaffected.

3.4.1 Depending on (i) BI’s compliance requirements for the routine manufacture of BBS, (ii) the expiry date of the remaining BBS from the PPQ batches as set forth in Task 2.3 in Exhibit 4 and (iii) HORIZON’s PRODUCT requirements, the Parties shall agree on the manufacture by BI of additional PRODUCT, and price therefor, using such remaining BBS from the PPQ batches for HORIZON’s commercial, clinical or development requirements.

3.4.2 All remaining BBS from the PPQ batches which is not used as provided for above shall be supplied to HORIZON […***…] and may be used for development and clinical activities, including but not limited to new PRODUCT applications.

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3.5 As consideration for the harmonisation services outlined in Exhibit 4 hereto HORIZON shallpay to BI the amount as set forth in Exhibit 4 in accordance with the relevant terms and conditions of Section 4 of the AGREEMENT. In the event that HORIZON does not complete the purchase of the BI PRODUCT as provided under the aforementioned asset purchaseagreement of 18 May 2016, HORIZON shall only be liable to pay […***…] of the amount set forth in Exhibit 4.

4.New Sections Added To The Agreement

4.1.Supply of Excess Material

A new Section 3.8 shall be added to the AGREEMENT:

“In the event of any EXCESS MATERIAL, the Parties may under a written and mutually executed change order agree for BI to supply such EXCESS MATERIAL to HORIZON for the purpose set out in the change order of certain, and in the change order agreed to, development and clinical activities, including but not limited to new PRODUCT applications.

Any such EXCESS MATERIAL shall, in accordance with Section 9.3.1, be shipped […***…] by BI to HORIZON. As consideration for EXCESS MATERIAL HORIZON shall pay BI as set forth in Exhibit 2 of Amendment No. 2, unless otherwise agreed between the Parties in writing. Only the relevant terms and conditions of this AGREEMENT shall apply to such supply of EXCESS MATERIAL. HORIZON will not use EXCESS MATERIAL for any other purposes other than those specifically agreed to by the Parties in the relevant change order. Further, HORIZON will in no event use any expired (non-GMP) EXCESS MATERIAL in humans.”

4.2.Representations and Warranties

4.2.1. Section 9.3 shall be deleted in its entirety and replaced with the following:

“9.3 Except as expressly provided for herein, BI makes no further warranties of the merchantability or fitness of the PRODUCT or any warranties of any other nature, express or implied.

Notwithstanding the foregoing and except for Section 9.2.1, BI’s warranties, as set forth in Section 9.2 above, shall:

9.3.1 not apply in the event of EXCESS MATERIAL supplied under the AGREEMENT (including amendments).

4.2.2. A new Section 9.4 shall be added to the AGREEMENT:

“9.5 HORIZON represents and warrants that any EXCESS MATERIAL supplied under the AGREEMENT (including any amendments) will solely be used for the purposes mutually agreed to by the Parties in writing in each change order. Further, HORIZON represents and warrants that it will in no event use any expired EXCESS MATERIAL in humans.”

5. The Parties agree that the following topics will be discussed in good faith and if agreed hereon, including but not limited to use, pricing etc., shall be incorporated under a global supply

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agreement, which the Parties intend to finalize by […***…]:

(i) one (1) additional fermentation engineering run; and

(ii) one (1) additional GMP batch manufactured subsequent to the PPQ campaign, as set forth in Exhibit 4; and

(iii) extended facility time during the PPQ campaign, as set forth in Exhibit 4 due to prolonged hold-times; and

(iv) the price to be charged by BI for the manufacture of PRODUCT (fill and finish price) using the BBS from PPQ batches as envisaged in 3.4 and 3.5 herein; and

(v) HARMONISED MANUFACTURING PROCESS small scale characterisation studies.

6. Other than as set forth herein, the AGREEMENT remains unchanged and in full force and effect.

SIGNATURES

Boehringer Ingelheim Biopharmaceuticals GmbH

ppa. /s/ Alois Konrad Alois Konrad
Vice President,
Business & Contracts ppa. /s/ Dr. Andreas Felder Dr. Andreas Felder
Head, Corp. Division
Biopharmaceuticals

  

Horizon Pharma Ireland Limited

/s/ David Kelly

David Kelly
Executive Vice President

Appendices

Exhibit 1 a, b and c: Manufacturing Processes for Imukin, Actimmune and the HARMONISED
MANUFACTURING PROCESS

Exhibit 2: INTERFERON GAMMA I b BBS Price

Exhibit 3: Additional Scope of Services (Change Order #3, Change Order #10b, Change Order #11, Change Order #21)

Exhibit 4: Additional Scope of Services for Process Harmonisation (Change Order #12, Change Order #17, Change Order #20, Change Order #25, optional Change Order #26)

Exhibit 5: Timeline estimate

Exhibit 6: Billing Schedule for Additional Services

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Exhibit 1A, 1B AND 1C: MANUFACTURING PROCESSES FOR IMUKIN, ACTIMMUNE AND THE HARMONISED MANUFACTURING PROCESS

[…***…]

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Exhibit 1 a: MANUFACTURING PROCESS FOR ACTIMMUNE:

[…***…]

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Exhibit 1 b: MANUFACTURING PROCESS FOR IMUKIN:

[…***…]

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Exhibit 1 c: HARMONISED MANUFACTURING PROCESS FOR ACTIMMUNE AND IMUKIN PRODUCT AFTER SUCCESSFUL RE-VALIDATION:

[…***…]

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Exhibit 2: INTERFERON GAMMA 1 b BBS Price

[…***…]

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Exhibit 3: ADDITIONAL SCOPE OF SERVICES (Change Orders (CO))

[…***…]

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Exhibit 4: ADDITIONAL SCOPE OF SERVICES FOR PROCESS HARMONISATION

[…***…]

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Exhibit 5: TIMELINE ESTIMATE

[…***…]

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Exhibit 6:  BILLING SCHEDULE FOR ADDITIONAL SERVICES

[…***…]

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EX-10.8

Exhibit 10.8

COMMERCIAL SUPPLY AGREEMENT

between

SAVIENT PHARMACEUTICALS INC.

and

BIO-TECHNOLOGY GENERAL (ISRAEL) LTD.

COMMERCIAL SUPPLY AGREEMENT

This Commercial Supply Agreement (the “Agreement”) is made and entered into as of the 20^th day of March 2007, (hereinafter the “Effective Date”), by and between Savient Pharmaceuticals, Inc., a public company organized under the laws of the State of Delaware having its principal place of business at One Tower Center, 14^th Floor, East Brunswick, New Jersey 08816, USA (“Savient”), and Bio-Technology General (Israel) Ltd., a private company organized under the laws of the State of Israel having its principal place of business at Beer Tuvia Industrial Zone, POB 571, Kiryat Malachi 83104, Israel (“BTG”) (hereinafter, each of Savient and BTG a “Party” and, collectively, the “Parties”).

WITNESSETH:

WHEREAS, pursuant to the Share Purchase Agreement (the “SPA”) and the Asset Purchase Agreement (“APA”), each dated March 23, 2005 (the SPA and APA, collectively, the “Divestiture Agreements”), Savient has, on 17 July 2005, sold to Ferring B.V. all of the issued and outstanding share capital of BTG, and to Ferring International Centre S.A. all of Savient’s right, title and interest in certain drug products and drug candidates developed and/or manufactured by BTG, but not in any case in the drug candidate known as “PEG-uricase” (or also known as “Puricase”); and

WHEREAS, the Parties to this Agreement have entered into a development agreement dated March 20, 2007, (the “Development Agreement”) according to which BTG renders continued development, manufacturing and other services in relation to Puricase.

WHEREAS, Savient wishes BTG, and BTG is willing, to supply Bulk Product for Commercial Launch and further commercial sales.

NOW THEREFORE, in consideration of the foregoing premises, which are incorporated into and made a part of this Agreement, and of the mutual covenants which are recited herein, the Parties agree as follows:

ARTICLE 1

DEFINITIONS

1.01 “AE” shall mean, with respect to the Product, any adverse event associated with the use of the Product in a patient or clinical investigation, whether or not considered drug related, including the following: an adverse event occurring in the course of the use of the Product in professional practice; an adverse event occurring from drug overdose whether accidental or intentional; an adverse event occurring from drug abuse; an adverse event occurring from drug withdrawal; and any significant and consistent failure of expected pharmacological action. AE shall include, without limitation, any unfavorable and unintended sign (including, without limitation, an abnormal laboratory finding), an exacerbation of a pre-existing condition, intercurrent illness, drug interaction, significant worsening of a disease under investigation or treatment, significant failure of expected pharmacological or biological action, symptom or disease temporally associated with the use of the Product, whether or not considered related to

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the Product. Notwithstanding anything foregoing to the contrary, with respect to the Territory in which the Product is marketed, AEs shall include any experience required to be reported to a relevant authority in any such country.

1.02 “Affiliate” shall mean any business entity which directly or indirectly controls, is controlled by, or is under common control with any Party to this Agreement. A business entity shall be deemed to “control” another business entity if (i) it owns, directly or indirectly, at least fifty percent (50%) of the issued and outstanding voting securities, capital stock, or other comparable equity or ownership interest of such business entity, or (ii) it has the de facto ability to control or direct the management of such business entity. If the laws of the jurisdiction in which such entity operates prohibit ownership by a Party of fifty percent (50%) or more, “control” shall be deemed to exist at the maximum level of ownership allowed by such jurisdiction; provided, however, that there is a de facto ability to direct or control its management.

1.03 “BLA” means a regulatory application filed with a governmental agency in a country or a group of countries (e.g. FDA or EU EMEA) for the purpose of lawfully marketing, selling, distributing, importing, exporting, manufacturing, developing or using a therapeutic or prophylactic product for the treatment or prevention of a disease or physical condition; a BLA shall include, without limitation, a Product License Application or Marketing Authorization in the European Union, and a Biologics License Application or a New Drug Application in the United States.

1.04 “BTG Assigned Improvements” shall mean all developments, discoveries, inventions, improvements, designs, methods, processes, techniques, devices, formulae and trade secrets related to the Product (including, without limitation, its pharmaceutical utility) and/or Processing of the Bulk Product or Product which are (i) made, created, developed or conceived, or reduced to practice, by BTG or an Affiliate of BTG and (ii) dominated by the Savient Patent Rights or necessary or useful in the Processing of the Bulk Product or Product. Notwithstanding the foregoing, BTG Assigned Improvements shall not include any innovations which are of general use in biopharmaceutical manufacturing.

1.05 “BTG Licensed Improvements” shall mean all developments, discoveries, inventions, improvements, designs, methods, processes, techniques, devices, formulae and trade secrets related to the Product (including, without limitation, its pharmaceutical utility) and/or Processing of the Bulk Product or Product which are (i) made, created, developed or conceived, or reduced to practice, by BTG or an Affiliate of BTG, and (ii) necessary or useful in the Processing of the Bulk Product or (iii) of general use in biopharmaceutical manufacturing.

1.06 “BTG Indemnitee” shall mean BTG and its Affiliates, and each of their respective directors, officers, employees and agents.

1.07 “BTG Know-How” shall mean all Know-How developed by BTG or any of its Affiliates during the Term or by BTG prior to July 17, 2005 relating to (i) the Bulk Product or Product (including, without limitation, its pharmaceutical utility) or (ii) the Processing of the Bulk Product or Product , and shall include, without limitation, all data (in any form, raw or analyzed or reported and whether maintained in paper, electronic or other media forms) relating to

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formulation, analytical methods, pre-clinical and clinical trials, pharmacology, toxicology, regulatory information, and data relating to the manufacture and use of such Bulk Product or Product.

1.08 “Bulk Product” shall mean the bulk solution of polyethylene glycol (PEG) conjugate of uricase ordered by Savient from BTG pursuant to this Agreement.

1.09 “Business Day” shall mean any day other than (i) Friday, Saturday or Sunday or (ii) a day on which banking institutions located in New York, New York, United States of America or in Israel are permitted or required by law, executive order or governmental decree to remain closed.

1.10 “cGMP” shall mean current good manufacturing practices as set forth in Title 21, Parts 210 and 211 of the C.F.R. and 21 C.F.R. Part 312 (IND) and Part 314 (NDA), and 21 C.F.R. Part 600 (Biological Products), as established and amended by the FDA.

1.11 “Claim” shall mean all charges, complaints, actions, suits, proceedings, hearings, investigations, claims, demands, judgments, orders, decrees, stipulations, injunctions, damages (including all incidental and consequential damages claimed by Third Parties), deficiencies, defaults, assessments, dues, penalties, fines, costs, amounts paid in settlement, liabilities, obligations, taxes, liens, losses, lost profits claimed by Third Parties, expenses, costs and fees (including without limitation interest, court costs, reasonable fees of attorneys, accountants and other experts or other expenses of litigation or other proceedings or of any claim, default or assessment), and includes all damages awardable pursuant to statute and treble damages.

1.12 “Commercial Bulk Product Specifications” shall mean the manufacturing and quality specifications for the Bulk Product, including, without limitation, unit descriptions established initially in accordance with Section 3.01(ii) and amended from time to time in accordance with Section 3.01(iii) .

1.13 “Commercial Launch” shall mean the first commercial sale of the Product in any country of the Territory.

1.14 “Competing Product” shall mean any prescription pharmaceutical product that (i) contains uricase as an active ingredient or (ii) is used for the therapeutic or prophylactic treatment of gout (in any form) or other diseases and conditions involving hyperuricemia and/or monosodium urate crystals.

1.15 “Current Provisional Bulk Product Specifications” shall mean those provisional specifications set forth on Exhibit C hereto and any amended and restated Bulk Product specifications which are agreed to by the Parties in accordance with Section 3.01(i) .

1.16 “Development Agreement” shall mean that certain Development Agreement by and between the Parties hereto, dated as of the date hereof.

1.17 “Dollar” shall mean the United States dollar.

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1.18 “FDA” shall mean the United States Food and Drug Administration or its foreign equivalent as may be appropriate in any given context.

1.19 “Facility” shall mean, the BTG facility located at Be’er Tuvia Industrial Zone, POB 571, Kiryat Malachi 83104, Israel, within which, and for the purposes of the calculation of “Pro Rata Basis” as defined in Section 1.37 there is the:

(i) “Purification Area” of the Facility used in the Processing of Bulk Product and comprising the small purification line totaling166 square meters;

(ii) “Fermentation Area” of the Facility used from time to time for the Processing of Bulk Product and comprising the fermentation suite, totaling 245 square meters;

(iii) “Recovery Area” of the Facility used from time to time for the Processing of Bulk Product and comprising the recovery suite, totaling 124 square meters, and;

(iv) “Total Manufacturing Area” of the Facility comprising the portion of the Facility dedicated to product manufacturing, excluding common areas such as buffer preparation, totaling 1182 square meters.

1.20 “Field” shall mean human therapeutic or prophylactic or diagnostic applications for the prevention, treatment and/or cure of diseases and physical conditions.

1.21 “Filled Product” shall mean sterile Product that is in Process and has been filled into its final primary packaging for further labeling or packaging activities.

1.22 “Genetic Material” shall mean the master cell bank of the E. coli strain expressing the recombinant uricase variant used in the Processing of the Bulk Product.

1.23 “IND” shall mean an Investigational New Drug application, as defined in 21 C.F.R. 312.3, and filed with the FDA or any equivalent foreign Regulatory Agency.

1.24 “Joint Inventions” shall mean (i) all patentable inventions jointly invented (as determined in accordance with United States patent law) by Savient (or its Affiliates) and BTG (or its Affiliates) pursuant to their activities relating to this Agreement during the Term, and (ii) all Know-How that Savient (or its Affiliates) and BTG (or its Affiliates) jointly make, create, develop, discover, conceive or reduce to practice pursuant to their activities relating to this Agreement during the Term other than those inventions described in the preceding clause (i).

1.25 “Know-How” shall mean all technical information, data (including, without limitation, regulatory data) patentable and unpatentable inventions, developments, discoveries, methods and processes that are, in each case, not disclosed in a published patent application or patent or otherwise publicly available, and includes, without limitation, BTG Know-How.

1.26 “Legal Requirements” shall mean (i) any present and future national, state, local or similar laws (whether under statute, rule, regulation or otherwise), (ii) requirements under permits, orders, decrees, judgments or directives, and requirements of applicable Regulatory Agencies (including, without limitation, cGMP) and (iii) regulations pertaining to commercially

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available biologic pharmaceutical products or to maintaining a BLA (with respect to each of the foregoing, as amended or revised from time to time).

1.27 “Negligence” shall mean an act or omission implying either a failure to exercise the care which a reasonable or prudent person would do in the circumstances, or taking action which such a reasonable person would not; as used herein, a reasonable or prudent person shall be considered to have such expertise as would be required in order to allow such party to perform the obligations of the parties hereunder with the level of skill and competence which prevail in the pharmaceutical industry.

1.28 “Non-Conforming Bulk Product” shall mean any Bulk Product which, at the time of delivery in accordance with ARTICLE 7, does not meet the Commercial Bulk Product Specifications.

1.29 “OCS” shall mean Office of Chief Scientist, The Ministry of Industry and Trade, State of Israel.

1.30 “OCS Requirements” shall mean the requirements of OCS which apply to the Product, including, without limitation, as specified pursuant to The Encouragement of Research and Development in Industry Law of 1984, as amended, and in the agreements by and among Savient, BTG and the OCS.

1.31 “Person” shall mean any individual, partnership, corporation, limited liability company, unincorporated organization or association, any trust or any other business entity.

1.32 “Process” or “Processing” shall mean the act of purification, preparation, filling, testing and any other pharmaceutical manufacturing procedures, or any part thereof (including, but not limited to, product or process specifications, testing or test methods, raw material specifications or suppliers, equipment, etc.), relating to, as applicable, the Bulk Product and Product.

1.33 “Product” shall mean pharmaceutical products containing Bulk Product ordered by Savient pursuant to this Agreement.

1.34 “Product Liability Claim” shall mean a Claim of a Third Party (other than a Claim arising out of use of the Product in a clinical trial) that (i) arises as a result of the use of the Product during the Term that results in personal injury or death or (ii) is in anticipation of or intended to prevent or forestall personal injury or death as a result of the use of the Product during the Term.

1.35 “Product Technology” shall mean the (i) Savient Patent Rights, (ii) Savient Know-How, (iii) BTG Assigned Improvements, (iv) BTG Licensed Improvements, (v) BTG Know-How, (vi) any developments, discoveries, inventions, improvements, designs, methods, processes, techniques, devices, formulae, and trade secrets which are or may be (A) developed, acquired or conceived by Savient and/or BTG and are derived from the Development Plan performed under the terms of the Development Agreement, developed by BTG prior to July 17, 2005 and related to the Bulk Product or used in the Processing of Bulk Product, or are derived from the manufacture and supply of Bulk Product, or (B) used in the Processing of Bulk Product.

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1.36 “Product Specifications” shall mean the manufacturing and quality specifications for the Product as attached hereto as Exhibit G as they may be modified from time to time.

1.37 “Pro-Rata Basis” shall mean when Facility changes will be implemented pursuant to the provisions of Section 6.03(ii)(B) and:

(i) such Facility changes will impact the totality of the Total Manufacturing Area and/or the common and technical areas related to manufacturing, the cost of the changes multiplied by a percentage, where such percentage equals

Purification Area	PLUS	Fermentation Area	X Time PLUS	Recovery Area	X Time
Total Manufacturing Area		Total Manufacturing Area		Total Manufacturing Area

(ii) when such Facility changes will impact only the Fermentation Area, the cost of the changes multiplied by Time;

(iii) when such Facility changes will impact only the Recovery Area, the cost of the changes multiplied by Time;

1.38 “Quality Agreement” shall mean that certain Quality Agreement by and between the Parties hereto, dated as of the date hereof and attached to this Agreement as Exhibit D.

1.39 “Regulatory Agency” shall mean with respect to the United States, the FDA, or, in the case of a country in the Territory other than the United States, such other appropriate regulatory agency with similar responsibilities.

1.40 “Residual Rights Agreement” shall mean that certain Amended and Restated Residual Rights Agreement by and between Savient and BTG, effective as of July 17, 2005, and attached hereto as Exhibit F.

1.41 “SAE” shall mean, with respect to the Product, any serious adverse event occurring during clinical trials of the drug at any dose that results in any of the following outcomes: death, a life-threatening adverse drug experience, inpatient hospitalization or prolongation of existing hospitalization, a persistent or significant disability/incapacity, or a congenital anomaly/birth defect. Important medical events that may not result in death, be life-threatening or require hospitalization may be considered a serious adverse drug experience when, based upon appropriate medical judgment, they may jeopardize the patient or subject and may require medical or surgical intervention to prevent one of the outcomes listed in this definition. Examples of such medical events include allergic bronchospasm requiring intensive treatment in an emergency room or at home, blood dyscrasias or convulsions that do not result in patient hospitalization, or the development of drug dependency or drug abuse.

1.42 “Savient Improvements” shall mean all inventions related to the Bulk Product or Product (including, without limitation, its pharmaceutical utility) and/or Processing of the Bulk Product or Product which are made, created, developed or conceived, or reduced to practice or come to be owned, by Savient or an Affiliate of Savient and are dominated by the Savient Patent Rights.

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1.43 “Savient Indemnitee” shall mean Savient and its Affiliates, and each of their respective directors, officers, employees and agents.

1.44 “Savient Know-How” shall mean all Know-How developed by Savient or any of its Affiliates during the Term relating to (i) the Bulk Product or Product (including, without limitation, its pharmaceutical utility) or (ii) the Processing of the Bulk Product or Product, and shall include, without limitation, all data relating to formulation, analytical methods, pre-clinical and clinical trials, pharmacology, toxicology, regulatory information, and data relating to the manufacture and use of such Bulk Product or Product.

1.45 “Savient Patent Rights” shall mean all valid patent claims contained in (i) the patent(s) and patent applications listed on Exhibit A; (ii) all converted provisionals, divisions, continuations, continuations-in-part, reissues, reexaminations or extensions thereof; (iii) any corresponding foreign counterparts and equivalents thereof; and (iv) any patents or patent applications filed after July 17, 2005.

1.46 “Sublicensee” shall mean any Third Party or Affiliate to whom a sublicense has been granted pursuant to Section 2.05.

1.47 “Term” shall have the meaning set forth in Section 11.01.

1.48 “Territory” shall mean, collectively, each country in the world.

1.49 “Third Party” shall mean any Person who is not a Party or an Affiliate under this Agreement.

1.50 “Time” shall mean for the purposes of the calculation of Pro Rata Basis, as defined in Section 1.37, the percentage based on the number of weeks that either the Fermentation Area or the Recovery Area, as applicable, is used for the Processing of Bulk Product divided by (i) 46 in the case of an entire year or (ii) the respective number of weeks in the billing term if the period is less than a year.

1.51 “United States” shall mean the fifty states of the United States of America, the District of Columbia and all territories and possessions of the United States of America and any other location where the FDA has jurisdiction over medicinal products intended for human use.

ARTICLE 2

INTELLECTUAL PROPERTY LICENSES

2.01 Grant of Licenses; Assignment.

(i) No restriction of license rights under the Residual Rights Agreement. The parties are agreed that the following provisions shall not in any way remove or restrict the rights pertaining to the grant of licenses to either party (“RRA License Rights”) as they exist pursuant to the Residual Rights Agreement. In the event of a conflict between this Agreement

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and the Residual Rights Agreement with respect to the RRA License Rights, the relevant provisions of the Residual Rights Agreement shall take precedence.

(ii) Grant by Savient. Savient hereby grants to BTG, and, if applicable, shall cause its Affiliates to grant to BTG, a fully paid-up, royalty-free, non-exclusive license within the State of Israel (“BTG Territory”) to manufacture, have manufactured, produce, have produced, develop, have developed, use, have used, offer for sale, have offered for sale, sell, have sold, export, and have exported Bulk Product under the Savient Patent Rights, the Savient Know-How, and the rights to the Savient Improvements for supply exclusively to Savient.

(iii) Grant by BTG. BTG hereby grants to Savient and, if applicable, shall cause its Affiliates to grant to Savient, a fully paid-up, royalty-free, non-exclusive license in the Territory to manufacture, have manufactured, produce, have produced, develop, have developed, use, have used, offer for sale, have offered for sale, sell, have sold, export, and have exported Bulk Product under the BTG Licensed Improvements and BTG Know-How.

(iv) Assignment by BTG. BTG shall promptly assign (and, if applicable, shall cause its Affiliates to assign) to Savient all right title and interest in and to any invention or discovery which may be claimed as a BTG Assigned Improvement. BTG shall execute (and, if applicable, shall cause its Affiliates to execute) such documents as may be necessary to obtain, perfect or maintain any patent rights arising out of the BTG Assigned Improvements, and shall cooperate with Savient so far as reasonably necessary with respect to furnishing all information and data in its possession which is reasonably necessary or useful to obtain and maintain such patent rights.

2.02 Notice of Improvements & Joint Inventions. BTG shall give Notice to Savient of all BTG Assigned Improvements, BTG Licensed Improvements and Joint Inventions promptly within due course of the discovery or creation thereof, but in any event at least thirty (30) days prior to any proposed publication thereof by BTG, its Affiliates or Sublicensees. Savient shall give Notice to BTG of all Savient Improvements and Joint Inventions promptly within due course of the discovery or creation thereof, but in any event at least thirty (30) days prior to any proposed publication thereof by Savient, its Affiliates or Sublicensees. The Parties shall, in any event, notify each other no less than annually, of whether they have made any BTG Assigned Improvements, BTG Licensed Improvements, Savient Improvements or Joint Inventions, as the case may be.

2.03 Disclosure of Know-How. BTG shall disclose, and shall cause its Affiliates to disclose, as soon as reasonably practicable, to Savient all BTG Know-How acquired, developed or which comes to be possessed by the BTG or any of its Affiliates after the date hereof (and upon reasonable request by Savient, shall make such disclosure in writing).

2.04 Use of Joint Inventions.

(i) Subject to subsections (ii) and (iii) hereof, each Party shall have the right to practice under the Joint Invention rights without any duty of accounting to the other Party.

(ii) BTG agrees that, except as otherwise agreed by the Parties in writing, it shall not (and shall, if applicable, ensure that its Affiliates shall not) (A) grant any license under the

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Joint Invention Rights to any other Person to manufacture, have manufactured, produce, have produced, develop, have developed, use, have used, market, have marketed, import, have imported, export, have exported, sell or have sold any Competing Product, or (B) practice any Claim under the Joint Inventions rights to manufacture, have manufactured, produce, have produced, develop, have developed, use, have used, market, have marketed, import, have imported, export, have exported, sell or have sold any Competing Product.

(iii) Each Party agrees that it shall (and shall, if applicable, ensure that its Affiliates shall) notify the other Party before granting any license to any other Person to manufacture, have manufactured, produce, have produced, develop, have developed, use, have used, import, have imported, export, have exported, offer for sale, have offered for sale, sell or have sold any product outside the Field under the Joint Invention rights; provided, however, that neither Party shall grant or purport to grant any license under the Joint Invention rights that is exclusive as to the other Party or its assignees or Sublicensees without the prior written consent of such other Party.

2.05 Sublicensing. Savient shall have the right to grant sublicenses of licenses granted to it in Section 2.01 of this Agreement to its Affiliates and to any Third Party; provided, however, that Savient, to the extent applicable, (i) ensures that each such Sublicensee and Third Party shall consent to be bound by the terms of this Agreement as a Sublicensee or Third Party and to the same extent as Savient with respect to such Sublicenses or Third Party’s activities, (ii) informs BTG, in confidence, of each sublicense granted, and any modification or termination thereof, within sixty (60) days after the modification, or termination of a sublicense and (iii) guarantees to BTG the performance of any of its obligations which it fulfills through sublicensing and remains primarily liable for the performance of such obligations.

2.06 OCS Requirements. BTG shall not without prior written approval of Savient (and, if applicable, shall ensure that its Affiliates shall not) take any action (including, without limitation, Processing the Bulk Product outside the State of Israel) which would (i) cause either Party (or any of their Affiliates) to violate any of the OCS Requirements or (ii) result in any increase of royalties due to OCS. Additionally, upon request by Savient, BTG shall cooperate and collaborate with Savient in applying to the OCS for Savient to carry out the manufacture of the Bulk Product through a Third Party outside the State of Israel. The Parties acknowledge the rights and obligations of each Party under Section 5 of the Residual Rights Agreement and each Party shall honor such rights and obligations set forth therein.

ARTICLE 3

SPECIFICATIONS; ONGOING REGULATORY ASSISTANCE

3.01 Specifications.

(i) Current Provisional Bulk Product Specifications. The Current Provisional Bulk Product Specifications are attached as Exhibit C. The Parties are agreed that the Current Provisional Bulk Product Specifications may still be subject to modification based on the outcome of the Validation, as defined and performed pursuant to the Development

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Agreement, and subject to the mutual agreement of the parties, such agreement not to be unreasonably conditioned, delayed or withheld.

(ii) Initial Commercial Bulk Product Specifications. The initial Commercial Bulk Product Specifications shall be agreed upon in writing by the Parties, as soon as reasonably practicable after the conclusion of the Validation, as defined and performed pursuant to the Development Agreement, but in no event later than ninety (90) days from the conclusion of the Validation, unless the Parties shall mutually agree to extend such time period (hereinafter the “Commercial Bulk Product Specifications”). The Commercial Bulk Product Specifications shall be incorporated into this Agreement by formal amendment as Exhibit C-1 and shall be the controlling standards for the manufacture of Bulk Product pursuant to this Agreement unless and until they are changed by written agreement between the parties. In determining the Commercial Bulk Product Specifications, the Parties shall take into consideration particularly (i) the results of the subsequent development activity of BTG under the Development Agreement and (ii) the results of the Validation as defined and performed pursuant to the Development Agreement.

(iii) Amendment of Commercial Bulk Product Specifications. Subject to the provisions of Section 6.02 and 6.03 (including the cost reimbursements provisions thereof), Savient shall have the right to amend the Commercial Bulk Product Specifications from time to time; provided, however, that (i) Savient shall use commercially reasonable efforts to minimize the frequency of such changes and shall provide BTG with reasonable advanced Notice of any changes to the Commercial Bulk Product Specifications (but, in any event, at least ninety (90) days advance notice) and (ii) the Parties have agreed in writing upon the implications and costs related to any contemplated changes pursuant to this Section 3.01, which agreement shall not be unreasonably conditioned, withheld or delayed. Without in any way limiting the foregoing, any modifications to the Commercial Bulk Product Specifications required by any Regulatory Agency with jurisdiction to require such modifications shall be made in accordance therewith.

3.02 Ongoing Assistance by BTG for Initial and Subsequent Filings or Applications.

(i) Upon the expiration or earlier termination of the Development Agreement, BTG hereby agrees to provide, in respect to any jurisdiction within the Territory (A) all information and assistance which is reasonably necessary for or useful in the preparation of (i) comprehensive and complete INDs and BLAs, including, without limitation, the Chemistry Manufacturing and Controls (CMC) section of the BLAs for the Product, (ii) any amendments and supplements to such filings and applications, (iii) subsequent filings and applications for secondary indications or additional marketing, sale, importing, exporting authorizations, or (iv) similar filings and applications and (B) access to the Facility and pertinent information to FDA inspectors conducting the pre-approval inspection. All documents to be supplied by BTG pursuant to this Section 3.02 or any other provision of this Agreement shall be translated by BTG into the English language as may be necessary. Any labor costs of BTG employees and/or Third Party expenses incurred by BTG related to this assistance shall be reimbursed by Savient in the manner and at the rates set forth on Exhibit B hereto.

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(ii) Ownership. The Parties agree that all INDs and BLAs arising under this Agreement, including any and all modifications and supplements thereto, will be owned by and held in the name of Savient and will list BTG in accordance with its role as contemplated under this Agreement and in compliance with the Legal Requirements. BTG shall have no rights in or to the IND or BLA and any and all modifications and supplements thereto, other than any rights specifically granted pursuant to this Agreement.

3.03 Record and Files. Upon the expiration or earlier termination of the Development Agreement, BTG shall maintain those documents required by the applicable Legal Requirements during the Term and for any period required by such Legal Requirements. BTG shall maintain those records specified in 21 C.F.R. § 600.12(e) for cases of divided manufacturing responsibility for biologics and shall provide the records as specified therein to any Third Party fillers or manufacturers designated by Savient.

ARTICLE 4

SUPPLY OF INGREDIENTS AND MATERIALS

4.01 Procurement of Ingredients and Materials.

(i) Ordinary and Safety Stocks. Ingredients and materials necessary for the Processing of Bulk Product shall be purchased and stored by BTG in accordance with the terms of the Quality Agreement and in commercially reasonable and prudent production and safety stock quantities necessary to meet the Bulk Product Forecast (as defined in Section 5.03) giving due regard to the potential for production and batch failures, Bulk Product loss until delivery to Savient and the amendment of the Bulk Product Forecast in accordance with Section 5.06.

(ii) PEG Purchases from NOF. The foregoing notwithstanding, Savient, in its sole and absolute discretion, shall have the right, but not the obligation, to directly contract with NOF Corporation for m-PEG-NPC (mono-methoxy polyethylene glycol nitro-phenyl carbonate) (hereinafter the “PEG”) necessary for BTG to Process the Bulk Product, provided, however, in the event Savient elects to do so, then (i) Savient shall use best efforts to ensure that adequate stock, including safety stock quantities, of PEG, in amounts to be agreed upon between the Parties, are delivered to BTG in a timely manner in order to enable BTG to fulfill its obligations to Process Bulk Product to meet the requirements of all Purchase Orders placed by Savient pursuant to Section 5.05; (ii) BTG agrees that it will, in accordance with the terms of the Quality Agreement, store and test, as applicable, such stock of PEG delivered by NOF; (iii) BTG shall reimburse Savient for the cost of any PEG utilized in the Processing of Bulk Product that is determined to be (a) Non-Conforming Bulk Product, or (b) a failed batch; (iv) that such agreement between Savient and NOF shall not materially interfere with the terms of this Agreement or unduly interfere with BTG’s ability to carry out its work; and (v) the inability of BTG to perform under the terms of this Agreement, where such failure is due to the failure of Savient to ensure the timely delivery to BTG of adequate stock of PEG shall not be deemed to be a breach by BTG of its obligations under this Agreement.

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4.02 Maintenance of Genetic Material. From the Effective Date, BTG shall (or shall procure one of its Affiliates to) maintain such quantity of Genetic Material to meet Purchase Orders placed and the Bulk Product Forecast provided by Savient pursuant to ARTICLE 5. In the event of the expiration or termination of this Agreement, BTG shall, within thirty (30) days of the effective date of such expiration or termination, transfer to Savient or its designee any and all remaining quantities of Genetic Material. Any labor costs of BTG employees and/or Third Party expenses incurred by BTG related to transfer of Genetic Material shall be reimbursed by Savient in the manner and at the rates set forth on Exhibit B hereto.

4.03 Reference Materials. BTG shall provide Savient with any physical, chemical or biological material that is otherwise unavailable, which is to be used as a reference standard in the testing of Bulk Product, ingredients or raw materials. Such physical, chemical or biological material shall be provided to Savient at cost plus 50% (fifty percent). Payments due by Savient under this Section 4.03 shall be payable by Savient no later than forty-five (45) days after the invoice date.

ARTICLE 5

BTG FACILITY CAPACITY, FORECASTING, PURCHASE ORDERS

AND ORDER CONFIRMATIONS

5.01 BTG Facility Bulk Product Processing Capacity and Capacity Reservation Fee.

(i) Existing Facility Capacity. Savient and BTG acknowledge that based on the (A) Purification Area used in the Processing of Bulk Product, (B) the Fermentation Area and the Recovery Area used from time to time for the Processing of Bulk Product, (C) methods, processes and procedures currently utilized in the Processing of Bulk Material as of the Effective Date, and (D) the current shift arrangement (one (1) — eight (8) hour shift operating five (5) days per calendar week during a forty-six (46) work week calendar year) in the Facility as of the Effective Date (hereinafter the “Capacity Parameters”), the BTG Facility has the projected capacity to Process up to forty-two (42) batches of Bulk Product per calendar year in the absence of other products manufactured in the areas specified above. Additionally, Savient and BTG acknowledge that this capacity could be increased, upon appropriate advance notice, if additional shift operations were implemented and/or certain Facility changes were made.

(ii) Subject to the terms set forth in this Section 5.01(ii), in order to reserve capacity at BTG for the Processing of Bulk Product, for all Bulk Product forecasted by Savient to be Processed by BTG and purchased by Savient prior to the Commercial Launch of the Product and through December 31, 2010 (hereinafter the “Reservation Fee Period”), Savient shall remit to BTG a Processing Capacity Reservation Fee in the amounts and manner set forth below:

(A) Within ten (10) Business Days of the provision of the Preliminary Bulk Product Forecast pursuant to Section 5.02, Savient shall remit to BTG a Processing Capacity Reservation Fee of Three Million Dollars ($3,000,000).

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(B) Within ten (10) Business Days of the provision of the Bulk Product Launch Forecast pursuant to Section 5.03, Savient shall remit to BTG a Processing Capacity Reservation Fee equal to the amount required to bring Savient’s Processing Capacity Reservation Fee, when added to the amount remitted under Section 5.01(ii)(A), to twenty percent (20%) of the applicable Price, as defined in Section 8.01, of the number of batches of Bulk Product reflected on such Bulk Product Launch Forecast, provided, however, if the amount calculated under this Section 5.01(ii)(B) is less than the Processing Capacity Reservation Fee remitted under Section 5.01(ii)(A) the Processing Capacity Reservation Fee shall remain at such higher amount. In the event that the initial Bulk Product Launch Forecast pursuant to section 5.03 is not provided by September 30, 2007, then Savient shall remit monthly to BTG an additional Processing Capacity Reservation Fee of $125,000 for each additional month that passes until the provision of the initial Bulk Product Launch Forecast.

(C) Within ten (10) Business Days of the provision of any Bulk Product Forecast pursuant to Section 5.03 or any Amended Bulk Product Forecast provided by Savient pursuant to Section 5.06 provided by Savient on or before July 1, 2009, Savient shall remit to BTG a Processing Capacity Reservation Fee equal to the amount required to bring Savient’s Processing Capacity Reservation Fee, when added to the amount remitted under Sections 5.01(ii)(A) and 5.01(ii)(B), to twenty percent (20%) of the applicable Price, as defined in Section 8.01, of the number of batches of Bulk Product reflected on such Bulk Product Forecast or Amended Bulk Product Forecast that are projected for purchase during the Reservation Fee Period, provided, however, if the amount calculated under this Section 5.01(ii)(C) is less than the aggregate of the Processing Capacity Reservation Fee remitted under Sections 5.01(ii)(A) and 5.01(B) the Processing Capacity Reservation Fee shall remain at such higher amount.

(D) All Processing Capacity Reservation Fee amounts remitted by Savient to BTG under this Section 5.01(ii) shall:

(1) earn interest at the one (1) year London Interbank Offering Rate (“LIBOR”) with the interest earned thereon inuring to the sole benefit of Savient;

(2) be credited, inclusive of interest, by BTG on a per batch basis by providing a 20% discount on the value of each batch at the time of invoicing for Bulk Product purchased by Savient during the Reservation Fee Period until it is fully utilized, provided however, except as otherwise provided in Sections 5.01(ii)(F), 5.01(ii)(G) and 5.01(ii)(H), any uncredited Processing Capacity Reservation Fee, inclusive of interest, remaining at the end of the Reservation Fee Period due to a failure by Savient to take delivery of Bulk Product which conforms to the Commercial Bulk Product Specifications and which is ordered pursuant to a Bulk Product Forecast provided pursuant to Section 5.03 or an Amended Bulk Product Forecast provided pursuant to Section 5.06 and which is otherwise properly amended pursuant to Section 5.05 shall be forfeited by Savient to BTG. For purposes of clarity, the credit of the Processing

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Capacity Reservation Fee shall accrue upon the delivery of the Bulk Product by BTG to Savient and shall be reflected on the invoice which relates to the Bulk Product shipment in question; and

(3) BTG shall provide to Savient a quarterly statement within ten (10) Business Days of the end of each calendar quarter of the then current balance of the Processing Capacity Reservation Fee, inclusive of interest, available for credit to the purchase of Bulk Product by Savient.

(E) Subject to the last sentence of this Section 5.01(ii)(E), Savient and BTG acknowledge and agree that by the conclusion of the Reservation Fee Period the demand for Savient’s Product will be sufficiently capable of reliable forecasting as to negate the need for a Processing Capacity Reservation Fee and that such will not be required for Bulk Product forecasted for purchase beyond the expiration of the Reservation Fee Period. On that basis, the final Processing Capacity Reservation Fee shall be due based on twenty percent (20%) of the applicable Price, as defined in Section 8.01, of the number of batches of Bulk Product reflected on the Bulk Product Forecast or Amended Bulk Product Forecast that is submitted for the period July 2009 through December 2010. If there is a delay in the commercial launch of the Product beyond the first calendar quarter of 2009 or any other factor reasonably preventing a reliable Bulk Product forecasting by the conclusion of the Reservation Fee Period, then the Parties will meet in good faith and discuss whether a further capacity reservation fee is necessary or appropriate and, if it is agreed necessary, for what duration and amount, if any.

(F) Anything to the contrary notwithstanding, in the event that any amount of the Processing Capacity Reservation Fee, inclusive of interest, remains unused or unapplied at the end of the Reservation Fee Period due to a failure by BTG for any reason, including Force Majeure conditions affecting BTG or the import, export or transportation of the Bulk Product which is beyond the reasonable control of BTG or Savient, to timely deliver any number of batches of Bulk Product properly ordered and accepted in accordance with the terms of this Agreement, then any amount of the Processing Capacity Reservation Fee, inclusive of interest, which would have been used for or applied to the purchase of Bulk Product but for the non-delivery or untimely delivery thereof, shall be refunded to Savient by wire transfer within fifteen (15) Business Days of the end of the Reservation Fee Period. For purposes of determining timely delivery pursuant to this section, the delivery dates identified in a Purchase Order submitted and accepted in accordance with Section 5.05 herein shall be considered binding, except in the event of a Force Majeure condition affecting BTG or the import, export or transportation of the Bulk Product which is beyond the reasonable control of BTG or Savient, in which case the Parties shall agree upon a reasonable extension of the delivery date in accordance with Section 14.14 hereof.

(G) In the event this Agreement is terminated by Savient pursuant to Sections 11.02 (ii) (for Force Majeure conditions affecting BTG), 11.02 (iii) (Material Breach by BTG), or 11.02 (v) (for insolvency of BTG) hereof, any amount of the Processing Capacity Reservation Fee and accrued interest thereon which has not been applied to payments for Bulk Product actually purchased by and delivered to Savient, shall be

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returned to Savient via wire transfer within thirty (30) days of the effective date of termination of this Agreement. In the event this Agreement is terminated with the mutual consent of both Parties, then, as part of such mutual consent, the Parties shall discuss in good faith and reach resolution with regard to the disposition of the then-existing Capacity Reservation Fee, including any interest thereon, having due regard for the reasons and basis that lead the Parties to terminate this Agreement by mutual consent.

(H) Savient and BTG further acknowledge and agree that in the event the BLA for Savient’s Product is not filed with the FDA on or before December 31, 2008 then the Processing Capacity Reservation Fee previously paid by Savient to BTG and accrued interest thereon relating to Bulk Product Forecasts provided by Savient before December 31, 2008 shall be refundable to Savient only in the event and to the extent that BTG is able, with the use of best efforts, to mitigate its losses by scheduling into the Processing Capacity reserved for Savient during such period production of a product or products on behalf of BTG, an Affiliate, or a third party, or any combination thereof.

5.02 Preliminary Bulk Product Forecast. As soon as reasonably practicable, but in no event later than thirty (30) days from the date of full execution of this Agreement, Savient shall provide BTG a preliminary, non-binding projection of its first eighteen month rolling forecast that sets forth Savient’s then best estimate of the date for the delivery of the first commercial quantity of Bulk Product and the total quantity of Bulk Product for commercial supply that Savient expects to order from BTG within the eighteen (18) month period following delivery of such first commercial quantity (“Preliminary Bulk Product Forecast”). In the Preliminary Bulk Product Forecast, Savient shall:

(i) set forth the assumptions it is utilizing for the establishment of the date for the delivery of the first commercial quantity of Bulk Product;

(ii) include a breakdown of the total quantity of Bulk Product by month for the eighteen months following the delivery of the first commercial order; and

(iii) identify the variables, Process and regulatory questions and issues and logistical considerations that could impact the date for the delivery of the first commercial quantity of Bulk Product.

Within thirty (30) days of the issuance of the Preliminary Bulk Product Forecast, Savient and BTG shall meet to commence good faith discussions and agree on the methodology and timeline for bringing to resolution and conclusion any and all Process and regulatory questions, issues and logistical considerations outlined in the Preliminary Bulk Product Forecast. Savient and BTG shall use their mutual best efforts to conclude these discussions and reach final resolution as soon as reasonably practicable, but in no event later than July 30, 2007, unless the parties mutually agree that additional time is required.

5.03 Bulk Product Launch Forecast and Bulk Product Forecast. Commencing at least twelve (12) months prior to the delivery date of the first Firm Order, Savient shall submit to BTG its final initial launch Bulk Product forecast which shall set forth month by month an eighteen (18) month rolling forecast that sets forth the total quantity of Bulk Product for commercial supply

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that Savient either has ordered, desires to order, or expects to order from BTG within the eighteen (18) month period following delivery of such first commercial quantity (“Bulk Product Launch Forecast”). Thereafter, Savient shall provide on a monthly basis on or before the first Business Day of each calendar month an updated Bulk Product forecast for the next ensuing eighteen (18) month rolling period (“Bulk Product Forecast”). In the Bulk Product Forecast, Savient shall:

(i) include a breakdown of the total quantity of Bulk Product by month for the following eighteen (18) month rolling period; and

(ii) in respect of the monthly breakdown under (i) above, identify the relevant set of Bulk Product Specifications.

As used herein, the term “Forecast” shall mean, as applicable, the Bulk Product Launch Forecast or Bulk Product Forecast, as may be amended from time to time pursuant to Section 5.06 hereof.

5.04 Firm Orders and Firm Forecasts. The Bulk Product Forecast submitted monthly by Savient shall breakdown by month of the next ensuing eighteen (18) months of the Bulk Product Forecast and shall consist of:

i. a rolling firm irrevocable order for the first two (2) quarters (i.e. quarters 1 and 2) of the Bulk Product Forecast (“Firm Order”), which shall each be the subject of a Purchase Order delivered and confirmed in accordance with Section 5.05;

ii. a rolling two (2) quarter forecast for the second two (2) quarters (i.e. quarters 3 and 4) of the Bulk Product Forecast (each a quarterly “Firm Forecast”); and

iii. a rolling two (2) quarter estimate for the third two (2) quarters (i.e. quarters 5 and 6) of the Bulk Forecast (each a quarterly “Estimated Forecast”).

5.05 Purchase Orders and Order Confirmations. Savient will accompany its monthly update of the Bulk Product Forecast with a written purchase order (“Purchase Order”) for each new Firm Order that was only a Firm Forecast in the previous month’s Bulk Product Forecast. Each Purchase Order shall specify the Bulk Product ordered and the time, manner and address of delivery, all of which shall be subject to this ARTICLE 5. BTG shall confirm each Purchase Order in a written order confirmation within seven (7) Business Days after receipt of the Purchase Order.

5.06 Amending Forecasts. Any Bulk Product Forecast that is not a Firm Order is to be considered a forecast or estimate to be used for planning purposes, and shall not be construed as a firm commitment by Savient to BTG and thus can be increased or reduced by Savient from time to time. Savient shall be entitled at any time up until and including the time that a Firm Forecast or Estimated Forecast becomes a Firm Order, to increase or decrease such monthly Firm Forecast or Estimated Forecast for Bulk Product, provided, however, such increases or decreases on a monthly basis shall not be greater than twenty-five percent (25%) of the originally forecasted quantity for such month and each month may not be increased and decreased more than one time. As a request by Savient to increase the quantity of Bulk Product in a Firm Forecast prior to its becoming a Firm Order may require longer lead times for delivery than

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requested by Savient, both Parties shall agree jointly on a new delivery date as close as possible to the requested date having due regard for BTG’s commercial commitments to Third Parties and its own production needs, such agreement to not be unreasonably withheld, conditioned or delayed. Once a Firm Forecast becomes a Firm Order, Savient may not reduce it, but may request that BTG increase the quantity of Bulk Product subject to a Firm Order and BTG shall use commercially reasonable efforts to fill the increased order.

5.07 Fulfillment of Purchase Orders; Review of Forecasts.

(i) BTG shall satisfy, in accordance with their terms, Savient’s Purchase Orders, provided and confirmed in accordance with Section 5.05. BTG shall promptly notify Savient if it becomes aware or believes that it will not be able to satisfy such Purchase Orders on time, in full, or at all, which Notice shall include an explanation in reasonable detail of the reason for BTG’s failure to comply with a confirmed Purchase Order and its proposed course of action for remedying such failure. Savient shall be entitled to request BTG to produce evidence to support its Notice, BTG’s response to such request shall not be unreasonably denied or delayed.

(ii) Within ten (10) Business Days of its receipt of the Bulk Product Launch Forecast or a Bulk Product Forecast or any amendment thereto, BTG shall review such Forecast and in the event that BTG believes that it will not be able to satisfy the quantity, time or manner for delivery of any portion of the order for any amount of Bulk Product identified in any portion therein (i.e.: in the Firm Order, Firm Forecast or Estimated Forecast portions), BTG shall notify Savient of the same, provide a reasonable explanation of the cause of its inability to do so and provide alternatives for the delivery of the quantity and/or scheduling or manner of delivery to satisfy the requirements of Savient.

(iii) Unless BTG has indicated, in accordance with Section 5.07(ii), an inability to satisfy the identified quantities of Bulk Product in the Bulk Product Launch Forecast, any Bulk Product Forecast, or any amendment thereto, BTG may not refuse to accept a Purchase Order which does not deviate from the previously provided Bulk Product Launch Forecast, Bulk Product Forecast or amended forecast, as the case may be when, on a rolling basis, months contained in a Firm Forecast or Estimated Forecast period becomes a Firm Order.

(iv) In the event that BTG notifies Savient of its inability to supply any subject quantity of Bulk Product identified in the Bulk Product Launch Forecast, any Bulk Product Forecast or amended forecast, the parties agree to work together in good faith to expeditiously resolve the discrepancy between the subject forecast and BTG’s inability to supply Bulk Product in accordance therewith.

5.08 Effect of Supply Failure. In the event of a Supply Failure (as defined herein), no forecast or estimate shall be considered a Firm Order until such time as BTG proves to Savient’s reasonable satisfaction that the cause of such Supply Failure has been corrected. “Supply Failure” shall mean BTG has experienced three (3) failed batches of Bulk Product within a calendar quarter, or four (4) failed batches of Bulk Product aggregated over the course of two consecutive quarters, or six (6) failed batches of Bulk Product aggregated over the course of a calendar year. For purposes of this definition, any Bulk Product that is discovered and notified by Savient in accordance with Section 6.04 (iv) to be Non-Conforming Bulk Product after

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delivery shall be considered a failed batch. In the event of a Supply Failure during the Reservation Fee Period, the period covered by the Reservation Fee Period shall be extended by the quarterly or other period of such Supply Failure.

5.09 Preferential Right of Supply. BTG shall schedule its own products or those of an Affiliate for processing at the Facility and shall not accept from a customer that is a Third Party any orders for product processed at the Facility to the extent the fulfillment of such scheduling or order could, at the time of BTG’s scheduling or acceptance of such Third Party order, reasonably be expected to impede BTG’s ability to fulfill Savient’s Bulk Product Requirements as reflected on the then current monthly Firm Orders, Firm Forecast and Estimated Forecast submitted by Savient pursuant to Section 5.04 and acted upon by the Parties pursuant to Sections 5.05, 5.06, and 5.07 supra.

5.10 Alternative Supplier. Savient shall have the right to establish an alternative supplier for Bulk Product for up to twenty percent (20%) of its annual world-wide Bulk Product requirements; provided, however,

(i) in the event of a Supply Failure under Section 5.08 above, Savient shall have the right to purchase all of its Bulk Product requirements from an alternative supplier upon reasonable prior written notice to BTG until BTG demonstrates to Savient’s reasonable satisfaction that BTG has fully remedied such Supply Failure, and

(ii) if despite the good faith efforts of BTG to modify its Capacity Parameters to meet the needs of Savient, or, as applicable, the Parties good faith efforts to agree on cooperative methods to modify the BTG Capacity Parameters, Savient’s Forecasts for orders of Bulk Product up to the OCS Requirements are reasonably anticipated to exceed BTG’s available capacity for the Processing of Bulk Product, then Savient shall have the right to purchase any and all of its requirements of Bulk Product that Savient reasonably determines in good faith may exceed BTG’s available capacity from Savient’s alternate supplier.

BTG acknowledges its obligation to assist Savient with Technology Transfer to an alternative contract manufacturing organization in accordance with the terms and conditions of Section 5.02 of the Development Agreement.

5.11 Effect of Termination on Purchase Order. Unless otherwise agreed to in writing by the Parties, the termination of this Agreement shall automatically terminate all then existing Purchase Orders, except when the termination of this Agreement is pursuant to Sections 11.02 (i) (Elective) and 11.02(iv) (Material Breach by Savient), provided such material breach by Savient is not based on the non-payment of non-disputed amounts for Bulk Product deliveries, in which case BTG shall honor and fulfill any then existing Purchase Order and Savient shall pay BTG for any Purchase Order so honored and fulfilled by BTG pursuant to the terms of this Agreement.

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ARTICLE 6

PRODUCTION

6.01 Obligation to Supply and Purchase. BTG shall manufacture and supply all Bulk Product quantities ordered by Savient and confirmed by BTG in accordance with the provisions of this Agreement. The Parties acknowledge and agree that, pursuant to the OCS Requirements and subject to the terms of this Agreement, Savient is obligated to order at least 80% of its annual world-wide Bulk Product requirements from BTG (“OCS Annual Requirements”) and BTG is obligated to provide such OCS Annual Requirements. BTG shall bear all risk of loss associated with production and batch failures or loss of Bulk Product until delivery to Savient, in accordance with the provisions of Section 7.01.

6.02 Process Changes.

(i) Prior Approval of Savient Required. Except as set forth in this Section 6.02, BTG shall not make any change to the Process for the Bulk Product that would have an impact on the Bulk Product or Product, result in a change to the Commercial Bulk Product Specifications or the Product Specifications or require submissions to or approvals from any Regulatory Agency, except by prior written approval of Savient for such change, which approval shall not be unreasonably conditioned, withheld or delayed.

(ii) Changes Based on Applicable Legal Requirements. BTG shall make such changes to the Process for the Bulk Product as may be required pursuant to applicable Legal Requirements; provided that BTG shall have notified Savient in advance of any required change and shall have obtained the prior written approval of Savient for such change, which approval shall not be unreasonably conditioned, withheld or delayed. Costs incurred by BTG in connection with changes to the Process for the Bulk Product that are required pursuant to Legal Requirements applicable solely to the Process for the Bulk Product, including but not limited to the purchase of equipment, shall be paid by Savient in advance, or on such other basis as the parties may agree at such time, of the incurrence of such charges at (x) one hundred fifteen percent (115%) of cost excluding labor and equipment; (y) labor costs, if applicable, as per Exhibit B; (z) equipment at one hundred eight percent (108%) of cost; provided, however, that Savient shall have explicitly approved in writing any contemplated changes pursuant to this Section 6.02(ii) prior to BTG implementing any such changes. To the extent that the cost of any purchase of equipment is fully allocated to Savient, title to such equipment shall vest in Savient and Savient shall have the right, but not the obligation, to remove such equipment at its sole cost and expense upon the expiration or termination of this Agreement.

(iii) Changes Made at the Request of Savient. From time to time, Savient may request that BTG make certain changes (other than those required by Legal Requirements) to the Processing of the Bulk Product; provided, however, that (A) Savient shall seek to minimize such changes, (B) Savient shall enter into good faith negotiations with BTG regarding the implementation of any such change to the Processing of the Bulk Product, with BTG’s consent to such change not being unreasonably withheld, conditioned, delayed or denied and (C) after the Parties have agreed upon the implications and costs related to a change to the Processing

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of the Bulk Product, BTG shall implement such change. Costs incurred by BTG in connection with such changes shall be reimbursed by Savient at (x) one hundred fifteen percent (115%) of cost excluding labor and equipment; (y) labor costs, if applicable, as per Exhibit B; (z) equipment at one hundred eight percent (108%) of cost. To the extent that the contemplated changes requested by Savient necessitate the purchase of equipment and the cost of such purchase of equipment is fully allocated to Savient, title to such equipment shall vest in Savient and Savient shall have the right, but not the obligation, to remove such equipment at its sole cost and expense upon the expiration or termination of this Agreement.

(iv) Improvements by BTG. If BTG identifies a potential improvement that would (A) require changes to the Process, (B) have an impact on the Product or Bulk Product or (C) require submissions to or approvals from any Regulatory Agency, then BTG shall notify Savient of such improvement and the Parties shall, in good faith, discuss implementation of such improvement. Such improvement shall not be made unless the Parties reach agreement including, without limitation, agreement on allocation of cost, which agreement shall be at the sole discretion of the Parties. To the extent that the contemplated changes necessitate the purchase of equipment and the cost of such purchase of equipment is fully allocated to Savient, title to such equipment shall vest in Savient and Savient shall have the right, but not the obligation, to remove such equipment at its sole cost and expense upon the expiration or termination of this Agreement.

(v) Price Adjustment. In the event of any changes to the Process, pursuant to this Section 6.02, the Parties will meet and discuss the impact such Process changes have on the cost of Processing Bulk Product, either negative or positive, and will negotiate the resulting adjustment to the Price, as defined in Section 8.01, such adjustment to appropriately reflect the investment made by each Party in such Process changes relative to the manner in which such changes impact the cost of Processing the Bulk Product. To effectuate this Section 6.02(v), both parties shall exchange appropriately detailed documentation and analysis required to adequately assess the negative or positive impact such Process changes have on the cost of Processing Bulk Product.

6.03 Facility Changes.

(i) Facility Changes by BTG. From time to time, BTG may desire to make certain changes or modifications to its Facility (other than those required by Legal Requirements) (“Facility Changes”) which Facility Changes impact, directly or indirectly, the Processing of the Bulk Product. BTG shall be entitled to make Facility Changes which impact, directly or indirectly, the Processing of the Bulk Product without the prior approval of Savient, provided, however:

(A) prior to the approval of the BLA for Savient’s Product, BTG shall (x) use its best efforts to minimize Facility Changes which impact, directly or indirectly, the Processing of the Bulk Product, and (y) not implement any Facility Changes that will inhibit BTG’s ability to meet its obligations to supply Savient’s requirements under this Agreement or require the approval of a Supplement to the BLA for Savient’s Product, unless such change is unavoidable;

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(B) after the approval of the BLA for Savient’s Product, BTG shall not implement any Facility Changes that will inhibit BTG’s ability to meet its obligations to supply Savient’s requirement under this Agreement unless and until the Parties have agreed to a plan for inventory stockpiling to satisfy Savient’s requirements, and;

(C) BTG shall promptly provide Savient notice of its Facility Changes which may impact, directly or indirectly, the Processing of the Bulk Product prior to the anticipated commencement of such Facility Changes and shall enter into good faith negotiations with Savient regarding the implementation of any such Facility Change and the satisfaction of Savient’s requirements for the stockpiling of safety stocks on Bulk Product in order that Savient can meet the clinical and market demands of its Product.

Under no circumstances shall BTG implement a Facility Change which may endanger the quality of the Bulk Product. Costs incurred by BTG in connection with such Facility Changes shall be borne by BTG. As used in this Section 6.03(i), “promptly” shall mean, given the nature and substance of the Facility Change, that period of time commercially reasonably necessary to complete the discussions and negotiations envisaged herein.

(ii) Facility Changes Based on Applicable Legal Requirements. BTG shall make such changes to the Facility as may be required pursuant to applicable Legal Requirements; provided that BTG shall promptly notify Savient in advance of such planned Facility Change; provided, however, that such notice from BTG shall be provided not later than ten (10) Business Days following BTG’s being notified of the necessity of changes to the Facility pursuant to Legal Requirements. Costs incurred by BTG in connection with such changes shall be reimbursed by Savient as follows:

(A) Changes Specific to Savient’s Bulk Product. To the extent that changes to the Facility, including but not limited to the purchase of equipment, are required pursuant to Legal Requirements applicable solely to the Bulk Product, costs incurred for such changes shall be paid by Savient in advance of the incurrence of such charges, or on such other basis as the parties may agree at such time, at (x) one hundred fifteen percent (115%) of cost excluding labor and equipment; (y) labor costs, if applicable, as per Exhibit B, and; (z) equipment at one hundred eight percent (108%) of cost; provided, however, that the Parties shall have agreed to a plan for the satisfaction of Savient’s requirements for safety stock of the Bulk Product to meet the clinical and market demands of its Product. To the extent that the cost of any purchase of equipment is fully allocated to Savient, title to such equipment shall vest in Savient and Savient shall have the right, but not the obligation, to remove such equipment at its sole cost and expense upon the expiration or termination of this Agreement.

(B) Changes Not Specific to Savient’s Bulk Product. To the extent that changes to the Facility are required pursuant to Legal Requirements applicable to biopharmaceutical manufacturing in general, costs incurred for such changes shall be reimbursed by Savient on a Pro Rata Basis, at cost.

(C) Changes in Connection With Another Product. If changes to the Facility are required pursuant to Legal Requirements applicable solely to other activities or the

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manufacture of other products in the Facility (even if such changes would not be required in the absence of the Processing of the Bulk Product at the Facility or if the Processing of the Bulk Product benefits from such changes) the costs incurred for such changes shall not be reimbursed by Savient.

Provided, however, that in the event of changes to the Facility required pursuant to applicable Legal Requirements, the Parties shall enter into good faith negotiations regarding the implementation of any such Facility Change in a manner intended to minimize the interruption of the supply of Bulk Product and, in any event, shall agree on a method for the satisfaction of Savient’s requirements for the stockpiling of safety stocks of Bulk Product in order that Savient can meet the clinical and market demands of its Product.

(iii) Changes Made at the Request of Savient. From time to time, Savient may request that BTG make certain changes to the Purification Area (other than those required by Legal Requirements); provided, however, that

(A) Savient shall seek to minimize such changes,

(B) Savient shall enter into good faith negotiations with BTG regarding the implementation of any such change, with BTG’s consent to such change not being unreasonably withheld, conditioned, delayed or denied and

(C) after the Parties have agreed upon the implications and costs related to the Savient requested changes, BTG shall implement such changes.

Costs incurred by BTG in connection with such changes to the Facility shall be reimbursed by Savient at (x) one hundred fifteen percent (115%) of cost excluding labor and equipment; (y) labor costs, if applicable, as per Exhibit B, and; (z) equipment at one hundred eight percent (108%) of cost. To the extent that the contemplated changes requested by Savient necessitate the purchase of equipment and the cost of such purchase of equipment is fully allocated to Savient, title to such equipment shall vest in Savient and Savient shall have the right, but not the obligation, to remove such equipment at its sole cost and expense upon the expiration or termination of this Agreement.

(iv) Price Adjustment. In the event of any changes to the Facility, pursuant to this Section 6.03, the Parties will meet and discuss the impact such Facility changes have on the cost of Processing Bulk Product, either negative or positive, and will negotiate the resulting adjustment to the Price, as defined in Section 8.01, such adjustment to appropriately reflect the investment made by each Party in such Facility changes relative to the manner in which such changes impact the cost of Processing the Bulk Product. To effectuate this Section 6.03(iv), both parties shall exchange appropriately detailed documentation and analysis required to adequately assess the negative or positive impact such Facility changes have on the cost of Processing Bulk Product.

(v) Alternate Use of Purification Area. BTG shall have the right, but not the obligation, to utilize the Purification Area for the production, handling or storage of other

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products during periods when the Purification Area is not being utilized for the Processing of Bulk Product pursuant to the terms and conditions of Section 5.7 in the Quality Agreement.

6.04 Quality Assurance.

(i) Testing by BTG. BTG shall perform quality testing using assays proposed by BTG and acceptable to Savient (which acceptance shall not be unreasonably conditioned, withheld or delayed) in order to assure that the Bulk Product complies with the Commercial Bulk Product Specifications, and shall retain samples of Bulk Product produced and records of the tests made on each such batch in accordance with applicable Legal Requirements. In addition, except as otherwise agreed by the Parties in writing, no Bulk Product shall be delivered until such Bulk Product has been processed in accordance with the tests, inspections and controls required under the Commercial Bulk Product Specifications and such other tests as the Parties may mutually agree upon in writing; provided, however, that the foregoing shall not relieve BTG of its obligation under ARTICLE 5. BTG shall maintain records with respect to the quality testing and shall deliver such records to Savient by facsimile or email and overnight courier prior to shipment of the Bulk Product. Savient shall pay for any and all costs and expenses related to the delivery of records to Savient by overnight courier. Such records shall also be made available to Savient during normal Israeli business hours, upon prior written request.

(ii) Notice of Non-Conforming Bulk Product. BTG shall promptly notify Savient of any Non-Conforming Bulk Product of which it becomes aware, whether or not such Non-Conforming Bulk Product been delivered to Savient or its designee, specifying the Bulk Product release testing and batch number.

(iii) Testing by Savient. At Savient’s election, Bulk Product may be subjected to testing by Savient at Savient’s facilities or facilities of a Third Party designated by Savient in order to verify conformance with the Commercial Bulk Product Specifications, using assays proposed by BTG and acceptable to Savient (which acceptance shall not be unreasonably conditioned, withheld or delayed). Savient shall maintain records with respect to the scope and nature of any such testing and shall disclose such records to BTG in a timely fashion.

(iv) Notice of Delivery of Non-Conforming Bulk Product. Savient shall notify BTG in writing of any Non-Conforming Bulk Product within

(A) forty-five (45) days of delivery of such Non-Conforming Bulk Product in the event of a defect which was discovered or could have been discovered by Savient through the use of reasonable testing methods and procedures mutually agreed to by the Parties in writing or

(B) ten (10) Business Days of Savient’s discovery of the Non-Conforming status of the Bulk Product in the event of a defect not recognizable for Savient through the use of such testing methods and procedures (hereinafter “Hidden Defect”).

Savient’s notices of any non-conforming Bulk Product shall specify the manner in which the Bulk Product fails to meet the Commercial Bulk Product Specifications,. BTG shall have the

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right to examine and test any Bulk Product in Savient’s possession that Savient claims is Non-Conforming. The Parties shall cooperate to determine the point at which the Bulk Product became Non-Conforming. In the event that the Parties cannot agree as to whether any Bulk Product was Non-Conforming at the time of delivery, the Parties shall promptly appoint an independent specialist (appointed by mutual agreement between the Parties, which agreement shall not be unreasonably withheld, conditioned or delayed) who shall determine whether such Bulk Product was Non-Conforming at the time of delivery. In the absence of manifest error, the independent specialist’s decision shall be conclusive and binding on the Parties.

Except as otherwise provided herein relating to Hidden Defects in the Bulk Product, if Savient fails to notify BTG in writing of any non-conforming Bulk Product within forty-five (45) days of delivery, then the Bulk Product delivered by BTG to Savient shall be deemed to be in all respects in accordance with this Agreement and Savient shall be bound to accept and pay for the same accordingly. For the avoidance of doubt, this shall apply irrespective of whether or not Savient has carried out quality testing in accordance with Section 6.04 (iii).

(v) Observation by Savient. During the Term, Savient (including Savient’s agents and consultants) shall have the right, at Savient’s sole cost and expense, during normal business hours and upon reasonable notice, to visit the Facility as per the Quality Agreement.

(vi) Recalls and Voluntary Withdrawals. If either Party becomes aware of information about distributed Product containing Bulk Product indicating that it may be Non-Conforming with respect to the Bulk Product or that there is potential adulteration, misbranding and/or any potential issues regarding safety or effectiveness with respect to the Bulk Product, it shall promptly serve Notice to that effect on the other Party. Savient will initiate an investigation and assessment of such circumstances and shall promptly notify BTG of its findings and any proposed course of action. The Parties shall meet to discuss such circumstances and to consider appropriate courses of action. Savient shall bear all costs associated with a recall of the Product unless such recall is caused by a Hidden Defect with respect to the Bulk Product, in which case BTG shall pay all costs associated with the recall, up to the maximum value of the Product Price paid by Savient to BTG for the Bulk Product containing such Hidden Defect.

(vii) Filled Product Release Testing. The Parties acknowledge that BTG is performing the Filled Product release testing for Savient under the terms of this Agreement and the Development Agreement until such time as the Filled Product release testing and methods can be transferred to Savient’s new third party fill/finisher of Product (hereinafter “Third Party Fill/Finisher”) or alternate Bulk Product or Product supplier. Savient will use its best efforts to effectuate the Technology Transfer of Product Technology to enable such Filled Product release testing to be performed by Savient’s Third Party Fill/Finisher or its alternate Product supplier as expeditiously as commercially practicable, and upon the approval of such amendments to this Agreement, and, if still in effect at such time, the Development Agreement shall be entered into relieving BTG of its obligation to perform release testing on Filled Product. It is the express intention of the Parties to mutually use best efforts to accomplish this Technology Transfer in adequate time to file the Product BLA with both BTG and Savient’s Third Party Fill/Finisher as alternate parties designated to perform the release testing of Filled Product, provided, however, the failure to succeed in this regard shall not be deemed

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a breach by Savient, nor shall it relieve BTG of its obligations to perform such release testing until such time as Savient’s Third Party Fill/Finisher is approved to perform such release testing.

6.05 Labeling and Packaging. BTG shall label and package the Bulk Product in accordance with Legal Requirements applicable to pharmaceutical products shipped in bulk for further processing, labeling, or repackaging.

6.06 Stability. Stability related activities for which BTG is responsible shall be completed in accordance with Quality Agreement. All costs incurred by BTG related to such activities shall be reimbursed by Savient in the manner and at the rates set forth on Exhibit B hereto.

ARTICLE 7

DELIVERY; INVOICES; WARRANTY

7.01 Shipment and Delivery. BTG shall use its best efforts to deliver Bulk Product in accordance with the delivery dates specified in its order confirmations or the Purchase Orders, as may be appropriate. All shipments shall be made by BTG pursuant to Savient’s instructions FCA Ben Gurion Airport, Tel Aviv, Israel, (Incoterms 2000) with BTG being responsible for delivering the Bulk Product cleared for export to the freight forwarder nominated by Savient.

7.02 Certificate of Analysis. An appropriate Certificate of Analysis and all relevant batch records shall precede the shipment of each Bulk Product batch delivered to Savient. BTG shall, for customs purposes, upon delivery of the Bulk Product, provide Savient with a valid declaration of origin, in a form reasonably acceptable to Savient, in respect of all Bulk Product supplied to Savient under this Agreement, together with such other supporting documents relating to the origin of such Bulk Product as Savient may reasonably require. If any of the foregoing documents are only available in a language other than English, the Parties shall agree upon an English language template for such document(s), and BTG shall provide to Savient an English language translation of any deviations from the template(s); provided, however, that any documentation required by any Regulatory Authority to be supplied for the purpose of importing, exporting, selling, storing, transferring, or otherwise disposing of Bulk Product, shall be provided in the English language.

7.03 Method of Invoicing. All orders under this Agreement shall be invoiced at the price which is in effect at the time of shipment.

7.04 Warranty. BTG hereby represents and warrants to Savient that (i) the quality (purity, physical and chemical properties) of the Bulk Product supplied by it to Savient shall be in accordance with its Specifications, shall not be adulterated or misbranded within the meaning of the applicable US food and/or drug law or regulation, and shall comply with all Legal Requirements (including cGMP) and those applicable laws, rules and regulations governing the formulation, manufacture, testing prior to delivery, packaging, labeling according to the Specifications for the Bulk Product and storage and delivery of the Bulk Product and (ii) the Processing of the Bulk Product at the Facility shall be in compliance with the CMC section of

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the BLA, as reviewed and attested to as accurate by BTG. This warranty is exclusive and is in lieu of all other warranties, whether written or oral, express, implied or statutory.

ARTICLE 8

PRICE

8.01 Price. The Parties agree that the Bulk Product shall be charged to Savient at the price set out in Exhibit E attached hereto (the “Price”).

8.02 Remittance of Payments. Payments due by Savient under Section 8.01 shall be payable by Savient no later than forty-five (45) days after the invoice date; provided, however, that Bulk Product associated with such payment was actually delivered in accordance with Section 7.01. Savient shall make payment by wire transfer of Dollars from a single source in the United States to a bank account designated by BTG or by such other payment method as the Parties may agree upon from time to time. Except where any amounts payable are in dispute under this Agreement and to the extent such dispute is resolved in favor of Savient, in the event of late payment, interest on any past due payments shall accrue at the rate of 1.5 percent per month, or if such rate shall exceed the maximum rate allowed by law, then at such maximum rate, and shall be payable on demand.

ARTICLE 9

REPORTING OF EVENTS

9.01 Exchange of Drug Safety Information. The Parties shall have the rights and responsibilities pertaining to AEs, SAEs and biologic product deviations in accordance with the provisions of the Quality Agreement attached hereto as Exhibit D.

9.02 Events Affecting Integrity or Reputation. During the Term, the Parties shall notify each other immediately of any circumstances of which they are or become aware of whereby the integrity and reputation of the Product or of the Parties are threatened by the unlawful activity of any Third Party in relation to the Product. In any such circumstances, the Parties shall cooperate to limit any damage to the Parties and/or to the Product.

9.03 Governmental Inspection. Each Party shall advise the other of any governmental communication, inspection or report which addresses or affects the Bulk Product promptly after becoming aware of it. Savient shall have the right to observe any such governmental inspection; provided, however that such governmental inspection is specifically related to the Bulk Product.

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ARTICLE 10

NON-COMPETITION AND NON-SOLICITATION

10.01 Non-Competition. During the Term of this Agreement, and for a period of thirty (30) months after the termination thereof, BTG agrees not to, and shall cause its Affiliates not to, use the Product Technology to manufacture, promote, market or sell any Competing Product in the Territory, nor will BTG acquire directly or indirectly any rights or interest in or to a Competing Product which is being manufactured, promoted, marketed or sold in the Territory. The Parties agree that an acquisition by BTG’s Affiliates of any rights or interest in or to a Competing Product which is being manufactured, promoted, marketed or sold in the Territory shall not be deemed to be an indirect acquisition by BTG, provided BTG has not participated in the acquisition process of its Affiliate.

10.02 Non-Solicitation. During the Term and for a period of thirty (30) months after the termination of this Agreement, the Parties agree that neither Party shall solicit any employee of the other Party or any of its Affiliates, with whom it has come in contact or interacted for the purposes of the performance of this Agreement, to leave the employment of the other Party or its Affiliate and accept employment or work as a consultant with the first Party, except in the event the other Party has approved such solicitation in writing. Notwithstanding the foregoing, nothing herein shall restrict or preclude either Party’s right to make generalized searches for employees by the issue of advertisement in the media (including trade media) or by engaging search firms to engage in searches that are not targeted or focused on an employee or employees of the other Party.

ARTICLE 11

TERM & TERMINATION

11.01 Term. This Agreement shall be in effect from the Effective Date and shall continue in effect until terminated pursuant to a Notice served by either Party in accordance with Section (the “Term”).

11.02 Termination. This Agreement may be terminated in accordance with the following sections:

(i) Elective. Either Party may terminate this Agreement by giving at least three (3) years’ advance Notice (“Elective Termination Notice”) to the other Party, which Elective Termination Notice may not be given prior to the seventh (7th) anniversary of the first delivery of Bulk Product by BTG under this Agreement but may be given at any time thereafter. Upon the third (3rd) anniversary of the Elective Termination Notice, this Agreement shall terminate, unless extended by mutual agreement of the Parties.

(ii) Force Majeure. In the event a Party (“Affected Party”) continues to experience a Force Majeure condition for a period of at least six (6) months after Notice of the Force Majeure was given pursuant to Section 14.04, the other Party shall be entitled to terminate this Agreement by giving a Notice of termination to Affected Party at any time while such Force

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Majeure persists thereafter with the termination becoming effective on the date specified in the Notice of termination.

(iii) Material Breach by BTG. Savient shall be entitled to terminate this Agreement, in the event that BTG commits a material breach of this Agreement (including, without limitation, in the event of a Supply Failure pursuant to Section 5.08 that is not due to an event of Force Majeure or a failure on the part of Savient to supply critical raw materials which it is obligated to supply pursuant to the terms of this Agreement) and BTG fails to cure such breach within sixty (60) days of receiving a Notice of default from Savient (or such longer period as Savient may reasonably agree if said breach is incapable of cure within such sixty (60) days) (“BTG’s Cure Period”), by giving a Notice of Termination to BTG (after expiration of BTG’s Cure Period, if applicable), with the termination to take effect on the date specified therein, provided, however, that if BTG experiences a second Supply Failure within any twelve (12) month period then BTG’s Cure Period shall be zero (0) days unless otherwise specified in the Notice of Termination provided by Savient in its sole discretion.

(iv) Material Breach by Savient. BTG shall be entitled to terminate this Agreement, in the event that Savient commits a material breach of this Agreement and Savient fails to cure such breach within sixty (60) days of receiving a Notice of default from BTG (or such longer period as BTG may reasonably agree if said breach is incapable of cure within such sixty (60) days) (“Savient’s Cure Period”), by giving a Notice of termination to Savient (after expiration of the Savient Cure Period, if applicable), with the termination to take effect on the date specified therein. For purposes of this Section only, any amount of the Processing Capacity Reservation Fee and accrued interest thereon which has not been applied to payments for Bulk Product actually purchased by and delivered to Savient shall be forfeited by Savient to BTG as of the effective date of termination of this Agreement.

(v) Insolvency. Either Party shall be entitled to terminate this Agreement, by giving Notice to the other Party (“Insolvent Party”), in the event of an Insolvency Event occurring in relation to the Insolvent Party, such termination to take effect upon delivery of the Notice of termination to the Insolvent Party. “Insolvency Event” for the purpose of this Clause shall mean any commencement – whether voluntarily or involuntarily – of any action seeking any relief by liquidation, reorganization (other than for corporate reorganization), dissolution or similar act under any bankruptcy, insolvency or similar law or otherwise any action seeking any arrangement between or with its creditors or any commencement of a proceeding or receipt of an order, judgment or decree seeking the liquidation, reorganization or dissolution of a Party or any other relief under any bankruptcy, insolvency or similar law or an arrangement is made with respect to such Party’s debts or business by its creditors with or without the consent of that Party.

11.03 Savient’s Rights Upon Termination. In the event Savient terminates this Agreement pursuant to Sections 11.02 (i) (Elective), 11.02 (ii) (for Force Majeure conditions affecting BTG), 11.02 (iii) (Material Breach by BTG), or 11.02 (v) (for insolvency of BTG) or in the event BTG terminates this Agreement pursuant to Section 11.02 (i), BTG shall promptly, upon request by Savient, convey to Savient all Know-How, BTG Licensed Improvements and other information related to the Processing of the Product and/or Bulk Product sufficient to enable Savient or any other Persons engaged by Savient to manufacture, produce or provide the Product

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and/or Bulk Product and BTG shall provide all other assistance that Savient may reasonably request, at no cost to Savient. Such Know-How, BTG Licensed Improvements and other information shall include, without limitation, all records and reports related to (i) the development of the Bulk Product, Product and/or Process, (ii) the Processing of the Bulk Product and Product, (iii) testing for compliance with the Specifications, and (iv) batch records. Unless this Agreement is terminated pursuant to Section 11.02 (iii), Savient shall be responsible for the reasonable labor costs and expenses incurred by BTG in conveying such Know-How, BTG Licensed Improvements and other information and providing such assistance. Such labor costs of BTG employees and/or Third Party expenses shall be reimbursed by Savient in the manner and at the rates set forth on Exhibit B hereto.

11.04 BTG’s Rights Upon Termination. In the event that BTG terminates this Agreement pursuant to Sections 11.02(i) (Elective), 11.02(ii) (for Force Majeure conditions affecting Savient), 11.02(iv) (Material Breach by Savient) or 11.02(v) (for insolvency of Savient), any and all outstanding non-disputed payments due from Savient pursuant to this Agreement shall become immediately due and payable. Anything to the contrary notwithstanding, upon termination by BTG, BTG shall promptly, upon request by Savient and at Savient’s cost, convey to Savient, all Know-How, BTG Licensed Improvements and other information related to the Processing of the Bulk Product and/or Product sufficient to enable Savient or any other Persons engaged by Savient to manufacture, product or provide the Bulk Product and/or Product and BTG shall provide all other assistance that Savient may reasonably request, at Savient’s sole cost.

11.05 Effect of Termination. Termination of this Agreement for any reason is without prejudice to the Parties’ accrued rights and shall not be construed to release either Party of any obligation matured prior to the effective date of such termination.

11.06 Survival. The following provisions shall survive the expiration or termination of this Agreement: 2.01(iii), 2.01(iv), 2.04, 3.02, 3.03, 4.01 (ii), 5.11, 6.04 (i), 6.04(ii), 6.04 (iv), 6.04 (vi), 6.04 (vii), 6.06, ARTICLE 7, ARTICLE 8, ARTICLE 9, Section 10.01 (except in the event of a termination by BTG pursuant to Section 11.02 (iv) (Material Breach by Savient)), 10.02, 11.03, 11.04, 11.05, 11.06, ARTICLE 12, ARTICLE 13, ARTICLE 14. The survival of Sections 3.02, 3.03, 6.04 (vii) and 6.06 shall be subject to BTG being compensated for any actions on their part under these provisions post expiration or termination on the basis of the principles set forth in this Agreement. The Parties expressly understand and agree that Section 2.01 (ii) shall not survive the expiration or termination of this Agreement. For the avoidance of doubt, even after the termination of this Commercial Agreement pursuant to either Section 11.02 (iii) or Section 11.02 (iv), each Party’s rights under the Residual Rights Agreement shall subsist in full and irrespective of the grounds for such termination, except Savient may not compel BTG to perform any additional manufacturing services as may be required by the Residual Rights Agreement.

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ARTICLE 12

REMEDIES

12.01 Remedies for Non-Conforming Bulk Product. In the event BTG delivers to Savient Bulk Product that does not meet the Commercial Bulk Product Specifications, Savient shall, at its option, be entitled to (A) the replacement of such Non-Conforming Bulk Product with corresponding Bulk Product meeting the Bulk Product Specifications and with the cost of the PEG material supplied by Savient and the cost of shipment for such replacement Bulk Product being borne by BTG; or (B) a refund of (x) any price paid by Savient for such Non-Conforming Bulk Product, (y) the cost of the PEG material supplied by Savient for such Non-Conforming Bulk Product, and (z) the shipment costs associated with such Non-Conforming Bulk Product, provided, however, that Savient has notified BTG in writing of the non-conforming Bulk Product in accordance with Section 6.04 (iv). In addition, Savient shall, at BTG’s option and cost, either destroy or return to BTG at its Facility any Non-Conforming Bulk Product.

12.02 Indemnity by BTG.

(i) BTG shall defend, indemnify and hold harmless each Savient Indemnitee from and against (i) all Claims of Third Parties that arise as a result of a material breach of any covenant, agreement, warranty or representation made by BTG under this Agreement, and (ii) all Product Liability Claims, or such portion of Product Liability Claims, as are allocated to BTG pursuant to Section 12.04.

(ii) BTG shall not be obligated under this Section 12.02 to the extent it is shown that the Claim was the direct result of a material breach of any covenant, warranty or representation made by Savient under this Agreement.

(iii) BTG shall have no obligation under this Section 12.02 unless

(A) Savient gives BTG prompt written notice of any Claim for which it seeks to be indemnified under this Agreement,

(B) BTG is granted full authority and control over the defense against such Claim, and

(C) Savient cooperates fully with BTG in defense of the Claim (all reasonable out-of-pocket expenses of such cooperation to be borne by BTG).

Savient shall have the right to participate in the defense of any such Claim utilizing attorneys of its choice, at its own expense; provided, however, that BTG shall have full authority and control to handle any such Claim, including without limitation any settlement or other disposition thereof, for which Savient seeks indemnification under this Section 12.02; provided, however, further that any settlement that includes an admission of fault, culpability or liability on the part of Savient shall not be concluded without Savient’s consent, which consent shall not be unreasonably conditioned, withheld, delayed or denied.

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(iv) BTG shall indemnify and hold Savient harmless for any income tax or other taxes which Savient may be required by current or future Legal Requirements to pay on behalf of BTG with respect to any monies payable to BTG under this Agreement, including without limitation, any associated penalties, fines and interest (hereinafter, a “Tax Claim”); provided, however, that if Savient becomes aware of any Legal Requirements according to which Savient is required to pay any taxes on behalf of BTG or to withhold any amounts with respect to any such Tax Claim, then Savient shall act in strict compliance with such Legal Requirements and shall promptly serve written notice to that effect on BTG. Furthermore, upon learning of the existence of a Tax Claim, Savient shall provide prompt written notice to BTG where such notice shall include copies of all materials received by Savient which pertain to the Tax Claim. Additionally, upon request by BTG, Savient shall provide reasonable assistance to BTG to enable BTG to defend any such Tax Claim and/or support a claim for a refund or a foreign tax credit with respect to any such Tax Claim; provided that BTG shall reimburse Savient for any out-of-pocket expenses which Savient incurs in rendering any assistance to BTG pursuant to this provision within thirty (30) days of receipt of a reasonably specific demand for reimbursement with accompanying documentation demonstrating such amounts claimed. Savient shall obtain the approval of BTG for any individual out-of-pocket expense in excess of Fifty Thousand Dollars ($50,000), such approval not to be unreasonably withheld, delayed or conditioned. BTG shall have the sole right to handle any such Tax Claim utilizing attorneys of its choice, at its own expense; provided, however, that any settlement that includes an admission of fault, culpability, penalty fine or any other liability on the part of Savient shall not be concluded without Savient’s consent, which consent shall not be unreasonably conditioned, withheld, delayed or denied.

12.03 Indemnity by Savient.

(i) Savient shall defend, indemnify and hold harmless each BTG Indemnitee from and against all Claims of Third Parties that arise as a result of (A) a material breach of any covenant, agreement, warranty or representation made by Savient under this Agreement, and (B) patent infringement involving the manufacture, use, importation, sale or marketing of the Bulk Product or Product, and (C) all Product Liability Claims, or such portion of Product Liability Claims, as are allocated to Savient pursuant to Section 12.04.

(ii) Savient shall not be obligated under this Section 12.03 to the extent it is shown that the Claim was the direct result of a material breach of any covenant, warranty or representation made by BTG under this Agreement.

(iii) Savient shall not be obligated under this Section 12.03 unless

(A) BTG provides Savient with prompt written Notice of any Claim for which it seeks to be indemnified under this Agreement,

(B) Savient is granted full authority and control over the defense against such Claim, and

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(C) BTG cooperates fully with Savient in defense of the Claim (all reasonable out-of-pocket expenses of such cooperation to be borne by Savient).

BTG shall have the right to participate in the defense of any such Claim utilizing attorneys of its choice, at its own expense; provided, however, that Savient shall have full authority and control to handle any such Claim, including without limitation any settlement or other disposition thereof, for which BTG seeks indemnification under this Section12.03; provided, however, further that any settlement that includes an admission of fault, culpability or liability on the part of BTG shall not be concluded without BTG’s consent, which consent shall not be unreasonably conditioned, withheld, delayed or denied.

12.04 Product Liability Claims. Notwithstanding the foregoing Sections 12.02 and 12.03, the Parties’ responsibilities with respect to Product Liability Claims shall be governed by this Section12.04.

(i) BTG shall be solely responsible for all Product Liability Claims that arise out of Non-Conforming Bulk Product, provided, however, that the following conditions are cumulatively satisfied: (A) such nonconformance existed at the time the Bulk Product was delivered by BTG and (B) such nonconformance was the result of BTG’s failure to manufacture the Bulk Product in strict adherence with the Process and (C) such Non-Conformance was the result of a Hidden Defect. Savient shall be solely responsible for all Product Liability Claims that arise out of Non-Conforming Bulk Product in each of the following cases: (A) such non-conformance occurred after the Bulk Product was delivered to Savient or (B) the Non-Conforming Bulk Product was manufactured by BTG in strict adherence with the Process or (C) such Non-Conformance was not the result of a Hidden Defect.

(ii) Each Party shall give the other prompt written notice of any Product Liability Claim, but the omission of such notice shall not relieve either Party from its obligations under this Section 12.04, except to the extent the other Party can establish actual prejudice and direct damages as a result thereof. With respect to each Product Liability Claim, Savient shall have the first right to defend and settle such Product Liability Claim. In the event that Savient does not assume the defense of such Product Liability Claim within ninety (90) days following Savient’s receipt of notice of the commencement or assertion of such Product Liability Claim, BTG may notify Savient of BTG’s desire to take the lead role in the defense of such Product Liability Claim. If, within ten (10) days after BTG notifies Savient of such desire, Savient does not assume the defense of such Product Liability Claim, then BTG may take the lead role in the defense of such Product Liability Claim.

The Party assuming the defense of any Product Liability Claim as permitted under this Section 12.04 (the “Controlling Party”) shall consult with the other Party on all material aspects of the defense, including without limitation settlement, of such Product Liability Claim, and the Parties shall cooperate fully with each other in connection therewith. The non-defending Party shall also have the right to participate in the defense of any Product Liability Claim utilizing attorneys of its choice, at its own expense. In furtherance of the Parties’ cooperation, the Controlling Party will consult with the other Party regarding strategic decisions, including without limitation the retention of counsel and defense of each Product Liability Claim. The Controlling Party will otherwise keep the other Party fully informed of the status and progress of the defense and any

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settlement discussions concerning the Product Liability Claim. Any settlement of a Product Liability Claim that would admit liability on the part of any Party or its Affiliates or Agents, or that would involve any relief other than the payment of money damages, shall be subject to the prior written approval of both Parties, such approval not to be unreasonably withheld or delayed. All damages and expenses (including attorney’s fees) incurred in connection with the defense of a Product Liability Claim shall be allocated between the Parties in accordance with Section 12.04 (i).

12.05 Limitation of Damages. Notwithstanding anything to the contrary set forth in this Agreement, in no event shall either Party be liable to the other Party for, and each Party shall procure that none of its Affiliates or Sublicensees shall make any claim against the other Party (or its Affiliates and Sublicensees) for, any lost profits, loss of business, loss of contracts, diminished goodwill, diminished reputation, or consequential, indirect, incidental or special damages arising under or in connection with this Agreement or the Bulk Product.

ARTICLE 13

DISPUTE RESOLUTION AND ARBITRATION

13.01 Governing Law. This Agreement and any and all matters arising directly or indirectly herefrom shall be governed by and construed in accordance with the laws of the State of New York, United States of America, without giving effect to (A) its conflict of law principles and (B) the United Nations Convention on Contracts from the International Sale of Goods.

13.02 Arbitration. Any dispute, controversy or claim arising out of or in relation to this contract, including the validity, invalidity, breach or termination thereof, shall be resolved by arbitration in accordance with the Swiss Rules of International Arbitration of the Swiss Chambers of Commerce in force on the date when the Notice of Arbitration is submitted in accordance with these Rules. The number of arbitrators shall be three; the seat of the arbitration shall be Zurich, Switzerland; the arbitral proceedings shall be conducted in English and shall take place in London, England.

ARTICLE 14

MISCELLANEOUS

14.01 Confidentiality. During the Term of this Agreement or the Commercial Agreement, whichever expires later, and for a period of three (3) years thereafter, each Party (the “Receiving Party”) shall keep strictly confidential any Confidential Information disclosed by any other Party (the “Disclosing Party”), using at least the same degree of care that it uses to protect its own confidential or proprietary information, but in no event less than reasonable care. The provisions of this ARTICLE 14 shall apply to all Confidential Information, and to all proprietary information of the Disclosing Party relating to the Product and/or the Process that is disclosed (or known) to a Receiving Party prior to the date hereof (which shall be deemed to be Confidential Information, subject to the exceptions in clauses (i) through (iv) below, for purposes of this Agreement). The nature and terms of this Agreement shall be deemed to be Confidential

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Information of each Party, subject to the exceptions set forth in clauses (i) through (iv) below, for purposes of this Agreement. The Receiving Party shall use Confidential Information solely for the purposes of this Agreement and the activities contemplated hereby and shall not disclose or disseminate any Confidential Information to any Person at any time, except for disclosure to those of its Affiliates, directors, officers, employees, consultants, accountants, attorneys, advisers and agents that have a need to know such information to permit the Receiving Party to exercise its rights or fulfill its obligations pursuant to this Agreement, provided that such Persons are bound to maintain the confidentiality of such Confidential Information to the same extent as if they were parties hereto. The obligations set forth in this Section 14.01 are subject to the following exceptions:

(i) The Receiving Party may disclose the Disclosing Party’s Confidential Information that is required to be publicly disclosed by law or by regulation; provided, however, that: (A) the Receiving Party shall, where possible, seek confidential treatment for any Confidential Information of the Disclosing Party, and shall provide the Disclosing Party with prompt advance notice of such disclosure and reasonable opportunity to review any such disclosure so that the Disclosing Party may, if it desires, seek a protective order or other appropriate remedy; and (B) the Parties or their Affiliates may disclose the terms of this Agreement in any filings with the U.S. Securities and Exchange Commission (provided that the Parties or their Affiliates, as applicable, use commercially reasonable efforts to seek confidential treatment for any trade secrets, commercial terms or information, or financial terms or information).

(ii) Pursuant to an agreement to maintain confidentiality, any Party may discuss, or provide a copy of, this Agreement to its accountants, its attorneys, and its current, future or potential investors or shareholders.

(iii) Pursuant to an agreement containing confidentiality obligations and subject to the other Parties’ written consent, either Party may provide a copy of this Agreement or relevant portions thereof to any Third Party sublicensee, if required pursuant to the relevant license agreement with such Third Party.

(iv) Any other disclosure of the nature or terms of this Agreement (including, without limitation, any public announcements, press releases or similar publicity with respect to this Agreement) by any Party, must be approved in advance in writing by Savient, in its sole discretion, as to form and content of such disclosure; provided, however, that the contents of any public announcement, press release or similar publicity which has been reviewed and approved can be re-released by any Party in any form without a requirement for re-approval.

14.02 BTG Insurance. BTG and/or its Affiliates shall obtain and maintain during the Term and for five (5) years thereafter comprehensive general liability insurance on a claims-made basis, with endorsements for product liability with annual coverage limits of not less than one million Dollars ($1,000,000) per claim and ten million Dollars ($10,000,000) annual aggregate. All of BTG’s insurance policies shall be issued by “A-rated” insurers as designated by Standard and Poor’s Corporation and/or by acceptable other means. The minimum level of insurance set forth herein shall not be construed to create a limit on BTG’s liability hereunder. On the Effective Date and upon the request of Savient (provided that such request shall be made no more than

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once per calendar year), BTG shall furnish to Savient a certificate of insurance evidencing such coverage as of such date. Each such certificate of insurance, as well as any certificates evidencing new or modified coverages of BTG, shall include a provision whereby thirty (30) days written notice must be received by Savient prior to coverage modification or cancellation by either BTG or the insurer. In addition, BTG shall promptly notify Savient of any cancellation or modification of such insurance coverage and of any new or modified coverage. In the case of a modification or cancellation of such coverage, BTG shall promptly provide Savient with a new certificate of insurance evidencing that BTG’s coverage meets the requirements in the first sentence of this Section 14.02.

14.03 Savient Insurance. Savient shall obtain and maintain during the Term and for five (5) years thereafter comprehensive general liability insurance on a claims-made basis, with endorsements for product liability with annual coverage limits of not less than one million Dollars ($1,000,000) per claim and fifteen million Dollars ($15,000,000) annual aggregate. All of Savient’s insurance policies shall be issued by “A-rated” insurers as designated by Standard and Poor’s Corporation and/or by acceptable other means. The minimum level of insurance set forth herein shall not be construed to create a limit on Savient’s liability hereunder. On the Effective Date and upon the request of BTG (provided that such request shall be made no more than once per calendar year), Savient shall furnish to BTG a certificate of insurance evidencing such coverage as of such date. Each such certificate of insurance, as well as any certificates evidencing new or modified coverages of Savient, shall include a provision whereby thirty (30) days written notice must be received by BTG prior to coverage modification or cancellation by either Savient or the insurer. In addition, Savient shall promptly notify BTG of any cancellation or modification of such insurance coverage and of any new or modified coverage. In the case of a modification or cancellation of such coverage, Savient shall promptly provide BTG with a new certificate of insurance evidencing that Savient’s coverage meets the requirements in the first sentence of this Section 14.03.

14.04 Notices. All notices, requests, demands, claims and other communications hereunder (each, a “Notice”) shall be in writing. Any notice, request, demand, claim or other communication hereunder shall be deemed duly delivered four (4) Business Days after it is sent by registered or certified mail, return receipt requested, postage prepaid, or one (1) Business Day after it is sent by overnight delivery via a reputable national courier service, in each case to the intended recipient as set forth below:

If to Savient, to:

Savient Pharmaceuticals Inc.

One Tower Center, 14^th Floor

East Brunswick, New Jersey 08816, USA

Telecopy: +1-732-418-9065

Attention: Philip K. Yachmetz, EVP & CBO

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with copies, which shall not constitute notice hereunder, sent to:

Savient Pharmaceuticals, Inc. One Tower Center, 14th Floor East Brunswick, NJ 08816 U.S.A. Attention: John Petrolino and Wilmer Cutler Pickering Hale and Dorr LLP 60 State Street Boston, MA 02109 Telecopy: +1-617-526-5000 Attention: David E. Redlick, Esq.

If to BTG, to:

Bio-Technology General (Israel) Ltd.

Beer Tuvia Industrial Zone

POB 571

Kiryat Malachi 83104, Israel

Telecopy: +972-8-8612288

Attention: General Manager

with copies, which shall not constitute notice hereunder, sent to:

Ferring International Center SA   Chemin de la Vergognausaz 50 CH-1162 Saint-Prex Switzerland Attention: General Counsel and Ferring International Center SA   Chemin de la Vergognausaz 50 CH-1162 Saint-Prex Switzerland Attention: EVP, Technical Operations

Any Party may give any notice, request, demand, claim, or other communication hereunder using any other means (including personal delivery, expedited courier, messenger service, telecopy, telex, ordinary mail, or electronic mail), but no such notice, request, demand, claim or other communication shall be deemed to have been duly given unless and until it actually is received by the Party for whom it is intended. Any Party may change the address to which notices, requests, demands, claims and other communications hereunder are not be delivered by giving the other Party notice in the manner herein set forth.

14.05 Entire Agreement. This Agreement and all attachments, including the exhibits hereto, constitutes the entire agreement between Savient and BTG with respect to the subject matter hereof, and supersedes any prior agreements or understandings, both written and oral, between Savient and BTG with respect to such matters, other than the Divestiture Agreements and the Residual Rights Agreement, which shall be read together with this Agreement.

14.06 Order of Precedence. In the event of a conflict or inconsistency that relates to the subject matter hereof between any of the terms of the following documents, the following order of precedence shall control:

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(i) this Commercial Supply Agreement between the Parties, and Exhibits hereto

(ii) the Development Agreement between the Parties, and Exhibits thereto

(iii) the Residual Rights Agreement, and Exhibits thereto

Without limiting the generality of the foregoing, and for the avoidance of any doubt, the following sections of the Residual Rights Agreement are hereby superseded by this Agreement as far as the subject matter hereof is concerned: (A) Section 3—Research & Development; Regulatory Services; Manufacturing Services; (B) Section 4—Technology Transfer; (C) Section 9—Indemnification; (D) Section 13 – Governing Law and Dispute Resolution; (E) Annex C (Development and Regulatory Work-Puricase); (F) Annex D (Term Sheet Manufacturing Services); and (G) Annex E (Term Sheet for Technology Transfer). In resolving any such conflicts, these documents shall be read as a whole and in a manner most likely to accomplish their purposes. Any amendments to these documents on which the Parties may agree to in accordance with the terms of each document shall take precedence over any conflicting terms in the prior release of each document. Each Party shall promptly report to the other in writing any inconsistencies in these documents, even if the inconsistency is resolvable using the above order of precedence.

14.07 Covenant of Further Assurances. The Parties covenant and agree that, subsequent to the execution and delivery of this Agreement and without any additional consideration, each of the Parties shall execute and deliver any further legal instruments and perform such acts which are or may become reasonably necessary to effectuate the purposes of this Agreement.

14.08 Waivers; Amendments. The failure of either Party to insist, in any one or more instances, upon the performance of any of the terms, covenants or conditions of this Agreement or to exercise any right hereunder, shall not be construed as a waiver or relinquishment of the future performance of any such term, covenant or conditions or the future exercise of such right, and the obligation of the other Party with respect to such future performance shall continue in full force and effect. Savient and BTG may (A) mutually amend or waive any provision of this Agreement at any time and (B), from time to time after the date hereof, modify and/or replace any of the exhibits hereto, which modified or replaced exhibits shall automatically constitute part of this Agreement; provided, however, that no amendment or waiver of any provision of this Agreement and no modification and/or replacement of any exhibits hereto shall be valid unless the same shall be in writing and duly signed by both of the Parties.

14.09 Relationship. BTG is an independent contractor engaged by Savient for the provision of the Bulk Product and certain services as set forth in this Agreement. Nothing in this Agreement shall constitute BTG as an employee, agent or general representative of Savient. This Agreement shall not constitute either Party as the legal representative or agent of the other, nor shall either Party have the right or authority to assume, create or incur any liability or any obligation of any kind, express or implied, against, or in the name of or on behalf of, the other Party. This Agreement shall not constitute, create or in any way be interpreted as a joint venture, partnership or formal business organization of any kind.

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14.10 Publicity. Except as otherwise required by Legal Requirements, neither Party shall use the other’s name or refer to it directly or indirectly in an advertisement, news release or release to any professional or trade publication or issue any news release relating to this Agreement, without the prior written approval from such Party for such use or release. The Parties agree that a news release with respect to the consummation of this transaction and the details thereof will be made, the content and form of which shall be reasonably agreed between the Parties. In addition, the Parties agree that Savient shall be permitted to disclose this Agreement and the transactions contemplated hereby in filings made with the U.S. Securities and Exchange Commission or other regulatory authorities in accordance with Section 14.01.

14.11 Severability. If any term of other provision of this Agreement is invalid, illegal or incapable of being enforced by any rule of law or public policy, all other conditions and provisions of this Agreement shall nevertheless remain in full force and effect so long as the economic and legal substance of the underlying transaction in any country in the Territory is not affected in any manner materially adverse to either Party. Upon such determination that (i) any term of other provision is invalid, illegal or incapable of being enforced and (ii) the economic or legal substance of the underlying transaction in any country in the Territory is affected in a manner materially adverse to either Party, the Parties shall modify this Agreement, with respect to such country in the Territory, so as to effect the original intent of the Parties as closely as possible in a mutually acceptable manner to the fullest extent permitted by Legal Requirements in such country in the Territory in order that the underlying transaction be completed as originally contemplated to the fullest extent possible.

14.12 No Assignment. Neither this Agreement nor any of the rights, interests, or obligations hereunder may be assigned by either Party without the prior written consent of the other Party hereto, except that Savient may assign its rights, interests, or obligations hereunder to any Third Party acquiring rights to the Product and either Party may assign its rights hereunder to any Affiliates or any entity that acquires all or substantially all of such Party’s business or assets (provided that no such assignment shall relieve the assigning Party of its obligations hereunder, and the assigning Party shall remain primarily liable for such obligations). Subject to the foregoing, this Agreement shall be binding upon and inure to the benefit of the Parties and their respective successors and permitted assigns.

14.13 Headings. The headings used in this Agreement are included for convenience only and are not to be used in construing or interpreting this Agreement.

14.14 Force Majeure. If either of the Parties is impeded in fulfilling its undertakings in accordance with this Agreement by circumstances beyond its reasonable control, such as, but not limited to, labor conflict, lightening striking, acts of God, fire, war, mobilization or unforeseen military call-up of a large magnitude, requisition, confiscation, commandeering, public decrees, riots, insurrections, general shortage of transport, goods or energy and faults or delays in deliveries from subcontractor or suppliers caused by any circumstances referred to in this Section 14.14, the impediment shall be considered a Force Majeure condition and the Party shall be exempted from liability for delays due to such reasons; provided, however, that it notifies the other Party thereof without undue delay after such a circumstance has occurred. Upon such notification, the Parties shall agree upon a reasonable extension of the time for performance, not to exceed an extension equal to the period the Force Majeure condition continues to exist.

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14.15 Counterparts. This Agreement may be executed in any number of counterparts, each of which will be deemed an original, but all of which together will constitute one and same instrument.

IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be executed by their respective officers hereunto duly authorized as of the Effective Date.

SAVIENT PHARMACEUTICALS, INC.		BIO-TECHNOLOGY GENERAL (ISRAEL) LTD.
By:	/s/ Philip K. Yachmetz	By:	/s/ Dov Kanner
	Name: Philip K. Yachmetz Title: EVP & CBO		Name: Dov Kanner Title: Managing Director

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Exhibit A

Savient Patent Rights

Puricase Patents And Application Licensed To And Owned By Savient Pharmaceuticals, Inc.
TITLE	COUNTRY	SERIAL NO	PATENT NO	STATUS
URATE OXIDASE	WO	PCT/US99/17678		PUBLISHED
URATE OXIDASE	US	09/762,097	7,056,713	ISSUED
URATE OXIDASE	US	11/357,028		PENDING
URATE OXIDASE	AU	53365/99	766421	ISSUED
URATE OXIDASE	BR	P19913360-1		PUBLISHED
URATE OXIDASE	CA	2,337,967		PENDING
URATE OXIDASE	CN	99811738.2		PENDING
URATE OXIDASE	CZ	PV2001-466		PENDING
URATE OXIDASE	EP	99938996.8		PUBLISHED
URATE OXIDASE	HK	01108032.2		PENDING
URATE OXIDASE	HU	P01032005		PENDING
URATE OXIDASE	IL	141221		PENDING
URATE OXIDASE	IN	IN/PCT/2001/00165/CH		PENDING
URATE OXIDASE	JP	2000-563819		PENDING
URATE OXIDASE	KR	7001618-2001		PENDING
URATE OXIDASE	MX	PA/a/2001/00134		PENDING
URATE OXIDASE	NZ	509633	509633	ISSUED
URATE OXIDASE	PL	P-346222		PENDING
URATE OXIDASE	RU	2001103131/13		PENDING
URATE OXIDASE	SG	200100782-2	78987	ISSUED
URATE OXIDASE	ZA	2001/0974	2001/0974	ISSUED
URATE OXIDASE	US	60/095,489		EXPIRED
PEG-URATE OXIDASE CONJUGATES AND USE THEREOF	US	60/219,318		EXPIRED
PEG-URATE OXIDASE CONJUGATES AND USE THEREOF	WO	PCT/US99/17514		PUBLISHED
PEG-URATE OXIDASE CONJUGATES AND USE THEREOF	US	09/370,084	6,576,235	ISSUED
PEG-URATE OXIDASE CONJUGATES AND USE THEREOF	US	09/839,946		PENDING
PEG-URATE OXIDASE CONJUGATES AND USE THEREOF	DE	99937745.0	69925917-7	ISSUED
PEG-URATE OXIDASE CONJUGATES AND USE THEREOF	DK	99937745.0	1100542	ISSUED
PEG-URATE OXIDASE CONJUGATES AND USE THEREOF	ES	99937745.0	1100542	ISSUED

A-1

Puricase Patents And Application Licensed To And Owned By Savient Pharmaceuticals, Inc.
TITLE	COUNTRY	SERIAL NO	PATENT NO	STATUS
PEG-URATE OXIDASE CONJUGATES AND USE THEREOF	FI	99937745.0	1100542	ISSUED
PEG-URATE OXIDASE CONJUGATES AND USE THEREOF	FR	99937745.0	1100542	ISSUED
PEG-URATE OXIDASE CONJUGATES AND USE THEREOF	GB	99937745.0	1100542	ISSUED
PEG-URATE OXIDASE CONJUGATES AND USE THEREOF	GR	99937745.0	1100542	ISSUED
PEG-URATE OXIDASE CONJUGATES AND USE THEREOF	IE	99937745.0	1100542	ISSUED
PEG-URATE OXIDASE CONJUGATES AND USE THEREOF	IT	99937745.0	1100542	ISSUED
PEG-URATE OXIDASE CONJUGATES AND USE THEREOF	LU	99937745.0	1100542	ISSUED
PEG-URATE OXIDASE CONJUGATES AND USE THEREOF	MC	9993 7745.0	1100542	ISSUED
PEG-URATE OXIDASE CONJUGATES AND USE THEREOF	NL	99937745.0	1100542	ISSUED
PEG-URATE OXIDASE CONJUGATES AND USE THEREOF	PT	99937745.0	1100542	ISSUED
PEG-URATE OXIDASE CONJUGATES AND USE THEREOF	SE	99937745.0	1100542	ISSUED
PEG-URATE OXIDASE CONJUGATES AND USE THEREOF	EP	99937745.0	1100542	ISSUED
PEG-URATE OXIDASE CONJUGATES AND USE THEREOF	AT	99937745.0	1100542	ISSUED
PEG-URATE OXIDASE CONJUGATES AND USE THEREOF	BE	99937745.0..	1100542	ISSUED
PEG-URATE OXIDASE CONJUGATES AND USE THEREOF	CH	99937745.0	1100542	ISSUED
PEG-URATE OXIDASE CONJUGATES AND USE THEREOF	AU	52515/99	770014	ISSUED
PEG-URATE OXIDASE CONJUGATES AND USE THEREOF	BR	PI 9912974-4		PENDING
PEG-URATE OXIDASE CONJUGATES AND USE THEREOF	CA	2,338,665		PENDING
PEG-URATE OXIDASE CONJUGATES AND USE THEREOF	CN	99811845.1	ZL99811845.1	ISSUED
PEG-URATE OXIDASE CONJUGATES AND USE THEREOF	CY	99937745.0	1100542	ISSUED
PEG-URATE OXIDASE CONJUGATES AND USE THEREOF	CZ	PV2001317		PENDING
PEG-URATE OXIDASE CONJUGATES AND USE THEREOF	HK	01108240.0	HK1037330	ISSUED
PEG-URATE OXIDASE CONJUGATES AND USE THEREOF	HU	P0103003		PENDING
PEG-URATE OXIDASE CONJUGATES AND USE THEREOF	IL	141220		PENDING
PEG-URATE OXIDASE CONJUGATES AND USE THEREOF	IN	IN/PCT/01/00133		PENDING
PEG-URATE OXIDASE CONJUGATES AND USE THEREOF	JP	2000-563311		PENDING
PEG-URATE OXIDASE CONJUGATES AND USE THEREOF	KR	7001569/2001	0488848	ISSUED
PEG-URATE OXIDASE CONJUGATES AND USE THEREOF	KR	7014428/2004	TBA	ISSUED
PEG-URATE OXIDASE CONJUGATES AND USE THEREOF	MX	PA/a/2001/001272	232518	ISSUED
PEG-URATE OXIDASE CONJUGATES AND USE THEREOF	NZ	509595	509595	ISSUED

A-2

Puricase Patents And Application Licensed To And Owned By Savient Pharmaceuticals, Inc.
TITLE	COUNTRY	SERIAL NO	PATENT NO	STATUS
PEG-URATE OXIDASE CONJUGATES AND USE THEREOF	PL	P346224		PENDING
PEG-URATE OXIDASE CONJUGATES AND USE THEREOF	RU	2001103144		PENDING
PEG-URATE OXIDASE CONJUGATES AND USE THEREOF	RU	2004104953/15	2278680	ISSUED
PEG-URATE OXIDASE CONJUGATES AND USE THEREOF	SG	200100559-4	78843	ISSUED
PEG-URATE OXIDASE CONJUGATES AND USE THEREOF	TW	88113406	194583	ISSUED
PEG-URATE OXIDASE CONJUGATES AND USE THEREOF	ZA	2001/01814	2001/01814	ISSUED
PEG-URATE OXIDASE CONJUGATES AND USE THEREOF	CN	200610084131.8		PENDING
PEG-URATE OXIDASE CONJUGATES AND USE THEREOF	EP	05011069.1		PENDING
PEG-URATE OXIDASE CONJUGATES AND USE THEREOF	HU	0114194		PENDING
PEG-URATE OXIDASE CONJUGATES AND USE THEREOF	IN	1899/KOLMP/2006		PENDING
PEG-URATE OXIDASE CONJUGATES AND USE THEREOF	RU	2006107111		PENDING
AGGREGATE-FREE URATE OXIDASE FOR PREPARATION OF NON-IMMUNOGENIC POLYMER CONJUGATES	WO	PCT/US01/40069		NAT PHASE
AGGREGATE-FREE URATE OXIDASE FOR PREPARATION OF NON-IMMUNOGENIC POLYMER CONJUGATES	US	09/501,730	6,783,965	ISSUED
AGGREGATE-FREE URATE OXIDASE FOR PREPARATION OF NON-IMMUNOGENIC POLYMER CONJUGATES	AU	2001249975		PENDING
AGGREGATE-FREE URATE OXIDASE FOR PREPARATION OF NON-IMMUNOGENIC POLYMER CONJUGATES	BR	PI0108386-4		PENDING
AGGREGATE-FREE URATE OXIDASE FOR PREPARATION OF NON-IMMUNOGENIC POLYMER CONJUGATES	CA	2,398,679		PENDING
AGGREGATE-FREE URATE OXIDASE FOR PREPARATION OF NON-IMMUNOGENIC POLYMER CONJUGATES	CN	081807750.1		PUBLISHED
AGGREGATE-FREE URATE OXIDASE FOR PREPARATION OF NON-IMMUNOGENIC POLYMER CONJUGATES	CZ	2002-2982		PENDING
AGGREGATE-FREE URATE OXIDASE FOR PREPARATION OF NON-IMMUNOGENIC POLYMER CONJUGATES	EP	01923265.1		PENDING
AGGREGATE-FREE URATE OXIDASE FOR PREPARATION OF NON-IMMUNOGENIC POLYMER CONJUGATES	HK	03109064.9		PUBLISHED
AGGREGATE-FREE URATE OXIDASE FOR PREPARATION OF NON-IMMUNOGENIC POLYMER CONJUGATES	HU	0204544		PENDING
AGGREGATE-FREE URATE OXIDASE FOR PREPARATION OF	IL	151065		PENDING

A-3

Puricase Patents And Application Licensed To And Owned By Savient Pharmaceuticals, Inc.
TITLE	COUNTRY	SERIAL NO	PATENT NO	STATUS
NON-IMMUNOGENIC POLYMER CONJUGATES
AGGREGATE-FREE URATE OXIDASE FOR PREPARATION OF NON-IMMUNOGENIC POLYMER CONJUGATES	IN	IN/PCT/2002/00983		PENDING
AGGREGATE-FREE URATE OXIDASE FOR PREPARATION OF NON-IMMUNOGENIC POLYMER CONJUGATES	JP	2001-558218		PENDING
AGGREGATE-FREE URATE OXIDASE FOR PREPARATION OF NON-IMMUNOGENIC POLYMER CONJUGATES	KR	7010189/2002		PUBLISHED
AGGREGATE-FREE URATE OXIDASE FOR PREPARATION OF NON-IMMUNOGENIC POLYMER CONJUGATES	MX	PA/a/2002/007545	233192	ISSUED
AGGREGATE-FREE URATE OXIDASE FOR PREPARATION OF NON-IMMUNOGENIC POLYMER CONJUGATES	MX	PA/a/2005/01389		PENDING
AGGREGATE-FREE URATE OXIDASE FOR PREPARATION OF NON-IMMUNOGENIC POLYMER CONJUGATES	NZ	520434	520434	ISSUED
AGGREGATE-FREE URATE OXIDASE FOR PREPARATION OF NON-IMMUNOGENIC POLYMER CONJUGATES	PL	P-358539		PENDING
AGGREGATE-FREE URATE OXIDASE FOR PREPARATION OF NON-IMMUNOGENIC POLYMER CONJUGATES	RU	2002120486(021249)		PENDING
AGGREGATE-FREE URATE OXIDASE FOR PREPARATION OF NON-IMMUNOGENIC POLYMER CONJUGATES	SG	200204601-9	90846	ISSUED
AGGREGATE-FREE URATE OXIDASE FOR PREPARATION OF NON-IMMUNOGENIC POLYMER CONJUGATES	TW	90102540		PENDING
AGGREGATE-FREE URATE OXIDASE FOR PREPARATION OF NON-IMMUNOGENIC POLYMER CONJUGATES	ZA	2002/7206	2002/7206	ISSUED
AGGREGATE-FREE URATE OXIDASE FOR PREPARATION OF NON-IMMUNOGENIC POLYMER CONJUGATES	RU	2006107110		PENDING
AGGREGATE-FREE URATE OXIDASE FOR PREPARATION OF NON-IMMUNOGENIC POLYMER CONJUGATES	AU	TBA		PENDING
AGGREGATE-FREE PROTEIN COMPOSITIONS AND METHODS OF PREPARING SAME	US	10/928,370		PUBLISHED
VARIANT FORMS OF URATE OXIDASE AND USE THEREOF	WO	TBA		PENDING
VARIANT FORMS OF URATE OXIDASE AND USE THEREOF	TW	TBA		PENDING
VARIANT FORMS OF URATE OXIDASE AND USE THEREOF	US	60/670,573		EXPIRED

A-4

Puricase Patents And Application Licensed To And Owned By Savient Pharmaceuticals, Inc.
TITLE	COUNTRY	SERIAL NO	PATENT NO	STATUS
VARIANT FORM OF URATE OXIDASE AND USE THEREOF	US	60/670,541		EXPIRED
VARIANT FORM OF URATE OXIDASE AND USE THEREOF	WO	TBA		PENDING
VARIANT FORM OF URATE OXIDASE AND USE THEREOF	TW	TBA		PENDING
PURIFICATION OF PROTEINS WITH CATIONIC SURFACTANT	US	60/670,520		EXPIRED
PURIFICATION OF PROTEINS WITH CATIONIC SURFACTANT	WO	PCT/US06/13751		PENDING
PURIFICATION OF PROTEINS WITH CATIONIC SURFACTANT	TW	TBA		PENDING

A-5

Exhibit B

Compensation for Services and Reimbursement of Expenses

BTG shall submit invoices to Savient on a quarterly basis in arrears, which invoices shall provide an account of (i) detailed descriptions of the services performed, (ii) the number of hours such services were performed, (iii) the levels of the individuals performing such services and (iv) detailed descriptions of any Third Party expenses incurred (documentation of such expenses shall be provided to Savient upon request).

Payment to BTG shall be due within forty-five (45) days of the date of the invoice (provided that the invoice is received by Savient within three (3) Business Days of the date thereof) or within forty-five (45) days of Savient’s receipt of the invoice (if received by Savient four (4) or more Business Days after the date thereof).

Compensation Rates:

Level	Daily Rate (eight (8) hour day)
Vice President or Senior Director	$	1,657
Department Head or Director	$	1,098
Unit Head	$	757
Exempt Non-Management Employee, Group Leader & others	$	577

Beginning on January 1, 2008, and on each successive January 1^st thereafter, the above rates shall increase by an amount equal to the average increase in the United States Consumer Pricing Index (CPI) over the immediately preceding twelve (12) month period.

Third Party Expenses:

Savient shall reimburse BTG for documented expenses paid to a Third Party; provided that, other than BTG’s travel expenses for travel at the request of Savient, expenses for raw materials, expenses for subcontractors/consultants, BTG shall be required to obtain Savient’s pre-approval in writing for any expenses to be incurred in excess of Twenty thousand Dollars ($20,000).

Exhibit C

Current Provisional Bulk Product Specifications

SPECIFICATION PEG-URICASE API

Parameter	Test	Specification
Appearance	Physical inspection	Clear colorless solution, free of visible particles
General	pH	7.0-7.8
	Osmolality	270-368 mOsm/kg
Protein Content	SE-HPLC	7.2 — 8.8 mg/ml
No. of PEG Strands per Subunit	SE-HPLC	9±1
Potency	Enzymatic activity	5.0 — 9.5 Units/mg
Purity/Impurities	Free PEG, SE-HPLC	< 1 mg/ml
	Free Uricase; ELISA	To be established
	Xanthine; RP-HPLC	< 10 ppm (<10 µg/ml)
	PNP; RP-HPLC	< 500 ppb (<0.5 µg/ml)
	Endotoxin (LAL kinetic turbidimetric)	< 10 EU/mg
	Microbial Limit	< 10 CFU/100 ml

C-1

Exhibit D

Quality Agreement

QUALITY ASSURANCE RESPONSIBILITY AGREEMENT

BETWEEN

SAVIENT PHARMACEUTICALS, INC.

AND

BIO-TECHNOLOGY GENERAL (ISRAEL) LTD.

(COMMERCIAL PHASE)

Table of Contents

1	Purpose & Scope:	1
2	Definitions:	1
3	Notification of Process Deviations and Documentation Changes:	3
4	Materials:	5
5	Manufacturing:	6
6	Release and Shipment of Products(s):	8
7	Deviations in Process or Product:	8
8	Storage of Products(s):	9
9	Traceability of Products(s):	9
10	Conflict of Terms:	9
11	Compliance with Laws:	9
12	Inspections:	10
13	Observations by SAVIENT:	11
14	Adverse Events:	11
15	Stability:	12
16	Regulatory Action:	12
17	Annual Report to FDA:	12
18	APPENDIX I:	14
19	APPENDIX II:	15
20	APPENDIX III:	18

ARTICLE 1

PURPOSE AND SCOPE:

1.01 Savient Pharmaceuticals, Inc. (“SAVIENT”) and Bio-Technology General (Israel) Ltd. (“BTG”) have entered into a Supply Agreement of (event date) herewith (the “Supply Agreement”).

This document (the “Quality Agreement”) defines the quality assurance responsibilities between SAVIENT and BTG. This Quality Agreement applies only to the manufacture and supply by BTG to SAVIENT of the Product (as defined in the Supply Agreement).

ARTICLE 2

DEFINITIONS:

2.01 Capitalized terms used but not otherwise defined in this Quality Agreement will have the meanings ascribed thereto in the Supply Agreement. For ease of reference, the following definitions from the Supply Agreement which are used in this Quality Agreement are copied in full below, amended where appropriate for the purposes of this Quality Agreement:

(i) “BLA” means a Biologics License Application filed with the FDA and/or any other application required for the purpose of marketing or selling or using a therapeutic or prophylactic product to be filed with a governmental agency in a non-U.S. country or group of countries, including, without limitation, a Product License Application or Marketing Authorization in the European Union.

(ii) “Bulk Product” shall mean the bulk solution of polyethylene glycol (PEG) conjugate of uricase ordered by Savient from BTG pursuant to the Supply Agreement.

(iii) “Bulk Product Specifications” shall mean the manufacturing and quality specifications for the Bulk Product, including, without limitation, unit descriptions established from time to time in accordance with section 3.01 of the Supply Agreement.

(iv) “Business Day” shall mean any day other than (i) Friday, Saturday or Sunday or (ii) a day on which banking institutions located in New York, New York, United States of America or in Israel are permitted or required by law, executive order or governmental decree to remain closed.

(v) “cGMP” shall mean current good manufacturing practices as set forth in Title 21, Parts 210 and 211 of the C.F.R. and 21 C.F.R. Part 312 (IND) and Part 314 (NDA), and 21 C.F.R. Part 600 (Biological Products), as established and amended by the FDA.

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(vi) “FDA” shall mean the United States Food and Drug Administration or, where applicable, its regulatory equivalent in a foreign jurisdiction.

(vii) “Facility” shall mean, as applicable, the Be’er Tuvia manufacturing facility located at Beer Tuvia Industrial Zone, POB 571, Kiryat Malachi 83104, Israel

(viii) “IND” shall mean an Investigational New Drug application, as defined in 21 C.F.R. 312.3, and filed with the FDA or any equivalent foreign Regulatory Agency.

(ix) “Legal Requirements” shall mean (i) any present and future national, state, local or similar laws (whether under statute, rule, regulation or otherwise), (ii) requirements under permits, orders, decrees, judgements or directives, and requirements of applicable Regulatory Agencies (including, without limitation, cGMP) and (iii) regulations pertaining to BLAs (with respect to each of the foregoing, as amended or revised from time to time).

(x) “Process” or “Processing” shall mean the act of purification, preparation, filling, testing and any other pharmaceutical manufacturing procedures, or any part thereof (including, but not limited to, product or process specifications, testing or test methods, raw material specifications or suppliers, equipment, etc.), relating to, as applicable, Bulk Product and Product.

(xi) “Product” shall mean pharmaceutical products containing Bulk Product ordered by Savient pursuant to the Supply Agreement.

(xii) “Regulatory Agency” shall mean with respect to the United States, the FDA, or, in the case of a country in the Territory other than the United States, such other appropriate regulatory agency with similar responsibilities.

2.03 In addition, the following definitions apply to this Quality Agreement:

(i) “Bulk Product” shall mean bulk solution of polyethylene glycol (PEG) conjugate of uricase in its final formulation which is in Process, and has been produced for sterilization, filling or other finishing activities.

(ii) “Filled Product” shall mean sterile Product that is in Process and has been filled into its final primary packaging for further labelling or packaging activities.

(iii) “Final Product” shall mean finished Product in its final packaged and labeled form which is ready for distribution to the marketplace or third party distributors for sale or clinical use.

(iv) “Release” shall mean control, approval and authorization of shipment.

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ARTICLE 3

NOTIFICATION OF PROCESS DEVIATIONS AND DOCUMENTATION OF CHANGES:

3.01 BTG shall provide to SAVIENT, within two Business Days of BTG’s discovery of its occurrence, written notification of (i) any deviation from the Process as set forth in the Bulk Product Specifications and the BLA and any deviation from cGMP requirements, regulations and standards, and any event that represents an unexpected or unforeseeable event that may affect safety, purity or potency of Bulk Product; and (ii) any deviation in the quality (purity, physical and chemical properties) of the Bulk Product from the Bulk Product Specifications. Appendix I sets forth a list of examples of deviations from the Process, for purposes of illustration only, and is not intended to be comprehensive or definitive.

(i) BTG shall not conduct any retesting or reprocessing as the result of deviations described above without prior written authorization from SAVIENT Quality Assurance unless a delay of retesting or reprocessing would result in increased risk to the safety, purity or potency of the Bulk Product or Product.

3.02 Any changes to be made to this Quality Agreement in accordance with the provisions set out in this section 3 must be documented as an addendum to this Quality Agreement, and must be signed by authorized representatives from each of the BTG QA department and the SAVIENT QA department, in addition to authorized representatives from any other departments as may be specified in relation to the matters set forth in section 3.3 below. This Quality Agreement will be reviewed by BTG and SAVIENT on a periodic basis (approximately once per year) and revised as appropriate.

3.03 Change Control

(i) Specifications that control the Process for the manufacture, including packaging, holding, and test of Bulk Product and Product, must be signed by authorized representatives from BTG and SAVIENT Quality Assurance, SAVIENT Regulatory Affairs, and SAVIENT Manufacturing. Such documents include, but are not limited to Bulk Product Specifications (including specifications for intermediate), Product Specifications (including specifications for product, component and packaging). Changes to such documents must be signed by authorized representatives from SAVIENT Quality Assurance, SAVIENT Manufacturing and SAVIENT Regulatory Affairs.

(ii) Changes to additional documents that control the Process for the manufacture of Bulk Product and Product (including test methods, manufacturing procedures and batch records) must be assessed according to the BTG change control process described in section 3.4. Any change that would have an impact on the Process, Bulk Product or Product, or require submissions to or approvals from any Regulatory Agency must receive prior written approval by authorized representatives from SAVIENT Quality Assurance, SAVIENT Manufacturing and SAVIENT Regulatory Affairs. If there is no such impact, BTG may proceed with the change, but must notify SAVIENT Quality

3

Assurance no later than 5 days from the initiation of the BTG change control process. If SAVIENT does not agree with BTG’s assessment of impact, SAVIENT must respond to BTG no later than within 5 days of receipt of notification.

(iii) The stability protocol as well as any changes to the stability protocol must be approved by SAVIENT QA and SAVIENT Regulatory Affairs.

(iv) Critical Raw Materials. The current specifications for Critical Raw Materials are attached as Appendix III. The Parties acknowledge and agree that these specifications may be amended from time to time by the supplier of the material. With respect to such amendments:

BTG shall notify SAVIENT as soon as reasonable practicable, but no later than within 5 days of receipt of notification by BTG.

The Parties will meet and agree as to suitability of the material produced according to the amended specification for manufacture of the Bulk Product.

3.04 BTG will utilize a documented system of written procedures for the control of changes to documents relating to raw materials, packaging materials, labeling, suppliers, equipment, manufacturing methods, batch size, product, intermediates and raw materials specifications, sampling, analytical test methods and Release requirements and any other Processing by BTG, relating to the Bulk Product.

3.05 Any changes to any matter relating to the manufacture and supply of Bulk Product by BTG shall be governed by the procedures set out in the Supply Agreement at Article 3 in relation to changes to the Bulk Product Specifications, and Article 6 in relation to changes to the Process.

3.06 SAVIENT Regulatory Affairs will have responsibility for determining the regulatory impact of any proposed change. SAVIENT Regulatory Affairs will determine the classification and requirements for notification to, or approval by FDA. SAVIENT is responsible for communication of any changes to FDA. SAVIENT Regulatory Affairs will have responsibility to advise BTG of any changes to the BLA prior to submission.

BTG will ensure that changes are evaluated and qualified in accordance with all applicable ICH (International Conference on Harmonization) requirements in addition to all Legal Requirements, including but not limited to:

ICH Guideline Q5E Comparability of Biotechnological/Biological Products Subject to Changes in Their Manufacturing Process.

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ARTICLE 4

MATERIALS:

4.01 Procurement of Components

BTG will procure all the components described in the Bulk Product Specifications in such quantities as may be necessary to meet Purchase Orders placed by SAVIENT pursuant to the Supply Agreement, and store the components in appropriate storage conditions under quarantine until tested.

4.02 Inspection and Testing of Materials

Upon receipt, BTG shall sample in accordance with acceptable statistical methods, inspect and test containers of all materials to be used in the Process or in connection with the supply and manufacture of Bulk Product on a batch-by-batch basis, in accordance with the Bulk Product Specifications.

4.03 Bulk Product

BTG will be responsible for ensuring that Bulk Product is manufactured, tested and stored in compliance with all applicable ICH guidance documents (including, without limitation, the guidance contained therein for master and working cell banks) in addition to all Legal Requirements. ICH Guidance includes, but is not limited to:

Q5D Quality of Biotechnological Products: Derivation and Characterization of Cell Substrates Used for Production of Biotechnological/Biological Products.

Q7A, Good Manufacturing Practices Guidance for Active Pharmaceutical Ingredients

4.04 Retention, Storage and Handling of Materials and Product Samples

BTG shall sample and retain such amounts of Bulk Product and of all materials to be used in the Process or in connection with the supply and manufacture of Bulk Product (“Retains”) except water, compressed gasses and any highly volatile compounds as set forth in Appendix II or as otherwise required in accordance with applicable Legal Requirements. BTG will store for five years, or such longer period as may be required in accordance with Appendix II or by Legal Requirement, sample Product and Retains for each batch or lot of intermediates and raw materials. Reasonably prior to the expiry of such retention period, or upon termination of this Quality Agreement, BTG shall offer all such materials to SAVIENT. Any labor costs of BTG employees and/or Third Party expenses incurred by BTG related to the transfer of such materials shall be reimbursed by SAVIENT in the manner and at the rates set forth on Exhibit B to the Supply Agreement.

A schedule of specific Retains, storage conditions and retention periods for Puricase^® is listed in Appendix II.

4.05 Transmissible Spongiform Encephalopathy (TSE)

BTG will provide a written TSE declaration that all materials (including non-dedicated equipment) used in the manufacturing process are free from animal derived material. In addition, BTG must have available, on site, written TSE declarations from the supplier, where appropriate, of raw material used in the manufacturing process verifying exclusion

5

of animal derived material. If BTG is unable to provide the above declarations, BTG will comply with applicable TSE laws and regulations and will obtain all associated TSE documentation as requested by SAVIENT. This documentation may include a TSE Certificate of Suitability in accordance with European directive 75/318/EEC as amended by directive 1999/82/EEC, the note for guidance EMEA/410/01 rev2 as amended and AP-CSP(99)4, Appendix 2, as amended.

4.06 Supplier Audits

BTG and SAVIENT will provide each other with copies of supplier audit reports for materials used in the Process or manufacture of the Product.

ARTICLE 5

MANUFACTURING, PACKAGING, INSPECTION AND TEST:

5.01 The Processing, packaging, and labeling of Bulk Product will be performed and documented by BTG. BTG will not subcontract any of the Processing, packaging, and labeling functions except as may be permitted in accordance with the Bulk Product Specifications, and if so permitted, in accordance with the provision set forth in Section 2.05 of the Supply Agreement.

5.02 BTG shall not Process or store Bulk Product in the same building in which BTG manufactures, stores or processes potentially hazardous substances (including, without limitation, certain antibiotics such as beta-lactam and cephalosporins, cytotoxic compounds, toxins or poisons such as pesticides or herbicides, (collectively, “Potential Contaminants”) unless the Potential Contaminants are stored or manufactured in contained environments and in compliance with all Legal Requirements and the Bulk Product is Processed and stored in compliance with building, cleaning, validation and changeover requirements of all cGMPs and all Legal Requirements. BTG shall promptly notify SAVIENT if any of the Potential Contaminants are manufactured, processed or stored in any portion of the Facility which may result in the introduction of Potential Contaminants into the areas of such facilities where the Bulk Product is Processed. Savient is aware that other products are processed in the Facility, the nature of those other products existing today and that certain equipment (multi-use equipment) is used in the processing of both the Bulk Product and these other existing products. Savient has also had the opportunity to assess the risk to the Processing of Bulk Product of the use of such certain multi-use equipment with respect to the other existing products. However, in the instance where BTG intends to introduce a new product or substance to its Facility which is out of the matrix of existing products and use such multi-use equipment in the processing or handling of such new product or substance, Savient will need to reassess the risks to the Processing of Bulk Product with this new product or substance utilizing the multi-use equipment. Therefore, whenever BTG plans to introduce a new product or molecular entity which is out of the matrix of existing products to equipment shared with Puricase production, BTG will provide no less than 30 days prior notice of its intent, and will contemporaneously make supporting cleaning validation data/rationale available to Savient. Savient will make its assessment of the risk potential for adulteration of its own product through examination of cleaning validation

6

documentation prior to any further Puricase production and will respond to BTG within 5 days of its receipt of cleaning validation data/rationale as to its conclusion(s) about the introduction.

5.03 BTG will provide to SAVIENT: a copy of all master batch record documents and production and control records, a Certificate of Analysis (PEG-uricase API and uricase), executed batch records and associated batch documentation, which shall include, without limitation: formulation records, label records, manufacturing records, environmental monitoring data, microbiological data, in-process and final analytical data, including lab control results, sterility data, deviations/out-of-specification reports and cleaning records for any critical product contact equipment (for example, fermentors or any other non-dedicated product contact equipment).

(i) Translation: BTG will provide an English translation of all such documents, including, without limitation, all reports, notes or comments on records that are not part of the master batch record but if any of the foregoing documents are only available in a language other than English, the Parties shall agree upon an English language template for such document(s), and BTG shall provide to Savient an English language translation of any deviations from the template(s). When required by SAVIENT, translations shall be performed by an independent, translation firm. Translations by a third party firm must be verified by BTG to ensure translation of company or process specific language. Any labor costs of BTG employees and/or Third Party expenses incurred by BTG in relation thereto shall be reimbursed by SAVIENT in the manner and at the rates set forth on Exhibit B to the Supply Agreement.

5.04 Upon request by SAVIENT, BTG will provide access to additional records that are not normally part of the batch record but which bear a reasonable relation to the Bulk Product for SAVIENT to review, which may include, without limitation, maintenance and use records, water testing data, training records, raw material release records, log books, receiving and shipping records, inventory records and vendor qualification records Any labor costs of BTG employees and/or Third Party expenses incurred by BTG in relation thereto shall be reimbursed by SAVIENT in the manner and at the rates set forth on Exhibit B to the Supply Agreement.

5.05 BTG will retain copies of all completed batch records for a minimum of five years, or such longer period as may be required by Legal Requirement. Reasonably prior to the expiry of such retention period, or upon termination of this Quality Agreement, BTG shall offer such completed batch records to SAVIENT. Any labor costs of BTG employees and/or Third Party expenses incurred by BTG related to the transfer of such materials shall be reimbursed by SAVIENT in the manner and at the rates set forth on Exhibit B to the Supply Agreement.

5.06 Use of BTG Manufacturing Space for Bulk Product

BTG has allotted an amount of manufacturing floor space at the Facility for the Processing of Bulk Product (Purification Area in the Agreement). This space may be used for the production of other products subject to the following limitations:

7

(i) BTG may use the Purification Area for alternate product manufacturing only during periods when the Purification Area is not used for the Processing of Bulk Product.

(ii) BTG adheres to all relevant cGMPs including, without limitation, procedures for prevention of mix-ups, prevention of contamination, labeling requirements, cleaning requirements and changeover requirements

(iii) BTG, shall not, under any circumstances utilize any equipment dedicated to the Processing of Bulk Product for such alternate product manufacturing

(iv) BTG adheres to limits and procedures described in section 5.2 for Potential Contaminants.

ARTICLE 6

RELEASE AND SHIPMENT OF PRODUCT(S):

6.01 Bulk Product shall be Released in accordance with the procedures set forth in the Supply Agreement, together with the additional obligations described in this section 0 of the Quality Agreement. BTG QA will review the records described in section 5.3 above. Following review and acceptance by BTG QA, BTG will send copies of these documents to SAVIENT QA. SAVIENT QA and Manufacturing will then review the documentation and notify BTG whether or not documentation is acceptable. If such documentation is not reasonably acceptable to SAVIENT, BTG will cooperate in taking such steps as SAVIENT may reasonably require to ensure that the documentation, and any Processing described therein complies with the Bulk Product Specifications and all Legal Requirements.

6.02 BTG QA will be responsible for the QC testing of Filled Product until such time as a third party laboratory has been qualified to perform such testing. BTG will provide a Certificate of Analysis and/or stability results for each batch that BTG tests. Savient QA will be responsible for the review of the manufacturing batch record for Filled Product, review of the Certificate of Analysis and Release of the Filled Product.

6.03 SAVIENT QA will be responsible for the Release of the Final Product.

6.04 Product shall be delivered in accordance with the provisions of Article 7 of the Supply Agreement.

6.05 BTG will not ship any SAVIENT products to any destination, as identified by SAVIENT, unless prior approval has been received from SAVIENT.

ARTICLE 7

DEVIATIONS IN PROCESS OR BULK PRODUCT:

In the event of a notification of a deviation by BTG in accordance with section 0 above, BTG shall investigate and fully document in English such deviation within 30 days of its discovery. If BTG cannot resolve the deviation within the 30-day period, BTG will provide

8

weekly updates of the investigation progress. At SAVIENT’s request, BTG shall conduct such additional or more detailed investigation of the deviation as SAVIENT may reasonably instruct. Investigation documentation will be retained by BTG as part of the batch documentation for the batch affected. When a deviation has occurred, SAVIENT will have the final review and decision making responsibility as to the impact of the deviation on the Bulk Product or Product, which will include the disposition of affected lots.

ARTICLE 8

STORAGE OF PRODUCT(S):

Bulk Product will be stored under appropriate storage conditions and in a secure area to ensure that they comply with the Bulk Product Specifications, including all the label requirements, quality specifications and attributes as well as Legal Requirements.

ARTICLE 9

TRACEABILITY OF PRODUCT(S):

SAVIENT will be responsible for traceability of products to first consignee within the US. BTG will be responsible for traceability from the finished product lot number to raw material and component lots used in manufacture.

ARTICLE 10

CONFLICT OF TERMS:

To the extent that there exists any conflict between the terms of this Quality Agreement and the Supply Agreement, the latter shall prevail. To the extent that there exists any conflict between the terms of this Quality Agreement and any Legal Requirements, the latter shall prevail.

ARTICLE 11

COMPLIANCE WITH LAWS:

BTG will ensure that all of its activities pursuant to this Agreement are performed in accordance with all Legal Requirements (including cGMPs), the respective Bulk Product Specifications, conditions of the BLA, and BTG’s Standard Operating Procedures (SOPs). BTG will ensure that the Bulk Product supplied by it to SAVIENT shall not itself cause the Final Product to be adulterated or misbranded within the meaning of the Federal Food, Drug, and Cosmetic Act and regulations.

9

ARTICLE 12

INSPECTIONS:

Each party shall advise the other of any governmental communication, inspection or report, including, without limitation, that of any appropriate regulatory agency in any jurisdiction with responsibilities similar to those of the FDA in respect of the United States, any environmental agency, health agency or other governmental or administrative agency having jurisdiction over the Product or the Processing. The notifying party shall promptly notify the other party by fax and telephone, to the person and on the contact numbers set out below:

TO SAVIENT:
•  Contact Name:	Robert Lamm, Ph.D., Sr. VP of Quality and Regulatory Affairs
•  Telephone:	732-418-9300
•  Fax:	732-418-0766
TO BTG:
•  Contact Name:	Rivka Zaibel, VP, Quality Assurance
•  Telephone:	972-8-861-2007
•  Fax:	972-8-861-2166

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ARTICLE 13

OBSERVATION BY SAVIENT:

Observation by SAVIENT or its authorized representative shall be governed the following. Observation will be limited to not more than one quality audit every 12 months. One additional quality audit may be conducted within the 12 month period if BTG receives a communication from any regulatory authority threatening license approval or supply of the Product due to compliance deficiencies at BTG facilities or if BTG was found to be in material non-compliance of this Agreement during or since the last quality audit. Person-in-Plant visits may be conducted at the discretion of SAVIENT during the manufacture of Bulk Product at BTG facilities. The frequency and duration of any additional visits must be agreed to by SAVIENT and BTG.

ARTICLE 14

ADVERSE EVENTS:

14.1 BTG will provide to SAVIENT within 48 hours of becoming aware, any information from any source that suggests an adverse event or serious adverse event has occurred. This information will include any adverse drug experience or reaction reports or any other information indicating that the product has any toxicity, sensitivity reactions or is otherwise alleged to cause illness or injury due to a possible product quality problem, adulteration or misbranding.

14.2 Quality Assurance Investigations. Upon notification to BTG that SAVIENT has received an SAE, AE, product complaint or inquiry regarding a Product supplied or incorporating a Bulk Product supplied, BTG shall conduct a quality assurance investigation to determine if any process or testing deviations or events may have contributed to the SAE, AE, product complaint or inquiry. BTG shall provide a written report on the results of the investigation to SAVIENT in not more than 30 days from Savient’s notification. In cases where a more comprehensive investigation might be required, the Parties will jointly develop an investigation plan. BTG shall reasonably cooperate with SAVIENT and regulatory agencies regarding an investigation or inquiry that may be initiated by a regulatory agency or otherwise required in response to a consumer or healthcare professional. BTG shall further provide SAVIENT with all data or other information that SAVIENT may reasonably require in connection with any reports or correspondence that SAVIENT provides to the regulatory agency, consumer or healthcare professional relative to any such AE, SAE or product complaint. BTG shall make records accessible to SAVIENT for purposes of FDA or other regulatory agency inspection.

14.3 Exchange of Drug Safety Requests. The Parties shall immediately provide each other with copies of all drug safety requests from all governmental and other regulatory health authorities. Proposed answers affecting the Product will be exchanged between the Parties before submission and the Parties shall cooperate with respect to such answers. SAVIENT shall

11

have the ultimate decision-making authority with respect to the answers relating to the Product. The Parties shall exchange decisions from applicable health authorities immediately.

ARTICLE 15

STABILITY:

BTG will perform the stability testing, data interpretation, reporting and updating of stability information to regulatory documents for the Product and Bulk Product and for Product until such time as a third party laboratory has been qualified to perform such testing. Stability related activities for which BTG is responsible shall be completed in accordance with the timing specified in stability protocols and BTG procedures.

ARTICLE 16

REGULATORY AFFAIRS:

Each Party shall advise the other Party of any regulatory action of which it is aware which would affect the Product in any country of the Territory.

ARTICLE 17

ANNUAL REPORT TO FDA:

BTG will prepare a summary of all changes to the product, production process, quality controls, equipment or facilities that have a potential to affect the identity, strength, quality, purity or potency of the Product. Such data will be prepared and sent to SAVIENT within thirty days of the end of the review period. BTG will also ensure that the results of all stability testing performed within the review period are sent to Savient within thirty days of the end of the review period.

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Approvals

	Print Name	Signature	Date
SAVIENT QA	Robert B. Lamm	/s/ Robert B. Lamm	20-Mar-07
BTG QA	Rivka Zaibel	/s/ Rivka Zaibel	20 March 2007

13

APPENDIX I

Listing of Example Deviations

The following is a non-exclusive list of deviations requiring notification in accordance with section 0:

• Deviation impacting any filed regulatory document.

• Use of manufacturing or testing site (finished products, intermediates, API or excipients) other than that specified in Bulk Product and Product Specifications and/or BLA.

• Change of manufacturing scale from that specified in Bulk Product Specifications and/or BLA.

• Deviation from packaging or packaging specifications from that specified in Bulk Product Specifications and/or BLA.

• Deviation from suppliers, sources or specifications of starting and Critical Raw Materials or supplier of any filters for Products or intermediates set forth in Bulk Product Specifications and/or BLA.

• Change in the layout, functioning or structure of the Facility, equipment or utilities (HVAC, nitrogen, water or compressed gasses) that may affect the quality of the Bulk Product.

• Use of solvents or reagents (including volatile reagents), other than those specified in Bulk Product Specifications and/or BLA, or change of specifications for such solvents, reagents, or intermediates, or change in analytical methods of solvents, reagents, or intermediates.

• Deviation in amounts of solvents or reagents used from that specified in the Process, Bulk Product Specifications and/or BLA.

• Change in Transmissible Spongiform Encephalopathy (TSE) status of any raw material or product(s).

• Any reprocessing or rework of any step of the Process.

• A physical contamination, cross-contamination or other chemical contamination.

• Any manufacturing, packaging, labeling, sampling or testing deviation that affects the quality, safety or purity of the Product.

• Departures from the SOPs, IPC tests, stability SOPs, the Stability Protocol or Batch Records outside the filed limits, excursions or any deviation with potential registration impact.

• Any unexpected results from stability testing.

• Environmental monitoring results that are out-of-specification.

14

APPENDIX II

Schedule of Retains, Storage Conditions and Retention Periods for Puricase^®

The following is a list of the reserve/retention samples that are taken during the manufacturing processes of bulk uricase and PEG-uricase as well as from the final bulk uricase and the final bulk PEG-uricase (Bulk Product).

The document was prepared based on the following BTG QC SOPs:

1. SOP 04-68-1288 (v2): QC Sampling Plan for Bulk Uricase

2. SOP 04-68-1830 (v1): QC Sampling Plan for PEG-Uricase API

3. SOP 04-68-1861 (v1): IPC Testing of Bulk Uricase Batches

4. SOP 04-68-1862 (v1): IPC Testing of PEG-Uricase

Table 1 details the reserve/retention samples that are taken during the manufacturing process of bulk uricase and from the final bulk uricase.

Table 2 details the reserve/retention samples that are taken during the manufacturing process of PEG-uricase and from the final bulk PEG-uricase (Bulk Product).

All IPC samples (including reserve/retention samples) are to be discarded after the Final Product is released by Savient.

Uricase retention and reserve samples will be kept for one year after manufacturing. PEG-Uricase retention and reserve samples will be kept for six years after manufacturing

15

Table 1. Reserve/Retention Samples for Bulk Uricase (IPC and Final)

Process Step	Sample name	Number of Samples	Storage Temperature
Fermentation -Beginning of Induction	0	1 x 0.1 ml	-20°C
Fermentation - After 3 hr of Induction	3	1 x 0.1 ml
Fermentation Harvest (End of Induction)	6	1 x 0.1 ml
		1 x 50 ml
Harvest Supernatant	7	1 x 1 ml
Fermentation Bacterial Cake Diluted 10 Fold	9	1 x 0.1 ml
Crude Suspension	10	1 x 0.1 ml
Supernatant After 1st Centrifugation	11	1 x 1 ml
Pellet After 1st Centrifugation	12	1 x 0.1 ml
Supernatant After 2nd Centrifugation	13	1 x 1 ml
Pellet After 2nd Centrifugation	14	1 x 0.1 ml
Dissolution of IBs	DS	1 x 7 ml
	End DS	1 x 7 ml
Centrifugation of Precipitate	CP	1 x 7 ml
Concentration / Diafiltration	30 ICD Filt.	1 x 7 nil
	30 KD Ret (only if process is stopped)	1 x 7 ml
QS-1 Column	QS-1 Load	1 x 7 ml	2-8°C
	QS-1 MP	1 x 7 ml
PS Column	PS Load	1 x 7 ml
	PS MP	1 x 7 mi
Xanthine-Agarose Column	Xa Load Prep.*	1 x 7 ml
	Xa Load (from each day)	1 x 7 ml
	Each Xa MP	1 x 7 ml
Concentration	Xa MP (AC)	1 x 7 ml
		1 x 50 ml
Bulk Uricase Reserve Samples		2 x 10 ml
Bulk Uricase Retention Samples		2 x 50 ml

* The number of Xa Load Prep. samples depends on the concentration measured after sample dilution.

16

Table 2. Reserve/Retention Samples for PEG-Uricase API (IPC and Final)

Process Step	Sample name	Number of Samples	Storage Temperature
Concentration and dialysis	30K AD	3 x 5 ml	2-8°C
QS 2	QS2 MP	3 x 5 ml
PEGylation	PEG Solution	1 x 2 ml
	End of PEGylation	2 x 5 ml
QS 3	QS 3 MP	2 x 5 ml
100K Dialysis	Dialysis Buffer	1 x 5 ml
	Pellicon Final Rinse Water	1 x 5 ml
	100K Filtrate — After X Volumes (~15, 20, 25 volumes; to be determined based on Free PEG content)	1 x 5 ml after each dialysis volume
	100K Retentate	2 x 5 ml
		1 x 30 ml
PEG-Unease API Reserve Samples		1 x 7 ml
PEG-Unease API Retention Samples		2 x 50 ml

17

APPENDIX III

Critical Raw Materials Used in the Production of Recombinant Uricase and PEG-Uricase

Material	Manufacturer	Cat. No.	Testing	Source	Origin
N-Z-Amine AS	Kerry Bio- Science	5X59028/ 5X59039	Chem/NIR	Milk derivative	USA
N-Z-Amine B	Kerry Bio- Science	5X59032	Chem/NIR	Milk derivative	USA
Yeast Extract, microgranulated powder, without salt, type D	BioSpringer	0251/ 0-MG-L	Chem/NIR	Yeast	France
Q Sepharose™ Fast Flow	Amersham Pharmacia	17-4510-04	Chem	Chemical	Sweden
Phenyl Sepharose™ 6 Fast Flow low substitution	Amersham Pharmacia	17-0965-04	Chem	Chemical	Sweden
Xanthine-agarose	Sigma	X3128	CoA	Plant / Chemical	USA
Methoxypoly (ethylene glycol)-nitrophenyl carbonate MW 10 000, Sunbright MENP-10T	NOF Corporation	—	Chem	Chemical	Japan
Lysozyme, from egg white, 50,000 U/mg cryst. HCl salt, for biochemistry EC 3.2.1.17	Merck	1.05281	Chem	Egg, chicken	Germany
Lysozyme Chloride (pharmaceutical grade) (Mucopeptide N- Acetylmuramyl hydrolase, HCL, E.C. 3.2.1.17)(from egg white)	Belovo	PO-VEN-03 Appendix 13a		Egg chicken

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SPECIFICATION N-Z-AMINE AS

Parameter	Test	Specification
Total Nitrogen (TN)	Combustion		11.0% minimum
Amino Nitrogen (AN)	HCHO Titration (%)		Record
Ratio AN/TN	Ratio		45 minimum
Ash Content	Oven		7.5% maximum
Loss on drying	Moisture balance		5.0% maximum
pH	2% autoclaved solution		6.4 — 7.0
Color	2% autoclaved solution, ABS @ 420 nm		0.180 AU maximum
Clarity	2% autoclaved solution, 2100AN		0.76 NTU maximum
Standard Plate Count	USP		10,000 CFU/g maximum
Enterobacteriaceae	ISO		10 CFU/g maximum
Salmonella	USP		Absent in 25 g

19

SPECIFICATION N-Z-AMINE B

Parameter	Test	Specification
Total Nitrogen (TN)	Combustion		11.0% minimum
Amino Nitrogen (AN)	HCHO Titration (%)		Record
Ratio AN/TN	Ratio		39.0 minimum
Ash Content	Oven		7.0% maximum
Loss on drying	Moisture balance		5% maximum
pH	2% autoclaved solution		6.6 — 7.1
Color	2% autoclaved solution, ABS @ 420 nm		0.160 AU maximum
Clarity	2% autoclaved solution, 2100AN		1.36 NTU maximum
Standard Plate Count	USP		10,000 CFU/g maximum
Enterobacteriaceae	ISO		10 CFU/g maximum
Salmonella	USP		Absent in 25 g

20

SPECIFICATION YEAST EXTRACT

Parameter	Specification
Dry matter		94.0 — 98.0 g per 100 g product
Total nitrogen		10.0 — 11.8 g per 100 g product
Amino nitrogen		4.5 — 5.8 g per 100 g product
PH		6.8 — 7.2
Sodium chloride		< 0.5 g per 100 g product
Total plate count		< 5,000 CFU per g product
Coliforms		< 5 CFU per g product
Spores of Clostridium perfringens		< 10 CFU per g product
Yeast		< 50 CFU per g product
Mold		< 50 CFU per g product
Salmonella		Negative (per 25 g)
E. coli		Negative
Staphylococcus aureus		Negative

21

SPECIFICATION Q SEPHAROSE™

Parameter	Specification
Function - retention volume; ml
- GammaBind™		40 — 50
- ß-Lactoglobulin A		59 — 79
- ß-Lactoglobulin B		72 — 92
Total capacity
mmol C1-/mL packed gel		0.18 — 0.25
Flow rate at 0.1 MPa
cm/hour Bed height: 14 — 16 cm		400 — 700
Particle size distribution
Volume share within 45 — 165 µm; %		95 minimum
Microbial contamination
microorganisms / mL suspension		100 maximum

22

SPECIFICATION PHENYL SEPHAROSE™

Parameter	Specification
Function — Separation of Cytochrome C, Myoglobin and Lysozyme
Retention Time; minutes
Myoglobin		52 — 63
Lysozyme		80 — 90
Microbial contamination
microorganisms / mL suspension		100 maximum
Degree of substitution
µmol phenyl per ml drained gel		Record

23

SPECIFICATION XANTHINE AGAROSE

Parameter	Specification
Appearance		White Suspension
Binding capacity		> 1.5 mg/ml binding capacity

24

SPECIFICATION METHOXYPOLY (ETHYLENE GLYCOL)-NITROPHENYL CARBONATE

Parameter	Test	Specification
Physical description	Visual observation	White to off-white powder or granular solid
Appearance of acidic solution	Visual inspection of 1 mg/ml solution in 1mM HCL	Colorless and free of turbidity or suspended matter
Average molecular weight (Mn) (Daltons)	SEC monitored by RI	9,000 — 11,000
Polydispersity (Mw/Mn) main peak	SEC monitored by RI	NMT 1.1
PEG diol content (%)	SEC monitored by RI, 20 kD Peak	NMT 2
Content of active m-PEG-npc (%)	Spectrophotometric determination of pNP released by alkaline hydrolysis / H-NMR	NLT 90
Free p-nitrophenol (%)	Spectrophotometric determination of pNP released by alkaline hydrolysis / H-NMR	NMT 5 of total pNP measured after alkaline hydrolysis
Bacterial endotoxins (EU/g)	USP (gel clot)	NMT 20
Water content (%)	Karl Fischer	LT 2
Bioburden (cfu/g)	Microbial limit test (JP)	LT 100
Organic volatile impurities (%)	GC (Head-space) acetonitrile pyridine, toluene, hexane, ethyl acetate, triethanolamine	NMT 0.1

25

SPECIFICATION LYSOZYME (MERCK)

Parameter	Specification
Activity (Micrococcus luteus, FIP- Standard; pH 7.0; 25° C)		> 50,000 U/mg

26

SPECIFICATION LYSOZYME (BELOVO)

Parameter	Test	Specification
Solubility in water (mg,/ml)			>100
Protein purity (%)	HPLC on TSK-gel G2000SWXL detection 280 nm		>99.0
Identification	Nihydrin test: blue-purple color, maximum absorbance between 279 nm and 281 nm		Conforms
Transmittance @ 650 nm (%)	Of a 1.5% solution in water		>99.5
Transmittance @ 400 nm (%)	Of a 10% solution in water		>90
pH	Of a 1.5% solution in water		3.0 — 4.0
Activity * (FIP U/mg)	By comparison to a lysozyme standard FIP from Center for Standards, Gent (Belgium). According to FIP ref. Int. Pharm. J (1988) 2(5), 169-171		>36,000
Assay * (mg/mg)	By comparison to a lysozyme reference standard according to the Japanese Pharmaceutical Codex. (JPC 1997 Part I)		>0.9
Moisture (%)	105 °C — 4 hours		<5
Ash (%)	800 °C — 3 hours		<0.3
Chloride (%)	Potentiometric titration with ion selective electrode		<4
Nitrogen* (%)	Kjeldhall method		16.8 — 17.8
Density (ml/g)	Bulk density by sieving the powder on the top of a cylinder of 30 ml capacity (diam. 22 mm, height 79 mm)		2 - 3
Particle size (p.m)	Opening: 0.077 mm; wire: 0.050mm; % opening 34		<77
Arsenic (ppm)	Test strips semiquantitative Merckoquant 10 026 (Merck)		<1
Heavy metals (ppm)	Atomic Absorption		<10
Total viable count (/g)	Culture medium: OXOID CM1; on membrane filters; 0.45 µm pore size; 30°C 3 days		<10
Pyrogens (IU/mg)	LAL: pyrogentR plus kit Bio Whittaker		<1
VVND	Viral safety validation study according to Council Directive 92/66/EEC, Annexe III: Diagnostic procedures for the confirmation and differential diagnosis of Newcastle disease		Absent

* on anhydrous basis

27

Exhibit E

Product Price

During the first three (3) years from the date of the receipt by Savient of the first commercial batch of the Product, the Price of the Product shall be as follows:

(i) For each gram, Eight Thousand Two Hundred Ninety United States Dollars (USD$8290) for any aggregated quantities of the Product up to and including Two point Four kilograms (2.4 kg) ordered during any calendar year that commercial batches of Product are shipped, i.e. after the first commercial batch of Product has been shipped.

(ii) For each gram, Seven Thousand Eight Hundred Sixty Five United States Dollars (USD$7865) for any aggregated quantities of the Product between Two point Four kilograms (2.4 kg) and Four point Eight kilograms (4.8 kg) ordered during any calendar year as above.; and

(iii) For each gram, Seven Thousand Four Hundred Forty United States Dollars (USD$7440) for any aggregated quantities of the Product equal to or greater than Four point Eight kilograms (4.8k g) ordered during any calendar year as above.

The Parties agree that Savient will enter into a supply agreement with NOF, the supplier of m-PEG-NPC (mono-methoxy polyethylene glycol nitro-phenyl carbonate), and will order and pay for PEG needed in Product manufacture on an ongoing basis. In the event that BTG purchases PEG directly from NOF or any other manufacturer, the cost of the PEG will be invoiced to Savient.

Beginning on the Third (3^rd) anniversary of the date of receipt of the first commercial batch of Product by Savient, and on each successive first (1^st) January thereafter, the Price of the Product shall increase by an amount equal to the average increase in the United States Consumer Pricing Index (CPI) over the immediately preceding twelve (12) month period; such percentage increase shall be applied to each amount specified in (i) through (iii) above.

Exhibit F

Residual Rights Agreement

AMENDED AND RESTATED

RESIDUAL RIGHTS AGREEMENT

This Amended and Restated Residual Rights Agreement (“Agreement”) is entered into on the 17th day of July, 2005, by and between Savient Pharmaceuticals, Inc., a public company duly organized under the laws of the State of Delaware (“Savient”) and Bio-Technology General (Israel) Ltd., a private company duly organized under the laws of the State of Israel (“BTG”), to replace and supersede the Residual Rights Agreement previously signed and dated 20 June, 2005.

(Savient and BTG shall be referred to jointly as the “Parties” and individually as a “Party”).

WHEREAS, BTG is a wholly owned subsidiary of Savient; and

WHEREAS, the Parties are parties to a Manufacturing Services Agreement effective January 1, 1996 (the “Manufacturing Agreement”) and a Research and Development Services Agreement dated January 1, 1996 (the “R & D Agreement”) (the Manufacturing Agreement and the R & D Agreement being collectively referred to hereunder as the “Inter-Company Agreements”); and

WHEREAS, pursuant to the Share Purchase Agreement (the “SPA”) and the Asset Purchase Agreement (“APA”), each dated March 23, 2005 (the SPA and APA, collectively, the “Divestiture Agreements”), Savient intends to sell to Ferring B.V. all of the issued and outstanding share capital of BTG, and to Ferring International Centre S.A. (together with Ferring B.V., the “Buyer”) all of Savient’s right, title and interest in and to certain assets and rights of Savient in the drug products and drug candidates developed and/or manufactured at BTG pursuant to the Inter-Company Agreements (the “Divestiture” and the “Divested Products”, respectively), but not in any case in the drug candidate known as “Peguricase” (a/k/a “Puricase”); and

WHEREAS, the development of Puricase is ongoing and Savient shall require, and BTG is willing to render, continued development, manufacturing and other services of BTG in relation to Puricase, following the Closing (as defined in the Divestiture Agreements); and

WHEREAS, the Parties wish to record certain specific understandings in relation to certain protein purification technology (the “CPC Technology”) as to which Savient has retained title, in furtherance of the understandings set out in the SPA in relation thereto, which CPC Technology forms part of the Puricase Technology, but which can also be used for the manufacture of other

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products (all products that may be manufactured using the CPC Technology, other than Puricase, Divested Products and HA (as defined below), being referred to herein as “CPC Products”); and

WHEREAS, the Parties wish to record certain specific understandings in relation to the OCS-funded project, known as BTG-271 (“BTG-271”), in furtherance of the understandings set out in the SPA in relation thereto; and

WHEREAS, certain of the Divested Products, Puricase, the CPC Technology and BTG-271 were developed at BTG within the framework of research and development programs carried out with the support of the Office of the Chief Scientist at the Ministry of Industry, Trade and Labor (“Approved Programs” and the “OCS” respectively) and Savient has ownerships rights thereto but BTG possesses other rights as set forth in Savient’s letter to the OCS of July 15, 2003 (the “OCS Letter”), a copy of which is attached as Annex “A”; and

WHEREAS, the Parties have agreed to terminate the Inter-Company Agreements and wish to record their understandings in relation to the continued development and/or manufacture of Puricase and/or other services that may be rendered by BTG in relation thereto; and

WHEREAS, the Parties wish to record their understandings in relation to the royalties that may be payable to the OCS (“Royalties”) in relation to the Divested Products, Puricase, other products embodying Puricase Technology, CPC Products and BTG-271, all subject to and effective as from the Closing.

Now therefore, in consideration of the foregoing premises, which are incorporated into and made a part of this Agreement, and of the mutual covenants which are recited herein, the Parties agree as follows:

1. Termination of the Inter-Company Agreements

1.1. Prior to the Closing, Savient and BTG shall comply with the terms and conditions of the Inter-Company Agreements, including any payment obligations by Savient thereunder. Notwithstanding anything to the contrary contained in the Inter-Company Agreements, all of the provisions of the Inter-Company Agreements shall automatically terminate effective as of the Closing, including provisions that were intended to survive termination. Savient shall not have any further obligation to pay BTG in respect of Reimbursable Costs (as such term is defined in the R & D Agreement) or Processing Fees (as such term is defined in the Manufacturing Agreement) that may be outstanding as of such time in relation to Divested Products, and BTG shall be considered as having waived such payments.

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1.2. In connection with such terminations, and for the avoidance of doubt, the Parties agree that:

1.2.1. Notwithstanding the provisions of Section 1.1 and Section 3.2 of the Manufacturing Agreement, title to all work in process relating to Divested Products and inventory of Divested Products shall automatically vest in the Buyer, as of the Closing;

1.2.2. Notwithstanding the provisions of Section 1.1 above and Section 11.3 of the Manufacturing Agreement, as of the Closing, BTG shall process and deliver Divested Products ordered prior to the Closing to the Buyer or the Buyer’s designee, and Savient shall have no responsibilities in relation thereto;

1.2.3. As of the Closing, Savient and BTG agree that any liability of Savient to pay BTG for development activities, regulatory or other services of any nature that may have been carried out by BTG for Savient prior to the Closing under the R & D Agreement or otherwise have been satisfied as of the Closing; and

1.2.4. The provisions of the Manufacturing Term Sheet attached hereto as Annex “D” shall apply to work in process relating to Puricase existing as of the Closing and the delivery of Puricase that may have been ordered prior to the Closing.

2. Ownership in Technology; Patent Rights; Other Rights

2.1. Savient has and shall have the exclusive right, title and interest in and to Puricase and the Puricase Technology, subject to (i) BTG’s irrevocable and perpetual right to conduct research and development with the Puricase Technology developed in the course of Approved Programs, excluding clinical trials that BTG is not in a position to monitor from Israel and (ii) BTG’s right to manufacture Puricase in Israel. BTG shall have commercialization rights with respect thereto only as provided in Section 6 herein or as provided in the Divestiture Agreements. In the case of clauses (i) and (ii), BTG’s rights shall always remain subject to the terms and conditions of any existing supply, manufacturing or development agreement between the Parties. For the avoidance of doubt, Savient and an additional manufacturer on its behalf approved by the OCS, will have the right to use the CPC Technology in order to manufacture Puricase.

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2.2. Savient has and shall have the exclusive right, title and interest in the CPC Products and the CPC Technology subject to BTG’s exclusive, irrevocable, perpetual and unconditional license for purposes of research and development and production. BTG shall have commercialization rights with respect thereto only as provided in Section 6 herein or as provided in the Divestiture Agreements.

2.3. For the purposes of this Agreement, the term “Puricase Technology” means the technology described in the patent applications listed on Annex “B” as 1.1 (the “Puricase Patents”), and any developments, discoveries, inventions, improvements, designs, methods, processes, techniques, devices, formulae and trade secrets which may be developed, acquired and conceived by BTG and are derived from any Development Program in relation to Puricase which have been or may be carried out at any time after the submission of the Puricase Patents and all patents that may be issue from patent applications claiming or describing such technology, information and know-how and filed in addition to the Puricase Patents after their submission.

For the purposes of this Agreement, the term “CPC Technology” means the technology described in the patent applications listed on Annex “B” as 1.2 (the “CPC Patents”) and any developments, discoveries, inventions, improvements, designs, methods, processes, techniques, devices, formulae and trade secrets which have been or may be developed, acquired and conceived by BTG and are derived from any Development Program which have been or may be carried out at any time after the submission of the CPC Patents and all patents that may issue from patent applications claiming or describing such technology, information and know-how and filed in addition to the CPC Patents after their submission.

For the purposes of this Agreement, “Development Programs” shall mean research and development work carried out by BTG for Savient.

2.4. The Puricase Patents, and the CPC Patents (collectively, the “Savient Patents”) are owned by Savient. BTG shall have no rights with respect to the Savient Patents, other than as provided herein or as provided in the Divestiture Agreements. Savient has the sole control over filing and prosecuting applications for United States and foreign patents covering the Puricase Technology and the CPC Technology and may file and prosecute the same in Savient’s name. The cost for all such filings and

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prosecutions are and shall be borne by Savient. BTG and its employees and consultants shall provide Savient, without compensation other than recovery of out of pocket expenses, with the necessary authorizations, powers of attorney and other documents and assistance reasonably requested by Savient from time to time to file, secure and maintain Savient’s patent rights in connection with the Savient Patents and BTG hereby grants to Savient powers of attorney to execute and file on BTG’s behalf any documents reasonably necessary to secure and maintain such patent rights.

For the purposes of this Agreement, the term “Savient Patents” means the patents listed on Annex B and any disclosures, continuations, continuations-in-part, divisionals, provisionals, PCT applications, reissuances, revisions, substitutions, conversions, renewals, extensions, prolongations, and reexaminations thereof, any technology and inventions covered thereby, and any corresponding international, regional, and national applications and patents.

2.5. BTG shall, from time to time and as soon as practicable following Savient’s request, provide Savient with documentation describing the current Puricase Technology and CPC Technology held by or under the control of BTG and any other report reasonably requested by Savient. For the avoidance of doubt, Puricase Technology and CPC Technology shall be described in sufficient detail to allow Savient to manufacture Puricase, or use the CPC Technology (as the case may be) it being understood and agreed, however, that Savient shall not commence manufacture of Puricase or of a CPC Product (i) unless so permitted by the OCS, if such permission is required; and (ii) unless in compliance with any agreement between the Parties relating to such manufacture and supply; and (iii) provided that such permission by the OCS does not trigger any additional obligations of BTG vis-à-vis Savient or the OCS, above and beyond those provided in such agreement of manufacture and supply or in this Agreement. In any event, BTG may retain copies of such documentation for archival purposes.

2.6. For the sake of clarity:

2.6.1. Nothing herein is intended to derogate from BTG’s ownership of the real property, tools, machinery and equipment which have been or may be acquired by it in furtherance of, or incidental to, the Development Programs;

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2.6.2. Neither “Puricase Technology” nor “CPC Technology” shall be deemed to include general methods of production or analysis that are generally known in the pharmaceutical industry but have been or will be applied to a Divested Product, HA, Puricase or any CPC Product.

2.7. Savient hereby grants BTG and its Affiliates a non-transferable, royalty-bearing, perpetual, worldwide nonexclusive, unconditional (save for the reasonable consideration to be paid for commercialization rights hereunder) license, under the Puricase Patent to develop products which are not PEGylated recombinant porcine uricase (urate oxidase), and to manufacture and commercialize any such product, it being understood and agreed, however, that the royalties that will be due and payable by BTG to Savient in respect of the commercialization rights to any such product, and other terms and conditions of such license, shall be subject to the negotiation, in good faith, of a mutually acceptable license agreement containing normal and customary terms for transactions of a similar nature (the “License Agreement”). Should the Parties fail to execute the License Agreement within 90 (ninety) days of either Party initiating such negotiations, then the matter may be referred for resolution by either Party, in accordance with the provisions and the procedures attached hereto as Annex F. Nothing in the Parties’ failing to execute the License Agreement or the initiation or conduct of any such procedures shall bar BTG from exercising the license granted to it pursuant to this Section 2.7 pending the decision of the expert.

2.8. The provisions of this Section 2 shall survive the termination or expiration of this Agreement.

3. Research & Development; Regulatory Services; Manufacturing Services

3.1. BTG hereby agrees to the extent and on the terms set out in Annexes “C” and “D” hereto (as such Annexes may be modified or superseded by a final definitive agreement between the Parties) to (i) complete the ongoing research and development currently being conducted in respect to Puricase; (ii) transfer the process to BTG’s facility in Be’er Tuvia, Israel; (iii) produce a sufficient quantity of Puricase as required for Phase 3 clinical trials and the initial commercial launch of Puricase and perform all related stability and other testing and activities required for worldwide regulatory filing; (iv) render assistance to Savient in

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relation to the worldwide regulatory filings related thereto; and (v) remain a back-up supplier to the new manufacturer (if any) throughout the time period set forth in Section E of Annex “D” attached hereto or any successive Manufacturing Services Agreement between the Parties.

3.2. In the event that BTG breaches any of its obligations to Savient under this Section 3, in addition to any other remedies that may be available to Savient in law or equity, BTG shall, promptly upon Savient’s request, cooperate and collaborate with Savient in applying to the OCS for Savient to carry out the work in question through a third party. Nothing in the foregoing should be construed as relieving BTG from its contractual obligations pursuant to Section 3.1, and Annexes “C” and “D” attached hereto.

4. Technology Transfer

Subject to the approval of the OCS, Savient shall be entitled to request BTG to render to Savient and/or its third party manufacturer technical assistance relating to the transfer of the Puricase Technology or the CPC Technology. The terms and conditions upon which BTG shall be obligated to render such assistance in relation to the Puricase Technology are set out in Annex “E” attached hereto.

5. Compliance with Law for the Encouragement of Research and Development in Industry and the Regulations, Rules and, Procedures Promulgated Thereunder (collectively, the “Law”)

5.1. BTG hereby confirms and acknowledges that as from the Closing BTG and/or the Buyer (as the case may be) shall be fully responsible for the payment of Royalties pursuant to the Law in relation to income derived from the Divested Products and income derived by BTG from the commercial exploitation of a CPC Product pursuant to the license granted to it by Savient pursuant to Section 6.2 below, and BTG hereby agrees to indemnify Savient for any liability that may be imposed upon it by the OCS in relation thereto. BTG shall provide Savient with copies of its semi-annual reports to the OCS in relation to the payment of such Royalties, together with evidence of payment. Moreover, BTG shall notify Savient of any audit conducted by the OCS in respect thereto and the result of such audit, and provide Savient with copies of any written audit report. BTG has been using the CPC Technology in the production of caroboxpeptidase as of February 2005, and Royalties pursuant to

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the Law in relation to income derived from carboxypeptidase are thus payable to the OCS. As there is uncertainty as to whether these Royalties should be allocated to OCS file 27141 (Puricase) and/or OCS file 10281 (APA), it is hereby agreed that BTG and Savient shall mutually refer the question of the allocation of such Royalties and the relevant background information to Keren Tmurah at the OCS (“Keren Tmurah”) within 30 days of this Agreement, and Keren Tmurah’s directives shall be binding upon the Parties.

5.2. Savient hereby confirms and acknowledges that as from the Closing Savient shall be fully responsible for the payment of Royalties pursuant to the Law in relation to income derived by Savient from Puricase, Puricase Technology, a CPC Product and the CPC Technology and hereby agrees to indemnify BTG for any liability that may be imposed upon it by the OCS in relation thereto.

5.3. Due to the fact that BTG shall remain a conduit for the payment of Royalties as set forth in Section 5.2, and in order to ensure Savient’s compliance with the requirements of the Law, Savient irrevocably and unconditionally undertakes to periodically provide BTG with the funds required for making such payments of Royalties in a timely manner. In furtherance thereof:

5.3.1. Savient shall provide BTG with semi-annual reports on its development and commercialization activities in respect of Puricase, Puricase Technology, the CPC Products and the CPC Technology, and any other information related thereto, that may be requested by the OCS from time to time, for conveyance to the OCS, as required. Such reports shall be accompanied by a financial report signed by Savient’s Chief Financial Officer showing the calculation of the amounts due to the OCS pursuant to the Law in respect of the period covered by the said report and the funds necessary to make the appropriate payments to the OCS, it being understood and agreed, however, that the funds will be transferred by Savient to BTG by no later than 15 (fifteen) days before timely payment has to be made by BTG to the OCS. Such financial reports shall be certified by an independent auditor, once a year, at Savient’s expense.

5.3.2. Savient shall keep complete, accurate and correct books of account and records consistent with sound business and US generally accepted accounting

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principles and practices, in such form and in such details as to enable the verification and the determination of the amounts due to the OCS in respect of Puricase, Puricase Technology, the CPC Products and the CPC Technology. Savient shall retain such books of account for 7 (seven) years after the end of each calendar year.

5.4. BTG hereby undertakes to irrevocably and unconditionally remit the funds received from Savient pursuant to Section 5.3.1 above to the OCS in a timely manner, without any set-offs, deductions or withholdings of any nature.

5.5. BTG and Savient shall comply with any request by the OCS to conduct, inter alia, an audit at Savient. In such event, BTG and/or the OCS shall be entitled to appoint a representative to inspect, during normal business hours, and to take copies of Savient’s books of accounts, records and other documentation to the extent relevant or necessary for the ascertainment or verification of the amounts due to the OCS under the Law, at Savient’s expense.

6. CPC Patents

6.1. In addition to BTG’s rights in relation to the CPC Technology, as set out in Section 2.2 above, Savient hereby grants BTG and its Affiliates an irrevocable, fully paid-up, transferable, non-royalty-bearing, perpetual, worldwide, exclusive, unconditional license, under the CPC Patents, to offer for sale, sell and import Divested Products and HA. Nothing in the foregoing shall be construed as a representation on BTG’s part, that such license, or the rights set out in Section 2.2, are required in order to develop, manufacture or commercialize any or all of the Divested Products or HA.

6.2. Savient hereby grants BTG and its Affiliates a non-transferable, royalty-bearing, perpetual, worldwide nonexclusive, unconditional (save for the reasonable consideration to be paid for commercialization rights hereunder) license, under the CPC Patents to offer for sale, sell and import CPC Products, it being understood and agreed, however, that the royalties that will be due and payable by BTG to Savient in respect of the commercialization rights and other terms and conditions of such license, shall be subject to the negotiation, in good faith, of a mutually acceptable license agreement containing normal and customary terms for transactions of a similar nature (the “CPC License Agreement”). Should the Parties fail to execute the CPC License Agreement within 90 (ninety) days of either Party

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initiating such negotiations, then the matter may be referred for resolution by either Party, in accordance with the provisions and the procedures attached hereto as Annex F. Nothing in the Parties’ failing to execute the CPC License Agreement or the initiation or conduct of any such procedures shall bar BTG from exercising the license granted to it pursuant to this Section 6.2 pending the decision of the expert. Nothing in the foregoing shall derogate from the terms and conditions of any existing supply, manufacturing or development agreement between the Parties.

6.3. Should Savient decide to abandon a CPC Patent at any time during the first 5 (five) years following the Closing; Savient undertakes to notify BTG in writing at least 60 (sixty) days prior to the date on which such CPC Patent would become finally abandoned in the absence of action on the part of the party prosecuting or maintaining such patent. Savient shall afford BTG the right, during such 60 (sixty) day period, to acquire such patent application or patents. Should the Parties fail to reach a mutually acceptable agreement as to the terms and conditions upon which BTG may acquire such patent applications or patents, Savient shall be entitled to abandon the same.

7. BTG-271

7.1. Prior to the Closing, Savient shall either (a) transfer the patent applications listed in Annex “G” attached hereto (the “BTG-271 Patents”) to a third party and arrange with the OCS for a full release of BTG’s obligation to pay royalties to the OCS with respect to subsequent sales in relation thereto or (b) transfer the BTG-271 Patents to BTG.

7.2. Subject to OCS approval, BTG undertakes to relinquish its rights in the BTG-271 project under the OCS Letter in the event that the BTG-271 Patents are transferred to a third party prior to the Closing or as envisaged under Section 7.3 below.

7.3. Notwithstanding the foregoing, should negotiations between Savient and Eager BioGroup Ltd., a corporation registered in Israel, or any affiliated company registered in Israel and controlled by Prof. Max Herzberg, be ongoing at the time of the Closing, Savient shall have an additional period of 90 (ninety) days from the Closing in order to finalize such transaction (the “Eager Transaction”), and Savient shall bear the cost of the BTG-271 Patents throughout such time period. Should the Eager Transaction not be consummated with OCS approval within such time period, for any reason whatsoever, then the BTG-271 Patents shall be transferred to BTG.

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7.4. Should the BTG-271 Patents be transferred to BTG, then BTG-271 shall be treated as a “Divested Product” for purposes hereof.

8. Promoter Patents

8.1. BTG hereby grants Savient a fully paid-up, non-royalty-bearing, perpetual, worldwide nonexclusive license, with the right to sub-license, under the patents and patent applications listed in Annex “H” attached hereto (the “Promoter Patents”), to use the Osm B promoter claimed therein to make, have made, use, offer for sale, sell and import Puricase, it being understood and agreed, however, that the manufacture “of Puricase outside of Israel is subject to the approval of the OCS.

8.2. BTG shall favorably consider any request by Savient to expand the scope of the license granted to it under Section 8.1. In such circumstances, the Parties shall negotiate in good faith with a view towards entering into a mutually acceptable license agreement containing normal and customary terms for transactions of a similar nature.

8.3. Should BTG decide to abandon any of the Promoter Patents at any time during the first 5 (five) years following the Closing, BTG undertakes to notify Savient in writing, at least 60 (sixty) days prior to the date on which such Promoter Patent would become finally abandoned in the absence of action on the part of the party prosecuting or maintaining such patent. BTG shall afford Savient the right, during such 60 (sixty) day period, to acquire such patent application or patents. Should the Parties fail to reach a mutually acceptable agreement as to the terms and conditions upon which Savient may acquire such patent applications or patents, BTG shall be entitled to abandon the same.

9. Indemnification

Each Party shall indemnify, hold harmless and defend the other Party and its officers, directors and employees against damages, costs and expenses (including reasonable attorney’s fees) incurred as a result of such Party’s failure to comply with its undertakings under this Agreement.

10. Term; Effect of Termination

10.1. This Agreement shall enter into force and effect upon the Closing and shall continue to be in force for as long as the Puricase Technology and the CPC Technology is in use by either Party.

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10.2. Should the Divestiture Agreements be terminated without the Closing taking place, for any reason whatsoever, this Agreement shall be null and void.

10.3. The termination of this Agreement for whatever cause shall not prejudice or affect the accrued rights and obligations of either Party.

11. Disclosure of Information

11.1. BTG and its Affiliates shall not furnish copies of documents, patents, patent applications, copyrights, drawings, specifications, bills of materials, devices, equipment, prototypes and other information relating to the Puricase Technology other than as contemplated by this Agreement (and other than to any of their respective Affiliates) and shall not, without the prior approval of Savient, disclose such information to any third party, except to the extent that such disclosure is necessary for BTG’s manufacture of Puricase for Savient, and then only if (i) such disclosure is subject to the same limitations on the recipient as on BTG, and (ii) such limitations are set forth in a written agreement in form and substance satisfactory to Savient. “Affiliate”, as used herein, means, any corporation which controls, is controlled by, or is under common control with, BTG, following the Closing. A corporation shall be deemed to control another corporation if it owns, directly or indirectly, more than 50% (fifty percent) of the voting shares, or has the power to elect more than half the directors, of such other corporation. For purposes of this Section 11.1, “Puricase Technology” shall not include information which is in or becomes, part of the public domains through no act or omission by BTG or any of its employees.

11.2. No publication with respect to any activity undertaken pursuant to a Development Program shall be made, nor any manuscript submitted for publication, without the prior review and written approval of Savient such approval not to be unreasonably withheld.

11.3. The Parties agree that remedies at law may be inadequate to protect against breach of this Section 11, and in case of such a breach BTG hereby consents to the granting of injunctive relief, whether temporary, preliminary or final, in favor of Savient without proof of actual damages.

11.4. The provisions of this Section 11 shall survive the termination or expiration of this Agreement.

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12. Non - Compete

From the Closing Date until the expiration of the later to expire (following issuance) of the Puricase Patents; BTG agrees not to, and shall cause its Affiliates not to, use the Puricase Technology to manufacture, promote, market or sell any Competing Product in the Territory, or to license or sublicense the Puricase Technology to any third party. As used in this Agreement, “Competing Product” shall mean any prescription pharmaceutical product that (i) contains uricase as an active ingredient or (ii) has a primary use in a particular country, based on a majority of prescription use in such country, for the treatment of gout (in any form). As used in this Agreement, “Territory” shall mean, collectively, every country in the world.

13. Governing Law and Dispute Resolution

13.1. This Agreement and any disputes hereunder shall be governed by and construed in accordance with the laws of the State of New York, United States of America, without giving effect to any choice or conflict of law provision or rule that would cause the application of any other laws.

13.2. Save as provided in Section 6.2 hereof, any disputes, claims or controversies between the Savient and BTG in connection with this Agreement, including any question regarding its formation, existence, validity, enforceability, performance, interpretation, breach or termination (any such dispute, claim or controversy, a “Dispute”), shall be finally resolved by binding arbitration.

13.3. Any arbitration hereunder shall be conducted under the Rules of Arbitration of the London Court of International Arbitration. The arbitration shall be conducted in the English language before three arbitrators chosen according to the following procedure: within 20 (twenty) days after commencement of the arbitration, each of Savient and BTG shall appoint one arbitrator, and within 20 (twenty) days after the appointment of both such arbitrators, the two arbitrators so chosen shall choose the third arbitrator. If the two arbitrators chosen by Savient and BTG cannot agree on the choice of the third arbitrator within a period of 20 (twenty) days after their appointment, then the third arbitrator shall be appointed by the London Court of International Arbitration.

13.4. Each of the arbitrators shall be a lawyer or former judge. The chairman of the three arbitrators shall have experience arbitrating disputes in the pharmaceutical industry.

13.5. Any arbitration that would otherwise be conducted pursuant to this Section 13 that relates to the subject matter of any arbitration

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conducted pursuant to Section 10.15 of the SPA shall be combined into a single arbitration before the same panel of three arbitrators, conducted in accordance with Section 10.15 of the SPA.

13.6. Each of the Asset Buyer and the Seller hereby irrevocably waives all rights to trial by jury in any Dispute.

13.7. The place of the arbitration shall be London, England.

14. Miscellaneous

14.1. Unless the context explicitly dictates otherwise, all references herein to “patents” and/or “patent applications” herein shall be deemed to include any disclosures, continuations, continuations-in-part, divisionals, provisionals, PCT applications, reissuances, revisions, substitutions, conversions, renewals, extensions, prolongations, and re-examinations thereof, any technology and inventions covered thereby, and any corresponding international, regional and national applications.

14.2. From time to time after the date hereof and prior to the Closing, the Parties may modify and/or replace any of Annexes C, D or E hereto, which modified or replaced Annexes shall automatically constitute part of this Agreement.

14.3. Nothing in this Agreement or in the Divestiture Agreements shall derogate from BTG’s rights under the Technology Transfer Agreement effective February 1, 1998, pursuant to which BTG acquired Savient’s process for the manufacture of sodium hyaluronate (“HA”), as described and claimed in U.S. Patent No. 4,780,414, and the related patent applications, patents, trademarks and domain names listed in Annex “I”. Savient and its employees shall provide BTG, without compensation, with the necessary authorizations, powers of attorney and other documents and assistance reasonably requested by BTG from time to time to record the assignment of said intellectual property rights from Savient to BTG.

14.4. This Agreement constitutes the entire agreement between Savient and BTG with respect to the subject matter hereof, and supersedes any prior agreements or understandings between Savient and BTG with respect to such matters.

14.5. Each Party agrees to execute, acknowledge and deliver such further documents and instruments and do any other acts, from time to time, as may be reasonably necessary, to effectuate the purposes of this Agreement.

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14.6. Neither this Agreement nor any of the rights, interests, or obligations hereunder may be assigned by either Party without the prior written consent of the other Party hereto, except that either Party may assign its rights hereunder to any entity that acquires all or substantially all of such Party’s business or assets (provided that no such assignment shall relieve the assigning Party of its obligations hereunder, and the assigning Party shall remain primarily liable for such obligations). Subject to the foregoing, this Agreement shall be binding upon and inure to the benefit of the Parties and their respective successors and permitted assigns.

14.7. All notices, requests, demands, claims and other communications hereunder shall be in writing. Any notice, request, demand, claim or other communication hereunder shall be deemed duly delivered four Business Days after it is sent by registered or certified mail, return receipt requested, postage prepaid, or one Business Day after it is sent by overnight delivery via a reputable national courier service, in each case to the intended recipient as set forth below:

If to Savient:

Savient Pharmaceuticals Inc.

One Tower Center, l4^th Floor

East Brunswick, New Jersey 08816, USA

Telecopy: +1-732-418-9065

Attention: Philip K. Yachmetz, Esq.

If to BTG:

Bio-Technology General (Israel) Ltd.

Kiryat Weizmann

Building 17

Rehovot 76326, Israel

Telecopy: +972-8-9409041

Attention: Dr. Dov Kanner

A “Business Day” shall be any day other than (i) a Saturday or Sunday or (ii) a day on which banking institutions located in New York, New York, United States of America or in Israel are permitted or required by law, executive order or governmental decree to remain closed.

Any Party may give any notice, request, demand, claim, or other communication hereunder using any other means (including personal delivery, expedited courier, messenger service, telecopy,

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telex, ordinary mail, or electronic mail), but no such notice, request, demand, claim or other communication shall be deemed to have been duly given unless and until it actually is received by the Party for whom it is intended. Any Party may change the address to which notices, requests, demands, claims and other communications hereunder are to be delivered by giving the other Party notice in the manner herein set forth.

14.8. Savient and BTG may mutually amend or waive any provision of this Agreement at any time. No amendment or waiver of any provision of this Agreement shall be valid unless the same shall be in writing and signed by both of the Parties.

14.9. Any term or provision of this Agreement that is invalid or unenforceable in any situation in any jurisdiction shall not affect the validity or enforceability of the remaining terms and provisions hereof or the validity or enforceability of the offending term or provision in any other situation or in any other jurisdiction. If the final judgment of a court of competent jurisdiction declares that any term or provision hereof is invalid or unenforceable, the Parties agree that the body making the determination of invalidity or unenforceability shall have the power to reduce the scope, duration or area of the term or provision, to delete specific words or phrases, or to replace any invalid or unenforceable term or provision with a term or provision that is valid and enforceable and that comes closest to expressing the intention of the invalid or unenforceable term or provision, and this Agreement shall be enforceable as so modified.

14.10. Except as otherwise specifically provided to the contrary in this Agreement, each of the Parties shall bear its own costs and expenses (including legal fees and expenses) incurred in connection with this Agreement and the transactions contemplated hereby.

14.11. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original; but such counterparts shall together constitute but one and the same instrument.

[Intentionally Left Blank]

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IN WITNESS WHEREOF the Parties hereto have set their signatures as of the date first mentioned above.

/s/ Christopher Clement

SAVIENT PHARMACEUTICLAS, INC.

By: Christopher Clement

Title: President and Chief Executive Officer

/s/ Philip K. Yachmetz

BIO-TECHNOLOGY GENERAL (ISRAEL) LTD.

By: Philip K. Yachmetz

Title: Director

List of Annexes:

Annex “A”	OCS letter
Annex “B”	Puricase Patents
Annex “C”	Development and Regulatory Work—Puricase
Annex “D”	Term Sheet for Manufacture of Puricase
Annex “E”	Term Sheet for Technology Transfer
Annex “F”	Expert Procedures
Annex “G”	BTG-271 Patents
Annex “H”	List of osmB promoter patents/patent applications
Annex “I”	List of HA Patents, Trademarks and Domain Names

Annex A

OCS letter

	One Tower Center
	Fourteenth Floor
	East Brunswick, NJ 08816
	Telephone: 732-418-9300
	Facsimile: 732-418-9065 www.savientpharma.com

July 15, 2003

Mr. Avi Feldman, Esq.

General Counsel to the

Office of the Chief Scientist

Ministry of Industry, Trade and Labor

4 Mevo Hamatmid Street

Jerusalem 91021

Dear Mr. Feldman,

Re: Bio-Technology General (Israel) Ltd. (“BTG Israel”)

We have been informed of the meeting that took place in Jerusalem on June 15, 2003 with the participation of representatives of the Chief Scientist (the “CS”) and BTG Israel.

We understand that during the course of the meeting, the parties resolved certain issues that arose in relation to CS-approved R & D programs at BTG Israel (the “Approved Programs”) as follows:

1. BTG Israel will have title to all future Approved Programs, relating to new projects.

2. BTG Israel will have an exclusive irrevocable and perpetual right from us to conduct R&D with technology developed in the course of Approved Programs which are completed or ongoing, excluding clinical trials that BTG Israel is not in a position to monitor from Israel; and

3. Except as otherwise approved by the CS, BTG Israel will have an exclusive right from us to manufacture in Israel products developed through Approved Programs.

We understand that the CS will not unreasonably withhold its consent to the conduct of such R&D activities outside of Israel if BTG Israel is finable to carry out such activities, or the manufacture of such products outside of Israel, if commercially unfeasible or if BTG Israel is unable to carry out such activities.

We also understand it was agreed that upon receipt of our agreement to the foregoing, funds withheld by the CSO upon the 2002 audit as well as funds that would otherwise have been payable in 2002 (if properly spent and reported) will be immediately released to BTG Israel.

On the basis of such understandings, and without waiving any rights that we may have from time to time under the Law for the Encouragement of Research and Development in Industry, we hereby confirm our agreement to the understandings set out above.

Respectfully yours,

/s/ Sim Fass

Savient Pharmaceuticals, Inc.

By: Sim Fass

Title: Chairman & CEO

cc: Mr. Amos Efrati

Mr. Shaul Freilich

Deputies to the Chief Scientist

Y. Baratz

D. Kanner

R. Shaw

Annex B

Puricase Patents

1. New Applications

1.1. Puricase

File Reference	Country	Status	Appln No	Appln Date	Title
557-PRO-US	USA	Pending	60/670573	11 April, 2005	Variant Forms of Urate Oxidase and Use Thereof
650-PRO-US	USA	Pending	60/670541	11 April, 2005	A Variant Form of Urate Oxidase

1.2. Protein Purification

File Reference	Country	Status	Appln No	Appln Date	Title
541-PRO-US	USA	Pending	60/670520	11 April, 2005	Purification of Proteins with Cationic Surfacant

Annex C

Development and Regulatory Work

Puricase

The following outline summarizes the key elements of ongoing development work and regulatory services relating to Puricase which will be required from BTG as from the Closing, certain elements of which are required under agreement with the OCS. This outline will form the basis of a detailed work plan covering these activities, which will be concluded prior to the Closing. It is anticipated that the detailed work plan when completed, will include a specific list of deliverables and a timetable for performance and delivery.

While every effort has been utilized to make this outline as comprehensive as possible, certain activities shown here may need to be expanded to include normal and customary related activities.

1. Project Timeline

Puricase is currently completing Phase 2 clinical testing and Savient expects to initiate Phase .3 testing in late 2005. Assuming FDA agreement with the proposed clinical plan and a successful clinical trial, the Puricase Biologics License Application (“BLA”) filing is expected to take place in Q1 2007. Services to be provided by BTG (with the exception of certain ongoing stability studies) are to be planned for completion by 1 Jan 07.

2. Scope of Work

2.1. R& D Services

The R & D services to be provided involve completion of needed elements in the Chemistry/Manufacturing/Controls (CMC) section of the Puricase BLA. These elements are listed in Table 1, along with an indication of which tasks will be performed for Phase 3 and which tasks will be completed by BLA filing.

2.2. Regulatory Services

The Regulatory services involve elements needed to complete the relevant sections of the BLA as well as other documentation, and appropriate support for the various filings. This includes, but is not limited to:

2.2.1. preparation of the CMC update for the Phase 3 FDA package including a Rehovot-Beer Tuvia bridging document;

2.2.2. development and preparation of the requisite assays;

2.2.3. analytical method validation;

2.2.4. preparation of process validation documents;

2.2.5. annual report preparation (CMC, stability, process updates);

2.2.6. preparation of the CMC chapter of the BLA (process, methods, validations, specifications);

2.2.7. participation in meetings and calls with Savient (e.g. preparation for the end of Phase 2 [EOP21 meeting);

2.2.8. participation in meetings with regulatory authorities (e.g. the EOP2 meeting); and

2.2.9. support for any and all regulatory activities required for worldwide registrations.

2.3. Reporting - BTG shall provide Savient with the necessary development reports to support the methods, specifications and in-process controls that are chosen, in a form acceptable o FDA inspectors and reviewers.

3. Financial provisions

3.1. Services will be provided at (i) 115% of BTG-’s fully loaded cost including only the proportional share of overhead related to this project, as compared to maximum facility utilization, and not including raw Materials or equipment and (ii) 103% of the out-of-pocket cost to BTG of purchasing raw materials for manufacturing Product and equipment used primarily or exclusively to provide the ongoing development work and regulatory services contemplated by this Annex C.

3.2. Reporting and audit rights

3.3. Payment terms

4. Miscellaneous Terms

4.1. Services will be carried out in a professional and workmanlike manner.

4.2. Ownership of results and in any inventions to vest in Savient

4.3. Patents to be filed and maintained by Savient

4.4. Indemnification of BTG from and against any claims in relation to Savient’s use of the results/inventions

4.5. Confidentiality

4.6. No assignment of rights or obligations other than to a party acquiring rights in the Product.

Annex D

Term Sheet

Manufacturing Services

The following outline summarizes the key elements of manufacturing services that will be required from BTG as contract manufacturer with respect to the manufacturing Puricase (the “Product”), as required from BTG as from the Closing. This outline will form the basis of a detailed work plan covering these activities, which will be concluded prior to the Closing. It is anticipated that the detailed work plan when completed, will include a specific list of deliverables and a timetable for performance and delivery.

While every effort has been utilized to make this outline as comprehensive as possible, certain activities shown here may need to be expanded to include normal and customary related activities.

BTG has to date performed all Product manufacture at its Kiryat Weizmann facility. For Phase 3 material, the new Biologics GMP-compliant Beer Tuvia facility will be used. BTG will transfer the production process to Beer Tuvia and validate the process by producing three Product batches which will serve as clinical supply and, if Product stability and timing of BLA approval permit, as initial commercial launch material. Filling (vialling) of finished Product will take place at Dr. Madaus, EITG’s contract filling facility.

These terms and conditions shall be binding upon the Parties, unless and until superseded by a definitive Manufacturing Services Agreement and/or a detailed work plan:

General Obligations of BTG

A. Transfer of production to Beer Tuvia and manufacture of one batch of Product in Beer Tuvia (by Sep 05), to be finished into a Phase 3 clinical lot of Product at Madaus (Sep 05);

B. Completion of process validation by production of two additional batches (H1 06);

C. Filling of two additional lots in order to complete production validation (H2 06).

D. BTG and Savient will work together in good faith to prepare prior to Closing a definitive Manufacturing Services Agreement memorializing the terms and conditions of this Annex D with respect to the Phase 3 and initial commercial supply of the Product and related activities. In addition, BTG and Savient will negotiate in good faith prior to the Closing with the goal of reaching a long-term exclusive supply agreement for Product on commercially competitive terms, provided that any such agreement would permit the technology transfer, as outlined in Annex E, and qualification of an alternative supplier chosen by Savient.

E. In the event that no such long-term exclusive supply agreement is reached between-BTG and Savient prior to the Closing, (i) BTG shall remain available as commercial scale manufacturer of Product until successor manufacturer is selected, technology transfer, as outlined in Annex E, has been successfully completed and successor manufacturer has been qualified and validated; and thereafter BTG shall remain available as a “back-up” supplier of Product upon reasonable notice and other terms and conditions and (ii) BTG and Savient will use commercially reasonable efforts to complete the technology transfer as outlined on Annex E within 36 months of its commencement, upon which completion of such technology transfer BTG’s obligation to supply Product will termination; provided, however, that if such technology transfer will not or cannot reasonably be successfully completed within such 36-month period, BTG and Savient will enter into good faith discussions to determine an alternative arrangement for continued supply of Product on reasonable terms to be mutually agreed.

1. Clinical Grade Peguricase for Phase 3 clinical trials

1.1. BTG to set up capabilities for manufacturing in Be’er Tuvia

1.1.1. Product specifications

1.1.2. production capacity and quantities to be produced

1.1.3. cost of setting up production facilities

1.1.4. timetable for setting up production facilities

1.1.5. cost of FDA inspections

1.2. Savient to acquire all Product so manufactured.

1.2.1. Placement of orders

1.2.2. Delivery terms - The risk of loss will pass to Savient upon delivery of Product and confirmation that it meets the specifications.

1.2.3. Price – (1) 115% of BTG’s fully loaded cost including only the proportional share of overhead related to this project, as compared to maximum facility utilization, and not including raw materials or equipment and (ii) 103% of the out-of-pocket cost to BTG of purchasing raw materials for manufacturing Product and equipment used primarily or exclusively to manufacture Product.

1.2.4. Reporting and audit rights

1.2.5. Payment terms

2. Supply of Commercial Quantities

2.1. Lead time - Savient will advise BTG if and when it requires

commercial quantities of the Product, at least 12 months in advance.

2.2. BTG to set up capabilities for manufacturing in Be’er Tuvia

2.2.1. Product specifications

2.2.2. capacity and quantities to be produced

2.2.3. cost of setting up production facilities

2.2.4. timetable for setting up production facilities and validation:

2.2.5. cost of FDA inspections

2.3. Purchase of Product

2.3.1. Minimum orders over ..X years

2.3.2. Placement of orders

2.3.3. Price — (i) 115% of BTG’s fully loaded cost including only the proportional share of overhead related to this project, as compared to maximum facility utilization, and not including raw materials or equipment and (ii) 103% of the out-of-pocket cost to BTG of purchasing raw materials for manufacturing Product and equipment used primarily or exclusively to manufacture Product.

2.3.4. Reporting and audit rights

2.3.5. Delivery terms

2.3.6. Payment terms

3. General Provisions

3.1. Grant of license by Savient to BTG to utilize the Technology required to manufacture the Product, solely for such purpose.

3.2. BTG to set up the production line and manufacture Product in compliance with Good Manufacturing Practices (“GMPs”) and other applicable regulatory requirements. The production line and facility requirements will be subject to a technical annex to the agreement that will detail the requirements for the establishment of the production line and operational and performance criteria, without limitation.

3.3. If BTG terminates on or prior to December 31, 2005 the employment of any of the 12 employees of BTG who were employed by BIG on a temporary basis as of March 21, 2005 for the purposes of assisting with activities related to the product transfer to BTG’s Be’er Tuvia facility including the transfer and manufacture of Product, and any such employee is entitled to any severance payment pursuant to Israel law as a result of such termination, then Savient shall reimburse BTG for the actual amount of such severance payment (without, for the avoidance of doubt, increasing such payment by 15% pursuant to Section 1.2.3 above).

3.4. In the event of failed batches manufactured strictly in adherence with the specifications of the manufacturing process, the cost of batch failures will be borne equally between Savient and BTG based on the actual labor and raw materials cost with no mark-up or increase in such costs pursuant to Section 1.2.3; provided however that any batch failure that results from negligence or misconduct by BTG will be borne solely by BTG.

3.5. BTG to obtain and maintain all permits, approvals and licenses required to manufacture the Product

3.6. The definitive Manufacturing Agreement or work plan shall include agreed upon success criteria for all manufacturing lots, including those for consistency and stability testing and validation criteria for aseptic filling processes which shall be designed to meet all required worldwide regulatory requirements.

3.7. Savient shall be entitled, but not obliged, to receive and to test samples of the Product.

3.8. BTG shall keep true and complete records on all production and shipment of Product in sufficient detail to enable Savient to determine the quantity of Product produced and the disposition of such Product, and shall grant Savient access during normal business hours following prior written notice.

3.9. BTG shall prepare a batch file for each batch of Product demonstrating compliance with the Specifications and provide same to Savient. BTG will retain copies for its records.

3.10. BIG shall perform all analytical activities required by the Technology or as may be requested by Savient from time to time.

3.11. BTG shall store representative samples of Product for the minimum legal period provided by applicable laws or as reasonably requested by Savient.

3.12. BTG shall inform Savient in writing of any significant modification in the manufacturing process.

3.13. BTG shall permit Savient to inspect the production line and to verify the method and quality of production and the relative documentation.

3.14. Risk of loss will pass to Savient upon delivery of Product and confirmation that it meets the Specifications. Savient shall analyze or have Product analyzed within 30 days of delivery. Any Product not meeting the Specifications shall be destroyed and replaced by BTG at its sole cost and expense. In the event that BTG disputes Savient’s evaluation of non-compliance, the disputed Products will be analyzed by an independent laboratory chosen by mutual consent. If the laboratory confirms non-compliance with the Specifications, BTG shall reimburse Savient for the expense of the analysis and associated expenses.

3.15. Packaging and labeling of commercial Product shall be carried out in accordance with Savient’s instructions and applicable laws.

3.16. BTG shall be responsible for obtaining any export license required under applicable laws.

3.17. Insurance requirements in respect of both parties.

3.18. Term

3.19. Termination for breach and effect of termination

3.20. Breach by BTG failure to meet the timetable during various phases/failure to produce Product meeting the Specifications/ any other material breach—Savient shall have the right to direct BTG to (i) stop production of Product; (ii) discontinue the use of the Technology.

3.21. No Assignment—None of the rights, duties or obligations hereunder shall be assignable, except that Savient may assign the same to any party acquiring rights to the Product.

3.22. Governing law

3.23. Arbitration

3.24. Should BTG be unwilling or unable to supply at any time:

3.24.1. BTG shall collaborate with Savient in requesting the OCS for permission to manufacture through a third party;

3.24.2. BTG shall assist Savient in transferring the technology as per the provisions of Exhibit E of the Residual Rights Agreement.

Annex E

Term Sheet

Technology Transfer

The following outline summarizes the key elements of the technology transfer relating to Puricase which may be required from BTG, after the Closing. This outline will form the basis of a detailed work plan covering these activities, which will be concluded prior to the Closing. It is anticipated that the detailed work plan when completed, will include a specific list of deliverables and a timetable for performance and delivery.

While every effort has been utilized to make this outline as comprehensive as possible, certain activities shown here may need to be expanded to include normal and customary related activities.

These terms and conditions shall be binding upon the Parties, unless and until superseded by a definitive Technology Transfer Agreement and/or a detailed work plan:

1. Scope of Work

1.1. Detailed Description

1.2. List of deliverables

1.3. Timetable for performance and delivery

2. Financial Provisions

Services will be rendered at the rate of $ 400 per 8 hours man day, pro rata per partial day. payment terms

3. General Provisions

3.1. Services shall be carried out by BTG in a professional and workmanlike manner.

3.2. Technical assistance to be provided in an advisory capacity.

3.3. Indemnification of BTG from and against any claims in relation to Savient’s use of the Technology.

ANNEX F

Expert Procedures

Pursuant to Sections 2.5 and 6.2 of the Residual Rights Agreement:

1. Either Party may serve on the other Party notice (a “Referral Notice”) that it wishes to refer to a single expert (the “Expert”) any dispute relating to the royalties due and payable by BTG to Savient and any other terms and conditions of the License Agreement or the CPC License Agreement.

2. The Expert shall be an independent and impartial person residing in the US or Israel, having significant experience in the pharmaceutical industry, who shall be agreed upon by the Parties or, and in the absence of such agreement between the Parties, within 30 (thirty) days of the service of a Referral Notice, be appointed by the London Court of International Arbitration.

3. Thirty (30) days after the appointment of the Expert pursuant to Paragraph 2, both Parties shall provide the Expert with any information that the Expert may request in relation to the subject matter, with a copy to the other Party.

4. There shall be no hearing except that the Expert may call for a one day hearing if such Expert considers the same to be desirable and appropriate. The Expert shall issue his/her reasoned decision in writing to the Parties within 30 days alter review of all evidence deemed necessary by him/her has been completed.

5. The seat of the dispute resolution shall be the normal place of business or residence of the Expert.

6. The language of the dispute resolution shall be English.

7. The Expert shall not have power to alter, amend or add to the provisions of the Agreement.

8. The Expert shall have the power to request copies of any documents in the possession and/or control of the Parties which may be relevant to the dispute. The Parties shall forthwith provide to the Expert and the other Parties copies of any documents so requested by the Expert.

9. The Expert shall decide the dispute as an expert and not as an arbitrator. The Expert shall decide which party or parties shall bear the costs involved for the Expert procedure and in what proportion.

10. The decision of the Expert shall be final and binding upon all of the Parties except in the case of manifest error. The Parties hereby exclude any rights of application or appeal to any court, and in particular in connection with any question of law arising in the course of these procedures.

Annex G

BTG-271 Patents

CONFIDENTIAL

BTG 271 Patent Applications

Docket ID	File Ref.	Country	Status	Substatus	Appl. No	Appl. Date	Expiry	Applicant/ Patentees
368/CA	368-A-WO-CA	Canada	Pending		2283474	4 March 1998	4 March 2018	Savient
368/EP	368-A-WO-EP	EPO	Pending		98908909.9	4 March 1998	4 March 2018	Savient
368/11K	368-A/HK	Hong Kong	Pending		00104775.3	4 March 1998	4 March 2018	BTG Corp.
368/IL	368-A-WO-IL	Israel	Pending	Published	131655	4 March 1998	4 March 2018	Savient
368/US/4	368-A-WO-US	USA	Pending		09/390225	3 September 1999	4 March 2018	Savient
456/AU	456-1-PCT-AU	Australia	Pending		2002246737	31 December 2001	31 December 2021	Savient
456/AU/2	456-ABC-PCT-AU	Australia	Pending		2002246738	31 December 2001	31 December 2021	Savient
456/BR	456-1-PCT-BR	Brazil	Pending	Published	P10116763-4	31 December 2001	31 December 2021	Savient
456/BR/2	456-ABC-PCT-BR	Brazil	Pending			31 December 2001	31 December 2021	Savient
456/CA	456-1-PCT-CA	Canada	Pending		2433227	31 December 2001	31 December 2021	Savient
456/CA/2	456-ABC-PCT-CA	Canada	Pending		2433225	31 December 2001	31 December 2021	Savient
456/CN	456-1-PCT-CN	China	Pending		011322885.2	31 December 2001	31 December 2021	Savient
456/CN/2	456-ABC-PCT-CN	China	Pending		01822884.4	31 December 2001	31 December 2021	Savient
456/CZ	456-1-PCT-CZ	Czech Republic	Pending		PV2003-1983	31 December 2001	31 December 2021	Savient
456/CZ/2	456-ABC-PCT-CZ	Czech Republic	Pending		PV2003-1982	31 December 2001	31 December 21321	Savient
456/EP	456-1-PCT-EPO	EPO	Pending	Published	01994329.9	31 December 2001	31 December 2021	BTG Corp.
456/EP/2	456-ABC-PCT-EPO	EPO	Pending	Published	01994330.7	31 December 2001	31 December 2021	BIG Corp.
456/HK	456-1-PCT-HK	Hong Kong	Pending	Published	04102871.6	31 December 2001	31 December 2021	Savient
456/HK/2	456-ABC-PCT-HK	Hong Kong	Pending			31 December 2001	31 December 2021	Savient
456/HU	456-1-PCT-HU	Hungary	Pending		P 04 0775	31 December 2001	31 December 2021	Savient
455/HU/2	456-ABC-PCT-HU	Hungary	Pending			31 December 2001	31 December 2021	Savient
456/IL	456-1-PCT-IL	Israel	Pending		156690	31 December 2001	31 December 2021	Savient
456/IL/2	456-ABC-PGT-IL	Israel	Pending		156689	31 December 2001	31 December 2021	Savient
456/IN	456-1-PCT-IN	India	Pending		01172/DELNP/2003	31 December 2001	31 December 2015	Savient
455/IN/2	456-ABC-PCT-IN	India	Pending		01171/DELNP12003	31 December 2001	31 December 2015	Savient
456/JP	456-1-PCT-JP	Japan	Pending		2002-559551	31 December 2001	31 December 2021	Savient
456/JP/2	456-ABC-PCT-JP	Japan	Pending		2002-555211	31 December 2001	31 December 2021	Savient
456/KR	456-1-PCT-KR	Korea (South)	Pending		10-2003-7008885	31 December 2001	31 December 2021	Savient
456/KR/2	456-ABC-PCT-KR	Korea (South)	Pending		10-20037008890	31 December 2001	31 December 2021	Savient
456/MX	456-1-PCT-MX	Mexico	Pending		PA/A/2003005944	31 December 2001	31 December 2021	Savient
456/MX/2	456-ABC-PCT-MX	Mexico	Pending		PA/A/2003/005945	31 December 2001	31 December 2021	Savient
456/NZ	456-1-PCT-NZ	New Zealand	Pending		527173	31 December 2001	31 December 2021	Savient
456/NZ/2	456-ABC-PCT-NZ	New Zealand	Pending		527150	31 December 2001	31 December 2021	Savient
456/PL	456-1-PCT-PL	Poland	Pending		P-365758	31 December 2001	31 December 2021	Savient

647/IP/BTG 271 Patent Applications 1 8 March, 2005

CONFIDENTIAL

Docket ID	File Ref.	Country	Status	Substatus	Appl. No	Appl. Date	Expiry	Applicant/ Patentees
456/PL/2	456-ABC-PCT-PL	Poland	Pending		P-366223	31 December 2001	31 December 2021	Savient
456/RU	456-1-PCT-RU	Russian Federation	Pending		2003123100	31 December 2001	31 December 2021	Savient
456/RU/2	456-ABC-PCT-RU	Russian Federation	Pending		2003123101	31 December 2001	31 December 2021	Savient
456/SG	456-1-PCT-SG	Singapore	Pending		200303552-4	31 December 2001	31 December 2021	Savient
456/SG/2	456-ABC-PCT-SG	Singapore	Pending		200303539-1	31 December 2001	31 December 2021	Savient
456/US/3	456-A-US	USA	Pending	Published	10/032037	31 December 2001	31 December 2021	BTG Corp.
456/US/4	456-1-US	USA	Pending	Published	10/029926	31 December 2001	31 December 2021	Savient
456/US/5	456-S-US	USA	Pending	Published	10/029988	31 December 2001	31 December 2021	Savient
456/US/6	456-C-US	USA	Pending	Published	10/032423	31 December 2001	31 December 2021	BTG Corp.
456/US17	456-0-US	USA	Pending		10/189258	1 July 2002	31 December 2021	Savient
456/ZA	456-1-PCT-Z4	South Africa	Pending		2003/5337	31 December 2001	31 December 2021	Savient
456/ZA/2	456-ABC—PCT-7A	South Africa	Pending		2003/5336	31 December 2001	31 December 2021	Savient
524/AU	524-PCT-AU	Australia	Pending	Nat. Phase		30 June 2003	30 June 2023	Savient
524/BR	524-PCT-BR	Brazil	Pending	Nat. Phase		30 June 2003	30 June 2023	Savient
524/CA	524-PCT-CA	Canada	Pending	Nat. Phase		30 June 2003	30 June 2023	Savient
524/CN	524-PCT-CN	China	Pending	Nat. Phase		30 June 2003	30 June 2023	Savient
524/EP	524-PCT-EP	EPO	Pending	Nat. Phase		30 June 2003	30 June 2023	Savient
524/IL	524-PCT-IL	Israel	Pending	Nat. Phase	156063	30 June 2003	30 June 2023	Savient
524/IN	524-PCT-IN	India	Pending	Nat. Phase		30 June 2003	30 June 2023	Savient
524/JP	524-PCT-JP	Japan	Pending	Nat. Phase		30 June 2003	30 June 2023	Savient
524/KR	524-PCT-KR	Korea (South)	Pending	Nat. Phase		30 June 2003	30 June 2023	Savient
524/MX	524-PCT-MX	Mexico	Pending	Nat. Phase		30 June 2003	30 June 2023	Savient
524/NZ	524-PCT-NZ	New Zealand	Pending	Nat. Phase		30 June 2003	30 June 2023	Savient
524/PL	524-PCT-PL	Poland	Pending	Nat. Phase		30 June 2003	30 June 2023	Savient
524/RU	524-PCT-RU	Russian Federation	Pending	Nat. Phase		30 June 2003	30 June 2023	Savient
524/SG	524-PCT-SG	Singapore	Pending	Nat. Phase		30 June 2003	30 June 2023	Savient
524/US/3	524-A-US	USA	Pending	Published	10/611588	30 June 2003	30 June 2023	Savient
524/ZA	524-PCT-ZA	South Africa	Pending	Nat. Phase		30 June 2003	30 June 2023	Savient
573/AU	573-PCT-AU	Australia	Pending	Nat. Phase		30 June 2003	30 June 2023	Savient
573/BR	573-PCT-BR	Brazil	Pending	Nat. Phase		30 June 2003	30 June 2023	Savient
573/CA	573-PCT-CA	Canada	Pending	Nat. Phase		30 June 2003	30 June 2023	Savient
573/CN	573-PCT-CN	China	Pending	Nat. Phase		30 June 2003	30 June 2023	Savient
573/EP	573-PCT-EP	EPO	Pending	Nat. Phase		30 June 2003	30 June 2023	Savient
573/IL	573-PCT-IL	Israel	Pending	Nat. Phase	166062	30 June 2003	30 June 2023	Savient

647/IP/BTG 271 Patent Applications 2 8 March, 2005

CONFIDENTIAL

Docket ID	File Ref.	Country	Status	Substatus	Appl. No	Appl. Date	Expiry	Applicant/ Patentees
573/IN	573-PCT-IN	India	Pending	Nat. Phase		30 June 2003	30 June 2023	Savient
573/JP	573-PCT-JP	Japan	Pending	Nat. Phase		30 June 2003	30 June 2023	Savient
573/KR	573-PCT-KR	Korea (South)	Pending	Nat. Phase		30 June 2003	30 June 2023	Savient
573/MX	573-PCT-MX	Mexico	Pending	Nat. Phase		30 June 2003	30 June 2023	Savient
573/NZ	573-PCT-NZ	New Zealand	Pending	Nat. Phase		30 June 2003	30 June 2023	Savient
573/PL	573-PCT-PL	Poland	Pending	Nat. Phase		30 June 2003	30 June 2023	Savient
573/RU	573-PCT-RU	Russian Federation	Pending	Nat. Phase		30 June 2003	3D June 2023	Savient
573/SG	573-PCT-SG	Singapore	Pending	Nat. Phase		30 June 2003	30 June 2023	Savient
573/US/3	573-A-US	USA:	Pending	Published	10/610843	30 June 2003	30 June 2023	Savient
573/ZA	573-PCT-21A	South Africa	Pending	Nat. Phase		30 June 2003	30 June 2023	Savient
604/PCT	604-PCT	PCT	Pending	Published	PCT/US04/021002	30 June 2004	30 June 2008	Savient
604/US/3	604-A-US	USA	Pending		10/880922	30 June 2004	30 June 2024	Savient
606/PCT	606-PCT	PCT	Pending	Published	PCT/US041021099	30 June 2004		Savient
606/US/3	606-A-US	USA	Pending		10/881405	30 June 2004	30 June 2024	Savient
604/US/4	604-B-US	USA	Pending			27 June,2005		Savient

647/IP/BTG 271 Patent Applications 3 8 March, 2005

Annex H

osmB promoter patents/patent application

Docket ID	File Ref	Country	Annuity Due	Status	Applic. No	Appl. Date	Grant No.	Grant Date	Expiry	Application/ Patentees
191/EP	191-WO-EP	EPO	22-2006- March	Pending	95914162.3	22-1995- March			22-2015-March	Savient
191/IL	191-IL	Israel		Pending	113031	19-1995- March				Savient
191/IN/2	191-Z/IN	India		Pending	960/Del/99	12-1999- July				Savient
191/JP	191-WO-JP	Japan		Pending	7-524813	22-1995- March				Savient
191/US/2	191-A-US	USA	28-2007-Febrauary	Granted	08/897043	18-1997- July	5945304	31-1999-August	22-2014-March	Savient
191-ZA	191-/ZA	South Africa	13-2006- March	Granted	95/2056	13-1995-March	95-2056	28-1996-February	13-2015-March	Savient

Annex I

List of HA Patents, Trademarks and Domain Names

1. Patents

Refer to attached list

2. Design Right Registrations

2.1. US: Des. 403064 - Filed June 28, 1995, Granted December 22, 1998, Expiration date December 22, 2012.

2.2. Israel: Design 23832 - Filed January 22, 1995, Granted June 20, 1995; Expiration date January 22, 2010.

3. Trademarks

Refer to attached list

4. Domain Names

Name	Domain
biolon	.info
biolon	.co.il
biolon	.us
biolon	.com
euflexxa	.com
nuflexa	.com
nuflexxa	.com

CONFIDENTIAL

HA PATENTS

File Ref.	Country	Status	Appl. No	Appl. Date	Grant No	Grant Date	Expiry	Applicant/ Patentees
015-A/WO	Australia	Granted	53599/86	16-Jan-1986	600888	17-Dec-1990	16-Jan-2006	BTG Corp.
015-A-Z-WO-AU	Australia	Granted	62319/90	16-Jan-1986	624023	28-Nov-1994	16-Jan-2006	BTG Corp.
015-A/CA	Canada	Granted	499795	17-Jan-1986	1336177	04-Jul-1995	04-Jul-2012	BTG Corp.
015-A-WO-EP	EPO	Granted	86900929.0	16-Jan-1985	211037	26-Feb-1992	16-Jan-2006	BTG Corp.
015-A-WO-EP-AT	Austria	Granted	86900929.0	16-Jan-1985	E72B35B	12-Oct-1992	16-Jan-2006	BTG Corp.
015-A/WO-EP-BE	Belgium	Granted	86900929.0	16-Jan-1985	211037	26-Feb-1992	16-Jan-2006	BTG Corp.
015-A-WO-EP-CH	Switzerland	Granted	86900929.0	16-Jan-1985	211037	26-Feb-1992	16-Jan-2006	BTG Corp.
015-A-WO-EP-DE	Germany	Granted	86900929.0	16-Jan-1985	3683969.8	26-Feb-1992	16-Jan-2006	BTG Corp.
015-A/WO-EP-FR	France	Granted	86900929.0	16-Jan-1985	211037	26-Feb-1992	16-Jan-2006	BTG Corp.
015-A-WO-EP-IT	Italy	Granted	86900929.0	16-Jan-1985	211037	26-Feb-1992	16-Jan-2006	BTG Corp.
015-AWO-EP-LU	Luxembourg	Granted	86900929.0	16-Jan-1985	211037	26-Feb-1992	16-Jan-2006	BTG Corp.
015-A/WO-EP-NL	Netherlands	Granted	86900929.0	16-Jan-1985	211037	26-Feb-1992	16-Jan-2006	BTG Corp.
015-A-WO-EP-SE	Sweden	Granted	86900929.0	16-Jan-1985	211037	26-Feb-1992	16-Jan-2006	BTG Corp.
015-A-WO-EP-GB	United Kingdom	Granted	86900929.0	16-Jan-1985	211037	26-Feb-1992	16-Jan-2006	BTG Corp.
015A/HK	Hong Kong	Granted	86900929.0	16-Jan-1985	1174/1996	04-Jul-1996	16-Jan-2006	BTG Corp.
015-A-IL	Israel	Granted	77625	16-Jan-1985	77625	18-Jul-1991	16-Jan-2006	BTGIL
015-A-Z/IL	Israel	Granted	94791	16-Jan-1985	94791	11-Jun-1992	16-Jan-2006	BTGIL
015-A-WO-JP	Japan	Granted	61-500791	16-Jan-1985	2677553	25-Jul-1997	16-Jan-2006	BTG Corp.
015-A-Y-WO-JP	Japan	Granted	6-273821	16-Jan-1985	3081544	23-Jun-2000	16-Jan-2006	BTG Corp.
015-A-Z-WO-JP	Japan	Granted	6-141201	16-Jan-1985	2571908	24-Oct-1995	16-Jan-2006	BTG Corp.
015-A/SG	Singapore	Granted	9590363-9	16-Jan-1985	9590363-9	30-Sep-1995	16-Jan-2006	BTG Corp.
015-/US	USA	Granted	692692	16-Jan-1985	4784990	15-Nov-1988	15-Nov-2005	BTG Corp.
015-A/US	USA	Granted	815957	09-Jan-1986	4780414	25-Oct-1988	25-Oct-2005	BTG Corp.
015-A/ZA	South Africa	Granted	86/0366	17-Jan-1986	86/0366	24-Sep-1986	17-Jan-2006	BTG Corp.
319-/IL	Israel	Granted	23832	22-Jan-1995	23832	20-Jun-1995	22-Jan-2010	BTG Corp.
319-/US	USA	Granted	29/040830	28-Jan-1995	Des. 403064	22-Dec-1998	22-Dec-2012	Savient

lpgp1/647/Intellectual Property/HA Patent Applications TM 28 February, 2005

CONFIDENTIAL

HA TRADEMARKS

File Ref.	Country	Trademark	Class	Reg. Owner	Appl. No.	Appl. Date	Reg. No.	Reg. Date	Status
T2057-Israel	Israel	ARTHREASE	5	BTGIL	144847	14-Dec-2000	144847	14-Dec-2000	Registered
T2057-A-Israel	Israel	ARTHREASE- English and Hebrew	10	BT	150544	05-Jul-2001	150544	03-Sep-2002	Registered
T2069-Israel	Israel	Arthrease Logo	10	BT	159394	19-Sep-2002	159394	14-Apr-2004	Registered
T2009-IL	Israel	BIOHY	5	BT	77923	18-Oct-1990	77923	10-Mar-1994	Registered
T2009-US	USA	BIOHY	5	Savient	78532936	15-Dec-2004			Pending
T2010-/OAPI	African Union (AIPO)	BIOLON	5	BTG Corp.	85707	12-Apr-1996	36215	25-Feb-1997	Registered
T2010-/DZ	Algeria	BIOLON	5	BTG Corp.	960540	06-Apr-1996	50597	06-Apr-1996	Registered
T2010-/AR	Argentina	BIOLON	5	BTG Corp.	1923104	06-Jun-1994	1594955	27-Mar-1998	Registered
T2010-EM	Austria	BIOLON	5, 10	BTG Corp.	2432169	22-Oct-2001	2432169	21-May-2003	Registered
T2010-Benelux	Benelux	BIOLON	5	BTG Corp.	777702	23-Mar-1992	509296	23-Mar-1992	Registered
T2010-EM	Benelux	BIOLON	5,10	BTG Corp.	2432169	22-Oct-2001	2432169	21-May-2003	Registered
T2010-/BO	Bolivia	BIOLON	5	BTG Corp.	SM-93-2434	01-Oct-1993	58548-C	24-May-1995	Registered
T2010-A-BO	Bolivia	BIOLON	5	BTG Corp.	SM-1162-95	17-Mar-1995	69448-C	13-Mar-2003	Registered
T2010-/BR	Brazil	BIOLON		Savient	820926656	24-Jul-1998			Pending
T2010-/BG	Bulgaria	BIOLON	5	BTG Corp.	31590	24-Jul-1995	28084	24-Jul-1995	Registered
T2010-/KH	Cambodia	BIOLON	5	BTG Corp.	7235	03-May-1996	7235	12-Jun-1996	Registered
T2010-/CA	Canada	BIOLON	5	BTG Corp.	726489	13-Apr-1993	TMA433098	09-Sep-1994	Registered
T2010-/CL	Child	BIOLON	5	BTG Corp.	251.326	31-Aug-1993	462254	06-Oct-1996	Registered
T2010-/CO	Colombia	BIOLON	5	BTG Corp.	94050424	03-Nov-1994	196624	31-Jan-1987	Registered
T2010-/CR	Costa Rica	BIOLON	5	BTG Corp.	91.98	16-Dec-1994	91.680	13-Jun-1995	Registered
T2010-/CY	Cyprus	BIOLON	5	BTG Corp.	46837	25-Nov-1998	46637	25-Nov-1996	Registered
T2010-EM	Cyprus	BIOLON	5,10	BTG Corp.	2432169	22-Oct-2001	2432169	21-May-2003	Registered
T2010-/CZ	Czech Republic	BIOLON	5	BTG Corp.	101381	20-Jun-1995	212355	28-Sep-1998	Registered
T2010-EM	Czech Republic	BIOLON	5,10	BTG Corp.	2432169	22-Oct-2001	2432169	21-May-2003	Registered
T2010-/DK	Denmark	BIOLON	5	BTG Corp.	02238/1992	24-Mar-1992	00171/94	14-Jan-1994	Registered
T2010-EM	Denmark	BIOLON	5,10	BTG Corp.	2432169	22-Oct-2001	2432169	21-May-2003	Registered
T2010-/DO	Dominican Republic	BIOLON	11	BTG Corp.		01-Nov-1994	75847	15-Jan-1995	Registered
T2010-/EC	Ecuador	BIOLON	5	BTG Corp.	56.835	06-Jul-1995	268/97	12-Mar-1997	Registered
T2010-/EG	Egypt	BIOLON	5	BTG Corp.	96258	25-Jun-1995	96258	13-Oct-1998	Registered
T2010-/SV	El Salvador	BIOLON	5	BTG Corp.	4123-94	04-Nov-1994	2208.37	22-Oct-1998	Registered
T2010-EM	Estonia	BIOLON	5,10	BTG Corp.	2432169	22-Oct-2001	2432169	21-May-2003	Registered
T2010-EM	European Union	BIOLON	5,10	BTG Corp.	2432169	22-Oct-2001	2432169	21-May-2003	Registered
T2010-/FI	Finland	BIOLON	5	BTG Corp.	1541/92	27-Mar-1992	130038	20-Jan-1994	Registered
T2010-EM	Finland	BIOLON	5,10	BTG Corp.	2432169	22-Oct-2001	2432169	21-May-2003	Registered
T2010-France	France	BIOLON	5	BTG Corp.	92411786	24-Mar-1992	92411768	04-Sep-1992	Registered
T2010-EM	France	BIOLON	5,10	BTG Corp.	2432169	22-Oct-2001	2432169	21-May-2003	Registered

lpgp1/647/Intellectual Property/HA Patent Applications TM 1 28 February, 2005

CONFIDENTIAL

HA TRADEMARKS

File Ref.	Country	Trademark	Class	Reg. Owner	Appl. No.	Appl. Date	Reg. No.	Reg. Date	Status
T2010-Gaza	Gaza	BIOLON	5	BTG Corp.	2962	18-May-1995	2962	19-Jun-1995	Registered
T2010-DE	Germany	BIOLON	5	BTG Corp.	B98 358/5 WZ	21-Apr-1993	2 105 144	22-Oct-1998	Registered
T2010-EM	Germany	BIOLON	5,10	BTG Corp.	2432159	22-Oct-2001	2432169	21-May-2003	Registered
	Germany	BIOLON	5	Pharma Stutn	P434855WZ	25-Sep-1992	2025182	24-Nov-1992	Registered
T2010-EM	Greece	BIOLON	5, 10	BTG Corp.	2432169	22-Oct-2001	2432169	21-May-2003	Registered
T2010-A-Greece	Greece	BIOLON	5, 10	BTG Corp.	747553	08-Mar-2002	147553	17-Aug-2004	Registered
T2010-/GT	Guatemala	BIOLON	5	BTG Corp.	95000215	22-May-1985	083194	30-Oct-1996	Registered
T2010-/HT	Haiti	BIOLON	5	BTG Corp.	280/101	07-Sep-1995	280/101	07-Sep-1995	Registered
T2010-/HN	Honduras	BIOLON	5	BTG Corp.	7625/94	18-Oct-1994	82.502	07-Aug-1995	Registered
T2010-/HK	Hong Kong	BIOLON	5	BTG Corp.	95 03898	01-Apr-1996	4516/1997	18-Apr-1997	Registered
T2010-EM	Hungary	BIOLON	5,10	BTG Corp.	2432169	22-Oct-2001	2432169	21-May-2003	Registered
T2010-ICELAND	Iceland	BIOLON	5	BTG Corp.	761/1992	27-Mar-1992	761/1992	29-Jul-1992	Registered
T2010-India	India	BIOLON	5	BTG Corp.	615152	30-Dec-1993	615152	30-Dec-1993	Registered
T2010-Indonesia	Indonesia	BIOLON	5	BTGIL	D00 2004 01647 01660	23-Jan-2004			Pending
T2010-/IR	Iran	BIOLON	5	BTG Corp.	7508196	07-Sep-1996	80448	07-Sep-1996	Registered
T2010-/IE	Ireland	BIOLON	5	BTG Corp.	95/0800	25-Jan-1995	186885	25-Jan-1995	Registered
T2010-EM	Ireland	BIOLON	5, 10	BTG Corp.	2432169	22-Oct-2001	2432169	21-May-2003	Registered
	Ireland	BIOLON	10	Kestrel (formerly Inpharmed)	205725	07-Jan-1998	206725	07-Jan-1998	Registered
T2010-IL	Israel	BIOLON	5	BTGIL	77924	08-Oct-1990	77924	10-Mar-1994	Registered
T2010-A-IL	Israel	BIOLON	10	BTGIL	139336	26-Jun-2000	139338	05-Feb-2002	Registered
T2010-EM	Italy	BIOLON	5, 10	BTG Corp.	2432169	22-Oct-2001	2432169	21-May-2003	Registered
	Italy	BIOLON	5	S.I.F.I.SPA	1679 2002 RM	25-Mar-2002			Pending
T2010-A-Italy	Italy	BIOLON	5	BTG Corp.	2424 2002 MI	11-Mar-2002			Pending
T2010-/JM	Jamaica	BIOLON	5	BTG Corp.	5/6031	14-Oct-1994	27657	14-Oct-1994	Registered
T2010-/JP	Japan	BIOLON	5	BTG Corp.	179472/1997	21-Nov-1997	4359587	02-Apr-2000	Registered
T2010-EM	Jersey	BIOLON	5,10	BTG Corp.	2432169	22-Oct-2001	2432169	21-May-2003	Registered
T2010-JO	Jordan	BIOLON	5	BTG Corp.	40967	04-Apr-1996	40967	04-Apr-1996	Registered
T2010-/KR	Korea (South)	BIOLON	5	BTG Corp.	13533/1998	28-May-1998	446232	14-Apr-1999	Registered
T2010-/LA	Laos	BIOLON	5	BTG Corp.	4584	05-Feb-1996	4278	15-May-1995	Registered
T2010-EM	Latvia	BIOLON	5, 10	BTG Corp.	2432169	22-Oct-2001	2432169	21-May-2003	Registered
T2010-/LB	Lebanon	BIOLON	5	BTG Corp.	16217	26-Jun-1995	69274	26-Jun-1998	Registered
T2010-Liechtenstein	Liechtenstein	BIOLON	5, 10	BTGIL	12811	20-Jan-2003	12811	20-Jan-2003	Registered
T2010-EM	Lithuania	BIOLON	5, 10	BTG Corp.	2432169	22-Oct-2001	2432169	21-May-2003	Registered
T2010-EM	Malta	BIOLON	5, 10	BTG Corp.	2432169	22-Oct-2001	2432169	21-May-2003	Registered

lpgp1/647/Intellectual Property/HA Patent Applications TM 2 28 February, 2005

CONFIDENTIAL

HA TRADEMARKS

File Ref.	Country	Trademark	Class	Reg. Owner	Appl. No.	Appl. Date	Reg. No.	Reg. Date	Status
T2010-/MX	Mexico	BIOLON	5	BTG Corp.	192582	02-Mar-1994	497534	19-Jul-1995	Registered
T2010-/MA	Morocco	BIOLON	5	BTG Corp.	59409	12-Apr-1996	59409	12-Apr-1996	Registered
T2010-BU	Myanmar	BIOLON	5	BTG Corp.	2616	20-Jun-1995	2616 or 1996	11-Jul-1996	Registered
T2010-/NI	Nicaragua	BIOLON	5	BTG Corp.	96-00741	02-Mar-1995	28938	04-Aug-1995	Registered
T2010-NO	Norway	BIOLON	5	BTG Corp.	234176	24-Mar-1992	161914	24-Mar-1994	Registered
T2010-/PA	Panama	BIOLON	5	BTG Corp.	75147	07-Apr-1995	075147	02-Aug-1996	Registered
T2010-/PE	Peru	BIOLON	5	BTG Corp.	232107		005544	25-Feb-1994	Registered
T2010-EM	Poland	BIOLON	5, 10	BTG Corp.	2432169	22-Oct-2001	2432169	21-May-2003	Registered
T2010-Portugal	Portugal	BIOLON	5	BTG Corp.	281783	31-Mar-1992	281783	16-Nov-1993	Registered
T2010-EM	Portugal	BIOLON	5, 10	BTG Corp.	2432169	22-Oct-2001	2432169	21-May-2003	Registered
T2010-Romania	Romania	BIOLON	5	BTG Corp.	36419	15-Sep-1995	31132	15-Sep-1995	Registered
T2010-Russia	Russian Federation	BIOLON	5, 10	BTGIL	2002720948	02-Oct-2002			Pending
T2010-/SG	Singapore	BIOLON	5	Savient	1144/95	10-Feb-1995	1144/95	10-Feb-1995	Registered
T2010-/SK	Slovakia	BIOLON	5	BTG Corp.	PO21720-95	20-Jun-1995	182122	17-Sep-1998	Registered
T2010-EM	Slovakia	BIOLON	5, 10	BTG Corp.	2432169	22-Oct-2001	2432169	21-May-2003	Registered
T2010-EM	Slovenia	BIOLON	5, 10	BTG Corp.	2432169	22-Oct-2001	2432169	21-May-2003	Registered
T2010-/ZA	South Africa	BIOLON	5	BTG Corp.	95/00039	04-Jan-1995	95/00039	12-Jan-1997	Registered
T2010-Spain	Spain	BIOLON	5	BTG Corp.	1694642	06-Apr-1992	1694642	06-Apr-1992	Registered
T2010-EM	Spain	BIOLON	5, 10	BTG Corp.	2432169	22-Oct-2001	2432169	21-May-2003	Registered
T2010-Sweden	Sweden	BIOLON	5	BTG Corp.	92-2884	24-Mar-1992	248654	30-Apr-1993	Registered
T2010-EM	Sweden	BIOLON	5, 10	BTG Corp.	2432169	22-Oct-2001	2432189	21-May-2003	Registered
T2010-/CH	Switzerland	BIOLON	5	BTG Corp.	2608/1992.5	25-Mar-1992	397.284	14-Dec-1992	Registered
T2010-/TH	Thailand	BIOLON	5	BTG Corp.	306655	23-Apr-1996	Khor92629	23-Apr-1996	Registered
T2010-/TT	Trinidad & Tobago	BIOLON	3	BTG Corp.	23125	13-Oct-1994	23125	13-Oct-1997	Registered
T2010-/TN	Tunisia	BIOLON	5	BTG Corp.	EE96.0509	25-Apr-1996	EE96.0509	25-Apr-1996	Registered
T2010-Turkey	Turkey	BIOLON	5	BTG Corp.	86 1666	06-Feb-1996	171989	06-Feb-1998	Registered
T2010-/GB	United Kingdom	BIOLON	5	BTG Corp.	1532336	14-Apr-1993	1532336	15-Jul-1994	Registered
T2010-EM	United Kingdom	BIOLON	5, 10	BTG Corp.	2432169	22-Oct-2001	2432169	21-May-2003	Registered
T2010A/GB	United Kingdom	BIOLON	10	BTG Corp.	2152700	04-Dec-1997	2152700	28-Aug-1998	Registered
T2010-/US	USA	BIOLON	5	Savient	74/630840	08-Feb-1995	2235976	30-Mar-1999	Registered
T2010-/VE	Venezuela	BIOLON	5	BTG Corp.	15882-94	28-Nov-1994	P204815	08-May-1998	Registered
T2010-/VN	Vietnam	BIOLON	5	BTG Corp.	28087	09-Apr-1996	23650	15-Jan-1997	Registered
T2010-West Bank	West Bank	BIOLON	5	BTG Corp.	3443	20-May-1996	3443	20-May-1995	Registered
T2065-IL	Israel	BIOLON PRIME	10	BTGIL	153026	30-Oct-2001	153026	04-Mar-2003	Registered
T2065-A-IL	Israel	BIOLON PRIME	5	BTGIL	158014	01-Jul-2002	158014	03-Feb-2004	Registered
T2030-/ZA	South Africa	BIOLONE	5	BTG Corp.	95/0706	22-Jan-1998	96/0708	22-Jan-1996	Registered

lpgp1/647/Intellectual Property/HA Patent Applications TM 3 28 February, 2005

CONFIDENTIAL

HA TRADEMARKS

File Ref.	Country	Trademark	Class	Reg. Owner	Appl. No.	Appl. Date	Reg. No.	Reg. Date	Status
T2124-EM	Austria	EUFLEXXA	5, 10	BTGIL	3919768	13-Jul-2004			Pending
T2124-EM	Benchor	EUFLEXXA	5, 10	BTGIL	3919768	13-Jul-2004			Pending
T2124-EM	Cyprus	EUFLEXXA	5, 10	BTGIL	3919768	13-Jul-2004			Pending
T2124-EM	Czech Republic	EUFLEXXA	5, 10	BTGIL	3919768	13-Jul-2004			Pending
T2124-EM	Denmark	EUFLEXXA	5, 10	BTGIL	3919768	13-Jul-2004			Pending
T2124-EM	Estonia	EUFLEXXA	5, 10	BTGIL	3919768	13-Jul-2004			Pending
T2124-EM	European Union	EUFLEXXA	5, 10	BTGIL	3919768	13-Jul-2004			Pending
T2124-EM	Finland	EUFLEXXA	5, 10	BTGIL	3919768	13-Jul-2004			Pending
T2124-EM	France	EUFLEXXA	5, 10	BTGIL	3919768	13-Jul-2004			Pending
T2124-EM	Germany	EUFLEXXA	5, 10	BTGIL	3919768	13-Jul-2004			Pending
T2124-EM	Greece	EUFLEXXA	5, 10	BTGIL	3919768	13-Jul-2004			Pending
T2124-EM	Hungary	EUFLEXXA	5, 10	BTGIL	3919768	13-Jul-2004			Pending
T2124-EM	Ireland	EUFLEXXA	5, 10	BTGIL	3919768	13-Jul-2004			Pending
T2124-IL	Israel	EUFLEXXA	5, 10	BTGIL	174937	28-Sep-2004			Pending
T2124-EM	Italy	EUFLEXXA	5, 10	BTGIL	3919768	13-Jul-2004			Pending
T2124-EM	Jersey	EUFLEXXA	5, 10	BTGIL	3919768	13-Jul-2004			Pending
T2124-EM	Latvia	EUFLEXXA	5, 10	BTGIL	3919768	13-Jul-2004			Pending
T2124-EM	Lithuania	EUFLEXXA	5, 10	BTGIL	3919768	13-Jul-2004			Pending
T2124-EM	Malta	EUFLEXXA	5, 10	BTGIL	3919768	13-Jul-2004			Pending
T2124-EM	Poland	EUFLEXXA	5, 10	BTGIL	3919768	13-Jul-2004			Pending
T2124-EM	Portugal	EUFLEXXA	5, 10	BTGIL	3919768	13-Jul-2004			Pending
T2124-EM	Slovakia	EUFLEXXA	5, 10	BTGIL	3919768	13-Jul-2004			Pending
T2124-EM	Slovakia	EUFLEXXA	5, 10	BTGIL	3919768	13-Jul-2004			Pending
T2124-EM	Spain	EUFLEXXA	5, 10	BTGIL	3919768	13-Jul-2004			Pending
T2124-EM	Sweden	EUFLEXXA	5, 10	BTGIL	3919768	13-Jul-2004			Pending
T2124-TR	Turkey	EUFLEXXA	5, 10	BTGIL	2004/44860	29-Dec-2004			Pending
T2124-EM	United Kingdom	EUFLEXXA	5, 10	BTGIL	3919768	13-Jul-2004			Pending
T2122-US	USA	NUFLEXXA	5, 10	Savient	78416687	11-May-2004			Pending
T2123-Canada	Canada	NUFLEXXA	5, 10	Savient	1224738	28-Jul-2004			Pending
T2123-US	USA	NUFLEXXA	5, 10	Savient	78416699	11-May-2004			Pending
T2008-IL	Israel	OPHTHA	5, 10	BTGIL	76640	08-Jun-1990	76640	10-Mar-1994	Registered
T2071-IL	Israel	PRIME	5, 10	BTGIL	163725	14-Apr-2003			Pending
T2070-Israel	Israel	PURE RELIEF	5, 10	BTGIL	161041	09-Dec-2002	161041	03-Feb-2004	Registered
T2017-IL	Israel	WING YOUR WAY TO THE FUTURE	5, 10	BTGIL	96646	23-Jan-1995	96646	05-Aug-1996	Registered

lpgp1/647/Intellectual Property/HA Patent Applications TM 4 28 February, 2005

Exhibit G

Product Specifications

- 1 -

CONFIDENTIAL

Summary of Release Testing of Bulk Uricase Intermediate

Parameter	Test	Provisional Acceptance Criteria	Revision
Appearance	Visual inspection	Clear colorless solution, free of visible particles	None
General	pH	10.1-10.4	None
Protein Content	Bradford	1.0-3.0 mg/mL	None
Potency	Enzymatic activity	6.0-10.8 Units/mg	Addition of Upper Limit
Identification	N-terminal amino acid sequence	10 amino acids matching the sequence	None
	SDS-PAGE	Electrophoretogram similar to reference standard	None
	Peptide Mapping	Profile of the chromatogram of test solution corresponds to that of reference solution	None
	Mass Spectrometry	34,193 ± 6 Da	Revision to indicate specific molecular weight
Purity/Impurities	HMW Forms by SEC-HPLC	< 2%	None
	HMW Forms by SDS-PAGE	< 10%	None
	LMW Forms by SDS-PAGE	< 5%	None
	E. coli Proteins by Slot Blot	<. 25 ppm (< 25 ng/mg)	None
	Endotoxin (LAL kinetic turbidimetric)	< 10 EU/mg	None
	CPC by RP-HPLC	< 1 ppm (< 1 µg/mL)	None
	DNA by Slot Blot	< 25 pg/mg	None
	Tetracycline by RP-HPLC	< 5 ppb (< 5 ng/mL)	None
	Lysozyme by ELISA	< 3.9 ng/mL	Addition of Acceptance Criteria
	Microbial Limit	< 10 CFU/mL	None

CONFIDENTIAL

Summary of Release Testing of PEG-uricase API

Parameter	Test	Provisional Acceptance Criteria	Revision
Appearance	Physical inspection	Clear colorless solution, free of visible particles	None
General	pH	7.0-7.8	None
	Osmolality	270-368 mOsm/kg	None
Protein Content	SEC-HPLC	7.2-8.8 mg/mL	Addition of Lower Limit; Revision to Upper Limit
No. of PEG Strands per Monomer	SEC-I4PLC	9 ± 1	None
Potency	Enzymatic activity	5.0-9.5 Units/mg	Addition of Upper Limit
Purity/Impurities	Free PEG by SEC-HPLC	< 1 mg/mL	None
	Free Uricase by ELISA	Not yet established (ng/mL)	None
	Xanthine by RP-HPLC	< 10 ppm (<10 µg/mL)	None
	pNP by RP-HPLC	< 500 ppb (<0.5 µg/mL)	None
	Endotoxin (LAL kinetic turbidimetric)	< 10 EU/mg	None
	Microbial Limit	< 10 CFU/100 mL	None

EX-10.9

Exhibit 10.9

COMMERCIAL SUPPLY AGREEMENT

This Commercial Supply Agreement (this “Agreement”) is entered into as of October 16, 2008, (the “Effective Date”) by and between Enzon Pharmaceuticals, Inc., a Delaware corporation with an address of 685 Route 202-206, Bridgewater, New Jersey 08807 (“Enzon”), and Savient Pharmaceuticals, Inc., a Delaware corporation, having its principal place of business at One Tower Center, 14^th Floor, East Brunswick, New Jersey 08816 (“Savient”). Enzon and Savient may be referred to individually as a “Party” or collectively as “Parties.”

R E C I T A L S

WHEREAS, Savient is engaged in the development and research of certain biologic products and requires manufacture of such a product for commercial distribution;

WHEREAS, Enzon is a contract manufacturer that possesses the necessary technical capabilities and operates facilities for the manufacture of pharmaceutical and biological products for commercial distribution;

WHEREAS, Savient desires Enzon to supply to it the Product on the terms and conditions set forth herein; and

WHEREAS, Enzon is willing to supply the Product to Savient on the terms and conditions set forth below.

NOW, THEREFORE, in consideration of the mutual promises contained herein, and for other good and valuable consideration, the receipt and adequacy of which each of the Parties does hereby acknowledge, the Parties, intending to be legally bound, agree as follows:

Section 1. DEFINITIONS

1.1 As used herein, the following terms shall have the following meanings:

1.2 “Affiliate” shall mean any business entity which directly or indirectly controls, is controlled by, or is under common control with any Party to this Agreement. A business entity shall be deemed to “control” another business entity if (i) it owns, directly or indirectly, at least fifty percent (50%) of the issued and outstanding voting securities, capital stock, or other comparable equity or ownership interest of such business entity, or (ii) it has the de facto ability to control or direct the management of such business entity.

1.3 “Applicable Laws” means all relevant federal, state and local laws, statutes, rules, and regulations which are applicable to a Party’s activities hereunder, including, without limitation, the applicable regulations of the Regulatory Authority, European Medicines Agency (EMEA) and United States and European Union cGMPs. The Parties may amend this section in writing to include additional countries.

Commercial Supply Agreement

Execution Copy

Page 1 of 44

1.4 “BLA” means a regulatory application filed with a governmental agency in a the United States, the European Union, or any other country that the Parties mutually agree upon in writing (e.g. FDA and EMEA) for the purpose of lawfully marketing, selling, distributing, importing, exporting, manufacturing, developing or using a therapeutic or prophylactic product for the treatment or prevention of a disease or physical condition. As used herein, BLA shall include, without limitation, a Marketing Authorization Application in the European Union, a Biologics License Application in the United States.

1.5 “Bulk Product” shall mean the bulk solution of methoxy-polyethylene glycol (m-PEG) conjugate of uricase supplied by Savient to Enzon pursuant to this Agreement.

1.6 “Commercially Reasonable Efforts” shall mean efforts in accordance with the standards of care and diligence Enzon practices with respect to its own products.

1.7 “cGMPs” shall mean current good manufacturing practices as promulgated by the FDA under the United States Food, Drug and Cosmetic Act, 21 C.F.R. Part 210 et seq., as amended from time to time, and the European Union.

1.8 “Field Alerts” shall have the definition of field alerts used by the FDA irrespective of the jurisdiction in which the acts or circumstances giving rise to such field alerts occur.

1.9 “Process Consumables” means media, resins, raw materials, filters, membranes, product contact materials or surfaces, disposable lab supplies and similar materials used in the manufacture of Product. Provided, however, that Process Consumables shall not include components of manufacture supplied by third parties such as labels (hereinafter referred to as “Manufacture Components”).

1.10 “Product” means pegloticase, a PEGylated recombinant mammalian uricase formulation in final drug product form ready for commercial sale.

1.11 “Quality Agreement” shall mean that certain Quality Agreement by and between the Parties hereto, dated as of the date hereof and attached to this Agreement

1.12 “Regulatory Authority” shall mean any governmental agency with jurisdiction over the regulation of drug and biological agents for use in man, including, but not limited to, the United States Food and Drug Administration and any foreign equivalents thereto.

1.13 “Savient-supplied Materials” shall mean those materials including, but not limited to Bulk Product, supplied by Savient for use in connection with the manufacture of the Product, as set forth in the Work Plan which is attached hereto as Exhibit A or any subsequent Work Plan signed by both parties.

1.14 “Savient Intellectual Property” shall mean (i) all valid patent claims owned or licensed by Savient and all converted provisionals, divisions, continuations, continuations-in-part, reissues, reexaminations or extensions thereof, as well as any corresponding foreign

Commercial Supply Agreement

Execution Copy

Page 2 of 44

counterparts and equivalents thereof, whether issued or pending as of the Effective Date or thereafter; (ii) trademarks which are owned, licensed or sublicensed by Savient and which are registered in the United States and, where applicable, foreign jurisdictions for use in association with the Product; and (iii) any Savient Know-How developed by Savient or any of its Affiliates during the Term relating to (a) the Bulk Product or the Product (including, without limitation, its pharmaceutical utility) or (b) the Services provided hereunder

1.15 “Savient Know-How” shall mean all technical information, data (including, without limitation, regulatory data) patentable and unpatentable inventions, developments, discoveries, methods and processes that are, in each case, not disclosed in a published patent application or patent or otherwise publicly available, which are developed or conceived of by Savient or any of its Affiliates or which is licensed to Savient or any of its Affiliates.

1.16 “Service” means those services described in any Work Plan which is made a part of this Agreement and those services described in any Quality Agreement pertaining to such services.

1.17 “Specifications” means the written specifications for the Product and Savient-supplied Materials attached hereto as Exhibit B, which may be amended from time to time by the mutual written agreement of the parties.

1.18 “Work Plan” means the schedule and detailed plans used to prepare formulated Bulk Product, fill Bulk Product into vials and package the resulting drug product thereby resulting in the ultimate deliverable which is the Product. The definition of Work Plan shall also include subsequent change orders to any Work Plan (as described in Section 3.3) . The first Work Plan is attached hereto as Exhibit A.

Section 2. SERVICES

2.1 Enzon shall perform the Services described in this Agreement and in the exhibits hereto, which are made part of this Agreement, or as described in any Work Plan, the Specifications, or change order pursuant to Section 3.3. Savient shall provide such Savient-supplied Materials and make such payments as are set forth therein. The Parties mutually acknowledge and agree that nothing contained in this Agreement or any Work Plan executed hereunder shall create an exclusive manufacture or supply arrangement between the Parties.

2.2 To the extent necessary to enable Enzon to provide the Services, Savient hereby grants to Enzon a royalty-free, non-exclusive license and, where appropriate, sublicense, to use the Savient Intellectual Property which pertains to the Product or the Services hereunder; provided, however, that any license, or sublicense, granted herein as the case may be, shall be used by Enzon or any permitted sublicensee solely for the purposes of carrying out the Services and no rights or title in or to the Savient Intellectual Property shall vest in Enzon. Upon the expiration or earlier termination of this Agreement the license or sublicense granted to Enzon to

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use Savient Intellectual Property shall immediately cease and Enzon shall make no further use thereof and shall cause any permitted sublicensee to make no further use thereof.

2.3 Enzon agrees to provide the Services outlined in the Work Plan attached hereto as Exhibit A which is incorporated and made a part of this Agreement and any other Services that may be described in any future Work Plan or change order, or Quality Agreement which addresses the Services described in this Section 2, which shall be incorporated into this Agreement upon execution by both parties. Such Services shall be performed in accordance with Applicable Laws. Savient agrees to make payments in accordance with this Agreement and all Work Plans. In the event of a conflict between this Agreement and any Work Plan, this Agreement shall control.

2.4 Enzon shall provide Savient, at no additional charge, product support services, at Savient’s reasonable request, for the activities listed below:

• Meetings with Regulatory Authorities, whether in person or by phone

• Routine documentation provided to Regulatory Authorities on behalf of Savient

• Annual product reviews for commercial products, as required by Regulatory Authorities.

• All audit correspondence including Savient-requested revisions to Enzon’s audit response.

Savient may request from Enzon other product support services at its customary rate, as set forth on Exhibit C, including but not limited to:

• Preparation of documents in anticipation of a Pre-Approval Inspection.

• Letters of reference from Enzon or Enzon’s vendors that are requested by Savient (e.g., Master file reference letters, rubber or glass vendor letters).

• Documentation provided to Regulatory Authorities on behalf of Savient, other than routine documentation.

• All time used for collecting and photocopying Savient documentation. One copy of a batch record is exempted from support charges.

• Changes and revisions to artwork mandated by Regulatory Authorities or requested by Savient.

• Any additional validation work requested by Savient beyond original Work Plan or outside current validation requirements.

• Any analytical development and/or analyses beyond original Work Plan.

For all requests under this Section 2.4, Savient shall provide Enzon a written request for product support services that describes the required services and/or documents/work product required. Enzon shall provide Savient an estimate based on its customary rate. Upon acceptance of such estimate by Savient, Savient shall issue a purchase order to Enzon and Enzon shall perform such services in accordance with the terms hereof.

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2.5 Enzon shall prepare and effect the Product shipment in accordance with explict written instructions issued by Savient, which shall include the packaging instructions and Savient’s selected mode of transportation. All transportation costs shall be borne by Savient in accordance with the terms contained herein.

Section 3. MANAGEMENT/FORECASTING/MATERIALS

3.1 Account Management. Each party will appoint an account manager who will be the party responsible for overseeing the activities hereunder.

3.2 Content of Work Plans. Each Work Plan shall include a reasonably detailed description of the Services to be provided, relevant Specifications, a schedule for completion of the Work Plan, a fee and payment schedule, and such other information as is necessary for Enzon to perform the relevant Services.

3.3 Change Orders. In the event that Enzon is requested to perform services that are outside the scope of agreed-upon Work Plans such changes must be mutually agreed upon by the parties in a written change order prior to the provision of said services. Each such change order constitutes an amendment to the applicable Work Plan (which shall be explicitly referenced in such change order) and the services set forth therein shall be deemed to be part of such Work Plan. After receipt of the reasonably detailed description of the additional services from Savient, Enzon shall provide Savient with a cost estimate for performing the changed or additional services. Each change order shall be governed by the terms and conditions of this Agreement and by such supplementary written amendments of this Agreement or Work Plans as may be, from time to time, executed between the parties.

3.4 Forecasting And Savient-supplied Materials

(a) Upon execution of this Agreement and on the first day of each calendar quarter thereafter, Savient shall deliver to Enzon’s account manager an updated rolling forecast of Product requirements (in full-batch quantities) for the twenty four (24) month period commencing on the first day of the immediately following calendar month. Enzon shall, within ten (10) days of receipt of a forecast from Savient, confirm its receipt thereof in writing and shall advise Savient of whether such forecast is accepted in whole or in part; in the event that any part of the forecast is not accepted by Enzon then Enzon shall detail in writing the rationale for such non-acceptance. Within thirty (30) days of accepting each forecast, Enzon will provide Savient a projected manufacturing schedule indicating approximate dates of manufacturing which shall conform with the delivery dates specified in the forecast supplied by Savient. The foregoing notwithstanding, once a forecast (or any portion thereof) has been accepted by Enzon it shall be binding on both parties except as otherwise may be explicity set forth herein; in the event that Enzon neither accepts or rejects any forecast submitted by Savient within ten (10) days of receipt from Savient then the entire forecast as submitted by Savient shall be deemed accepted by Enzon. If accepted, the forecast for the first six (6) calendar months of each forecast (“Firm Forecast”) shall be 100% binding on both parties and the forecast for the next twelve (12) calendar months (“Planning Forecast”) shall be binding on both parties as set forth in the

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following sentence. Product requirements within the Planning Forecast shall not be increased or decreased by Savient by more than one (1) batch per three month period, per forecast, provided that no month may be reduced to zero (0) batches unless the initial Planning Forecast for that particular month was initially set as one or zero batches; for purposes of clarification only, the parties agree that the intention of this provision is to allow Savient, in each subsequent forecast, to modify each three month period of the most recently supplied Planning Forecast by one (1) batch as follows: the first three month period of the most recently provided Planning Forecast (which becomes the final three month period of the Firm Forecast) may be modified by one batch, the second three month period of the Planning Forecast may be modified by one batch, the third three month period of the most recently provided Planning Forecast may be modified by one batch and the fourth three month period of the most recently provided Planning Forecast may be modified by one batch. Savient shall forecast Product requirements for the six (6) months following the Planning Forecast, and the forecast for those six months are non-binding (“Non-Binding Forecast”) on Savient. Savient shall place firm purchase orders for its requirement of the Product in full-batch quantities at least ninety (90) days prior to the requested date of delivery. Each firm written purchase order, signed by Savient’s duly authorized representative, shall authorize Enzon to manufacture the number of batches of the Product as are set forth therein. The number of purchase orders submitted by Savient shall not exceed one (1) per calendar month, unless otherwise agreed to by the parties in writing. Enzon shall have completed any and all activities which are required by the applicable Work Plan and all Applicable Laws so as to be able to deliver the Product on or before the delivery dates specified by Savient in the subject purchase order but in any event the Product shall not be delivered by Enzon more than one (1) month in advance of any specified delivery date. Provided, however, that Enzon shall use Commercially Reasonable Efforts to minimize the amount of time elapsing between the completion of manufacturing activities and delivery of the completed Product to Savient.

(b) Starting from inception of the manufacture of the Product, Savient shall supply to Enzon, and use Commercially Reasonable Efforts to ensure that Enzon has on hand, a sufficient stock of Savient-supplied Materials as is necessary to provide the Services. Enzon shall have no liability for any failure to supply Product to Savient in accordance with the delivery terms contained in a Savient purchase order if sufficient quantities of Savient-supplied Materials in light of the forecasting described above have not been supplied to Enzon at least four (4) weeks prior to the scheduled manufacture date, as communicated to Savient pursuant to Section 3.4(a) . In such case, manufacture of Product may be delayed until receipt of adequate supplies of Savient-supplied Materials and the availability of an appropriate manufacturing slot; provided, however, that Enzon shall use Commercially Reasonable Efforts to schedule the manufacture of the Product as soon as is possible subsequent to receiving the Savient-supplied Materials. If Savient provides Enzon with insufficient Savient-supplied Materials to produce the amount of Product requested in a particular purchase order, both sides may nonetheless agree in writing to have Enzon produce a lesser amount based on the amount of Savient-supplied Materials provided to Enzon, and all such batches shall be subject to the pricing listed in Exhibit C, including the minimum batch price, if applicable. Provided, however, that the Parties agree that any shortfall on the part of Enzon to produce at least ten thousand five hundred (10,500) vials of Product when provided with at least fifteen kilograms (15kg) of Bulk Product by Savient shall

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not constitute a breach of this Agreement and that the the pricing for such shortfall below ten thousand five hundred (10,500 vials) shall be computed as set forth in Section 6.2(e) herein. Additionally, in the event that any scheduled manufacture of the Product is delayed due to the unavailability of adequate stores of Savient-supplied Materials, then any Firm Forecast then in effect shall be carried forward until such a time as the manufacture and delivery of the Product in accordance with the most recently supplied firm purchase order have been completed. Savient shall be responsible for verifying that all Savient-supplied Materials meet relevant Specifications. Title to Savient-supplied Materials shall not be transferred to Enzon. Savient will provide a signed, abbreviated Certificate of Analysis (“CofA”) which shall, at minimum, certify that Savient-supplied Materials meet the Specifications for such Savient-supplied Materials as defined on Exhibit B prior to the processing of Savient-supplied Materials by Enzon. Enzon shall store all Savient-supplied Materials and finished Product in accordance with instructions provided by Savient in the Quality Agreement.

(c) All costs associated with the selection and/or qualification of alternative suppliers for any materials required to perform the Services shall be borne by Savient. Any such activities will be defined by Savient in writing an accompanied by an appropriate purchase order to Enzon.

(d) Upon execution of this Agreement and along with every quarterly forecast, Savient shall pay Enzon a rolling, non-refundable reservation fee equal to 25% of the minimum batch (specifed on Exhibit C) price for batches included in the Firm Forecast to secure manufacturing capacity slots corresponding to the forecast provided. Savient shall pay such reservation fee to Enzon within ten (10) days of Enzon’s provision to Savient of the manufacturing schedule, as set forth in Section 3.4(a), which schedule sets forth the approximate dates of manufacturing for the Product. Such reservation fee shall be credited towards Product produced by Enzon on a batch-by-batch basis in a prorated amount. Additionally, upon payment of the reservation fee by Savient, Enzon warrants that manufacture of the Product shall occur on or before the dates specified in the manufacturing schedule which conforms to the Firm Forecast for which the reservation fee is paid. Upon shipment of each completed batch, Enzon will invoice Savient at a rate equivalent to the applicable unit price multiplied by the total number of vials produced less the applicable portion of any reservation fees paid. No less than two weeks prior to each quarterly update of the Firm Forecast, Enzon and Savient will reconcile the invoices against the above-mentioned reservation fee. In the event that Savient cancels any batch within the Firm Forecast, Enzon will charge Savient, and Savient agrees to pay to Enzon, a cancellation fee as set forth in the following sentence. For each batch canceled by Savient, Savient will pay Enzon an amount equal to the minimum batch price set forth on Exhibit C (less nineteen thousand eight hundred ninety dollars ($19,890) representing unused Process Consumables and Manufacturing Components), which amount shall represent liquidated damages resulting from unused manufacturing capacity. In the event that Savient postpones the manufacture of any batch scheduled during the Firm Forecast period for a period of more than thirty (30) days, then Enzon will charge Savient, and Savient agrees to pay to Enzon, a postponement fee as set forth in the following sentence. For each batch postponed by Savient, Savient will pay Enzon an amount equal to the minimum batch price set forth on Exhibit C (less nineteen thousand eight hundred ninety dollars ($19,890) representing unused Process Consumables and Manufacturing

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Components) which amount shall represent liquidated damages resulting from unused manufacturing capacity. Only with respect to batches which are postponed beyond the Firm Forecast, Savient will remit to Enzon the amount drawn within 30 days, and that amount will be credited back to the reservation fee. Enzon will draw the cancellation and postponement fee amounts described above from the amounts previously remitted to Enzon as reservation fees. In the event that any amounts owing to Enzon pursuant to this Section exceed the amounts previously remitted to Enzon as reservation fees, Enzon shall submit an invoice to Savient for the difference and Savient shall submit payment for such invoiced amounts in accordance with the terms of this Agreement.

Section 4. COMPENSATION AND EXPENSES

4.1 As compensation for rendering the Services hereunder, Savient shall pay Enzon the amounts specified in Exhibit C and any subsequent additional Work Plans executed in writing by both parties. Except as otherwise specifically provided in the attached Work Plan or any subsequent additional Work Plan, all payments by Savient shall be made within thirty (30) days of the date of its receipt of the appropriate invoice from Enzon. Enzon will charge a late payment fee of 1 ¹⁄₂% per month, or the maximum amount permitted by law if less than 1 ¹⁄₂% per month, for any payment not received within thirty (30) days of the date of Savient’s receipt of the appropriate invoice from Enzon. Failure to invoice for interest due shall not be a waiver of Enzon’s right to charge interest. Savient will pay any sales, use, gross receipts or other taxes, licenses, or fees (excluding tax based on Enzon’s net income) required to be paid by Enzon to any state or tax jurisdiction in connection with the Services performed hereunder.

4.2 All invoices and/or other requests for payment shall be itemized with a reasonable degree of specificity to ensure accuracy in accounting for services and/or goods provided and invoiced for. All invoices and/or other requests for payment shall be sent to:

Accounts Payable

Savient Pharmaceuticals, Inc.

One Tower Center, 14th Floor

East Brunswick, New Jersey 08816

4.3 Enzon will adjust prices not more often than annually, commencing on January 1, 2010, based on normal and customary increases in costs, not greater than the pharmaceutical Producer Price Index (as published by Bureau of Labor Statistics, Industry Code 325412). Additionally, Enzon may revise the prices provided in an attached Work Plan either upward or downward with Savient’s prior written consent, such consent not to be unreasonably withheld, if (i) any information which the parties reasonably agree is material to the performance of the Services proves to be incomplete or inaccurate (including but not limited to a material reduction in volume or a material change in prices of Enzon’s raw materials), (ii) Savient revises Enzon’s manufacturing or packaging responsibilities, procedures, or assumptions in a way that would impact the cost of the Services, or (iii) unforeseen circumstances, which both parties reasonably agree were unforeseeable at the time of contracting and which are not directly attributable to Enzon, affect the activities required to complete the Work Plan. Enzon will notify Savient

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immediately if the costs to complete Services materially differ, either positively or negatively, from the prices stated in the attached Work Plan. Enzon will not commence work involving charges in excess of those stated in the attached Work Plan without Savient’s written approval unless such advance notice was not possible due to the circumstances. Savient shall be responsible for all non-cancelable costs incurred by Enzon as a direct result of any change order or other variation in Services requested by Savient, including but not limited to, inventory rendered unusable under the Work Plan; provided, however, that Enzon shall use Commercially Reasonable Efforts to minimize any non-cancelable costs contemplated herein including, but not limited to, by maintaining on hand only such Manufacture Components which are reasonably required to manufacture such quantities of Product as are specified in the Firm Forecast.

4.4 Savient’s failure to pay for the amounts due under this Agreement (including but not limited to payments under 3.4(d)) shall constitute a material breach of this Agreement. Savient shall have 45 days from Enzon’s written notice to cure such breach; provided, however, that Savient’s failure to pay any amounts otherwise owing hereunder due to a good faith dispute relating to such amounts shall not constitute a material breach only with respect to such amounts. Upon the expiration of the stated cure period, Enzon shall have the right to suspend any Services under this Agreement. Any batch cancellations resulting from such actions will be billed to Savient in accordance with Section 3.4(d) .

Section 5. CERTAIN REPRESENTATIONS, WARRANTIES, AND COVENANTS

OF ENZON:

5.1 Authority. Enzon represents and warrants that it has full authority to enter into this Agreement.

5.2 Material/Supplies. Enzon shall use Savient-supplied Materials only to perform the Services hereunder.

5.3 Savient Intellectual Property. Enzon warrants that it shall use Savient Intellectual Property only for the purpose of manufacturing the Product on behalf of Savient in accordance with the terms of this Agreement.

5.4 MVP Confidential Information. Enzon hereby represents and warrants that, during the Term of this Agreement, it has not taken any action, nor failed to take any action, which would violate or cause to be violated the terms and conditions contained in the attached Exhibit E, which is incorporated herein by reference. The warranty contained herein shall survive the termination or expiration of the Agreement in accordance with the terms contained in the attached Exhibit E. Anything to the contrary contained in this Agreement notwithstanding, Enzon agrees that there shall be no limitation on the amount of liability for which Enzon may be liable to either Savient or Mountain View Pharmaceuticals, Inc., for breach of this Section 5.4.

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5.5 Books and Records. Enzon shall maintain true and accurate books, records, test and laboratory data, reports and all other information relating to manufacture of Product as required by regulation and in accord with current good manufacturing practices (“cGMP”) and as set forth in the Quality Agreement.

5.6 Regulatory Inspections. Enzon shall make its facilities and all records relating to the Product manufacture available to the Regulatory Authorities at times agreed with such authorities and shall notify Savient if the Regulatory Authority begins or schedules an inspection of Enzon’s records, facilities, or manufacturing processes related to the manufacture of Product and provide Savient access to any documentation related to or resulting from the inspection as described in the Quality Agreement.

5.7 Debarment. Enzon hereby certifies it does not and shall not employ, contract with or retain any person directly or indirectly to perform services under this Agreement if such person is debarred under 21 U.S.C. 335a (a) or (b) or other equivalent laws, rules, regulations or standards of any other relevant jurisdiction.

5.8 Regulatory Filings. Enzon will cooperate in providing to Savient any non-confidential information in its control relating to this Agreement or the Product that Savient may reasonably require in connection with its regulatory or governmental filings, provided that such information shall be provided in whatever form held by Enzon. If applicable, Enzon will provide a letter permitting applicable Regulatory Authority to reference its relevant drug master file.

5.9 Product and Process. Enzon provides services to its customers on a contractual fee-for-service basis. Enzon warrants that it will perform the Services with due care and in accordance with agreed upon protocols and/or specifications, the terms of this Agreement and any Work Plan hereunder, generally prevailing industry standards and Applicable Laws. Enzon warrants that its fill/finish process does not and will not infringe on the rights of any third parties.

OF SAVIENT:

5.10 Authority. Savient represents and warrants that it has full authority to enter into this Agreement.

5.11 Savient-supplied Materials. Savient represents, warrants and covenants as follows: (i) all Savient-supplied Materials will be supplied not later than four (4) weeks prior to a scheduled manufacturing date, as communicated to Savient pursuant to Section 3.4(a), so as to enable Enzon to complete manufacture and delivery of the Product in accordance with all forecasts and firm purchase orders submitted by Savient and accepted by Enzon; (ii) all Savient-supplied Materials shall meet all relevant specifications, (iii) Savient shall take sole and exclusive responsibility for the quality and sufficient supply of all such Savient-supplied Materials, including responsibility for all testing and inspection of the same except to the extent (if any) that Savient and Enzon agree that Enzon shall perform any such testing and/or inspections in any Work Plan to this Agreement, and (iv) Enzon shall have no liability for a loss of Savient-supplied Materials except as set forth in Section 11.4.

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5.12 IP Rights. Savient represents, warrants and covenants that Savient has all the rights necessary, including the rights to the Savient Trademarks, to permit Enzon to perform the Services hereunder without infringing the intellectual property rights of any third party.

5.13 Debarment. Savient hereby certifies it does not and shall not employ, contract with or retain any person directly or indirectly to perform services under this Agreement if such person is debarred under 21 U.S.C. 335a (a) or (b) or other equivalent laws, rules, regulations or standards of any other relevant jurisdiction.

Section 6. ADDITIONAL PRODUCT SUPPLY TERMS

6.1 Delivery. Delivery terms shall be FCA (Incoterms 2000) Enzon’s manufacturing facility in Indianapolis, Indiana (or such other facility as the Parties may agree upon); Product shall be delivered in accordance with the timeframe set forth in the applicable purchase order. Title to Product and Savient-supplied Materials shall remain vested with Savient at all times.

6.2 Rejected Goods; Failure of Supply.

(a) Except as provided for in Section 11.4, Savient’s sole remedy for breach of Enzon’s warranty in Section 5.9 shall be to require Enzon to re-perform the relevant services at Enzon’s cost.

(b) Concurrent with Enzon’s delivery to Savient of any Product contemplated hereunder, Enzon shall provide to Savient a written, executed CofA demonstrating compliance of Product with all relevant Specifications; such CofA may be transmitted to Savient via facsimile or electronic mail. Promptly following receipt of Product, Savient shall have the right but not the obligation to test such Product to determine compliance with the Specifications. Savient shall notify Enzon in writing of any rejection of Product based on any claim that the Product fails to meet Specifications within thirty (30) days of delivery, after which point all unrejected Product shall be deemed accepted. Any rightly rejected Product that does not meet the Specifications shall, at Enzon’s sole discretion and expense, either (i) be returned to Enzon within a reasonable period of time and relabeled or reworked as permitted in the Marketing Authorizations and Specifications, if permitted by the Applicable Laws, or (ii) be destroyed in accordance with Applicable Laws.

(c) In the event that Enzon believes that Product has been incorrectly rejected, Enzon may require that Savient provide to it Product samples for testing. Enzon may retain and test the samples of Product retained by it. In the event of a discrepancy between Savient’s and Enzon’s test results such that one Party’s test results fall within relevant Specifications and the other Party’s test results fall outside the relevant Specifications, or there exists a dispute between the Parties over the extent to which such failure is attributable to a given Party, the Parties shall cause an independent laboratory or appropriate expert promptly to review records, test data and perform comparative tests and/or analyses on samples of the alleged defective Product. Such independent laboratory or expert shall be mutually agreed upon by the Parties, and shall be of such national repute as to allow both Parties to reasonably agree that the independent laboratory

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or expert is sufficiently qualified to perform such analyses. The independent laboratory’s results shall be in writing and shall be final and binding save for manifest error. Unless otherwise agreed to by the Parties in writing, the costs associated with such testing and review shall be borne by the Party against whom the independent laboratory rules.

(d) Enzon shall replace any rightly rejected Product as promptly as practicable, using Commercially Reasonable Efforts to make available manufacturing capacity, after the notice of such rejection, and in any case as soon as reasonably possible after receiving such notice, provided that Savient shall provide to Enzon sufficient quantities of Savient-supplied Materials at no additional cost to Enzon. However, if the failure to meet Specifications is due to defects in the Savient-supplied Materials (where such defects are not due to any failure on the part of Enzon), or any other cause except Enzon’s failure to perform the Services in accordance with this Agreement, Savient will pay the full cost of the rejected batch.

(e) The Parties agree that Savient shall supply variable amounts of Bulk Product to Enzon for purposes of allowing Enzon to provide Services to fill and finish such Bulk Product into Product; the Parties further agree that.if Savient supplies to Enzon fifteen kilograms (15kg) or more of Bulk Product for a single filling run that Enzon shall produce not less than ten thousand five hundred (10,500) vials of Product; if Enzon should fail to produce at least ten thousand five hundred (10,500) vials of Product as indicated herein, then Savient shall pay to Enzon an amount equal to the per-vial price indicated on the attached Exhibit C multiplied by the actual number of vials produced. In the event that Savient supplies less than fifteen kilograms (15kg) of Bulk Product to Enzon for a single filling run, then Savient shall pay to Enzon the minimum batch price indicated on Exhibit C attached hereto.

6.3 Recall; Withdrawal; Modification; Complaints. Savient shall be responsible for the cost of and all losses associated with any recall or product withdrawal or modification; provided, however, that to the extent that any such recall or product withdrawal is due to the gross negligence or willful misconduct on the part of Enzon, then Enzon shall reimburse Savient for all direct costs associated with such recall or withdrawal, in addition to any other rights or remedies Savient may have, but in any case only to the extent attributable to Enzon. Enzon shall reasonably cooperate with Savient in connection with any recall, withdrawal, or modification, at the expense of Savient except as otherwise provided for herein. Savient shall share with Enzon all relevant information relating to any such recall, withdrawal, or modification. In addition, Savient shall also promptly and fully detail for Enzon any Product complaints or Field Alerts it receives insofar as any such complaints relate to the Services rendered by Enzon hereunder. Enzon shall cooperate with Savient to report any adverse events of which it becomes aware in accordance with the terms of the Quality Agreement. Enzon shall only be responsible for the testing and protocols set forth in the Work Plan and Exhibits A and B, as applicable, and Savient is responsible for all other testing and protocols.

Section 7. TERM AND TERMINATION

7.1 Term. This Agreement shall commence on the Effective Date and shall remain in full force and effect unless terminated as provided herein.

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7.2 Termination. Subsequent to the first (1^st) anniversary of the Effective Date of this Agreement, this Agreement may be terminated by either party at any time by giving at least twenty-four (24) months prior written notice to the other party as follows: either party may give notice to the other party thirty (30) days prior to every such anniversary date. During the 24-month period between the notice of termination and the effectiveness of such termination, the Parties shall continue to cooperate with each other in good faith to effectuate the purpose of this Agreement; specifically, and without limitation, Savient may place, and Enzon shall accept and fulfill, forecasts and purchase orders for the manufacture of Product, all in accordance with the terms and conditions of this Agreement. During the pendency of the effective date of the termination notice, Savient shall not reduce the final six (6) months of any previously submitted forecast to zero (0) batches except if Enzon is the party which is terminating this Agreement. For the purposes of clarification only, the prohibition contained in the immediately preceding sentence shall not apply where the final six (6) months of the most recently supplied forecast were identified as having zero (0) batches at the time that the notice of termination was provided. Except as provided for herein, if, at any time subsequent to the tendering of a notice of termination pursuant to the terms herein, Savient reduces any of the final six months of the forecast to zero (0) batches, Savient shall pay Enzon a termination fee of $55,000 per batch. Enzon shall use Commercially Reasonable Efforts to minimize the incurrence of any additional charges, fees or expenses which will not be utilized in the manufacture of the Product on behalf of Savient prior to the effective date of termination of this Agreement. Within thirty (30) days of the effective date of the termination of this Agreement, Enzon shall provide to Savient any case reports, analyses and other deliverables which were prepared by Enzon, if any, prior to the date of termination and Enzon shall also provide Savient with a written itemized statement of all Services performed by it hereunder and all costs incurred or for which Enzon is obligated. In the event of termination pursuant to this Section 7.2, Enzon shall be entitled to full payment for the Services actually rendered by it hereunder and all non-cancelable costs incurred through the date of termination. In addition to the foregoing, if Savient terminates this Agreement or any Work Plan pursuant to this Section 7.2, Savient shall pay any cancellation or postponement amounts set forth in Section 3.4(d); provided, however, that Enzon shall use Commercially Reasonable Efforts to mitigate any such cancellation or postponement amounts by scheduling, to the extent practicable, additional third party manufacturing activities, with any such mitigation accruing to the benefit of Savient and proportionately reducing any cancellation or postponement amounts otherwise owing. If the amount already paid by Savient to Enzon exceeds such amounts payable hereunder, Enzon shall refund such excess to Savient and if such amounts payable are greater than the amounts already paid by Savient to Enzon, then Savient shall pay the amount of such shortfall to Enzon.

7.3 This Agreement may also be terminated by either party upon material default in performance of the other party, provided that any defaulting party shall be given not less than ninety (90) days’ prior written notice of default and the opportunity to cure the default during such period. In the event this Agreement is terminated pursuant to this Section 7.3, Enzon shall be entitled to full payment for the services provided by it hereunder (as set forth in any Work Plan(s) made a part hereof) and all costs incurred through the date of termination or for which Enzon is obligated as of the date of termination; provided, however, that if Savient terminates this Agreement pursuant to this Section 7.3 then, anything to the contrary notwithstanding,

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Enzon shall be entitled only to payment for such Services which it actually rendered on behalf of Savient through the effective date of termination. In addition to the foregoing, if Enzon terminates this Agreement or any Work Plan pursuant to this Section 7.3, Savient shall pay any applicable cancellation or postponement amounts set forth in Section 3.4(d); provided, however, that Enzon shall use Commercially Reasonable Efforts to mitigate any such cancellation or postponement amounts by scheduling, to the extent practicable, additional third party manufacturing activities, with any such mitigation accruing to the benefit of Savient and proportionately reducing any cancellation or postponement amounts otherwise owing. If the amount previously paid by Savient exceeds such amount payable hereunder, the excess shall be refunded to Savient and if such amounts payable are greater than the amounts already paid by Savient to Enzon, then Savient shall pay the amount of such shortfall to Enzon.

7.4 In the event that Savient’s BLA for the Product is not approved by the FDA, and where such disapproval is final or otherwise not appealed by Savient, then either Party shall have the right, but not the obligation, to terminate this Agreement upon the provision of thirty (30) days notice to the other Party. In the event this Agreement is terminated pursuant to this Section 7.4, Savient shall pay Enzon for packaging and labeling materials, any unpaid amounts for manufactured batches, and any reservation fees or other applicable cancellation or termination fees, provided that Enzon shall use Commercially Reasonable Efforts to mitigate such fees.

7.5 In the event that Savient’s BLA for the Product has not been approved by April 2009, then this Agreement shall continue in force and effect but any deliverables and obligations of the parties shall be held in abeyance for up to 18 months so as to allow Savient to address any findings in such approvable letter issued by the FDA and resubmit the subject BLA. Savient shall pay any cancellation or postponement amounts set forth in Section 3; provided, however, that Enzon shall use Commercially Reasonable Efforts to mitigate any such postponement amounts by scheduling, to the extent practicable, additional third party manufacturing activities, with any such mitigation accruing to the benefit of Savient and proportionately reducing any cancellation or postponement amounts otherwise owing. Savient shall provide to Enzon notice of its receipt of an approvable letter from the FDA within five (5) business days of its receipt of same. After said 18 months lapses, Enzon shall have the right to terminate this agreement immediately and with no penalty, and Savient shall pay all applicable cancellation and postponement amounts as set forth .

7.6 This Agreement may be terminated immediately, upon written notice, upon either party’s bankruptcy (voluntary or involuntary), insolvency, or placing of either party’s business in the hands of a receiver.

7.7 Survival. The rights and obligations of each Party which by their nature survive the termination or expiration of this Agreement shall survive the termination or expiration of this Agreement, including Sections 4, 6, 7, 8, 9, 10, 11, 14, and 15 (to the extent relevant). In addition, Enzon hereby acknowledges that neither expiration nor termination of this Agreement shall affect in any manner Savient’s right to manufacture and sell, or have manufactured and sold, the Product.

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Section 8. INTELLECTUAL PROPERTY

8.1 Subject to Section 8.2, all Savient Intellectual Property supplied to Enzon or developed by Enzon in the course of performing the Services hereunder are owned by Savient. All information developed by Enzon and related to the Bulk Product or the Product shall be disclosed to Savient promptly upon discovery or development by Enzon. Savient shall have the right to make any use of such information and Enzon agrees to execute any documents which may be reasonably required to effectuate any assignment of inventorship contemplated by this provision, at Savient’s expense. Following completion of the Services outlined in any Work Plan, Enzon will insure the return of all client data or other materials furnished to Enzon. Subject to Section 8.2, all intellectual property rights subsisting in or relating to any calculations, data, methods, specifications, papers, documents, and any other items, material or information arising from the performance of the Services by Enzon under this Agreement are vested in and are the sole property of Savient and Enzon shall execute any and all documents reasonably requested by Savient in order to effectuate the intent of this provision, at Savient’s expense.

8.2 Enzon shall own all rights to any invention (whether or not patentable) relating to manufacturing and analytical methods and processes developed by Enzon in connection with Services performed hereunder that have general use in biopharmaceutical manufacturing, to the extent not specific to Savient’s Product, and to the extent not directed to or derived from any pre-existing Savient Intellectual Property or MVP Confidential Information (“Process Invention”); provided that the provisions of this Section 8.2 shall not apply to manufacturing and analytical methods and processes developed by Enzon at the direction of Savient. Except as specifically prohibited with respect to MVP Confidential Information, Enzon reserves the right to use data developed during the course of performing Services hereunder to support applications, assignments or other instruments necessary to apply for and obtain patent or other intellectual property protection with respect to Process Inventions so long as no information which Enzon is required to keep confidential under this Agreement or any other previously executed agreement between the Parties relating to confidentiality of information is disclosed in any such application, assignment, or other instrument without the prior consent of Savient (not to be unreasonably withheld). For Process Inventions developed by Enzon in connection with performing services hereunder, Enzon will grant to Savient a perpetual, world-wide, royalty-free, non-exclusive license for Savient to use such Process Inventions in the development and manufacture of the Savient Products.

Section 9. CONFIDENTIALITY

9.1 For the duration of the Agreement and five (5) years thereafter with respect to Savient Confidential Information (as defined below), or, in the case of MVP Confidential Information (as defined below), for twenty (20) years from the Effective Date of the Agreement, Enzon will not disclose, without Savient’s written permission, any such Savient Confidential Information or MVP Confidential Information, unless such disclosure: (i) is to an Affiliate, agent, employee or consultant of Enzon that is under a similar obligation to keep such information confidential and such disclosure is reasonably necessary for the performance of the Services contemplated herein; (ii) is or becomes publicly available through no fault of Enzon;

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(iii) is disclosed by a third party entitled to disclose it; (iv) is already known to Enzon as shown by its prior written records; or, (v) is required by any law, rule, regulation, order, decision, decree, subpoena or other legal process to be disclosed or in response to a request or order from a regulatory agency. If such disclosure is requested by a regulatory agency or legal process, Enzon will make all reasonable efforts to notify Savient of this request promptly prior to any disclosure to permit Savient to oppose such disclosure by appropriate legal action. Enzon shall use reasonable precautions to protect the confidentiality of both Savient Confidential Information and MVP Confidential Information in a manner that is comparable to precautions taken to protect is own proprietary information. As used herein, “MVP Confidential Information” means any Confidential Information that Savient provides, or has provided, to Enzon which is specifically identified in writing as containing Mountain View Pharmaceuticals, Inc.’s proprietary technology for the manufacture of PEGylated uricase (Puricase^®/pegloticase), specifically including the documents referenced in Schedule A of the Second Amendment to the Agreement for Services between Savient and Enzon dated October 31, 2006, which the Parties have agreed to in a letter dated September 12, 2007, as containing Confidential Information belonging to Mountain View Pharmaceuticals, Inc; “Savient Confidential Information” means any Confidential Information provided by Savient to Enzon, with the sole exception of MVP Confidential Information, during the term of the Agreement.

9.2 For the duration of the Agreement and five (5) years thereafter with respect to Savient Confidential Information, or in the case of MVP Confidential Information, for twenty (20) years from the Effective Date of the Agreement, Enzon will not use such Confidential Information except in connection with the performance of Services under the Agreement or any other Agreement between Savient and Enzon related to Savient’s PEGylated uricase (Puricase^®/pegloticase) product and in particular represents and warrants that it will not utilize such Confidential Information in the manufacturing of any other product.

9.3 For twenty (20) years from the Effective Date of the Agreement, Savient will not disclose, without Enzon’s written permission, any Confidential Information belonging to Enzon which is provided to Savient by Enzon during the Term of the Agreement (“Enzon Confidential Information”) unless such disclosure: (i) is to an affiliate, agent, employee or consultant of Savient that is under a similar obligation to keep such information confidential; (ii) is or becomes publicly available through no fault of Savient; (iii) is disclosed by a third party entitled to disclose it; (iv) is already known to Savient as shown by its prior written records; or, (v) is required by any law, rule, regulation, order decision, decree, subpoena or other legal process to be disclosed or in response to a request or order from a regulatory agency. If such disclosure is requested by a regulatory agency or legal process, Savient will make all reasonable efforts to notify Enzon of this request promptly prior to any disclosure to permit Enzon to oppose such disclosure by appropriate legal action. Savient shall use reasonable precautions to protect the confidentiality of Enzon Confidential Information in a manner that is comparable to precautions taken to protect its own proprietary information.

9.4 If either Party shall be obliged to provide testimony or records pertaining to the Confidential Information provided by the other in any legal or administrative proceeding, then the Party which supplied the Confidential Information shall reimburse the other Party for its out-

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of-pocket costs therefore plus an hourly fee for its employees or representatives equal to the internal fully burdened costs of such employee or representative.

9.5 For both Parties, “Confidential Information” shall mean and include, without limitation, such types of information as: inventions, methods, plans, processes, specifications, characteristics, raw data, analyses, equipment design, trade secrets, costs, marketing, sales, and product performance information, including patents and patent applications, grant applications, notes, and memoranda, whether in writing or presented, stored or maintained electronically, magnetically or by other means, which are disclosed by the disclosing Party to the recipient Party in writing or in other tangible form and marked “confidential” or, if disclosed orally (or in some other non-tangible form), are identified as confidential to the recipient Party in writing within sixty (60) days of such disclosure; provided, however, that failure to reduce any verbal disclosure to writing shall not, in and of itself, vitiate the confidential nature of such Confidential Information and provided, further, that for the purposes of this Agreement, Confidential Information shall include any and all such information exchanged between the Parties prior to the Effective Date of this Agreement pursuant to the Confidentiality Agreement between the Parties dated July 24, 2006.”

Section 10. INSURANCE

Each Party shall for the term of this Agreement and for two (2) years after the last Product is delivered, obtain and maintain at its own cost and expense from a qualified insurance company, comprehensive general liability insurance including, but not limited to, contractual liability coverage and standard product liability coverage in an amount commensurate with industry standards. Savient shall for the term of this Agreement and for two (2) years after the last Product is delivered, obtain and maintain at its own cost and expense from a qualified insurance Savient, insurance coverage for losses of inventory at Enzon’s facility prior to, and following manufacture of the Product. At a Party’s request, the other Party shall provide it with proof of such coverage.

Section 11. INDEMNIFICATION AND LIMITS OF LIABILITY

11.1 Without limiting Enzon’s rights under law or in equity, Savient agrees to indemnify and hold harmless Enzon and its employees, directors and agents from and against any loss, damage, cost and expense (including without limitation attorneys’ fees and expenses) incurred in connection with any claims, proceedings or investigations arising directly or indirectly from (a) the manufacture, promotion, marketing, distribution or sale of the Product, (b) use or exposure to Product or any material provided to Enzon by Savient, (c) use of any Savient Intellectual Property provided by Savient to Enzon (but only in cases where Savient has provided such Savient Intellectual Property for Enzon’s use) or any infringement of the intellectual property rights of any third party related to the Product, or (d) any breach of Savient’s representations and/or warranties, except to the extent any such claim is the result of Enzon’s gross negligence or willful misconduct.

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11.2 Without limiting Savient’s rights under law or in equity, Enzon agrees to indemnify and hold harmless Savient and its employees, directors and agents from and against any loss, damage, cost and expense (including without limitation attorneys’ fees and expenses) incurred in connection with any claims, proceedings or investigations arising out of or in connection with (a) this Agreement and the Product produced and the Services rendered hereunder to the extent that such claim, proceeding or investigation is based on the gross negligence or willful misconduct of Enzon or its employees, (b) any breach of Section 9.2 of this Agreement with respect to MVP Confidential Information, (c) any breach of the representations made by Enzon in the Letter Agreement between Enzon and Savient dated September 12, 2007, attached hereto as Exhibit E; but in any case only to the extent attributable to Enzon.

11.3 Any party seeking indemnification pursuant to this Section 11 (the “Indemnitee”) shall give notice within five (5) days to the party from whom indemnification is sought (the “Indemnitor”) of any claim, proceeding or investigation; provided, however, that any failure to notify the Indemnitor within such five (5) day period shall not negate the rights of indemnification granted hereunder except to the extent that the Indemnitor is actually prejudiced by such delay in notification. The Indemnitee shall cooperate in the defense of such claim, proceeding or investigation, subject to reimbursement by the Indemnitor for all reasonable out-of-pocket expenses. The Indemnitor shall, at its option, assume control of the defense of any such claim, proceeding or investigation. The indemnities set forth in Sections 11.1 and 11.2 shall include amounts paid in settlement provided, however, that no such settlement shall be entered into without the Indemnitor’s consent, which consent shall not be unreasonably withheld.

11.4 As Savient’s sole remedy, Enzon agrees to reimburse Savient up to a maximum of $25,000 per batch, pro-rated over the usable portion of the batch, if applicable, for any loss of Savient-supplied Materials for each batch that does not meet Specifications or was not manufactured in accordance with the Manufacturing Process or cGMP or the requirements of this Agreement, and therefore cannot be released or otherwise utilized for its intended purpose; provided that the loss of such materials can be shown after investigation to be caused solely and directly by: (a) the failure of Enzon to follow its SOP’s; or (b) Enzon’s negligence, gross negligence, willful misconduct, or breach of this Agreement. In addition to this payment, if due to Enzon’s gross negligence, willful misconduct, or breach of this Agreement, Enzon will re-perform the Services as provided in Section 6.2(a) .

11.5 SECTION 11.4 IS SAVIENT’S SOLE AND EXCLUSIVE REMEDY FOR ANY LOSSES OF SAVIENT-SUPPLIED MATERIAL AS A RESULT OF PRODUCT THAT DOES NOT COMPLY WITH THE SPECIFICATIONS OR THE OTHER REQUIRMENTS OF THIS AGREEMENT. UNDER NO CIRCUMSTANCES SHALL ENZON BE LIABLE TO SAVIENT OR ANY THIRD PARTY FOR ANY CONSEQUENTIAL, INDIRECT (INCLUDING LOST REVENUES OR PROFITS), SPECIAL, OR OTHER DAMAGES, AND THE WARRANTY SET FORTH IN SECTION 5.9 IS THE SOLE AND EXCLUSIVE WARRANTY AND IN LIEU OF ANY AND ALL OTHER WARRANTIES RELATING TO THE SERVICES TO BE PERFORMED, EXPRESS OR IMPLIED, INCLUDING, WITHOUT LIMITATION, ANY IMPLIED WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE, OR FOR NON-INFRINGEMENT OF INTELLECTUAL

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PROPERTY RIGHTS. ENZON’S MAXIMUM LIABILITY FOR DAMAGES IN CONNECTION WITH A CLAIM RELATED TO THIS AGREEMENT, REGARDLESS OF THE CAUSE OF ACTION, WILL NOT EXCEED THE SUM TOTAL OF THE AMOUNTS PAID BY SAVIENT TO ENZON IN THE PRECEEDING TWELVE (12) MONTHS.

EXCEPT AS EXPRESSLY STATED HEREIN, NEITHER PARTY PROVIDES TO THE OTHER PARTY HERETO ANY WARRANTIES, EXPRESS OR IMPLIED, WITH RESPECT TO THE SERVICES PROVIDED HEREUNDER, AND ALL SUCH WARRANTIES, EXPRESS OR IMPLIED, INCLUDING WITHOUT LIMITATION ANY IMPLIED WARRANTIES OF MERCHANTIBILITY OR FITNESS FOR A PARTICULAR PURPOSE ARE WAIVED, OTHER THAN AGREED HEREIN. WITHOUT LIMITING THE PROVISIONS OF SECTION 5.9 AND 6.2(e), ENZON MAKES NO WARRANTIES THAT THE EXECUTION OF THIS AGREEMENT WILL RESULT IN ANY SPECIFIC QUANTITY OR QUALITY OF PRODUCT.

Section 12. PUBLICITY AND PUBLICATIONS

Neither Savient nor Enzon shall make any news release or other public statement, whether to the press or otherwise, disclosing the existence of this Agreement, the terms thereof, or of any amendment thereto without the prior written approval of the other Party, except as required by Applicable Laws including, without limitation, those regulations promulgated by the United States Securities and Exchange Commission.

Section 13. FORCE MAJEURE AND CHANGE IN CIRCUMSTANCES

If either Party shall be delayed or hindered in or prevented from the performance of any act required hereunder by reason of strike, lockouts, labor troubles, restrictive governmental or judicial orders or decrees, riots, insurrection, war, terrorist acts, acts of God, inclement weather, or other reason or cause reasonably beyond such Party’s control (each a “Force Majeure”), then performance of such act shall be excused for the period of such Force Majeure. The Party affected by the Force Majeure shall provide notice to the other of the commencement and termination of the Force Majeure. Should a Force Majeure continue for more than three (3) months, the Party unaffected by the Force Majeure may terminate this Agreement upon prior written notice to the affected Party. If the Force Majeure equally affects the ability of each Party to perform under this Agreement, then such termination shall only be by mutual written agreement. In the event of any other type of unforeseen material change in circumstances (that does not qualify as force majeure), both parties agree to negotiate in good faith to find a commercially reasonable solution.

Section 14. NOTICES

14.1 All administrative communications provided for in this Agreement shall be sent via first class mail (subject to Section 14.2 below), postage prepaid, addressed to the respective parties as follows:

To Enzon: To Savient

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Executive Vice President, Operations	Vice President, Technical Operations
Enzon Pharmaceuticals, Inc.	Savient Pharmaceuticals, Inc.
685 Route 202/206	One Tower Center, 14th Floor
Bridgewater, New Jersey 08807	East Brunswick, NJ 08816
United States of America	United States of America
With a copy to:
Legal Department	General Counsel
Enzon Pharmaceuticals, Inc.	Savient Pharmaceuticals, Inc.
685 Route 202/206	One Tower Center, 14th Floor
Bridgewater, New Jersey 08807	East Brunswick, NJ 08816
United States of America	USA

14.2 Original documents and other than routine correspondence required under this Agreement shall be sent by certified mail and addressed to the respective parties at the addresses set forth in Section 14.1. All legal notices shall be in writing and sent by certified mail, return receipt requested. Such notices shall be effective on receipt. All routine correspondence between the Parties may be sent via electronic mail, facsimile or by regular mail.

Section 15. MISCELLANEOUS

15.1 Amendments; Assignment. This Agreement, including any Work Plans or other attachments, may not be altered, amended or modified except by a written document signed by both Parties. Enzon will not assign this Agreement without the prior written consent of Savient and any purported assignment in contravention of this Section shall be null and void; provided, however, that either Party may assign this Agreement in connection with the sale of all or substantially all of its assets related to this Agreement or the Services to be provided hereunder; provided, further, that any such successor or assignee assumes and accepts in writing all obligations of the purported assigning party hereunder.

15.2 Subcontracting. Enzon may subcontract or delegate any of its rights or obligations under this Agreement with the prior written authorization of Savient, such authorization not to be unreasonably withheld. Enzon shall cause any subcontractor to be subject by contract to the same restrictions, exceptions, obligations, reports, termination provisions and other provisions contained in this Agreement.

15.3 Successors; Assigns. This Agreement shall be binding upon and inure to the benefit of the Parties hereto and each of their respective successors and permitted assigns.

15.4 Severability. All agreements and covenants contained herein are severable, and in the event any of them shall be held to be invalid by any competent court, this Agreement shall be interpreted as if such invalid agreements or covenants were not contained herein.

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15.5 Entire Agreement. This Agreement, including the attached Work Plans, constitutes the entire agreement between the Parties and supersedes all prior communications, representations, or agreements, either verbal or written between the Parties which are specifically related to the subject matter contemplated herein; anything to the contrary notwithstanding, any previously executed Confidentiality and Nondisclosure Agreement shall remain valid and enforceable in accordance with its terms. Each Party confirms that it is not relying on any representations or warranties of the other Party except as specifically set forth herein.

15.6 Independent Contractor. This Agreement shall not be deemed to create any partnership, joint venture, or agency relationship between the Parties. Each Party shall act hereunder as an independent contractor and its agents and employees shall have no right or authority under this Agreement to assume or create any obligation on behalf of, or in the name of, the other Party. All persons employed by a Party shall be employees of such Party and not of the other Party, and all costs and obligations incurred by reason of any such employment shall be for the account and expense of such Party.

15.7 Waiver. The waiver by either Party of any right hereunder shall not be deemed a waiver of any other right hereunder.

15.8 Counterparts. This Agreement may be executed in two (2) or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.

15.9 Headings. The headings used in this Agreement are for convenience only and are not a part of this Agreement.

15.10 Governing Law. This Agreement shall be construed and enforced in accordance with the laws of the State of New Jersey, without application of its principles of conflict of laws.

15.11 Audits. Once each calendar year during the term of this Agreement, Savient and its agents and designees shall have the right to audit Enzon’s facilities, systems, records solely related to this Agreement or the Product. Such audits may be conducted upon reasonable notice during the term of this Agreement, so long as (i) all auditors have entered into confidentiality agreements relating to the materials to be reviewed, (ii) no materials are removed from the premises of Enzon, provided, however, that Savient may make and retain copies of Enzon materials as may be reasonably necessary solely for purposes of completing the contemplated audit and any such materials shall be considered confidential, and (iii) a copy of all findings is provided to Enzon. All costs for such audits shall be paid by Savient. For the avoidance of doubt, pre-approval inspections shall be considered an audit under this Section 15.11. Anything to the contrary notwithstanding, in the event that an audit is required due to batch failures or because the Services are not rendered in accordance with the terms of this Agreement (including any Work Plan), then such for-cause audit shall not count towards the annual audit provided for herein.

15.12 Nonsolicitation. For the term of this Agreement, and for twelve (12) months following termination of this Agreement, for any reason, neither Savient nor Enzon nor any of

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their employees or agents shall, directly or indirectly, solicit any employees of the other, who have been involved in the Services, unless otherwise approved by the other party.

IN WITNESS WHEREOF, each of the Parties hereto has caused this Commercial Supply Agreement to be executed by its duly authorized representative as of the date written above.

ENZON PHARMACEUTICALS, INC.		SAVIENT PHARMACEUTICALS, INC.
By:	/s/ Ralph del Campo	By:	/s/ Philip K. Yachmetz
	Ralph del Campo		Philip K. Yachmetz
	EVP - Operations		EVP & Chief Business Officer

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Exhibit A

Work Plan

Enzon will fill, inspect, package and test the Product using the components defined below and the process as outlined on the following Process Flow Diagram.

COMPONENTS:

Bulk Product	Supplier	Form	Concentration in Bulk Formulation	Storage Conditions	Special Handling
Bulk Product formulated, prefiltered peg-uricase	Savient through contract manufacturers	0.22 micron filtered liquid	8 mg/mL	2-8°C	Prevent from freezing

CONTAINER CLOSURE COMPONENTS:

Description	Enzon Part #	Manufacturer/Part #		Height, min	OD, mm
2 mL, 13 mm Vial	530-101	Alcan/2702-B9BA		31.5-32.5 mm	14.5-15.00 mm
13 mm Stopper	520-010	West Pharmaceutical Services/1012-4668	STOPPER, 13MM, 4416/50, GREY, FEP
Seal, 13 mm, FO, AL Purple #0527	510-002	54130024

Packaging Components
Description	Enzon Part #	Supplier Part #
Carton, Puricase USA	C49011USA	C49011USA
Carton Label, Puricase USA	CL49011USA	CL49011USA
Vial Holder, Puricase USA	H49011USA	H49011USA
Package Insert, Puricase USA	I49011USA	I49011USA
Packer, Puricase USA	P49011USA	P49011USA
Vial Label, Puricase USA	V49011USA	V49011USA

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Exhibit B

Final Product Release Specifications

Parameter	Test Method	Specification
Endotoxin	ACM-0073	<80 EU/mL
Sterility	ACM-0071	Sterile
Particulates	ACM-0070 (Light Obscuration method)	Size >10 µm: <6000 particles per vial Size >25 µm: <600particles per vial

In-Process Product Specifications

Parameter	Test Method	Specification
Bioburden (in-process only)	ACM-0072	<10 CFU/100 mL
Identity	ACM-1900	Positive for Urate Oxidase activity
Bulk Sterility	ACM-007	Sterile

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Exhibit C

Product Price

Commercial Manufacturing

Price

Activitites Included •    Prepare Master Batch Records •    Materials to be packed with one vial and product insert per carton. •    Commercial Batch Prices are effective on 1 January 2008, and are effective through 31 December 2009. •    Enzon reserves the right to increase prices pursuant to the terms of the Supply Agreement. •    Release testing of batches; provision of CoA •    Supply temperature recorders to Drug Substance manufacturer for shipping. Download and provide temperature data to Savient.

$20.80 per vial The minimum price per batch of $218,400.00 shall apply in accordance with the terms of Section 6.2(e) of the Agreement.

Puricase Final Drug Product Stability test Schedule at 5°C ±3°C

Endotoxin and Sterility At Each Pull Point

Price is per each lot tested

Setup & initiation Fee	Initial Test		3 Months		6 Months		12 Months		24 Months		36 Months		Total Cost
$1,900	$	5,150		N/T		N/T	$	5,150	$	5,150	$	5,150	$	22,500

Puricase Final Drug Product Stability test Schedule at 25°C ±2°C and 70% ±5% Relative Humidity

Endotoxin and Sterility At Each Pull Point

Price is per each lot tested

Setup & initiation Fee	Initial Test	1 Months		2 Months		3 Months		6 Months		Total Cost
$1,900		$	5,150	$	5,150	$	5,150	$	5,150	$	22,500

Stability studies will be conducted on batches requested in advance by Savient. Prices will be in effect for stability studies initiated on 2008 or 2009 and subject to review at the end of 2009.

Professional Services Fee Structure	Price
•    One (1) man-hour	$195.00 Enzon to update prices on or about January 1 of every year

Terms: Purchase Orders are required for each scheduled batch.

• Invoice for vials produced will be sent upon shipment of materials. Payment due net 30 days.

• Delivery terms are FCA Enzon’s manufacturing facility in Indianapolis, IN

• Cancelled and postoponed batches shall be billed in accordance with Section 3.4(d).

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Exhibit D

Product Forecast

Savient has provided the following forecast for the 28 month period beginning October 2008.

(See following page.)

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Exhibit E

Letter Agreement

(see attached)

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September 12, 2007 Our Ref: pky/jmw

Enzon Pharmaceuticals, Inc.

Attn: Thomas J. Puskar

685 Route 202/206

Bridgewater, New Jersey 08807

Re: Second Amendment to Agreement for Services (“Agreement”) between Savient Pharmaceuticals, Inc. (“Savient”) and Enzon Pharmaceuticals, Inc. (“Enzon”) dated October 31, 2006 and as amended on June 15, 2007

Dear Mr. Puskar:

Pursuant to Section 13,01 of the Agreement, Savient and Enzon hereby agree to amend the Agreement by repealing Section 4: Confidentiality and replacing it as follows:

“4.01: For the duration of the Agreement and five (5) years thereafter with respect to Savient Confidential Information (as defined below), or, in the case of MVP Confidential Information (as defined below), for twenty (20) years from the Effective Date of the Agreement, Enzon will not disclose, without Savient’s written permission, any such Savient Confidential Information or MVP Confidential Information, unless such disclosure: (i) is to an affiliate, agent, employee or consultant of Enzon that is under a similar obligation to keep such information confidential and such disclosure is reasonably necessary for the performance of the Services contemplated herein; (ii) is or becomes publicly available through no fault of Enzon; (iii) is disclosed by a third party entitled to disclose it; (iv) is already known to Enzon as shown by its prior written records; or, (v) is required by any law, rule, regulation, order decision, decree, subpoena or other legal process to be disclosed or in response to a request or order from a regulatory agency. If such disclosure is requested by a regulatory agency or legal process, Enzon will make all reasonable efforts to notify Savient of this request promptly prior to any disclosure to permit Savient to oppose such disclosure by appropriate legal action. Enzon shall use reasonable precautions to protect the confidentiality of both Savient Confidential Information and MVP Confidential Information in a manner that is comparable to precautions taken to protect its own proprietary information. As used herein, “MVP Confidential Information” means any Confidential Information that Savient provides, or has provided, to Enzon which is specifically identified in writing as containing Mountain View Pharmaceuticals, Inc.’s proprietary technology for the manufacture of PEGylated uricase

Cont.../…

(Puricase^®/pegloticase), specifically including the documents referenced in the attached Schedule A, which the Parties have agreed to in a letter dated September 12, 2007, as containing Confidential Information belonging to Mountain View Pharmaceuticals, Inc; “Savient Confidential Information” means any Confidential Information provided by Savient to Enzon, with the sole exception of MVP Confidential Information, during the Term of the Agreement,

4.02 For the duration of the Agreement and five (5) years thereafter with respect to Savient Confidential Information, or in the case of MVP Confidential Information, for twenty (20) years from the Effective Date of the Agreement, Enzon will not use such Confidential Information except in connection with the performance of Services under the Agreement or any other Agreement between Savient and Enzon related to Savient’s PEGylated uricase (Puricase^®/pegloticase) product and in particular represents and warrants that it will not utilize such Confidential Information in the manufacturing of any other product.

4.03 For twenty (20) years from the Effective Date of the Agreement, Savient will not disclose, without Enzon’s written permission, any Confidential Information belonging to Enzon which is provided to Savient by Enzon during the Term of the Agreement (“Enzon Confidential Information”) unless such disclosure: (i) is to an affiliate, agent, employee or consultant of Savient that is under a similar obligation to keep such information confidential; (ii) is or becomes publicly available through no fault of Savient; (iii) is disclosed by a third party entitled to disclose it; (iv) is already known to Savient as shown by its prior written records; or, (v) is required by any law, rule, regulation, order decision, decree, subpoena or other legal process to be disclosed or in response to a request or order from a regulatory agency. If such disclosure is requested by a regulatory agency or legal process, Savient will make all reasonable efforts to notify Enzon of this request promptly prior to any disclosure to permit Enzon to oppose such disclosure by appropriate legal action. Savient shall use reasonable precautions to protect the confidentiality of Enzon Confidential Information in a manner that is comparable to precautions taken to protect its own proprietary information.

4.04 If either Party shall be obliged to provide testimony or records pertaining to the Confidential Information provided by the other in any legal or administrative proceeding, then the Party which supplied the Confidential Information shall reimburse the other Party for its out-of-pocket costs therefore plus an hourly fee for its employees or representatives equal to the internal fully burdened costs of such employee or representative.

Cont.../…

2

4.05. For both Parties, “Confidential Information” shall mean and include, without limitation, such types of information as: inventions, methods, plans, processes, specifications, characteristics, raw data, analyses, equipment design, trade secrets, costs, marketing, sales, and product performance information, including patents and patent applications, grant applications, notes, and memoranda, whether in writing or presented, stored or maintained electronically, magnetically or by other means, which are disclosed by the disclosing Party to the recipient Party in writing or in other tangible form and marked “confidential” or, if disclosed orally (or in some other non-tangible form), are identified as confidential to the recipient Party in writing within sixty (60) days of such disclosure; provided, however, that failure to reduce any verbal disclosure to writing shall not, in and of itself, vitiate the confidential nature of such Confidential Information and provided, further, that for the purposes of this Agreement, Confidential Information shall include any and all such information exchanged between the Parties prior to the effective date of this Agreement pursuant to the Confidentiality Agreement between the Parties dated July 24, 2006.”

To signify your acceptance of this Amendment, kindly countersign and return one copy to my attention.

Should you have any questions, please do not hesitate to contact John Petrolino at (732) 565-4655.

Very truly yours,

/s/ Philip K. Yachmetz

Philip K. Yechmetz

Executive Vice President

Chief Business Officer

I hereby agree to the terms and conditions contained herein.

Enzon Pharmaceuticals, Inc.

By:	/s/ Ralph del Campo
Name:	Ralph del Campo
Title:	EVP Technical Operations
Date:	9/17/07

3

SCHEDULE A

List of Confidential Documents identified pursuant to

Section 4.01 of this Agreement in the letter of September 12, 2007

1. 01V398-3.pdf - Report on the validation of the kinetic turbidimetric method for measuring endotoxin.

2. 03V715-2.pdf - Report on the validation of the KT Endotoxin method using a plate reader

3. 04-68-500.pdf SOP for the endotoxin method.

4. 04-68-275 - UV Activity Assay.

4

Exhibit F

QUALITY AGREEMENT

Quality Technical Agreement for:

PRODUCT: Puricase^® (PEG-Uricase)

DOSAGE/FORM: 8 mg/ml per vial

This Quality Agreement shall be read in conjunction with a commercial Supply Agreement between ENZON and SAVIENT (“Supply Agreement”), dated as of October 16, 2008 and is incorporated into the Supply Agreement. Capitalized terms not defined herein shall have the respective meanings set forth in the Supply Agreement. The effective date of this Quality Agreement shall be the Effective Date of the Supply Agreement.

This Quality Agreement defines the duties of ENZON and SAVIENT for the contract pharmaceutical manufacture of Product. In particular this Quality Agreement clearly states who is responsible for the cGMP aspects of manufacturing and specifies the way in which the Party releasing Product for sale ensures that the Product complies with the approved Product Specifications (defined below) and the Marketing Authorizations (defined below).

This Quality Agreement takes the form of a detailed checklist of all the activities associated with pharmaceutical production, analysis, release, and distribution. Responsibility for each activity is assigned to either ENZON or SAVIENT in the appropriate box in the Delegation Responsibility Checklist which follows.

In order to provide better quality assurance, ENZON will perform the activities defined herein in accordance with its Standard Operating Procedures (defined below) to the extent that a Standard Operating Procedure is applicable to such activity.

This Agreement is subject to the terms of the Supply Agreement. A breach of this Quality Agreement shall be deemed a breach of the Supply Agreement. In the event of a conflict between this Quality Agreement and the Supply Agreement, the Supply Agreement shall control.

This Quality Agreement is intended to comply with the guidance and directives set forth in the current versions and effective amendments of (I) FDA Guidance for Industry, Cooperative Manufacturing Arrangements for Licensed Biologics, August 1999; (ii) 21 CFR 210 & 211 and applicable portions of 21 CFR 600 through 610; and (iii) European Commission Directive 91/356 down the principles and guidelines of good manufacturing practice for medicinal Products for human use. This will be made accessible to relevant regulatory authorities if required by them.

[signature page follows]

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The Parties have caused their duly authorized representatives to executed this Quality Agreement, effective as of October 16, 2008.

SAVIENT PHARMACEUTICALS, Inc.	ENZON PHARMACEUTICALS, Inc.
/s/ Robert Lamm	/s/ Christian W. Dreyer
Signature	Signature
Robert Lamm	Christian W. Dreyer
Printed Name	Printed Name
SVP, QA, RA	V.P. QOP
Title	Title
10/16/08	10/21/08
Date	Date

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For purposes of this Quality Agreement, the following definitions shall apply:

A. “FDA” shall mean the United States Food and Drug Administration, and any successor entity thereto.

B. “Marketing Application” shall mean an application for Product marketing authorization which has not yet been approved by the FDA or other regulatory authority, including, without limitation, FDA New Drug Application, FDA Biologics License Application, and other similar marketing applications promulgated by regulatory authorities.

C. “Marketing Authorizations” shall mean any approved application for Product marketing authorization, including, without limitation, FDA New Drug Application, FDA Biologics License Application, and other similar marketing authorizations promulgated by international regulatory authorities.

D. “Process” or “Processing” shall mean the sterile compounding, filling, producing and/or packaging of the raw materials into Product in accordance with the Product Specifications and the terms and conditions set forth in the Supply Agreement and this Quality Agreement.

E. “Product Specifications” shall mean the procedures, requirements, specifications, standards, quality control testing, other data and scope of Supply related to the Product, as set forth in the Project Plan and/or attached hereto. ENZON shall not release Product if these parameters are not met and investigation shows the non-complying parameter to be a valid test result.

F. “Standard Operating Procedures” or “SOPS” shall mean the standard operating procedures in effect at ENZON which have been approved by ENZON Quality Assurance department and which are applicable to the Processing; provided that all Standard Operating Procedures applicable to the Processing or the Product shall also be approved by SAVIENT.

G. “Bulk Product” shall mean the bulk solution of methoxy-polyethylene glycol (m-PEG) conjugate of uricase supplied by Savient to Enzon pursuant to this agreement.

H. “Business Day” shall mean Monday through Friday excluding government holidays.

I. “Component” shall mean all packaging materials utilized during manufacture, including all primary and secondary packaging materials.

J. “Deviation” shall mean any planned or unplanned event or result that is different from the expected event or result defined in existing procedures or specifications.

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K. “Filled Product” shall mean in-process sterile Product that has been filled into its final primary package for further labeling and packaging.

L. “Product” shall mean sterile Product in its final packaged and labeled form that is ready for disposition.

M. “Manufacture” shall mean finished drug Product pooling, filling, packaging, and associated in-process and stability testing, as applicable.

N. “Master Production Control Record (MPCR)” shall mean a master document that represents a detailed procedure and data record for the batch manufacturing process, pursuant to CFR 21 §211.186.

O. “Out of Specification (OOS)” shall mean any in-process, intermediate, or finished Product test result that is outside of acceptable ranges defined in approved specifications or analytical test methods.

P. “cGMPs’ shall mean current good manufacturing practices as promulgated by the FDA under the United States Food, Drug, and Cosmetic Act, 21 C.F.R. Part 210 et seq., as amended from time to time, and the European Union.

The following Facilities shall be used by ENZON for Processing or provision of Supply (“Facilities”):

Manufacturing, Packaging, Testing and Storage

6925 Guion Rd.

Indianapolis, IN 46268

USA

Section 16. RESPONSIBILITY DELEGATION CHECKLIST

	RESPONSIBILITIES	SAVIENT	ENZON
1.	Regulatory Authorizations & cGMP Compliance
1.1	Maintain all licenses, registrations and other authorizations as are required to operate a cGMP pharmaceutical manufacturing facility under the Applicable Laws.		X
1.2	Maintain and operate the Facility in compliance with the cGMPs, Applicable Laws and all other Product-specific instructions and requirements agreed to by the Parties.		X

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	RESPONSIBILITIES	SAVIENT	ENZON
1.3	Process the Product in accordance with the cGMPs, Applicable Laws and all other Product-specific instructions and requirements agreed to by the Parties.		X
1.4	Prepare, maintain and update the Marketing Authorizations in accordance with cGMPs, Applicable Laws and all other Product-specific instructions and requirements agreed to by the Parties.	X
1.5	Provide ENZON with copies of those portions of the Marketing Applications which are applicable to the Processing, prior to submission of such Marketing Applications to the applicable regulatory authorities.	X
1.6	Provide ENZON with copies of updates of those portions of the Marketing Authorizations which are applicable to the Processing, prior to submission of such Marketing Applications to the applicable regulatory authorities.	X
1.7	Satisfy all drug listing filing requirements for all Product and packaging configurations processed at the Facilities.		X
1.8	Prepare and submit post-marketing annual reports to the FDA and other applicable regulatory authorities in accordance with cGMPs, Applicable Laws and all other Product-specific instructions and requirements agreed to by the Parties.	X
1.9	Provide SAVIENT within 30 business days of their request with the following information to be included in the post-marketing annual reports: •    Change control information for all changes implemented during the preceding year relating to the Product. •    Applicable Product test data submitted in accordance with the requirements of the Supply Agreement, including any non-conforming data.		X
1.10	Conduct Annual Product Quality Review for the Product in accordance with cGMP’s, and Applicable Laws.	X
1.11	Provide SAVIENT with the following information to be included in the Annual Product Quality Review: •    All requested data and information required per 21 CFR 211.180(e)		X

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	RESPONSIBILITIES	SAVIENT	ENZON
2.	Regulatory Actions & Inspections
2.1	Promptly (within 24 hours of receiving notice) notify SAVIENT of any FDA or other regulatory authority (a) notice of inspection or inspection of the Facilities directly relating to the Product, or (b) inspection or investigation relating to the Product; and promptly (within 3 days) notify SAVIENT of any regulatory authority request for Product samples or Product batch records.		X
2.2	Promptly (within 24 hours of receiving notice) notify ENZON of any FDA or other regulatory authority inspection or investigation relating to the Product; and promptly (within 3 days) notify ENZON of any regulatory authority request for Product samples or Product batch records.	X
2.3	Provide SAVIENT copies of any FDA Form 483’s, warning letters or the like from applicable regulatory authorities within 30 days of receipt and copies of all subsequent response(s) relating to the Product or Quality Systems.		X
2.4	Approve inspection responses to observations relevant to Product.	X
2.5	Other than a request(s) delivered in conjunction with an inspection, notify the other Party of any requests for information, notices of violations or other communications from a regulatory authority relating directly to the Product produced at the Facility.	X
3.	Specifications & Change Control
3.1	Approve Product Specifications.	X
3.2	Assume primary responsibility for ensuring that all Specifications (including Product Specifications) and batch records that specifically relate to the manufacture and release of Product comply with relevant portions of the Marketing Applications and Marketing Authorizations, as amended from time to time.	X

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3.3	Assume secondary responsibility for ensuring that all Specifications (including Product Specifications) and batch records that specifically relate to the manufacture and release of Product comply with relevant portions of the Marketing Applications and Marketing Authorizations, as amended from time to time.		X
	RESPONSIBILITIES	SAVIENT	ENZON
3.4	Submit any proposed changes to the Specifications to SAVIENT for review and approval, prior to the implementation of such changes by ENZON.		X
3.5	Submit any proposed changes to the Specifications to ENZON for review and comment, prior to the submission of any such changes by SAVIENT to the regulatory authorities.	X
3.6	Discuss and reach agreement with SAVIENT regarding any proposed changes to the Facilities or the Processing that may impact the Product, prior to implementation of such proposed changes.		X
3.7	Serve as sole communicator with regulatory authorities for the approval and any revisions of Product Specifications in the Market Applications and Marketing Authorizations.	X
4.	Materials
4.1	Maintain Bulk Product according to cGMPs and Appplicable Laws	X
4.2	Retain reference samples of Bulk Product, including samples for periodic re-tests, for 6 years beyond Product expiry date.	X
4.3	Provide Bulk Product meeting the Specifications and cGMPs for manufacture, as well as a certificate of analysis for Bulk Product.	X
4.4	Perform identification testing of Bulk Product.		X
4.5	Source and qualify raw materials (excluding Bulk Product) used in Processing.	X
4.6	Maintain Specifications for Components and procure, store, sample, test and release raw materials.		X
4.7	Audit suppliers that provide Components and Process Consumables used in Processing in accordance with applicable SOPs to ensure full compliance with cGMPs and Applicable Laws.		X

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4.8	Store Bulk Product and Components in accordance with the Specifications, SOPs, cGMPs and Applicable Laws while at the Facilities.		X
	RESPONSIBILITIES	SAVIENT	ENZON
4.9	Retain reference samples of raw materials in a quantity sufficient to perform periodic re-tests, for 1 year beyond Product expiry date in accordance with Specifications, SOPs, cGMPs and Applicable Laws.		X
4.10	Notify SAVIENT of intent to dispose of material retains.		X
4.11	At SAVIENT’s option, ship material retains to SAVIENT (at SAVIENT’s expense) or destroy.		X
4.12	Dispose of Product waste and any special waste related to the Processing of the Product in accordance with Applicable Laws.		X
5.	Production, Investigations & Validations
5.1	Provide personnel with appropriate education, training and/or experience for manufacturing, testing and disposition of Product that is suitable for human use, and for provision of Supply hereunder.		X
5.2	Provide premises that are maintained and able to meet design and cleanliness requirements in accordance with Applicable Laws and industry standards.		X
5.3	Test and maintain utilities and environment to the appropriate compendia or environmental standard to assure appropriateness for use in connection with Processing and the Product.		X
5.4	Maintain, qualify and validate the Facility, equipment, utilities (air and water) and processes associated with Processing the Product in accordance with Applicable Laws and industry standards.		X
5.5	Manufacture and test the Product at the Facilities in accordance with the Product master Production control record, the SOPs referenced therein, and the Specifications.		X
5.6	Perform visual inspection of finished Product in accordance with the Product master Production control record, the SOPs referenced therein, and the Specifications.		X
5.7	Label Product in accordance with the Product master Production control record, the SOPs referenced therein, and the Specifications.		X

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5.8	Prepare and approve all artwork, inserts, labeling and packaging in connection with the Product.	X
5.9	Package the Product in accordance with the Product master Production control record, the SOPs referenced therein, and the Specifications.		X
	RESPONSIBILITIES	SAVIENT	ENZON
5.10	Perform finished Product testing in accordance with the supply agreement and supply a certificate of analysis and a Certificate of Compliance to SAVIENT.		X
5.11	Final release Product in accordance with the Product Specifications.	X
5.12	Investigate, resolve and document deviations from the Master Production Control Record and OOS test results in accordance with the cGMPs. Investigations should be completed with 30 calendar days. Interim status reports must be provided to Savient periodically in writing for investigations remaining open beyond 30 business days.		X
5.13	Obtain Quality Assurance approval of all investigations and corrective and preventive action plans.		X
5.14	Provide equipment maintained and able to meet design and cleanliness requirements in accordance with Applicable Laws and industry standards, as applicable.		X
5.15	Establish a validation master plan and maintain the validation program in accordance with plan requirements.		X
5.16	Prepare and execute all Product related validation protocols, and complete validation reports.		X
5.17	Review and approve validation protocols related to Product.	X
5.18	Provide Quality Assurance review and approval of all validation packages.		X
6.	Audits
6.1	SAVIENT will schedule and audit ENZON Facilities, records and documentation related to the Product manufactured by ENZON at a time mutually agreed by Enzon with a minimum advanced notice of 3 months and at a frequency of not more than once every 12 months. SAVIENT may request for-cause audits as needed.	X
6.2	Conduct internal audits of Facilities, processes and quality systems, in accordance with cGMPs and applicable SOPs.		X

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6.3	SAVIENT shall provide ENZON with a written audit report containing audit observations within 30 business days of the audit.	X
6.4	ENZON will respond to Savient audit report in writing within 15 business days.		X
6.5	SAVIENT is entitled to inspect and audit suppliers, vendors and contractors used by ENZON in connection with the Product.	X
7.	Lot Codes & Expiration Dating
7.1	Establish Product lot code.		X
7.2	Establish Product expiry dating as per approved Product License/Marketing Authorization.	X
8.	Samples
8.1	Perform Product sampling in accordance with the Supply Agreement, cGMP’s, and as otherwise agreed to by the Parties in the master Production control record for the Product.		X
8.2	Retain Finished Product samples including Stability samples in accordance with cGMP’s and the Supply Agreement.		X
9.	Testing & Analysis
9.1	Perform all applicable Product testing according to the Supply Agreement.	X	X
9.2	Track and investigate all deviations (including DOS’s) associated with the Product, and notify SAVIENT Quality and Manufacturing within 24 hours of discovery of any significant deviations (those that may affect the identity, strength, quality, or purity of the Product).		X
9.3	Notify ENZON of any Product recall that might be attributed to Processing the Product.	X
9.4	Notify SAVIENT Quality and Manufacturing via email within the business day followed by signed documents of any confirmed failure of the Product that might be attributed to Processing the Product.		X
10.	Release
10.1	Provide initial QA dispostion of Product to SAVIENT.		X
10.2	Provide final QA dispostion of Product.	X
11.	Records

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11.1	Review and approve the executed batch records.	X	X
	RESPONSIBILITIES	SAVIENT	ENZON
11.2	Provide the released, executed batch record documentation for each batch of Product, which shall include the following: •    A statement that the lot was manufactured, packaged and tested in accordance with cGMPs, identifies the master batch Record documents, and lists any incident reports and investigations associated with the batch. •    A certificate of analysis covering all regulatory authority and compendial tests, and a Certificate of Compliance. •    The signature of the QA Representative who released the batch. •    Copies of significant deviations (those that may materially affect the identify, strength, quality or purity of the Product). •    A list of other deviations that may affect the Product. •    A list of change control records that could impact the Product. •    Copies of summary Quality Assurance reviewed release test records.		X
11.3	Store the master record, batch records, manufacturing documentation and all other documentation related to the Product for the minimum period required by all Applicable Laws.		X
11.4	Provide copies of all documentation necessary for SAVIENT to respond to inquiries by regulatory authorities.		X
12.	Storage
12.1	Store and ship the Bulk Product in accordance with the Bulk Product Specifications, SOPs, cGMPs and Applicable Laws until manufacture of the Product.	X
12.2	Receive and store the Bulk Product. Intermediates, and finished Product in accordance with the Specifications, SOPs, cGMPs and Applicable Laws pending release of the Product.		X
12.3	Provide written instructions for shipping prior to Product release and shipment.	X
13.	Safety
13.1	Maintain safety/hazard and handling data on the Product and Bulk Product.	X	X

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	RESPONSIBILITIES	SAVIENT	ENZON
13.2	Maintain safety/hazard and handling data on the raw materials.	X	X
14.	Complaints
14.1	Upon request of SAVIENT, assist SAVIENT in investigating and resolving all medical, adverse events, and non-medical Product complaints.		X
14.2	Collect and log all information relating to Product complaints and adverse drug events.	X	X
14.3	Investigate all Product complaints and adverse drug events.	X	X
14.4	Issue all reports and conduct follow up corrective action relating to Product complaints and adverse drug events.	X	X
15.	Recall, Field Alerts and Product Withdrawal
15.1	Inform the Quality Assurance contact from the other Party within 24 hours upon knowledge of all quality issues which might compromise the other Party’s quality requirements for Products already shipped, or about to be shipped.	X	X
15.2	Issue any decision to initiate Product recall or Product withdrawal.	X
15.3	Communicate decision to initiate Product recall to ENZON.	X
15.4	Notify appropriate regulatory authorities of any Product recall or Product withdrawal.	X
15.5	Manage any Product recall or Product withdrawal.	X
15.6	Reconcile returned Product following Product recall or Product withdrawal.	X	X
15.7	Issue and follow up on FDA Field Alerts (or other similar processes of other regulatory authorities).	X
15.8	Perform mock recall and recall effectiveness checks.	X
16	Quality Agreement Review
16.1	On an as-needed basis (or once every two years), conduct a review to ensure that the Quality Agreement is in alignment with the current scope of the Project Plan and the then- current Supply Agreement. Update by mutual agreement of the Parties (if necessary).	X	X
17	Key Contacts

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17.1 Either party may change the following contact information by issuing a memo to the other party. Each party shall attach the memo to this original signed agreement. The updated information shall be incorporated into the next controlled revision of this agreement.         X                 X        

Savient Pharmaceuticals Inc.

For All Product Concerns:

Savient Pharmaceutical’s Inc.

One Tower Center

14^th Floor

East Brunswick, New Jersey 08816

USA

Enzon Pharmaceuticals, Inc.

For Manufacturing, Quality Assurance and Quality Control:

Enzon Pharmaceuticals, Inc.

6925 Guion Road

Indianapolis, Indiana 46268

USA

For Regulatory Affairs:	For Operations, Planning & Logistics:
Enzon Pharmaceuticals, Inc.	Enzon Pharmaceuticals, Inc.
685 Route 202/206	685 Route 202/206
Bridgewater, New Jersey 08854	Bridgewater, New Jersey 08807
USA	USA

Enzon Contact	Name/Title	Phone	Fax	E-mail
Quality Assurance	Chris Dreyer, Vice President Quality Operations	317-347-2857	317-347-2883	Chris.dreyer@enzon.com
QA – Product Release	Brendan O’Shaughnessy, Associate Director, QA	317-347-2849	317-290-0075	Brendan.OShaughnessy@enzon.com
Quality Control Lab	Hector Rosa, Director, Quality	317-612-2932	317-290-0075	Hector.Rosa@enzon.com

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Operations	Control
Regulatory Affairs	Thomas Eckhardt, Vice President, Regulatory Affairs	908-541-8734	732-980-4638	Thomas.Eckhardt@enzon.com
Operations – Planning	Derek Kalinowski, Director, Planning & Logistics	908-541-8633	908-541-8691	Derek.Kalinowski@enzon.com

Savient Contact	Name/Title	Phone	Fax	E-mail
Quality Assurance	Robert Lamm, Ph.D Senior Vice President, QA	732-565-4667	732-418-1862	rlarnm@savientpharma.com
Quality Assurance	Eric Nickerson Senior Director, QA	732-565-4759	732-418-1862	enickerson@savientpharma.com
QA — Product Release	Shelley Mahon Manager, QA	732-565-4657	732-418-1862	smahon@savientpharma.com
Regulatory Affairs	Murad Husain Vice President Regulatory Affairs	732-565-4676	732-418-1862	mhusain@savientpharma.com
Manufacturing	Peter Clarke, Ph.D Vice President, Technical Operations	732-565-4703	732-418-1862	pclarke@savientpharma.com
Planning and Logistics	Gary Savvas Manager, Manufacturing and Logistics	732-565-4661	732-418-1862	qsavvas@savientpharma.com

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EX-31.1

Exhibit 31.1

Certification of Chief Executive Officer

I, Timothy P. Walbert, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Horizon Pharma PLC (the “registrant”);

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 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; and

5. The registrant’s other certifying officer 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.

Date: August 8, 2016

/s/ Timothy P. Walbert

Timothy P. Walbert

Chairman, President and Chief Executive Officer

(Principal Executive Officer)

EX-31.2

Exhibit 31.2

Certification of Chief Financial Officer

I, Paul W. Hoelscher, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Horizon Pharma PLC (the “registrant”);

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 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; and

5. The registrant’s other certifying officer 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.

Date: August 8, 2016

/s/ Paul W. Hoelscher

Paul W. Hoelscher

Executive Vice President, Chief Financial Officer

(Principal Financial Officer)

EX-32.1

Exhibit 32.1

CERTIFICATION

Pursuant to the requirement set forth in Rule 13a-14(b) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and 18 U.S.C. Section 1350, I, Timothy P. Walbert, President, Chief Executive Officer and Chairman of the Board of Horizon Pharma PLC (the “Company”), certify to the best of my knowledge that:

1. the Company’s Quarterly Report on Form 10-Q for the period ended June 30, 2016 (the “Report”), to which this Certification is attached as Exhibit 32.1, fully complies with the requirements of Section 13(a) or 15(d) of the Exchange Act; and

2. the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: August 8, 2016	/s/ Timothy P. Walbert
	Timothy P. Walbert
	Chairman, President and Chief Executive Officer
	(Principal Executive Officer)

A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

This certification accompanies the Form 10-Q to which it relates, is not deemed filed with the Securities and Exchange Commission and is not to be incorporated by reference into any filing of the Company under the Securities Act of 1933, as amended, or the Exchange Act (whether made before or after the date of the Form 10-Q), irrespective of any general incorporation language contained in such filing.

EX-32.2

Exhibit 32.2

CERTIFICATION

Pursuant to the requirement set forth in Rule 13a-14(b) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and 18 U.S.C. Section 1350, I, Paul W. Hoelscher, Executive Vice President and Chief Financial Officer of Horizon Pharma PLC (the “Company”), certify to the best of my knowledge that:

1. the Company’s Quarterly Report on Form 10-Q for the period ended June 30, 2016 (the “Report”), to which this Certification is attached as Exhibit 32.2, fully complies with the requirements of Section 13(a) or 15(d) of the Exchange Act; and

2. the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: August 8, 2016	/s/ Paul W. Hoelscher
	Paul W. Hoelscher
	Executive Vice President, Chief Financial Officer
	(Principal Financial Officer)

A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

This certification accompanies the Form 10-Q to which it relates, is not deemed filed with the Securities and Exchange Commission and is not to be incorporated by reference into any filing of the Company under the Securities Act of 1933, as amended, or the Exchange Act (whether made before or after the date of the Form 10-Q), irrespective of any general incorporation language contained in such filing.

XML

Document and Entity Information - shares	6 Months Ended
	Jun. 30, 2016	Jul. 29, 2016
Document And Entity Information [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Jun. 30, 2016
Document Fiscal Year Focus	2016
Document Fiscal Period Focus	Q2
Trading Symbol	HZNP
Entity Registrant Name	HORIZON PHARMA PLC
Entity Central Index Key	0001492426
Current Fiscal Year End Date	--12-31
Entity Filer Category	Large Accelerated Filer
Entity Common Stock, Shares Outstanding		160,904,874

XML

Condensed Consolidated Balance Sheets (Unaudited) - USD ($) $ in Thousands	Jun. 30, 2016	Dec. 31, 2015
CURRENT ASSETS:
Cash and cash equivalents	$ 424,525	$ 859,616
Restricted cash	3,169	1,860
Accounts receivable, net	304,382	210,437
Inventories, net	172,102	18,376
Prepaid expenses and other current assets	33,866	15,858
Total current assets	938,044	1,106,147
Property and equipment, net	21,971	14,020
Intangible assets, net	1,934,368	1,616,110
In-process research and development	66,000	66,000
Goodwill	255,927	253,811
Deferred tax assets, net	4,992	2,278
Other assets	6,156	222
TOTAL ASSETS	3,227,458	3,058,588
CURRENT LIABILITIES:
Long-term debt—current portion	4,000	4,000
Accounts payable	58,970	16,590
Accrued expenses	75,709	100,046
Accrued trade discounts and rebates	220,674	183,769
Accrued royalties—current portion	58,008	51,700
Deferred revenues—current portion	1,448	1,447
Total current liabilities	418,809	357,552
LONG-TERM LIABILITIES:
Exchangeable notes, net	290,310	282,889
Long-term debt, net, net of current	849,377	849,867
Accrued royalties, net of current	170,160	123,519
Deferred revenues, net of current	8,366	8,785
Deferred tax liabilities, net	131,587	113,400
Other long-term liabilities	20,636	9,431
Total long-term liabilities	1,470,436	1,387,891
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS’ EQUITY:
Ordinary shares, $0.0001 nominal value; 300,000,000 shares authorized; 161,126,363 and 160,069,067 shares issued at June 30, 2016 and December 31, 2015, respectively, and 160,741,997 and 159,684,701 shares outstanding at June 30, 2016 and December 31, 2015, respectively	16	16
Treasury stock, 384,366 ordinary shares at June 30, 2016 and December 31, 2015	(4,585)	(4,585)
Additional paid-in capital	2,057,128	2,001,552
Accumulated other comprehensive loss	(2,737)	(2,651)
Accumulated deficit	(711,609)	(681,187)
Total shareholders’ equity	1,338,213	1,313,145
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	3,227,458	3,058,588
Developed Technology [Member]
CURRENT ASSETS:
Intangible assets, net	1,927,713	1,609,049
Customer Relationships [Member]
CURRENT ASSETS:
Intangible assets, net	$ 6,655	$ 7,061

XML

Condensed Consolidated Balance Sheets (Unaudited) (Parenthetical) - $ / shares	Jun. 30, 2016	Dec. 31, 2015
Statement Of Financial Position [Abstract]
Ordinary shares, nominal value	$ 0.0001	$ 0.0001
Ordinary shares, shares authorized	300,000,000	300,000,000
Ordinary shares, shares issued	161,126,363	160,069,067
Ordinary shares, shares outstanding	160,741,997	159,684,701
Treasury stock, ordinary shares	384,366	384,366

XML

Consolidated Statements of Comprehensive Income (Loss) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
Income Statement [Abstract]
Net sales	$ 257,378	$ 172,821	$ 462,068	$ 285,962
Cost of goods sold	81,126	61,826	158,359	90,679
Gross profit	176,252	110,995	303,709	195,283
OPERATING EXPENSES:
Research and development	11,210	8,922	23,932	15,103
Sales and marketing	79,589	58,056	155,133	105,119
General and administrative	53,986	77,190	120,381	103,470
Total operating expenses	144,785	144,168	299,446	223,692
Operating income (loss)	31,467	(33,173)	4,263	(28,409)
OTHER EXPENSE, NET:
Interest expense, net	(19,228)	(19,448)	(38,686)	(29,480)
Foreign exchange gain (loss)	15	(87)	(158)	(924)
Loss on induced conversion of debt and debt extinguishment		(67,080)		(77,624)
Other expense, net	(26)	(9,078)	(40)	(10,069)
Total other expense, net	(19,239)	(95,693)	(38,884)	(118,097)
Income (loss) before benefit for income taxes	12,228	(128,866)	(34,621)	(146,506)
BENEFIT FOR INCOME TAXES	(2,756)	(160,680)	(4,199)	(158,767)
NET INCOME (LOSS)	$ 14,984	$ 31,814	$ (30,422)	$ 12,261
NET INCOME (LOSS) PER ORDINARY SHARE—Basic	$ 0.09	$ 0.21	$ (0.19)	$ 0.09
WEIGHTED AVERAGE ORDINARY SHARES OUTSTANDING—Basic	160,468,146	150,771,902	160,186,270	138,369,537
NET INCOME (LOSS) PER ORDINARY SHARE—Diluted	$ 0.09	$ 0.20	$ (0.19)	$ 0.08
WEIGHTED AVERAGE ORDINARY SHARES OUTSTANDING—Diluted	163,920,581	159,797,319	160,186,270	145,031,882
OTHER COMPREHENSIVE INCOME (LOSS), NET OF TAX
Foreign currency translation adjustments	$ 161	$ (257)	$ (86)	$ 1,607
Other comprehensive income (loss)	161	(257)	(86)	1,607
COMPREHENSIVE INCOME (LOSS)	$ 15,145	$ 31,557	$ (30,508)	$ 13,868

XML

Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015
CASH FLOWS FROM OPERATING ACTIVITIES:
Net (loss) income	$ (30,422)	$ 12,261
Adjustments to reconcile net (loss) income to net cash provided by (used in) operating activities:
Depreciation and amortization expense	102,525	50,743
Equity-settled share-based compensation	55,418	31,339
Royalty accretion	19,028	7,021
Royalty liability remeasurement		14,277
Loss on induced conversions of debt and debt extinguishment		21,581
Amortization of debt discount and deferred financing costs	8,932	7,828
Foreign exchange loss and other adjustments	159	1,023
Changes in operating assets and liabilities:
Accounts receivable	(83,932)	(97,167)
Inventories	13,777	10,555
Prepaid expenses and other current assets	(16,626)	4,597
Accounts payable	42,278	1,604
Deferred revenues	(418)	2,778
Deferred income taxes	(5,362)	(158,873)
Other non-current assets and liabilities	4,174	190
Net cash provided by (used in) operating activities	101,484	(29,155)
CASH FLOWS FROM INVESTING ACTIVITIES:
Payments for acquisitions, net of cash acquired	(520,405)	(1,022,361)
Proceeds from the liquidation of available-for-sale investments		64,623
Purchases of property and equipment	(12,776)	(2,281)
Change in restricted cash	(1,309)	138
Net cash used in investing activities	(534,490)	(959,881)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net proceeds from the issuance of ordinary shares		475,627
Proceeds from the issuance of ordinary shares in connection with warrant exercises		14,693
Proceeds from the issuance of ordinary shares through ESPP programs	3,235	1,541
Proceeds from the issuance of ordinary shares in connection with stock option exercises	1,658	3,888
Payment of employee withholding taxes relating to share-based awards	(4,734)	(1,956)
Net cash (used in) provided by financing activities	(1,841)	1,438,033
Effect of foreign exchange rate changes on cash	(244)	(747)
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS	(435,091)	448,250
CASH AND CASH EQUIVALENTS, beginning of the period	859,616	218,807
CASH AND CASH EQUIVALENTS, end of the period	424,525	667,057
Supplemental cash flow information:
Cash paid for interest	29,791	11,755
Cash paid for income taxes	18,059	1,610
Fee paid for debt commitment		9,000
Cash paid for induced conversions		10,005
Cash paid for debt extinguishment		45,367
Supplemental non-cash flow information:
Conversion of Convertible Senior Notes to ordinary shares		60,985
Purchases of property and equipment included in accounts payable and accrued expenses	2,189	182
Accrued Trade Discounts and Rebates [Member]
Changes in operating assets and liabilities:
Accrued liabilities	35,480	47,596
Accrued Expenses and Accrued Royalties [Member]
Changes in operating assets and liabilities:
Accrued liabilities	(43,527)	16,492
2014 Senior Secured Credit Facility [Member]
Changes in operating assets and liabilities:
Payment of original issue discount upon repayment of 2014 Term Loan Facility		(3,000)
2015 Term Loan Facility [Member]
CASH FLOWS FROM FINANCING ACTIVITIES:
Net proceeds from debt		391,719
Repayment of term loan facility	(2,000)
2014 Term Loan Facility [Member]
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayment of term loan facility		(297,000)
Exchangeable Senior Notes [Member]
CASH FLOWS FROM FINANCING ACTIVITIES:
Net proceeds from issuance of Exchangeable Senior Notes	$ 387,200	387,181
2023 Senior Notes [Member]
CASH FLOWS FROM FINANCING ACTIVITIES:
Net proceeds from debt		$ 462,340

XML

Basis of Presentation and Business Overview

6 Months Ended

Jun. 30, 2016

Organization Consolidation And Presentation Of Financial Statements [Abstract]

Basis of Presentation and Business Overview

NOTE 1 – BASIS OF PRESENTATION AND BUSINESS OVERVIEW

Basis of Presentation

The unaudited condensed consolidated financial statements presented herein have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim financial information and in accordance with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, the financial statements do not include all of the information and notes required by GAAP for complete financial statements. In the opinion of management, all adjustments, including normal recurring adjustments, considered necessary for a fair statement of the financial statements have been included. Operating results for the three and six months ended June 30, 2016 are not necessarily indicative of the results that may be expected for the year ending December 31, 2016. The December 31, 2015 condensed consolidated balance sheet was derived from audited financial statements, but does not include all disclosures required by GAAP.

On September 19, 2014, the businesses of Horizon Pharma, Inc. (“HPI”) and Vidara Therapeutics International Public Limited Company (“Vidara”) were combined in a merger transaction (the “Vidara Merger”), accounted for as a reverse acquisition under the acquisition method of accounting for business combinations, with HPI treated as the acquiring company in the Vidara Merger for accounting purposes. As part of the Vidara Merger, a wholly-owned subsidiary of Vidara merged with and into HPI, with HPI surviving the Vidara Merger as a wholly-owned subsidiary of Vidara. Prior to the Vidara Merger, Vidara changed its name to Horizon Pharma plc (the “Company”). Upon the consummation of the Vidara Merger, the historical financial statements of HPI became the Company’s historical financial statements.

On May 7, 2015, the Company completed its acquisition of Hyperion Therapeutics Inc. (“Hyperion”) in which the Company acquired all of the issued and outstanding shares of Hyperion’s common stock for $46.00 per share in cash or approximately $1.1 billion on a fully-diluted basis. Following the completion of the acquisition, Hyperion became a wholly-owned subsidiary of the Company and was renamed as Horizon Therapeutics, Inc.

On January 13, 2016, the Company completed its acquisition of Crealta Holdings LLC (“Crealta”) for approximately $539.7 million, including cash acquired of $24.9 million. Following the completion of the acquisition, Crealta became a wholly-owned subsidiary of the Company and was renamed as Horizon Pharma Rheumatology LLC.

On May 18, 2016, the Company entered into a definitive agreement with Boehringer Ingelheim International GmbH (“Boehringer Ingelheim International”) to acquire rights to interferon gamma-1b, which Boehringer Ingelheim International currently commercializes under the trade names IMUKIN^®, IMUKINE^®, IMMUKIN^® and IMMUKINE^® in an estimated 30 countries, primarily in Europe and the Middle East. Under the terms of the agreement, the Company paid Boehringer Ingelheim International €5.0 million ($5.6 million when converted using a Euro-to-Dollar exchange rate of 1.1132) upon signing and will pay €20.0 million upon closing, for the rights for interferon gamma-1b in all territories outside of the United States, Canada and Japan, as the Company currently holds marketing rights to interferon gamma-1b in these territories. The Company currently markets interferon gamma-1b as ACTIMMUNE^® in the United States. The Company and Boehringer Ingelheim International expect to close the transaction by year-end 2016, subject to the satisfaction of closing conditions. Under the terms of a separate agreement, the Company also licensed the U.S., European and Canadian intellectual property rights for interferon gamma-1b for the treatment of Friedreich’s ataxia (“FA”). Interferon gamma-1b is currently not indicated or approved for the treatment of FA by the U.S. Food and Drug Administration (“FDA”) or any other regulatory body.

The unaudited condensed consolidated financial statements presented herein include the results of operations of the acquired businesses from the date of acquisition. See Note 3 for further details of business acquisitions.

Unless otherwise indicated or the context otherwise requires, references to the “Company”, “we”, “us” and “our” refer to Horizon Pharma plc and its consolidated subsidiaries, including its predecessor, HPI. All references to “Vidara” are references to Horizon Pharma plc (formerly known as Vidara Therapeutics International Public Limited Company) and its consolidated subsidiaries prior to the effective time of the Vidara Merger on September 19, 2014.

The unaudited condensed consolidated financial statements presented herein include the accounts of the Company and its wholly-owned subsidiaries. All inter-company transactions and balances have been eliminated.

Business Overview

The Company is a biopharmaceutical company focused on improving patients’ lives by identifying, developing, acquiring and commercializing differentiated and accessible medicines that address unmet medical needs. The Company markets nine medicines through its orphan, primary care and rheumatology business units. The Company’s marketed medicines are ACTIMMUNE^® (interferon gamma-1b), BUPHENYL^® (sodium phenylbutyrate) Tablets and Powder, DUEXIS^® (ibuprofen/famotidine), KRYSTEXXA^® (pegloticase), MIGERGOT^® (ergotamine tartrate and caffeine suppositories), PENNSAID^® (diclofenac sodium topical solution) 2% w/w (“PENNSAID 2%”), RAVICTI^® (glycerol phenylbutyrate) Oral Liquid, RAYOS^® (prednisone) delayed-release tablets and VIMOVO^® (naproxen/esomeprazole magnesium).

The Company developed DUEXIS and RAYOS, known as LODOTRA^® outside the United States, acquired the U.S. rights to VIMOVO from AstraZeneca AB (“AstraZeneca”) in November 2013, acquired certain rights to ACTIMMUNE as a result of the Vidara Merger in September 2014, acquired the U.S. rights to PENNSAID 2% from Nuvo Research Inc. (“Nuvo”) in October 2014, acquired RAVICTI and BUPHENYL, known as AMMONAPS^® in Europe, as a result of the acquisition of Hyperion in May 2015, and acquired KRYSTEXXA and the U.S. rights to MIGERGOT as a result of the acquisition of Crealta in January 2016.

The Company’s medicines are dispensed by retail and specialty pharmacies. Part of the Company’s commercial strategy for its primary care and rheumatology business units is to offer physicians the opportunity to have their patients fill prescriptions through pharmacies participating in the Company’s HorizonCares patient access program. This program does not involve the Company in the prescribing of medicines. The purpose of this program is solely to assist in ensuring that, when physicians determine that one of the Company’s medicines offers a potential clinical benefit to their patients and prescribe the medicine for an eligible patient, financial assistance may be available to reduce a commercial patient’s out-of-pocket costs. In the first six months of 2016, this resulted in 99.8 percent of commercial patients having co-pay amounts of $10 or less when filling prescriptions for the Company’s medicines utilizing its patient access program. For commercial patients who are prescribed the Company’s primary care medicines or RAYOS, the HorizonCares program offers co-pay assistance when a third-party payor covers a prescription but requires an eligible patient to pay a co-pay or deductible, and offers full subsidization when a third-party payor rejects coverage for an eligible patient. For patients who are prescribed the Company’s orphan medicines, the Company’s patient access programs provide reimbursement support, a clinical nurse program, co-pay and other patient assistance. The aggregate commercial value of the Company’s patient access programs for the six months ended June 30, 2016 was $816.8 million. All pharmacies that dispense prescriptions for the Company’s medicines, which the Company estimates to be about 10,000 in the first half of 2016, are fully independent, including those that participate in HorizonCares. The Company does not own or possess any option to purchase an ownership stake in any pharmacy that distributes its medicines, and the Company’s relationship with each pharmacy is non-exclusive and arm’s length. All of the Company’s medicines are dispensed through pharmacies independent of its business.

As an alternative means of ensuring access to our medicines, the Company has also begun pursuing business arrangements with pharmacy benefit managers (“PBMs”) and other payors to secure formulary status and reimbursement of the Company’s medicines, such as the Company’s recently announced arrangement with CVS Caremark. While the Company believes that, if successful, this strategy would result in broader inclusion of certain of the Company’s primary care medicines on healthcare plan formularies, and therefore increase payor reimbursement and lower the Company’s cost of providing patient access programs, these arrangements would generally require the Company to pay administrative and rebate payments to the PBMs and/or other payors.

The Company has a comprehensive compliance program in place to address adherence with various laws and regulations relating to its sales, marketing and manufacturing of its medicines, as well as certain third-party relationships, including pharmacies. Specifically with respect to pharmacies, the compliance program utilizes a variety of methods and tools to monitor and audit pharmacies, including those that participate in the HorizonCares program, to confirm their activities, adjudication and practices are consistent with the Company’s compliance policies and guidance.

The Company is a public limited company formed under the laws of Ireland. The Company operates through a number of international and U.S. subsidiaries with principal business purposes to either perform research and development or manufacturing operations, serve as distributors of the Company’s medicines, hold intellectual property assets or provide services and financial support to the Company.

Recent Accounting Pronouncements

From time to time, the Company adopts, as of the specified effective date, new accounting pronouncements issued by the FASB or other standard setting bodies. Unless otherwise discussed, the Company believes that the impact of recently issued standards that are not yet effective will not have a material impact on the Company’s financial position or results of operations upon adoption.

In May 2014, the FASB issued Accounting Standards Update (“ASU”) No. 2014-09, Revenue from Contracts with Customers (Subtopic 606). The new standard aims to achieve a consistent application of revenue recognition within the United States, resulting in a single revenue model to be applied by reporting companies under GAAP. Under the new model, recognition of revenue occurs when a customer obtains control of promised goods or services in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. In addition, the new standard requires that reporting companies disclose the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. The new standard is required to be applied retrospectively to each prior reporting period presented or retrospectively with the cumulative effect of initially applying it recognized at the date of initial application. In March 2016 and April 2016, the FASB issued ASU No. 2016-08 and ASU No. 2016-10, respectively, which further clarify the implementation guidance on principal versus agent considerations contained in ASU No. 2014-09. In May 2016, the FASB issued ASU 2016-12, narrow-scope improvements and practical expedients which provides clarification on assessing the collectability criterion, presentation of sales taxes, measurement date for non-cash consideration and completed contracts at transition. These standards will be effective for the Company beginning in the first quarter of 2018. Early adoption is permitted, but not before December 15, 2016, the original effective date of the standard. The Company has not yet selected a transition method nor has it determined the impact of the new standard on its consolidated financial statements.

In August 2014, the FASB issued ASU No. 2014-15, Presentation of Financial Statements — Going Concern (Subtopic 205-40): Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern. ASU No. 2014-15 is intended to define management’s responsibility to evaluate whether there is substantial doubt about an organization’s ability to continue as a going concern and to provide related footnote disclosures. Substantial doubt about an entity’s ability to continue as a going concern exists when relevant conditions and events, considered in the aggregate, indicate that it is probable that the entity will be unable to meet its obligations as they become due within one year after the date that the financial statements are issued (or available to be issued). ASU No. 2014-15 provides guidance to an organization’s management, with principles and definitions that are intended to reduce diversity in the timing and content of disclosures that are commonly provided by organizations in the financial statement footnotes. ASU No. 2014-15 is effective for annual reporting periods ending after December 15, 2016 and to annual and interim periods thereafter. Early adoption is permitted. The Company adopted ASU No. 2014-15 on April 1, 2016, and the adoption did not have a material impact on the consolidated financial statements and related disclosures.

In April 2015, the FASB issued ASU No. 2015-03, Interest-Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs. The amendments in this ASU require that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. In August 2015, the FASB issued ASU No. 2015-15, which further clarifies the implementation guidance of ASU No. 2015-03. The amendments in these ASUs are effective for the financial statements issued for fiscal years beginning after December 15, 2015, and interim periods within those fiscal years. The Company adopted ASU No. 2015-03 on January 1, 2016. The following table summarizes the adjustments made to conform prior period classifications as a result of the new guidance (in thousands):

	As of December 31, 2015
	As filed			Reclassification			As adjusted
Other non-current assets	$	8,581		$	(8,359	)	$	222
Exchangeable notes, net		(283,675	)	786				(282,889	)
Long-term debt, net, net of current		(857,440	)		7,573			(849,867	)

In April 2015, the FASB issued ASU No. 2015-05: Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Fees Paid in a Cloud Computing Arrangement which provides guidance on a customer’s accounting for fees paid in a cloud computing arrangement. Under the new standard, customers will apply the same criteria as vendors to determine whether a cloud computing arrangement contains a software license or is solely a service contract. The amendments in this ASU, which may be applied prospectively or retrospectively, are effective for annual and interim periods beginning after December 15, 2015. The Company adopted ASU No. 2015-05 on January 1, 2016 and the adoption did not have a material impact on the consolidated financial statements and related disclosures.

In July 2015, the FASB issued ASU No. 2015-11, Inventory (Topic 330): Simplifying the Measurement of Inventory. Under this new guidance, entities that measure inventory using any method other than last-in, first-out or the retail inventory method will be required to measure inventory at the lower of cost and net realizable value. The amendments in this ASU, which should be applied prospectively, are effective for annual and interim periods beginning after December 15, 2016. Early adoption is permitted. The Company adopted ASU No. 2015-11 on April 1, 2016, and the adoption did not have a material impact on the consolidated financial statements and related disclosures.

In September 2015, the FASB issued ASU No. 2015-16, Business Combinations (Topic 805): Simplifying the Accounting for Measurement-Period Adjustments (“ASC 805”). Under this guidance, an acquirer is required to recognize adjustments to provisional amounts that are identified during the measurement period in the reporting period in which the adjustment amounts are determined. The amendments in this ASU require that the acquirer record, in the same period’s financial statements, the effect on earnings of changes in depreciation, amortization or other income effects, if any, as a result of the change to the provisional amounts, calculated as if the accounting had been completed at the acquisition date. The amendments in this ASU require an entity to present separately on the face of the income statement or disclose in the notes the portion of the amount recorded in current-period earnings by line item that would have been recorded in previous reporting periods if the adjustment to the provisional amounts had been recognized as of the acquisition date. The amendments in this ASU, which should be applied prospectively, are effective for annual and interim periods beginning after December 15, 2015. The Company adopted ASU No. 2015-16 on January 1, 2016, and the adoption did not have a material impact on the consolidated financial statements and related disclosures.

In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842). Under ASU No. 2016-02, an entity will be required to recognize right-of-use assets and lease liabilities on its balance sheet and disclose key information about leasing arrangements. ASU No. 2016-02 offers specific accounting guidance for a lessee, a lessor and sale and leaseback transactions. Lessees and lessors are required to disclose qualitative and quantitative information about leasing arrangements to enable a user of the financial statements to assess the amount, timing and uncertainty of cash flows arising from leases. ASU No. 2016-02 is effective for annual reporting periods beginning after December 15, 2018, including interim periods within that reporting period, with early adoption permitted. At adoption, this update will be applied using a modified retrospective approach. The Company is currently in the process of evaluating the impact of adoption of ASU No. 2016-02 on its consolidated financial statements and related disclosures.

In March 2016, the FASB Issued ASU No. 2016-09, Compensation-Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting. The updated guidance will change how companies account for certain aspects of share-based payments to employees. Entities will be required to recognize the income tax effects of awards in the statement of income when the awards vest or are settled. The guidance on accounting for an employee’s use of shares to satisfy the statutory income tax withholding obligation and for forfeitures is changing, and the update requires companies to present excess tax benefits as an operating activity on the statement of cash flows rather than as a financing activity. The amendments in this update will be effective for annual periods beginning after December 15, 2016 and interim periods within those annual periods. Early adoption is permitted. The Company is currently in the process of evaluating the impact of adoption of ASU No. 2016-09 on its consolidated financial statements and related disclosures.

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Net Income (Loss) per Share

6 Months Ended

Jun. 30, 2016

Earnings Per Share [Abstract]

Net Income (Loss) per Share

NOTE 2 – NET INCOME (LOSS) PER SHARE

The following table presents basic net income (loss) per share for the three and six months ended June 30, 2016 and 2015 (in thousands, except share and per share data):

	For the Three Months Ended June30,				For the Six Months Ended June 30,
	2016		2015		2016			2015
Basic net income (loss) per share calculation:
Net income (loss)	$	14,984	$	31,814	$	(30,422	)	$	12,261
Weighted average ordinary shares outstanding		160,468,146		150,771,902		160,186,270			138,369,537
Basic net income (loss) per share	$	0.09	$	0.21	$	(0.19	)	$	0.09

The following table presents diluted net income (loss) per share for the three and six months ended June 30, 2016 and 2015 (in thousands, except share and per share data):

	For the Three Months Ended June 30,				For the Six Months Ended June 30,
	2016		2015		2016			2015
Diluted net income (loss) per share    calculation:
Net income (loss)	$	14,984	$	31,814	$	(30,422	)	$	12,261
Weighted average ordinary shares outstanding		163,920,581		159,797,319		160,186,270			145,031,882
Diluted net income (loss) per share	$	0.09	$	0.20	$	(0.19	)	$	0.08

Basic net income (loss) per share is computed by dividing net income (loss) by the weighted-average number of ordinary shares outstanding during the period. Diluted net income (loss) per share reflects the potential dilution beyond shares for basic net income (loss) per share that could occur if securities or other contracts to issue ordinary shares were exercised, converted into ordinary shares, or resulted in the issuance of ordinary shares that would have shared in the Company’s earnings.

The computation of diluted net income (loss) per share excluded 14.0 million and 13.4 million equity awards for the three and six months ended June 30, 2016, respectively, and 4.3 million and 3.4 million equity awards for the three and six months ended June 30, 2015, respectively, because their inclusion would have had an anti-dilutive effect on diluted net income (loss) per share.

The potentially dilutive impact of the Horizon Pharma Investment Limited (“Horizon Investment”), a wholly-owned subsidiary of the Company, March 2015 private placement of $400.0 million aggregate principal amount of 2.50% Exchangeable Senior Notes due 2022 (the “Exchangeable Senior Notes”) is determined using a method similar tothe treasury stock method. Under this method, no numerator or denominator adjustments arise from the principal and interest components of the Exchangeable Senior Notes because the Company has the intent and ability to settle the Exchangeable Senior Notes’ principal and interest in cash. Instead, the Company is required to increase the diluted net income (loss) per share denominator by the variable number of shares that would be issued upon conversion if it settled the conversion spread obligation with shares. For diluted net income (loss) per share purposes, the conversion spread obligation is calculated based on whether the average market price of the Company’s ordinary shares over the reporting period is in excess of the exchange price of the Exchangeable Senior Notes. The calculated spread added to the denominator for the three and six months ended June 30, 2015 was 851,500 and 294,286 ordinary shares, respectively. There was no calculated spread added to the denominator for the three and six months ended June 30, 2016.

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Business Acquisitions

6 Months Ended

Jun. 30, 2016

Business Combinations [Abstract]

Business Acquisitions

NOTE 3 – BUSINESS ACQUISITIONS

Acquisition of Additional Rights to Interferon Gamma-1b

On May 18, 2016, the Company entered into a definitive agreement with Boehringer Ingelheim International to acquire rights to interferon gamma-1b, which Boehringer Ingelheim International currently commercializes under the trade names IMUKIN, IMUKINE, IMMUKIN and IMMUKINE in an estimated 30 countries primarily in Europe and the Middle East. Under the terms of the agreement, the Company paid Boehringer Ingelheim International €5.0 million ($5.6 million when converted using a Euro-to-Dollar exchange rate of 1.1132) upon signing and will pay €20.0 million upon closing, for the rights for interferon gamma-1b in all territories outside of the United States, Canada and Japan, as the Company currently holds marketing rights to interferon gamma-1b in these territories. The Company currently markets interferon gamma-1b as ACTIMMUNE in the United States. The €5.0 million upfront amount paid in May 2016 has been included in “other assets” in the Company’s condensed consolidated balance sheet as of June 30, 2016.

Crealta Acquisition

On January 13, 2016, the Company completed its acquisition of all the membership interests of Crealta. The acquisition added two medicines, KRYSTEXXA and MIGERGOT, to the Company’s medicine portfolio. The Crealta acquisition further diversified the Company’s portfolio of medicines and aligned with its focus of acquiring value-enhancing, clinically differentiated, long-life medicines that treat orphan diseases. The total consideration for the acquisition was approximately $539.7 million, including cash acquired of $24.9 million, and was composed of the following before and after the measurement period adjustments (in thousands):

	Before		Adjustments		After
Cash	$	536,181	$	25	$	536,206
Net settlements on the exercise of stock options and    unrestricted units		3,526		—		3,526
Total consideration	$	539,707	$	25	$	539,732

During the three and six months ended June 30, 2016, the Company incurred $1.6 million and $11.7 million, respectively, in Crealta acquisition-related costs including advisory, legal, accounting, valuation, severance, retention bonuses and other professional and consulting fees. During the three and six months ended June 30, 2016, $1.1 million and $11.0 million were accounted for as “general and administrative”, respectively, $0.3 million and $0.3 million were accounted for as “research and development”, respectively, and $0.2 million and $0.4 million were accounted for as “costs of goods sold”, respectively, in the condensed consolidated statements of comprehensive income (loss).

Pursuant to ASC 805, the Company accounted for the Crealta acquisition as a business combination using the acquisition method of accounting. Identifiable assets and liabilities of Crealta, including identifiable intangible assets, were recorded based on their estimated fair values as of the date of the closing of the acquisition. The excess of the purchase price over the fair value of the net assets acquired was recorded as goodwill. Significant judgment was required in determining the estimated fair values of developed technology intangible assets, inventories and certain other assets and liabilities. Such preliminary valuation required estimates and assumptions including, but not limited to, estimating future cash flows and direct costs in addition to developing the appropriate discount rates and current market profit margins. The Company’s management believes the fair values recognized for the assets acquired and the liabilities assumed are based on reasonable estimates and assumptions. Accordingly, the unaudited purchase price adjustments are preliminary and are subject to further adjustments as additional information becomes available and as additional analyses are performed, and such further adjustments may be material.

During the three months ended June 30, 2016, the Company recorded measurement period adjustments related to developed technology and inventory, which resulted in a net increase in goodwill of $0.3 million. The measurement period adjustments were the result of a net working capital true-up adjustment and the alignment of Crealta’s inventory and obsolescence reserve policy to the Company’s policy.

The following table summarizes the preliminary fair values assigned to the assets acquired and the liabilities assumed by the Company, along with the resulting goodwill before and after the measurement period adjustments (in thousands): 

(Liabilities assumed) and assets acquired:	Before			Adjustments			After
Accounts payable and accrued expenses	$	(4,543	)	$	—		$	(4,543	)
Accrued trade discounts and rebates		(1,424	)		—			(1,424	)
Deferred tax liabilities		(20,835	)		—			(20,835	)
Other non-current liabilities		(6,900	)		—			(6,900	)
Contingent royalty liabilities		(51,300	)		—			(51,300	)
Cash and cash equivalents		24,893			—			24,893
Accounts receivable		10,014			—			10,014
Inventories		169,054			(1,700	)		167,354
Prepaid expenses and other current assets		1,382			—			1,382
Developed technology		417,300			1,400			418,700
Other non-current assets		275			—			275
Goodwill		1,791			325			2,116
Fair value of consideration paid	$	539,707		$	25		$	539,732

Inventories acquired included raw materials, work in process and finished goods for KRYSTEXXA and MIGERGOT. Inventories were recorded at their preliminary estimated fair values. The fair value of finished goods has been determined based on the estimated selling price, net of selling costs and a margin on the selling costs. The fair value of work in process has been determined based on estimated selling price, net of selling costs and costs to complete the manufacturing, and a margin on the selling and manufacturing costs. The fair value of raw materials was estimated to equal the replacement cost. A step up in the value of inventory of $163.6 million was originally recorded in connection with the acquisition and this was reduced to $161.9 million following the recording of $1.7 million in measurement period adjustments during the three months ended June 30, 2016. During the three and six months ended June 30, 2016, the Company amortized inventory step-up of $9.1 million and $16.5 million, respectively.

Other tangible assets and liabilities were valued at their respective carrying amounts as management believes that these amounts approximated their acquisition date fair values.

Other non-current liabilities represent an assumed $6.9 million probable contingent liability. See Note 12 for further details.

Identifiable intangible assets and liabilities acquired include developed technology and contingent royalties. The preliminary estimated fair values of the developed technology and contingent royalties represent preliminary valuations performed with the assistance of an independent appraisal firm based on management’s estimates, forecasted financial information and reasonable and supportable assumptions.

Developed technology intangible assets reflect the estimated fair value of Crealta’s rights to its currently marketed medicines, KRYSTEXXA and MIGERGOT. The preliminary fair value of developed technology was determined using an income approach. The income approach explicitly recognizes that the fair value of an asset is premised upon the expected receipt of future economic benefits such as earnings and cash inflows based on current sales projections and estimated direct costs for Crealta’s medicines. Indications of value were developed by discounting these benefits to their acquisition-date worth at a discount rate of 27% for KRYSTEXXA and 23% for MIGERGOT. The fair value of the KRYSTEXXA and MIGERGOT developed technologies were capitalized as of the Crealta acquisition date and are subsequently being amortized over approximately 12 and 10 years, respectively, which are the periods in which over 90% of the estimated cash flows are expected to be realized.

The Company has assigned a preliminary fair value of $51.3 million to a contingent liability for royalties potentially payable under previously existing agreements related to KRYSTEXXA and MIGERGOT. The royalties for KRYSTEXXA are payable under the terms of a license agreement with Duke University (“Duke”) and Mountain View Pharmaceuticals (“MVP”). See Note 12 for details of the percentages of royalties payable under such agreements. The initial fair value of this liability  was determined using a discounted cash flow analysis incorporating the estimated future cash flows of royalty payments resulting from future sales. The discount rate used was the same as for the fair value of the developed technology.

The preliminary deferred tax liability recorded represents deferred tax liabilities assumed as part of the acquisition, net of deferred tax assets, related to net operating tax loss carryforwards of Crealta.

Goodwill represents the excess of the preliminary acquisition consideration over the estimated fair value of net assets acquired and was recorded in the condensed consolidated balance sheet as of the acquisition date. The Company does not expect any portion of this goodwill to be deductible for tax purposes.

Hyperion Acquisition

On May 7, 2015, the Company completed the acquisition of Hyperion in which it acquired all of the issued and outstanding shares of Hyperion’s common stock for $46.00 per share. The acquisition added two important medicines, RAVICTI and BUPHENYL, to the Company’s medicine portfolio. Through the acquisition, the Company leveraged as well as expanded the existing infrastructure of its orphan disease business. The total consideration for the acquisition was approximately $1.1 billion and was composed of the following (in thousands, except share and per share data):

Fully diluted equity value (21,425,909 shares at $46.00 per    share)	$	985,592
Net settlements on the exercise of stock options, restricted    stock and performance stock units		89,806
Total consideration	$	1,075,398

During the three and six months ended June 30, 2016, the Company recorded a net release of $1.0 million and $0.3 million, respectively, in Hyperion acquisition-related costs primarily due to a reduction in severance and other payroll-related payments required. During the three and six months ended June 30, 2016, a net release of $1.3 million and $0.6 million were accounted for as “general and administrative”, respectively, while a net expense of $0.2 million and $0.2 million were accounted for as “research and development”, respectively, and a net expense of $0.1 million and $0.1 million were accounted for as “costs of goods sold”, respectively, in the condensed consolidated statements of comprehensive income (loss).

During the three and six months ended June 30, 2015, the Company incurred $45.9 million and $47.9 million, respectively, in Hyperion acquisition-related costs. During the three and six months ended June 30, 2015, $36.9 million and $37.9 million were accounted for as “general and administrative expenses”, respectively, and $9.0 million and $10.0 million were accounted for as “other expenses, net”, respectively, in the condensed consolidated statements of comprehensive income (loss).

Pursuant to ASC 805, the Company accounted for the Hyperion acquisition as a business combination using the acquisition method of accounting. Identifiable assets and liabilities of Hyperion, including identifiable intangible assets, were recorded based on their estimated fair values as of the date of the closing of the acquisition. The excess of the purchase price over the fair value of the net assets acquired was recorded as goodwill. Significant judgment was required in determining the estimated fair values of developed technology intangible assets and certain other assets and liabilities. Such a valuation required estimates and assumptions including, but not limited to, estimating future cash flows and direct costs in addition to developing the appropriate discount rates and current market profit margins. The Company’s management believes the fair values recognized for the assets acquired and the liabilities assumed are based on reasonable estimates and assumptions.

The following table summarizes the final fair values assigned to the assets acquired and the liabilities assumed by the Company (in thousands): 

(Liabilities assumed) and assets acquired:	Allocation
Deferred tax liabilities, net	$	(262,732	)
Accounts payable		(2,439	)
Accrued trade discounts and rebates		(9,792	)
Accrued expenses		(7,566	)
Contingent royalties		(86,800	)
Cash and cash equivalents		53,037
Short-term investments		39,049
Long-term investments		25,574
Accounts receivable, net		11,858
Inventory		13,498
Prepaid expenses and other current assets		2,533
Property and equipment		1,044
Other non-current assets		123
Developed technology		1,044,200
Goodwill		253,811
Fair value of consideration paid	$	1,075,398

Inventories acquired included raw materials and finished goods. Inventories were recorded at their current fair values. The fair value of finished goods has been determined based on the estimated selling price, net of selling costs and a margin on the selling costs. The fair value of raw materials was estimated to equal the replacement cost. A step up in the value of inventory of $8.7 million was recorded in connection with the acquisition and has subsequently been fully recognized in the condensed consolidated statements of comprehensive income (loss).  

Other tangible assets and liabilities were valued at their respective carrying amounts as management believes that these amounts approximated their acquisition date fair values.

Identifiable intangible assets and liabilities acquired include developed technology and contingent royalties. The fair values of the developed technology and contingent royalties represent valuations performed with the assistance of an independent appraisal firm based on management’s estimates, forecasted financial information and reasonable and supportable assumptions.

Developed technology intangible assets reflect the estimated value of Hyperion’s rights to its currently marketed medicines, RAVICTI and BUPHENYL. The fair value of developed technology was determined using an income approach. The income approach explicitly recognizes that the fair value of an asset is premised upon the expected receipt of future economic benefits such as earnings and cash inflows based on current sales projections and estimated direct costs for Hyperion’s medicines. Indications of value were developed by discounting these benefits to their acquisition-date worth at a discount rate of 8.5% that reflected the then-current return requirements of the market. The fair value of the RAVICTI and BUPHENYL developed technologies were capitalized as of the Hyperion acquisition date and are subsequently being amortized over 11 and 7 years, respectively, which are the periods in which over 90% of the estimated cash flows are expected to be realized.

The Company has assigned a fair value to a contingent liability for royalties potentially payable under previously existing agreements related to RAVICTI and BUPHENYL. The royalties are payable under the terms of an asset purchase agreement and an amended and restated collaboration agreement with Ucyclyd Pharma, Inc. (“Ucyclyd”) and a license agreement with Saul W. Brusilow, M.D. and Brusilow Enterprises Inc. (together “Brusilow”). See Note 12 for details of the percentages payable under such agreements. The initial fair value of this liability was $86.8 million and was determined using a discounted cash flow analysis incorporating the estimated future cash flows of royalty payments resulting from future sales. The discount rate used was the same as for the fair value of the developed technology.

Deferred tax assets and liabilities arise from acquisition accounting adjustments where book values of certain assets and liabilities differ from their tax bases. Deferred tax assets and liabilities are recorded at the currently enacted rates which will be in effect at the time when the temporary differences are expected to reverse in the country where the underlying assets and liabilities are located. Hyperion’s developed technology as of the acquisition date was located primarily in the United States where a U.S. tax rate of 39% is being utilized and a significant deferred tax liability is recorded. Upon consummation of the Hyperion acquisition, Hyperion became a member of the Company’s U.S. tax consolidation group. As such, its tax assets and liabilities were considered in determining the appropriate amount (if any) of valuation allowances that should be recognized in assessing the realizability of the group’s deferred tax assets. The Hyperion acquisition adjustments resulted in the recognition of significant net deferred tax liabilities. Per ASC Topic 740, Accounting for Uncertainty in Income Taxes, future reversals of existing taxable temporary differences provide objectively verifiable evidence that should be considered as a source of taxable income to realize a tax benefit for deductible temporary differences and carryforwards. Generally, the existence of sufficient taxable temporary differences will enable the use of the tax benefit of existing deferred tax assets. As of the first quarter of 2015, the Company had significant U.S. federal and state valuation allowances. These valuation allowances were released in the second quarter of 2015 to reflect the recognition of Hyperion’s deferred tax liabilities that will provide taxable temporary differences that will be realized within the carryforward period of the Company’s U.S. tax consolidation group’s available net operating losses and other deferred tax assets. Accordingly, the Company recorded an income tax benefit of $105.1 million in the second quarter of 2015 relating to the release of existing U.S. federal and state valuation allowances.

Short-term and long-term investments included in the table above represent available-for-sale securities that were 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 were recorded at fair value and were liquidated shortly after the acquisition.

Goodwill represents the excess of the acquisition consideration over the estimated fair value of net assets acquired and was recorded in the condensed consolidated balance sheet as of the acquisition date. The Company does not expect any portion of this goodwill to be deductible for tax purposes.

Pro Forma Information

The table below represents the condensed consolidated financial information for the Company for the six months ended June 30, 2015 on a pro forma basis, assuming that the Crealta and Hyperion acquisitions occurred as of January 1, 2015. The historical financial information has been adjusted to give effect to pro forma items that are directly attributable to the Crealta and Hyperion acquisitions, and are expected to have a continuing impact on the consolidated results. These items include, among others, adjustments to record the amortization of definite-lived intangible assets, interest expense, debt discount and deferred financing costs associated with the debt in connection with the acquisitions.

The Company does not believe that the pre-acquisition operating results for Crealta during January 2016 are material to the combined entity and as such the Company did not prepare an unaudited pro forma combined statement of operations for the six months ended June 30, 2016.

Additionally, the following table sets forth unaudited financial information and has been compiled from historical financial statements and other information, but is not necessarily indicative of the results that actually would have been achieved had the transactions occurred on the dates indicated or that may be achieved in the future (in thousands):

	For the Six Months Ended June 30,
	2015
	As reported		Pro forma adjustments			Pro forma
Net sales	$	285,962	$	64,693		$	350,655
Net income (loss)		12,261		(48,941	)		(36,680	)

The Company’s unaudited condensed consolidated statements of comprehensive income (loss) for the six months ended June 30, 2016 include KRYSTEXXA and MIGERGOT net sales as a result of the acquisition of Crealta of $36.0 million and $2.0 million, respectively, and RAVICTI and BUPHENYL net sales as a result of the acquisition of Hyperion of $76.4 million and $7.8 million, respectively. The Company’s unaudited condensed consolidated statements of comprehensive income (loss) for the six months ended June 30, 2015 include RAVICTI and BUPHENYL net sales as a result of the acquisition of Hyperion of $19.0 million and $3.9 million, respectively.

Crealta and Hyperion have been fully integrated into the Company’s business and as a result of these integration efforts, the Company cannot distinguish between these operations and those of the Company’s legacy business.    

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Inventories

6 Months Ended

Jun. 30, 2016

Inventory Disclosure [Abstract]

Inventories

NOTE 4 – INVENTORIES

Inventories are stated at the lower of cost or market value. Inventories consist of raw materials, work-in-process and finished goods. The Company has entered into manufacturing and supply agreements for the manufacture or purchase of raw materials and production supplies. The Company’s inventories include the direct purchase cost of materials and supplies and manufacturing overhead costs.

The components of inventories as of June 30, 2016 and December 31, 2015 consisted of the following (in thousands):

	June 30, 2016		December 31, 2015
Raw materials	$	2,145	$	6,232
Work-in-process		145,827		631
Finished goods		24,130		11,513
Inventories, net	$	172,102	$	18,376

Work-in-process at June 30, 2016 included $135.5 million of stepped-up KRYSTEXXA and MIGERGOT inventory. Finished goods at June 30, 2016 included $9.9 million of stepped-up KRYSTEXXA and MIGERGOT inventory. During the three and six months ended June 30, 2016, the Company amortized $9.1 million and $16.5 million, respectively, of the KRYSTEXXA and MIGERGOT finished goods inventory step-up.

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Prepaid Expenses and Other Current Assets

6 Months Ended

Jun. 30, 2016

Deferred Costs Capitalized Prepaid And Other Assets Disclosure [Abstract]

Prepaid Expenses and Other Current Assets

NOTE 5 – PREPAID EXPENSES AND OTHER CURRENT ASSETS

Prepaid expenses and other current assets as of June 30, 2016 and December 31, 2015 consisted of the following (in thousands):

	June 30, 2016		December 31, 2015
Prepaid income taxes	$	14,693	$	4
Medicine samples inventory		6,268		4,697
Prepaid co-pay expenses		2,023		1,881
Rabbi trust assets		2,303		773
Other prepaid expenses		8,579		8,503
Prepaid expenses and other current assets	$	33,866	$	15,858

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Property and Equipment

6 Months Ended

Jun. 30, 2016

Property Plant And Equipment [Abstract]

Property and Equipment

NOTE 6 – PROPERTY AND EQUIPMENT

Property and equipment as of June 30, 2016 and December 31, 2015 consisted of the following (in thousands):

	June 30, 2016			December 31, 2015
Machinery and equipment	$	2,843		$	2,946
Computer equipment		2,916			2,514
Software		9,593			1,360
Leasehold improvements		6,930			1,966
Other		1,689			276
		23,971			9,062
Less accumulated depreciation		(5,660	)		(3,791	)
Construction in process		1,908			3,492
Software implementation in process		1,752			5,257
Property and equipment, net	$	21,971		$	14,020

The Company capitalizes development costs associated with internal use software, including external direct costs of materials and services and payroll costs for employees devoting time to a software project. Costs incurred during the preliminary project stage, as well as costs for maintenance and training, are expensed as incurred.

Software implementation in process as of June 30, 2016 and December 31, 2015 is related to new enterprise resource planning software being implemented by the Company. The software is being implemented on a phased basis starting January 2016 and depreciation is not recorded on capitalized costs relating to a phase which has not yet entered service. Once a particular phase of the project enters service, associated capitalized costs are moved from “software implementation in process” to “software” in the table above, and depreciation commences.

Depreciation expense was $1.1 million and $0.6 million for the three months ended June 30, 2016 and 2015, respectively, and was $2.1 million and $1.2 million for the six months ended June 30, 2016 and 2015, respectively.

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Goodwill and Intangible Assets

6 Months Ended

Jun. 30, 2016

Goodwill And Intangible Assets Disclosure [Abstract]

Goodwill and Intangible Assets

NOTE 7 – GOODWILL AND INTANGIBLE ASSETS

Goodwill

The gross carrying amount of goodwill as of June 30, 2016 was as follows (in thousands):

Balance at December 31, 2015	$	253,811
Acquired during the period		2,116
Balance at June 30, 2016	$	255,927

In May 2015, the Company recognized goodwill with a value of $253.8 million in connection with the Hyperion acquisition, which represented the excess of the purchase price over the fair value of the net assets acquired.

In January 2016, the Company recognized goodwill with a preliminary value of $1.8 million in connection with the Crealta acquisition, which represented the excess of the purchase price over the fair value of the net assets acquired. During the three months ended June 30, 2016, the Company recorded measurement period adjustments related to developed technology and inventory, which resulted in a net increase in goodwill of $0.3 million.

See Note 3 for further details of goodwill acquired in business acquisitions.

As of June 30, 2016, there were no accumulated goodwill impairment losses.

Intangible Assets

The Company’s intangible assets consist of developed technology related to ACTIMMUNE, BUPHENYL, KRYSTEXXA, MIGERGOT, PENNSAID 2%, RAVICTI, RAYOS and VIMOVO in the United States, and AMMONAPS and LODOTRA in Europe, as well as in-process research and development (“IPR&D”) and customer relationships for ACTIMMUNE.

In May 2015, in connection with the acquisition of Hyperion, the Company capitalized $1,021.6 million of developed technology related to RAVICTI and $22.6 million of developed technology related to BUPHENYL.

In January 2016, in connection with the acquisition of Crealta, the Company capitalized $392.7 million of developed technology related to KRYSTEXXA and $24.6 million of developed technology related to MIGERGOT. During the three months ended June 30, 2016, the Company recorded a measurement period adjustment which increased the cost basis of MIGERGOT developed technology by $1.4 million, to $26.0 million.

See Note 3 for further details of intangible assets acquired in business acquisitions.

The Company tests its intangible assets for impairment when events or circumstances may indicate that the carrying value of these assets exceeds their fair value. The Company does not believe there have been any circumstances or events that would indicate that the carrying value of any of its intangible assets was impaired at June 30, 2016 or December 31, 2015.

As of June 30, 2016 and December 31, 2015, amortizable intangible assets consisted of the following (in thousands):

	June 30, 2016							December 31, 2015
	CostBasis		Accumulated Amortization			Net Book Value		Cost Basis		Accumulated Amortization			Net Book Value
Developed technology	$	2,211,195	$	(283,482	)	$	1,927,713	$	1,792,495	$	(183,446	)	$	1,609,049
Customer relationships		8,100		(1,445	)		6,655		8,100		(1,039	)		7,061
Total amortizable intangible assets	$	2,219,295	$	(284,927	)	$	1,934,368	$	1,800,595	$	(184,485	)	$	1,616,110

IPR&D is not amortized until successful completion of the project. IPR&D assets represent capitalized incomplete research projects related to ACTIMMUNE that the Company acquired through a business combination.

Amortization expense for the three months ended June 30, 2016 and 2015 was $50.8 million and $31.8 million, respectively, and was $100.4 million and $49.5 million for the six months ended June 30, 2016 and 2015, respectively. As of June 30, 2016, estimated future amortization expense was as follows (in thousands):

2016 (July to December)	$	101,376
2017		202,963
2018		202,963
2019		189,971
2020		189,752
Thereafter		1,047,343
Total	$	1,934,368

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Accrued Trade Discounts and Rebates

6 Months Ended

Jun. 30, 2016

Accrued Trade Discounts and Rebates [Member]

Valuation And Qualifying Accounts Disclosure [Line Items]

Accrued Liabilities / Expenses

NOTE 8 – ACCRUED TRADE DISCOUNTS AND REBATES

Accrued trade discounts and rebates as of June 30, 2016 and December 31, 2015 consisted of the following (in thousands):

	June 30, 2016		December 31, 2015
Accrued wholesaler fees and commercial rebates	$	25,317	$	21,112
Accrued co-pay and other patient assistance		134,467		114,201
Accrued government rebates and chargebacks		60,890		48,456
Accrued trade discounts and rebates		220,674		183,769
Invoiced wholesaler fees and commercial rebates, co-pay    and other patient assistance, and government rebates and    chargebacks in accounts payable		36,242		—
Total customer-related accruals and allowances	$	256,916	$	183,769

The following table summarizes changes in the Company’s customer-related accruals and allowances from December 31, 2015 to June 30, 2016 (in thousands):

	Wholesaler Fees			Co-Pay and			Government
	and Commercial			Other Patient			Rebates and
	Rebates			Assistance			Chargebacks			Total
Balance at December 31, 2015	$	21,112		$	114,201		$	48,456		$	183,769
Current provisions relating to sales in the six months ended    June 30, 2016		51,854			816,835			127,836			996,525
Adjustments relating to prior year sales		2,931			—			(7,191	)		(4,260	)
Payments relating to sales in the six months ended    June 30, 2016		(30,410	)		(646,622	)		(74,210	)		(751,242	)
Payments relating to sales in prior years		(20,644	)		(114,201	)		(34,455	)		(169,300	)
Crealta acquisition on January 13, 2016		492			—			932			1,424
Balance at June 30, 2016	$	25,335		$	170,213		$	61,368		$	256,916

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Accrued Expenses

6 Months Ended

Jun. 30, 2016

Accrued Expenses [Member]

Payables And Accruals [Line Items]

Accrued Liabilities / Expenses

NOTE 9 – ACCRUED EXPENSES

Accrued expenses as of June 30, 2016 and December 31, 2015 consisted of the following (in thousands):

	June 30, 2016		December 31, 2015
Payroll-related expenses	$	33,639	$	47,205
Consulting and professional services		15,097		17,160
Accrued interest		10,813		10,637
Accrued other		16,160		25,044
Accrued expenses	$	75,709	$	100,046

Accrued payroll-related expenses at June 30, 2016 include $1.7 million and $2.7 million relating to severance and related employee costs as a result of the Hyperion and Crealta acquisitions, respectively.

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Accrued Royalties

6 Months Ended

Jun. 30, 2016

Accrued Royalties [Member]

Payables And Accruals [Line Items]

Accrued Liabilities / Expenses

NOTE 10 – ACCRUED ROYALTIES

Changes in the liability for royalties during the six months ended June 30, 2016 consisted of the following (in thousands):

Balance as of December 31, 2015	$	175,219
Assumed KRYSTEXXA and MIGERGOT accrued royalties		1,401
Assumed KRYSTEXXA and MIGERGOT contingent royalty    liabilities		51,300
Royalty payments		(18,780	)
Accretion expense		19,028
Balance as of June 30, 2016		228,168
Less: Current portion		58,008
Accrued royalties, net of current	$	170,160

The Company did not record any remeasurements of contingent royalty liabilities during the six months ended June 30, 2016, as there were no triggering events during the period.

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Fair Value Measurements

6 Months Ended

Jun. 30, 2016

Fair Value Disclosures [Abstract]

Fair Value Measurements

NOTE 11 – FAIR VALUE MEASUREMENTS

The following tables and paragraphs set forth the Company’s financial instruments that are measured at fair value on a recurring basis within the fair value hierarchy. Assets and liabilities measured at fair value are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires management to make judgments and consider factors specific to the asset or liability. The following describes three levels of inputs that may be used to measure fair value:

Level 1—Observable inputs such as quoted prices in active markets for identical assets or liabilities;

Level 2—Observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities, quoted prices in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities; and

Level 3—Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

The Company utilizes the market approach to measure fair value for its money market funds. The market approach uses prices and other relevant information generated by market transactions involving identical or comparable assets or liabilities.

As of June 30, 2016, the Company’s restricted cash included bank time deposits which were measured at fair value using Level 2 inputs and their carrying values were approximately equal to their fair values. Level 2 inputs, obtained from various third-party data providers, represent quoted prices for similar assets in active markets, or these inputs were derived from observable market data, or if not directly observable, were derived from or corroborated by other observable market data.

Other current assets recorded at fair value on a recurring basis are composed of investments held in a rabbi trust related to deferred compensation arrangements. Quoted prices for these investments, primarily in mutual funds, are available in active markets. Thus, the Company’s investments related to deferred compensation arrangements are classified as Level 1 measurements in the fair value hierarchy.

The Company transfers its financial assets and liabilities between the fair value hierarchies at the end of each reporting period. There were no transfers between the different levels of the fair value hierarchy in 2016 or 2015.

Assets and liabilities measured at fair value on a recurring basis

The following table sets forth the Company’s financial assets and liabilities at fair value on a recurring basis as of June 30, 2016 and December 31, 2015 (in thousands):

	June 30, 2016
	Level 1		Level 2		Level 3		Total
Assets:
Bank time deposits	$	—	$	2,502	$	—	$	2,502
Money market funds		240,000		—		—		240,000
Other current assets		2,303		—		—		2,303
Total assets at fair value	$	242,303	$	2,502	$	—	$	244,805

	December 31, 2015
	Level 1		Level 2		Level 3		Total
Assets:
Bank time deposits	$	—	$	1,000	$	—	$	1,000
Money market funds		280,053		—		—		280,053
Other current assets		773		—		—		773
Total assets at fair value	$	280,826	$	1,000	$	—	$	281,826

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Commitments and Contingencies

6 Months Ended

Jun. 30, 2016

Commitments And Contingencies Disclosure [Abstract]

Commitments and Contingencies

NOTE 12 – COMMITMENTS AND CONTINGENCIES

Lease Obligations

The Company has the following lease agreements in place for real properties:

Location	Approximate Square Footage		Lease Expiry Date
Dublin, Ireland		18,900	November 4, 2029
Lake Forest, Illinois (1)		160,000	March 31, 2024
Deerfield, Illinois (2)		53,500	June 30, 2018
Brisbane, California (3)		20,100	November 30, 2019
Mannheim, Germany		14,300	December 31, 2018
Chicago, Illinois		6,500	December 31, 2018
Reinach, Switzerland		3,500	May 31, 2020

(1) In connection with the Lake Forest, Illinois lease, the Company has provided a $2.0 million letter of credit to the landlord, through a commercial bank. The Company has two separate lease agreements in place for this property, one of which, consisting of approximately 15,000 square feet, was assumed by the Company as a result of its acquisition of Crealta in January 2016 and will expire on October 31, 2017.

(2) The Company vacated the premises in Deerfield, Illinois in January 2016.

(3) The Company vacated the premises in Brisbane, California in December 2015 and entered into a sublease agreement for the property with a third party.  

Purchase Commitments

In August 2007, the Company entered into a manufacturing and supply agreement with Jagotec AG (“Jagotec”). Under the agreement, Jagotec or its affiliates are required to manufacture and supply RAYOS/LODOTRA exclusively to the Company in bulk. The Company committed to a minimum purchase of RAYOS/LODOTRA tablets from Jagotec for five years from the date of first launch of RAYOS/LODOTRA in a major country, as defined in the agreement, which was April 2009. Thereafter, the agreement automatically renews on a yearly basis until either party provides two years advance written notice of termination. In April 2016 the agreement automatically renewed, therefore the earliest the agreement can expire according to this advance notice procedure is April 15, 2019, and the minimum purchase commitment is in force until April 2019. At June 30, 2016, the minimum purchase commitment based on tablet pricing in effect under the agreement was $2.1 million through April 2019.

In May 2011, the Company entered into a manufacturing and supply agreement with Sanofi-Aventis U.S. LLC (“Sanofi-Aventis U.S.”), and amended the agreement effective as of September 25, 2013. Pursuant to the agreement, as amended, Sanofi-Aventis U.S. is obligated to manufacture and supply DUEXIS to the Company in final, packaged form, and the Company is obligated to purchase DUEXIS exclusively from Sanofi-Aventis U.S. for the commercial requirements of DUEXIS in North America, South America and certain countries and territories in Europe, including the European Union (“EU”) member states and Scandinavia. At June 30, 2016, the Company had a binding purchase commitment to Sanofi-Aventis U.S. for DUEXIS of $5.6 million, which is to be delivered through September 2016.

In July 2013, Vidara and Boehringer Ingelheim RCV GmbH & Co. KG (“Boehringer Ingelheim”) entered into an exclusive supply agreement, which the Company assumed as a result of the Vidara Merger and amended effective as of June 1, 2015. Under the agreement, Boehringer Ingelheim is required to manufacture and supply interferon gamma-1b (ACTIMMUNE) to the Company. The Company is required to purchase minimum quantities of finished medicine per annum through July 2020. As of June 30, 2016, the minimum binding purchase commitment to Boehringer Ingelheim was $14.6 million (converted using a Euro-to-Dollar exchange rate of 1.1108) through July 2020.

In November 2013, the Company entered into a long-term master manufacturing services and product agreement with Patheon Pharmaceuticals Inc. (“Patheon”) pursuant to which Patheon is obligated to manufacture VIMOVO for the Company through December 31, 2019. The Company agreed to purchase a specified percentage of VIMOVO requirements for the United States from Patheon. The Company must pay an agreed price for final, packaged VIMOVO supplied by Patheon as set forth in the Patheon manufacturing agreement, subject to adjustments, including certain unilateral adjustments by Patheon, such as annual adjustments for inflation and adjustments to account for certain increases in the cost of components of VIMOVO other than active materials. The Company issues 12-month forecasts of the volume of VIMOVO that the Company expects to order. The first six months of the forecast are considered binding firm orders. At June 30, 2016, the Company had a binding purchase commitment with Patheon for VIMOVO of $2.5 million through September 2016.

In October 2014, in connection with the acquisition of the U.S. rights to PENNSAID 2% from Nuvo, the Company and Nuvo entered into an exclusive supply agreement, which was amended in February 2016. Under the supply agreement, Nuvo is obligated to manufacture and supply PENNSAID 2% to the Company. The term of the supply agreement is through December 31, 2029, but the agreement may be terminated earlier by either party for any uncured material breach by the other party of its obligations under the supply agreement or upon the bankruptcy or similar proceeding of the other party. At least 90 days prior to the first day of each calendar month during the term of the supply agreement, the Company submits a binding written purchase order to Nuvo for PENNSAID 2% in minimum batch quantities. At June 30, 2016, the Company had a binding purchase commitment with Nuvo for PENNSAID 2% of $4.4 million through September 2016.

Purchase orders relating to the manufacture of RAVICTI and BUPHENYL of $4.6 million were outstanding at June 30, 2016. 

In March 2007, Savient Pharmaceuticals, Inc. (as predecessor in interest in Crealta), entered into a commercial supply agreement with Bio-Technology General (Israel) Ltd (“BTG Israel) for the production of the bulk KRYSTEXXA medicine (“bulk medicine”). The Company assumed this agreement as part of the Crealta acquisition. Under this agreement, the Company is obligated to purchase at least 80 percent of its annual world-wide bulk medicine requirements from BTG Israel. In December 2015, Crealta received a notice of termination from BTG Israel and as a result the agreement will terminate on December 15, 2018. If the manufacture of the bulk medicine is moved out of Israel, the Company may be required to obtain the approval of the Israeli Office of the Chief Scientist (“OCS”) because certain KRYSTEXXA intellectual property was initially developed with a grant funded by the OCS. In addition, if the manufacturing is moved out of Israel, the Company may be required to pay the OCS additional amounts as a repayment for the OCS grant funding. As of the Crealta acquisition date it was probable that the manufacture of the KRYSTEXXA bulk medicine would be moved outside of Israel and the Company may be required to pay additional amounts estimated at approximately $6.9 million. The estimated obligation was recorded as an assumed contingent liability as of the Crealta acquisition date (see Note 3 for further details) and is included in “other long-term liabilities” in the condensed consolidated balance sheet. The Company issues 18-month forecasts of the volume of KRYSTEXXA that the Company expects to order. The first six months of the forecast are considered binding firm orders. At June 30, 2016, the Company had a binding purchase commitment with BTG Israel for KRYSTEXXA of $2.2 million through September 2016.

Royalty Agreements

RAYOS/LODOTRA

In connection with an August 2004 development and license agreement with SkyePharma AG (“SkyePharma”) and Jagotec, a wholly-owned subsidiary of SkyePharma, regarding certain proprietary technology and know-how owned by SkyePharma, Jagotec is entitled to receive a single digit percentage royalty on net sales of RAYOS/LODOTRA and on any sub-licensing income, which includes any payments not calculated based on the net sales of RAYOS/LODOTRA, such as license fees, lump sums and milestone payments.

VIMOVO

The Company entered into a license agreement with Pozen Inc., who subsequently entered into a business combination with Tribute Pharmaceuticals Canada Inc. to become known as Aralez Pharmaceuticals Inc. (“Aralez”). Under this agreement, the Company is required to pay Aralez a flat 10% royalty on net sales of VIMOVO and other medicines sold by the Company, its affiliates or sublicensees during the royalty term that contain gastroprotective agents in a single fixed combination oral solid dosage form with nonsteroidal anti-inflammatory drugs, subject to minimum annual royalty obligations of $7.5 million. These minimum royalty obligations will continue for each year during which one of Aralez’s patents covers such medicines in the United States and there are no competing medicines in the United States. The royalty rate may be reduced to a mid-single digit royalty rate as a result of loss of market share to competing medicines. The Company’s obligation to pay royalties to Aralez will expire upon the later of (a) expiration of the last-to-expire of certain patents covering such medicines in the United States, and (b) ten years after the first commercial sale of such medicines in the United States.

ACTIMMUNE

Under a license agreement, as amended, with Genentech Inc. (“Genentech”), who was the original developer of ACTIMMUNE, the Company is or was obligated to pay royalties to Genentech on its net sales of ACTIMMUNE as follows:

· Through November 25, 2014, a royalty of 45% of the first $3.7 million in net sales achieved in a calendar year, and 10% on all additional net sales in that year;

· For the period from November 26, 2014 through May 5, 2018, a royalty in the 20% to 30% range for the first tier in net sales and in the 1% to 9% range for the second tier; and

· From May 6, 2018 and for so long as the Company continues to commercially sell ACTIMMUNE, an annual royalty in the low single digits as a percentage of annual net sales.

Under the terms of an assignment and option agreement with Connetics, the Company is obligated to pay royalties to Connetics on the Company’s net sales of ACTIMMUNE as follows:

· 0.25% of net sales of ACTIMMUNE, rising to 0.5% once cumulative net sales of ACTIMMUNE in the United States surpass $1.0 billion; and in the event the Company develops and receives regulatory approval for ACTIMMUNE in the indication of scleroderma, the Company will be obligated to pay a royalty of 4% on all net sales of ACTIMMUNE recorded for use in that indication.

RAVICTI

Under the terms of an asset purchase agreement with Ucyclyd, the Company is obligated to pay to Ucyclyd tiered mid to high single-digit royalties on its global net sales of RAVICTI. Under the terms of a license agreement withBrusilow, the Company is obligated to pay low single-digit royalties to Brusilow on net sales of RAVICTI that are covered by a valid claim of a licensed patent.

BUPHENYL

Under the terms of an amended and restated collaboration agreement with Ucyclyd, the Company is obligated to pay to Ucyclyd tiered mid to high single-digit royalties on its net sales in the United States of BUPHENYL to urea cycle disorder patients outside of the FDA-approved labeled age range for RAVICTI.

KRYSTEXXA

Under the terms of a license agreement with Duke and MVP, the Company is obligated to pay Duke a mid-single digit royalty on its global net sales of KRYSTEXXA and a low-double digit royalty on any global sublicense revenue. The Company is also obligated to pay MVP a mid-single digit royalty on its net sales of KRYSTEXXA outside of the United States and a low-double digit royalty on any sublicense revenue outside of the United States.

The royalty obligations described above are included in accrued royalties on the Company’s condensed consolidated balance sheets.

For all of the royalty agreements entered into by the Company, a total expense of $10.9 million and $21.4 million was recorded in cost of goods sold for the three and six months ended June 30, 2016, respectively. The total expense recorded in cost of goods sold for the three and six months ended June 30, 2015 was $19.4 million and $23.0 million, respectively.

Contingencies

The Company is subject to claims and assessments from time to time in the ordinary course of business. The Company’s management does not believe that any such matters, individually or in the aggregate, will have a material adverse effect on the Company’s business, financial condition, results of operations or cash flows. In addition, the Company from time to time has billing disputes with vendors in which amounts invoiced are not in accordance with the terms of their contracts.

In November 2015, Express Scripts, Inc. (“Express Scripts”) filed suit against the Company in Delaware Superior Court, Newcastle County, asserting claims for breach of contract, breach of the implied covenant of good faith and fair dealing, unjust enrichment, and declaratory relief arising from the parties’ 2012 Preferred Savings Grid Rebate Program Agreement. Express Scripts is seeking damages of approximately $166.2 million for alleged unpaid rebates and administrative fees through the end of 2015, late fees, interest, and attorneys’ fees and costs. On January 11, 2016, the Company answered the complaint, denying Express Scripts’ claims and denying that it owes Express Scripts any damages or other relief. The Company also filed a counter-claim against Express Scripts for breach of contract, breach of the implied covenant of good faith and fair dealing, and declaratory relief arising from Express Scripts’ breach of the rebate agreement. On February 1, 2016, Express Scripts filed an answer to the Company’s counter-claim. The parties have commenced discovery and a bench trial in the case is currently scheduled for April 2017. Consistent with FAS 5, Accounting for Contingencies, the Company did not establish a reserve in relation to the above suit as the Company currently believes that a loss is not probable nor reasonably estimable.

In November 2015, the Company received a subpoena from the U.S. Attorney’s Office for the Southern District of New York requesting documents and information related to its patient access programs and other aspects of its marketing and commercialization activities. The Company is unable to predict how long this investigation will continue or its outcome, but it anticipates that it may incur significant costs in connection with the investigation, regardless of the outcome. The Company may also become subject to similar investigations by other governmental agencies. The investigation by the U.S. Attorney’s Office and any additional investigations of the Company’s patient access programs and sales and marketing activities may result in damages, fines, penalties or other administrative sanctions against the Company.

Indemnification

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. To date, the Company has not paid any claims or been required to defend any action related to its indemnification obligations. However, the Company may record charges in the future as a result of these indemnification obligations.

In accordance with its memorandum and articles of association, 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. Additionally, the Company has entered, and intends to continue to enter, into separate indemnification agreements with its directors and executive officers. These agreements, among other things, require the Company to indemnify its directors and executive officers for certain expenses, including attorneys’ fees, judgments, fines and settlement amounts incurred by a director or executive officer in any action or proceeding arising out of their services as one of the Company’s directors or executive officers, or any of the Company’s subsidiaries or any other company or enterprise to which the person provides services at the Company’s request. There have been no claims to date and the Company has a director and officer insurance policy that enables it to recover a portion of any amounts paid for future potential claims. Certain of the Company’s officers and directors had also entered into separate indemnification agreements with HPI prior to the Vidara Merger.

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Legal Proceedings

6 Months Ended

Jun. 30, 2016

Commitments And Contingencies Disclosure [Abstract]

Legal Proceedings

NOTE 13 – LEGAL PROCEEDINGS

On July 15, 2013, the Company received a Paragraph IV Patent Certification from Watson Laboratories, Inc.—Florida, known as Actavis Laboratories FL, Inc. (“Actavis FL”), advising that Actavis FL had filed an Abbreviated New Drug Application (“ANDA”) with the FDA for a generic version of RAYOS, containing up to 5 mg of prednisone. On August 26, 2013, the Company, together with Jagotec, filed suit in the United States District Court for the District of New Jersey against Actavis FL, Actavis Pharma, Inc., Andrx Corp., and Actavis, Inc. seeking an injunction to prevent the approval of the ANDA.

On October 1, 2015, the Company’s subsidiary Horizon Pharma Switzerland GmbH, as well as Jagotec, entered into a license and settlement agreement (the “Actavis settlement agreement”) with Actavis FL relating to the Company’s and Jagotec’s patent infringement litigation against Actavis FL. In accordance with legal requirements, the Company, Jagotec and Actavis FL agreed to submit the Actavis settlement agreement to the U.S. Federal Trade Commission (“FTC”) and the U.S. Department of Justice (“DOJ”) for review. The parties submitted the Actavis settlement agreement to the FTC and DOJ for review and no issues were raised by either. The parties agreed to file stipulations of dismissal with the court regarding the litigation and the court entered the stipulation and closed the case on December 4, 2015. The Actavis settlement agreement provides for a full settlement and release by each party of all claims that relate to the litigation or under the patents with respect to Actavis FL’s generic version of RAYOS tablets.

Under the Actavis settlement agreement, the Company and Jagotec granted Actavis FL a non-exclusive license to manufacture and commercialize Actavis FL’s generic version of RAYOS tablets in the United States after the generic entry date (as defined below) and to take steps necessary to develop inventory of, and prepare to commercialize, Actavis FL’s generic version of RAYOS tablets during certain limited periods prior to the generic entry date. The Company and Jagotec also agreed that during the 180 days after the Generic Entry Date, the license granted to Actavis FL would be exclusive with respect to any third-party generic version of RAYOS tablets.

Under the Actavis settlement agreement, the generic entry date is December 23, 2022; however, Actavis FL may be able to enter the market earlier under certain circumstances. Such events relate to the resolution of any other third-party RAYOS patent litigation, the entry of other generic versions of RAYOS tablets or certain substantial reductions in RAYOS prescriptions over specified periods of time.

The Company and Jagotec also agreed not to sue or assert any claim against Actavis FL for infringement of any patent or patent application owned or controlled by the Company or Jagotec during the term of the Actavis settlement agreement based on Actavis FL’s generic version of RAYOS tablets in the United States. In turn, Actavis FL agreed not to challenge the validity or enforceability of the licensed patents.

If the Company or Jagotec enter into any similar agreements with other parties with respect to generic versions of RAYOS tablets, the Company and Jagotec agreed to amend the Actavis settlement agreement to provide Actavis FL with terms that are no less favorable than those provided to such other parties with respect to the license terms, generic entry date, permitted pre-market activities and notice provisions.

On November 13, 2014, the Company received a Paragraph IV Patent Certification from Watson Laboratories, Inc. (“Watson Laboratories”) advising that Watson Laboratories had filed an ANDA with the FDA for a generic version of PENNSAID 2%. On December 23, 2014, the Company filed suit in the United States District Court for the District of New Jersey against Watson Laboratories, Actavis, Inc., and Actavis plc (collectively “Actavis”) seeking an injunction to prevent the approval of the ANDA. Since then, Watson Laboratories, Inc. changed its name to Actavis Laboratories UT, Inc., and remains the current holder of the ANDA. The lawsuit alleged that Actavis has infringed U.S. Patent Nos. 8,217,078, 8,252,838, 8,546,450, 8,563,613, 8,618,164, and 8,871,809 by filing an ANDA seeking approval from the FDA to market a generic version of PENNSAID 2% prior to the expiration of certain of the Company’s patents listed in the FDA’s Orange Book (“Orange Book”). The commencement of the patent infringement lawsuit stays, or bars, FDA approval of Actavis’ ANDA for 30 months or until an earlier district court decision that the subject patents are not infringed or are invalid.

On June 30, 2015, the Company filed suit in the United States District Court for the District of New Jersey against Actavis for patent infringement of U.S. Patent No. 9,066,913. On August 11, 2015, the Company filed suit in the United States District Court for the District of New Jersey against Actavis for patent infringement of U.S. Patent No. 9,101,591. On September 17, 2015, the Company filed suit in the United States District Court for the District of New Jersey against Actavis for patent infringement of U.S. Patent No. 9,132,110. All three patents, U.S. Patent Nos. 9,066,913, 9,101,591, and 9,132,110 are listed in the Orange Book and have claims that cover PENNSAID 2%. These three cases have since been consolidated with the case filed against Actavis on December 23, 2014.

On October 27, 2015, the Company filed suit in the United States District Court for the District of New Jersey against Actavis for patent infringement of U.S. Patent Nos. 9,168,304 and 9,168,305. On February 5, 2016, the Company filed suit in the United States District Court for the District of New Jersey against Actavis for patent infringement of U.S. Patent No. 9,220,784. All three patents, U.S. Patent Nos. 9,168,304, 9,168,305, and 9,220,784 are listed in the Orange Book and have claims that cover PENNSAID 2%. All of the litigation against Actavis remains pending. No trial date for any of the Actavis actions has been set by the court.

The Company received from Actavis a Paragraph IV Patent Certification Notice Letter dated July 1, 2016, against Orange Book listed U.S. Patent Nos. 9,339,551 and 9,339,552, advising that Actavis had filed an ANDA with the FDA for a generic version of PENNSAID 2%.

On December 2, 2014, the Company received a Paragraph IV Patent Certification against Orange Book listed U.S. Patent Nos. 8,217,078, 8,252,838, 8,546,450, 8,563,613, 8,618,164, and 8,741,956 from Paddock Laboratories, LLC (“Paddock”) advising that Paddock had filed an ANDA with the FDA for a generic version of PENNSAID 2%. On January 9, 2015, the Company received from Paddock another Paragraph IV Patent Certification against newly Orange Book listed U.S. Patent No. 8,871,809. On January 13, 2015 and January 14, 2015, the Company filed suits in the United States District Court for the District of New Jersey and the United States District Court for the District of Delaware, respectively, against Paddock seeking an injunction to prevent the approval of the ANDA. The lawsuits alleged that Paddock has infringed U.S. Patent Nos. 8,217,078, 8,252,838, 8,546,450, 8,563,613, 8,618,164, and 8,871,809 by filing an ANDA seeking approval from the FDA to market generic versions of PENNSAID 2% prior to the expiration of certain of the Company’s patents listed in the Orange Book.

On May 6, 2015, the Company entered into a settlement and license agreement (the “Perrigo settlement agreement”) with Perrigo Company plc and its subsidiary Paddock (collectively, “Perrigo”), relating to the Company’s patent infringement litigation against Perrigo. The Perrigo settlement agreement provides for a full settlement and release by both the Company and Perrigo of all claims that were or could have been asserted in the litigation and that arise out of the issues that were the subject of the litigation or Perrigo’s generic version of PENNSAID 2%. The Perrigo settlement agreement also contemplated the filing of a joint stipulation of dismissal by the parties. This stipulation of dismissal was entered by the district court on May 13, 2015.

Under the Perrigo settlement agreement, the Company granted Perrigo a non-exclusive license to manufacture and commercialize Perrigo’s generic version of PENNSAID 2% in the United States after the license effective date (as defined below) and to take steps necessary to develop inventory of, and prepare to commercialize, Perrigo’s generic version of PENNSAID 2% during certain limited periods prior to the license effective date.

Under the Perrigo settlement agreement, the license effective date is January 10, 2029; however, Perrigo may be able to enter the market earlier under certain circumstances. Such events relate to the resolution of any other third-party PENNSAID 2% patent litigation, the entry of other third-party generic versions of PENNSAID 2% or certain substantial reductions in the Company’s PENNSAID 2% shipments over specified periods of time.

Under the Perrigo settlement agreement, the Company also agreed not to sue or assert any claim against Perrigo for infringement of any patent or patent application owned or controlled by the Company during the term of the license granted in the Perrigo settlement agreement based on the manufacture, use, sale, offer for sale, or importation of Perrigo’s generic version of PENNSAID 2% in the United States.

In certain circumstances following the entry of other third-party generic versions of PENNSAID 2%, the Company may be required to supply Perrigo PENNSAID 2% as its authorized distributor of generic PENNSAID 2%, with the Company receiving specified percentages of any net sales by Perrigo. The Company also agreed that if it enters into any similar agreements with other parties with respect to generic versions of PENNSAID 2%, the Company will amend the Perrigo settlement agreement to provide Perrigo with terms that are no less favorable than those provided to such other parties.

On February 2, 2015, the Company received a Paragraph IV Patent Certification against Orange Book listed U.S. Patent Nos. 8,217,078, 8,252,838, 8,546,450, 8,563,613, 8,618,164, 8,741,956, and 8,871,809 from Taro Pharmaceuticals USA, Inc. and Taro Pharmaceutical Industries, Ltd. (collectively, “Taro”) advising that Taro had filed an ANDA with the FDA for a generic version of PENNSAID 2%. On March 13, 2015, the Company filed suit in the United States District Court for the District of New Jersey against Taro seeking an injunction to prevent the approval of the ANDA.

On September 9, 2015, certain subsidiaries of the Company (the “Horizon Subsidiaries”) entered into a settlement and license agreement with Taro (the “Taro settlement agreement”) relating to the Horizon Subsidiaries’ patent infringement litigation against Taro. In accordance with legal requirements, the Horizon Subsidiaries and Taro submitted the Taro settlement agreement to the FTC and DOJ for review, and no issues have been raised by the FTC and DOJ. The Horizon Subsidiaries and Taro have also filed stipulations of dismissal with the courts regarding the litigation, with these dismissals being entered by the district court on November 3, 2015. The Taro settlement agreement provides for a full settlement and release by both us and Taro of all claims that were or could have been asserted in the Litigation and that arise out of the issues that were subject of the litigation or Taro’s generic version of PENNSAID 2%.

Under the Taro settlement agreement, the Horizon Subsidiaries granted Taro a non-exclusive license to manufacture and commercialize Taro’s generic version of PENNSAID 2% in the United States after the license effective date and to take steps necessary to develop inventory of, and prepare to commercialize, Taro’s generic version of PENNSAID 2% during certain limited periods prior to the license effective date.

Under the Taro settlement agreement, the license effective date is January 10, 2029; however, Taro may be able to enter the market earlier under certain circumstances. Such events relate to the resolution of any other third-party PENNSAID 2% patent litigation, the entry of other third-party generic versions of PENNSAID 2% or certain substantial reductions in the Company’s PENNSAID 2% shipments over specified periods of time.

Under the Taro settlement agreement, the Horizon Subsidiaries also agreed not to sue or assert any claim against Taro for infringement of any patent or patent application owned or controlled by the Horizon Subsidiaries during the term of the license granted in the Taro settlement agreement based on the manufacture, use, sale, offer for sale, or importation of Taro’s generic version of PENNSAID 2% in the United States.

The Horizon Subsidiaries also agreed that if they enter into any similar agreements with other parties with respect to generic versions of PENNSAID 2%, the Horizon Subsidiaries will amend the Taro settlement agreement to provide Taro with terms that are no less favorable than those provided to the other parties.

On March 18, 2015, the Company received a Paragraph IV Patent Certification against Orange Book listed U.S. Patent Nos. 8,217,078, 8,252,838, 8,546,450, 8,563,613, 8,618,164, 8,741,956, and 8,871,809 from Lupin Limited advising that Lupin Limited had filed an ANDA with the FDA for generic version of PENNSAID 2%. On April 30, 2015, the Company filed suit in the United States District Court for the District of New Jersey against Lupin Limited and Lupin Pharmaceuticals Inc. (collectively, “Lupin”), seeking an injunction to prevent the approval of the ANDA. The lawsuit alleges that Lupin has infringed U.S. Patent Nos. 8,217,078, 8,252,838, 8,546,450, 8,563,613, 8,618,164, and 8,871,809 by filing an ANDA seeking approval from the FDA to market generic versions of PENNSAID 2% prior to the expiration of certain of the Company’s patents listed in the Orange Book. The commencement of the patent infringement lawsuit stays, or bars, FDA approval of Lupin’s ANDA for 30 months or until an earlier district court decision that the subject patents are not infringed or are invalid.

On June 30, 2015, the Company filed suit in the United States District Court for the District of New Jersey against Lupin for patent infringement of U.S. Patent No. 9,066,913. On August 11, 2015, the Company filed an amended complaint in the United States District Court for the District of New Jersey against Lupin that added U.S. Patent No. 9,101,591 to the litigation with respect to U.S. Patent No. 9,066,913. On September 17, 2015, the Company filed suit in the United States District Court for the District of New Jersey against Lupin for patent infringement of U.S. Patent No. 9,132,110. All three patents, U.S. Patent Nos. 9,066,913, 9,101,591, and 9,132,110 are listed in the Orange Book and have claims that cover PENNSAID 2%.

On October 27, 2015, the Company filed suit in the United States District Court for the District of New Jersey against Lupin for patent infringement of U.S. Patent Nos. 9,168,304 and 9,168,305. On February 5, 2016, the Company filed suit in the United States District Court for the District of New Jersey against Lupin for patent infringement of U.S. Patent No. 9,220,784. All three patents, U.S. Patent Nos. 9,168,304, 9,168,305, and 9,220,784 are listed in the Orange Book and have claims that cover PENNSAID 2%. All of the infringement actions brought against Lupin remain pending. The court has not yet set a trial date for the Lupin actions.

The Company received from Teligent, Inc., formerly known as IGI Laboratories, Inc. (“Teligent”), a Paragraph IV Patent Certification dated March 24, 2015 against Orange Book listed U.S. Patent Nos. 8,217,078, 8,252,838, 8,546,450, 8,563,613, 8,618,164, 8,741,956, and 8,871,809 advising that Teligent had filed an ANDA with the FDA for a generic version of PENNSAID 2%. On May 21, 2015, the Company filed suit in the United States District Court for the District of New Jersey against Teligent seeking an injunction to prevent the approval of the ANDA. The lawsuit alleged that Teligent has infringed U.S. Patent Nos. 8,217,078, 8,252,838, 8,546,450, 8,563,613, 8,618,164, and 8,871,809 by filing an ANDA seeking approval from the FDA to market generic versions of PENNSAID 2% prior to the expiration of certain of the Company’s patents listed in the Orange Book. The commencement of the patent infringement lawsuit stays, or bars, FDA approval of Teligent’s ANDA for 30 months or until an earlier district court decision that the subject patents are not infringed or are invalid.

On June 30, 2015, the Company filed suit in the United States District Court for the District of New Jersey against Teligent for patent infringement of U.S. Patent No. 9,066,913. On August 11, 2015, the Company filed suit in the United States District Court for the District of New Jersey against Teligent for patent infringement of U.S. Patent No. 9,101,591. On September 17, 2015, the Company filed suit in the United States District Court for the District of New Jersey against Teligent for patent infringement of U.S. Patent No. 9,132,110. All three patents, U.S. Patent Nos. 9,066,913, 9,101,591, and 9,132,110 are listed in the Orange Book and have claims that cover PENNSAID 2%.

On October 27, 2015, the Company filed suit in the United States District Court for the District of New Jersey against Teligent for patent infringement of U.S. Patent Nos. 9,168,304 and 9,168,305. On February 5, 2016, the Company filed suit in the United States District Court for the District of New Jersey against Teligent for patent infringement of U.S. Patent No. 9,220,784. All three patents, U.S. Patent Nos. 9,168,304, 9,168,305, and 9,220,784 are listed in the Orange Book and have claims that cover PENNSAID 2%.

The Company entered into a settlement and license agreement with Teligent (the “Teligent settlement agreement”), effective May 9, 2016, relating to the patent infringement litigation against Teligent. In accordance with legal requirements, the Company and Teligent submitted the Teligent settlement agreement to the FTC and DOJ for review, and no issues have been raised by the FTC and DOJ. The Company and Teligent have also filed stipulations of dismissal with the district court regarding the litigation, with these dismissals having been entered by the district court on May 2, 2016. The Teligent settlement agreement provides for a full settlement and release by both the Company and Teligent of all claims that were or could have been asserted in the litigation and that arise out of the issues that were subject of the litigation or Teligent’s generic version of PENNSAID 2%.

Under the Teligent settlement agreement, the Company granted Teligent a non-exclusive license to manufacture and commercialize Teligent’s generic version of PENNSAID 2% in the United States after the license effective date (as defined below) and to take steps necessary to develop inventory of, and prepare to commercialize, Teligent’s generic version of PENNSAID 2% during certain limited periods prior to the license effective date.

Under the Teligent settlement agreement, the license effective date is January 10, 2029; however, Teligent may be able to enter the market earlier under certain circumstances. Such events relate to the resolution of any other third-party PENNSAID 2% patent litigation, the entry of other third-party generic versions of PENNSAID 2% or certain substantial reductions in the Company’s PENNSAID 2% shipments over specified periods of time.

Under the Teligent settlement agreement, the Company also agreed not to sue or assert any claim against Teligent for infringement of any patent or patent application owned or controlled by the Company during the term of the license granted in the Teligent settlement agreement based on the manufacture, use, sale, offer for sale, or importation of Teligent’s generic version of PENNSAID 2% in the United States.

In certain circumstances following the entry of other third-party generic versions of PENNSAID 2%, the Company may be required to supply Teligent PENNSAID 2% as an authorized distributor of generic PENNSAID 2%, with the Company receiving specified percentages of any net sales by Teligent. The Company also agreed that if it enters into any similar agreements with other parties with respect to generic versions of PENNSAID 2%, the Company will amend the Teligent settlement agreement to provide Teligent with terms that are no less favorable than those provided to the other parties.

The Company received from Amneal Pharmaceuticals LLC (“Amneal”) a Paragraph IV Patent Certification dated April 2, 2015 against Orange Book listed U.S. Patent Nos. 8,217,078, 8,252,838, 8,546,450, 8,563,613, 8,618,164, 8,741,956, and 8,871,809 advising that Amneal had filed an ANDA with the FDA for a generic version of PENNSAID 2%. On May 15, 2015, the Company filed suit in the United States District Court for the District of New Jersey against Amneal seeking an injunction to prevent the approval of the ANDA. The lawsuit alleged that Amneal has infringed U.S. Patent Nos. 8,217,078, 8,252,838, 8,546,450, 8,563,613, 8,618,164, and 8,871,809 by filing an ANDA seeking approval from the FDA to market generic versions of PENNSAID 2% prior to the expiration of certain of the Company’s patents listed in the Orange Book. The commencement of the patent infringement lawsuit stays, or bars, FDA approval of Amneal’s ANDA for 30 months or until an earlier district court decision that the subject patents are not infringed or are invalid. The court has not yet set a trial date for the Amneal action.

On June 30, 2015, the Company filed suit in the United States District Court for the District of New Jersey against Amneal for patent infringement of U.S. Patent No. 9,066,913. On August 11, 2015, the Company filed suit in the United States District Court for the District of New Jersey against Amneal for patent infringement of U.S. Patent No. 9,101,591. On September 17, 2015, the Company filed suit in the United States District Court for the District of New Jersey against Amneal for patent infringement of U.S. Patent No. 9,132,110. All three patents, U.S. Patent Nos. 9,066,913, 9,101,591, and 9,132,110 are listed in the Orange Book and have claims that cover PENNSAID 2%.

On October 27, 2015, the Company filed suit in the United States District Court for the District of New Jersey against Amneal for patent infringement of U.S. Patent Nos. 9,168,304 and 9,168,305. On February 5, 2016, the Company filed suit in the United States District Court for the District of New Jersey against Amneal for patent infringement of U.S. Patent No. 9,220,784. All three patents, U.S. Patent Nos. 9,168,304, 9,168,305, and 9,220,784 are listed in the Orange Book and have claims that cover PENNSAID 2%.

On April 18, 2016, the Company entered into a settlement and license agreement (the “Amneal settlement agreement”) with Amneal relating to the Company’s patent infringement litigation against Amneal. In accordance with legal requirements, the Company and Amneal submitted the Amneal settlement agreement to the FTC and DOJ for review, and no issues have been raised by the FTC and DOJ. The Company and Amneal have also filed a stipulation of dismissal with the court regarding the litigation. The Amneal settlement agreement provides for a full settlement and release by both the Company and Amneal of all claims that were or could have been asserted in the litigation and that arise out of the issues that were the subject of the litigation or Amneal’s generic version of PENNSAID 2%.

Under the Amneal settlement agreement, the Company granted Amneal a non-exclusive license to manufacture and commercialize Amneal’s generic version of PENNSAID 2% in the United States after the license effective date (as defined below) and to take steps necessary to develop inventory of, and prepare to commercialize, Amneal’s generic version of PENNSAID 2% during certain limited periods prior to the license effective date.

Under the Amneal settlement agreement, the license effective date is January 10, 2029; however, Amneal may be able to enter the market earlier under certain circumstances. Such events relate to the resolution of any other third-party PENNSAID 2% patent litigation or the entry of other third-party generic versions of PENNSAID 2%.

Under the Amneal settlement agreement, the Company also agreed not to sue or assert any claim against Amneal for infringement of any patent or patent application owned or controlled by the Company during the term of the license granted in Amneal settlement agreement based on the manufacture, use, sale, offer for sale, or importation of Amneal’s generic version of PENNSAID 2% in the United States.

In certain circumstances following the entry of other third-party generic versions of PENNSAID 2%, the Company may be required to supply Amneal PENNSAID 2% as a non-exclusive, authorized distributor of generic PENNSAID 2%, with the Company receiving specified percentages of any net sales by Amneal. The Company also agreed that if it enters into any similar agreements with other parties with respect to generic versions of PENNSAID 2%, the Company will amend the Amneal settlement agreement to provide Amneal with terms that are no less favorable than those provided to the other parties.

The Company received from Apotex Inc. (“Apotex”) a Paragraph IV Patent Certification Notice Letter dated April 1, 2016, against Orange Book listed U.S. Patent Nos. 8,217,078, 8,252,838, 8,546,450, 8,563,613, 8,618,164, 8,741,956, 8,871,809, 9,066,913, 9,101,591, 9,132,110, 9,168,304, 9,168,305 and 9,220,784 advising that Apotex had filed an ANDA with the FDA for a generic version of PENNSAID 2%. The Company also received from Apotex a second Paragraph IV Patent Certification Notice Letter dated June 30, 2016, against Orange Book listed U.S. Patent Nos. 9,339,551 and 9,339,552, advising that Apotex had filed an ANDA with the FDA for a generic version of PENNSAID 2%.

Currently, patent litigation is pending in the United States District Court for the District of New Jersey against four generic companies intending to market VIMOVO prior to the expiration of certain of the Company’s patents listed in the Orange Book. These cases are in the United States District Court for the District of New Jersey. They are collectively known as the VIMOVO cases, and involve the following sets of defendants: (i) Dr. Reddy’s Laboratories Inc. and Dr. Reddy’s Laboratories Ltd. (collectively, “Dr. Reddy’s”); (ii) Lupin; (iii) Mylan Pharmaceuticals Inc., Mylan Laboratories Limited, and Mylan Inc. (collectively, “Mylan”); and (iv) Actavis FL and Actavis Pharma, Inc. (collectively, “Actavis Pharma”). Patent litigation in the United States District Court for the District of New Jersey against a fifth generic company, Anchen Pharmaceuticals Inc. (“Anchen”), was dismissed on June 9, 2014 after Anchen recertified under Paragraph III. The Company understands that Dr. Reddy’s has entered into a settlement with AstraZeneca with respect to patent rights directed to Nexium for the commercialization of VIMOVO, and that according to the settlement agreement, Dr. Reddy’s is now able to commercialize VIMOVO under AstraZeneca’s Nexium patent rights. The settlement agreement, however, has no effect on the Aralez VIMOVO patents, which are still the subject of patent litigations. As part of the Company’s acquisition of the U.S. rights to VIMOVO, the Company has taken over and is responsible for the patent litigations that include the Aralez patents licensed to the Company under the amended and restated collaboration and license agreement for the United States with Aralez.

The VIMOVO cases were filed on April 21, 2011, July 25, 2011, October 28, 2011, January 4, 2013, May 10, 2013, June 28, 2013, October 23, 2013, May 13, 2015 and November 24, 2015 and collectively include allegations of infringement of U.S. Patent Nos. 6,926,907, 8,557,285, 8,852,636, and 8,858,996. On June 18, 2015, the Company amended the complaints to add a charge of infringement of U.S. Patent No. 8,865,190. On January 7, 2016, Actavis Pharma asserted a counterclaim for declaratory judgment of invalidity and non-infringement of U.S. Patent No. 8,945,621. On January 25, 2016, the Company filed a new case against Actavis Pharma including allegations of infringement of U.S. Patent Nos. 9,161,920 and 9,198,888. This case was subsequently consolidated with the Actavis Pharma case involving U.S. Patent Nos. 8,852,636, 8,858,996, and 8,865,190. On February 10, 2016, the Company amended the complaints against Dr. Reddy’s, Lupin, and Mylan to add charges of infringement of U.S. Patent Nos. 9,161,920 and 9,198,888. On February 19, 2016, Mylan asserted a counterclaim for declaratory judgment of invalidity and non-infringement of U.S. Patent. No. 9,220,698.

The cases asserting U.S. Patent Nos. 8,557,285 and 6,926,907 have been consolidated for discovery. The court has issued a claims construction order for these cases and has set a pretrial schedule, but has not yet set a trial date. On May 12, 2016, the court granted Dr. Reddy’s motion for summary judgment of non-infringement of U.S. Patent No. 6,926,907 with respect to one of Dr. Reddy’s two ANDAs.

The cases asserting U.S. Patent Nos. 8,852,636, 8,858,996, 8,865,190, 9,161,920 and 9,198,888 have been consolidated for discovery. The court has not issued a claims construction order or set a pretrial schedule.

The Company understands the cases arise from Paragraph IV Patent Certification notice letters providing notice of the filing of ANDAs with the FDA seeking regulatory approval to market generic versions of VIMOVO before the expiration of the patents-in-suit. The Company understands the Dr. Reddy’s notice letters were dated March 11, 2011, November 20, 2012 and April 20, 2015; the Lupin notice letters were dated June 10, 2011 and March 12, 2014; the Mylan notice letters were dated May 16, 2013, February 9, 2015, January 26, 2016, February 26, 2016, and July 19,2015; the Actavis Pharma notice letters were dated March 29, 2013, November 5, 2013, October 9, 2015, December 10, 2015, March 1, 2016, April 6, 2016, and July 22, 2016; and the Anchen notice letter was dated September 16, 2011.

On February 24, 2015, Dr. Reddy’s filed a Petition for inter partes review (“IPR”) of U.S. Patent No. 8,557,285, one of the patents in litigation in the above referenced VIMOVO cases. On October 9, 2015, the United States Patent and Trademark Office (the “U.S. PTO”) denied such Petition for IPR.

On May 21, 2015, the Coalition for Affordable Drugs VII LLC (“Coalition for Affordable Drugs”) filed a Petition for IPR of U.S. Patent No. 6,926,907, one of the patents in litigation in the above referenced VIMOVO cases. On December 8, 2015, the U.S. PTO denied such Petition for IPR.

On June 5, 2015, the Coalition for Affordable Drugs filed another Petition for IPR of U.S. Patent No. 8,858,996, one of the patents in litigation in the above referenced VIMOVO cases. On December 17, 2015, the U.S. PTO denied such Petition for IPR.

On August 7, 2015, the Coalition for Affordable Drugs filed another Petition for IPR of U.S. Patent No. 8,852,636, one of the patents in litigation in the above referenced VIMOVO cases. On February 11, 2016, the U.S. PTO denied such Petition for IPR.

On August 12, 2015, the Coalition for Affordable Drugs filed another Petition for IPR of U.S. Patent No. 8,945,621, one of the patents in litigation in the above referenced VIMOVO cases. On February 22, 2016, the Patent Trial and Appeal Board (the “PTAB”) issued a decision to institute the IPR. The PTAB must issue a final written decision on the IPR of U.S. Patent No. 8,945,621 no later than February 22, 2017.

On August 19, 2015, Lupin filed Petitions for IPR of U.S. Patent Nos. 8,858,996, 8,852,636, and 8,865,190, all patents in litigation in the above referenced VIMOVO cases. On March 1, 2016, the PTAB issued decisions to institute the IPRs for U.S. Patent Nos. 8,858,996 and 8,865,190. The PTAB must issue a final written decision on the IPRs of U.S. Patent Nos. 8,858,996 and 8,865,190 no later than March 1, 2017. Also on March 1, 2016, the PTAB denied the Petition for IPR for U.S. Patent No. 8,852,636.

On March 17, 2014, Hyperion received notice from Par Pharmaceutical, Inc. (“Par Pharmaceutical”) that it had filed an ANDA with the FDA seeking approval for a generic version of the Company’s medicine RAVICTI. The ANDA contained a Paragraph IV Patent Certification alleging that two of the patents covering RAVICTI, U.S. Patent No. 8,404,215, titled “Methods of therapeutic monitoring of nitrogen scavenging drugs,” which expires in March 2032 (the “’215 patent”), and U.S. Patent No. 8,642,012, titled “Methods of treatment using ammonia scavenging drugs,” which expires in September 2030 (the “’012 patent”), are invalid and/or will not be infringed by Par Pharmaceutical’s manufacture, use or sale of the medicine for which the ANDA was submitted. Par Pharmaceutical did not challenge the validity, enforceability, or infringement of the Company’s primary composition of matter patent for RAVICTI, U.S. Patent No. 5,968,979 titled “Triglycerides and ethyl esters of phenylalkanoic acid and phenylalkanoic acid useful in treatment of various disorders,” which would have expired on February 7, 2015, but as to which Hyperion was granted an interim term of extension until February 7, 2016 and to which the U.S. PTO has granted a final term extension of 1,267 days. Hyperion filed suit in the United States District Court for the Eastern District of Texas, Marshall Division, against Par Pharmaceutical on April 23, 2014 seeking an injunction to prevent the approval of Par Pharmaceutical’s ANDA and/or to prevent Par Pharmaceutical from selling a generic version of RAVICTI, and the Company has taken over and is responsible for this patent litigation. On September 15, 2015, the Company received notice from Par Pharmaceutical that it had filed a Paragraph IV Patent Certification alleging that U.S. Patent No. 9,095,559 (the “’559 patent”) is invalid and/or will not be infringed by Par Pharmaceutical’s manufacture, use or sale of the medicine for which the ANDA was submitted. On March 14, 2016, the Company received notice from Par Pharmaceutical that it had filed a Paragraph IV Patent Certification alleging that U.S. Patent No. 9,254,278 (the “’278 patent”) is invalid and/or will not be infringed by Par Pharmaceutical’s manufacture, use or sale of the medicine for which the ANDA was submitted. On June 3, 2016, the Company received notice from Par Pharmaceutical that it had filed a Paragraph IV Patent Certification alleging that U.S. Patent No. 9,326,966 (the “’966 patent”) is invalid and/or will not be infringed by Par Pharmaceutical’s manufacture, use or sale of the medicine for which the ANDA was submitted. The Company filed suit in the United States District Court for the District of New Jersey against Par Pharmaceutical on June 30, 2016 (“the Par New Jersey action”), seeking an injunction to prevent the approval of Par Pharmaceutical’s ANDA and/or to prevent Par Pharmaceutical from selling a generic version of RAVICTI. The lawsuit alleges that Par Pharmaceutical has infringed the ’559 patent, the ’278 patent and the ’966 patent by filing an ANDA seeking approval from the FDA to market generic versions of RAVICTI prior to the expiration of the patents. The subject patents are listed in the Orange Book. The court has not yet set a trial date for the Par New Jersey action.  

On April 29, 2015, Par Pharmaceutical filed Petitions for IPR of the ’215 patent and the ’012 patent. The PTAB issued decisions instituting such IPRs on November 4, 2015. On December 14, 2015, the District Court Judge Roy Payne issued a stay pending a final written decision from the PTAB with respect to the IPRs of the ’215 patent and the ’012 patent. The PTAB must issue a final written decision on the IPRs of the ’215 patent and the ’012 patent no later than November 4, 2016.

On September 4, 2015, the Company received notice from Lupin of Lupin’s Paragraph IV Patent Certification against the ’215 patent and the ’012 patent, advising that Lupin had filed an ANDA with the FDA for a generic version of RAVICTI. On November 6, 2015, the Company also received Notice of Lupin’s Paragraph IV Patent Certification against the ’559 patent. Lupin has not advised the Company as to the timing or status of the FDA’s review of its filing. On October 19, 2015 the Company filed suit in the United States District Court for the District of New Jersey against Lupin seeking an injunction to prevent the approval of the ANDA. The lawsuit alleges that Lupin has infringed the ’215 patent, the ’012 patent and the ’559 patent by filing an ANDA seeking approval from the FDA to market generic versions of RAVICTI prior to the expiration of the patents. The subject patents are listed in the Orange Book. On April 6, 2016, the Company filed an Amended Complaint in the United States District Court for the District of New Jersey against Lupin alleging that Lupin has infringed the ’559 patent by filing an ANDA seeking approval from the FDA to market generic versions of RAVICTI prior to expiration of the ’559 patent. The commencement of the patent infringement lawsuit stays, or bars, FDA approval of Lupin’s ANDA for 30 months or until an earlier district court decision that the subject patents are not infringed or are invalid. On April 18, 2016, the Company received notice from Lupin of Lupin’s Paragraph IV Patent Certification against the ’278 patent. On July 6, 2016, the Company received notice from Lupin of Lupin’s Paragraph IV Patent Certification against the ’966 patent. The Company filed suit in the United States District Court for the District of New Jersey against Lupin Ltd. and Lupin Pharmaceutical, Inc. on July 21, 2016, seeking an injunction to prevent the approval of Lupin’s ANDA and/or to prevent Lupin from selling a generic version of RAVICTI. The lawsuit alleges that Lupin has infringed the ’278 patent and the ’966 patent by filing an ANDA seeking approval from the FDA to market generic versions of RAVICTI prior to the expiration of the patents. The subject patents are listed in the Orange Book. The court has not yet set a trial date for the Lupin New Jersey actions.

On April 1, 2016, Lupin filed a Petition to request an IPR of the ’559 patent. The PTAB will decide whether to institute an IPR on the ’559 patent no later than October 8, 2016.

On August 3, 2015, HPI filed a lawsuit in the Superior Court of the State of California, County of Santa Clara, naming as defendants Depomed, Inc. (“Depomed”) and the members of its board of directors (the “Depomed Board”), Vicente J. Anido, Jr., Karen A. Dawes, Louis J. Lavigne, Jr., Samuel R. Saks, James A. Schoeneck, Peter D. Staple and David B. Zenoff. The lawsuit is captioned Horizon Pharma, Inc. v. Vicente J. Anido, Jr., et al., Case Number 1:15-cv-283835. The lawsuit alleges that the adoption by the Depomed Board of the Rights Agreement dated as of July 12, 2015 between Depomed and Continental Stock Transfer & Trust Company, as Rights Agent (the “Depomed Rights Agreement”), and Sections 2(b), 2(c), 2(d), and 5(d) of Depomed’s Amended and Restated Bylaws, effective July 12, 2015 (the “Depomed Bylaws”), violates the General Corporation Law of the California Corporations Code, constitutes ultra vires acts and breaches the fiduciary duties of the members of the Depomed Board. The lawsuit seeks, among other things, an order (i) declaring that the Depomed Rights Agreement and Sections 2(b), 2(c), and 2(d) of the Depomed Bylaws are invalid under California law, (ii) declaring that the members of the Depomed Board breached their fiduciary duties by enacting the Depomed Rights Agreement and Sections 2(b), 2(c), 2(d), and 5(d) of the Depomed Bylaws, (iii) enjoining the members of the Depomed Board from relying on, implementing, applying or enforcing either the Depomed Rights Agreement or Sections 2(b), 2(c), 2(d), or 5(d) of the Depomed Bylaws, (iv) enjoining the members of the Depomed Board from taking any improper action designed to impede, or which has the effect of impeding, the proposed combination with Depomed or the Company’s efforts to acquire control of Depomed and (v) compelling the members of the Depomed Board to redeem the Depomed Rights Agreement or to render it inapplicable to the Company. On November 20, 2015, following a hearing on HPI’s request for a preliminary injunction, the Superior Court denied HPI’s request for a preliminary injunction against Depomed and the Depomed Board. On April 22, 2016, HPI and Depomed settled the lawsuit with neither party admitting liability.

On August 3, 2015, Depomed filed a Complaint in the Superior Court of the State of California, County of Santa Clara, against the Company. The lawsuit is captioned Depomed, Inc. v. Horizon Pharma plc and Horizon Pharma, Inc., Case Number 1:15-cv-283834. On September 15, 2015, Depomed filed an Amended Complaint, alleging Depomed obtained the rights to a confidentiality agreement that the Company previously executed with Janssen Pharmaceuticals Inc. (“Janssen”) following Depomed’s purchase of the U.S. rights to NUCYNTA^® from Janssen. Depomed further alleges the Company breached the confidentiality agreement when developing offers for a merger with Depomed, and made fraudulent and materially misleading statements to Depomed’s shareholders. The lawsuit seeks, among other relief, an injunction (i) to prevent the Company from continuing its allegedly improper and unlawful use of confidential information relating to NUCYNTA and (ii) to prevent the Company from continuing to make and failing to correct its allegedly false and misleading statements in connection with the proposed combination with Depomed. On January 4, 2016, following a hearing on Depomed’s request for a preliminary injunction, the Superior Court entered a preliminary injunction enjoining the Company from making any further attempts to acquire Depomed or take any other action to facilitate taking control of Depomed pending final resolution of the litigation. On April 22, 2016, HPI and Depomed settled the lawsuit with neither party admitting liability.

In November 2015, Express Scripts filed suit against the Company in Delaware Superior Court, Newcastle County, asserting claims for breach of contract, breach of the implied covenant of good faith and fair dealing, unjust enrichment, and declaratory relief arising from the parties’ 2012 Preferred Savings Grid Rebate Program Agreement. Express Scripts is seeking damages of approximately $166.2 million for alleged unpaid rebates and administrative fees through the end of 2015, late fees, interest, and attorneys’ fees and costs. On January 11, 2016, the Company answered the complaint, denying Express Scripts’ claims and denying that it owes Express Scripts any damages or other relief. The Company also filed a counter-claim against Express Scripts for breach of contract, breach of the implied covenant of good faith and fair dealing, and declaratory relief arising from Express Scripts’ breach of the rebate agreement. On February 1, 2016, Express Scripts filed an answer to the Company’s counter-claim. The parties have commenced discovery and a bench trial in the case is currently scheduled for April 2017.     

Beginning on March 8, 2016, two federal securities class-action lawsuits (captioned Schaffer v. Horizon Pharma plc, et al., Case No. 16-cv-01763-JMF and Banie v. Horizon Pharma plc, et al., Case No. 16-cv-01789-JMF) were filed in the United States District Court for the Southern District of New York against the Company and certain of the Company’s current and former officers (the “Officer Defendants”). On March 24, 2016, the court consolidated the two actions under Schaffer v. Horizon Pharma plc, et al. On June 3, 2016, the court appointed Locals 302 and 612 of the International Union of Operating Engineers-Employers Construction Industry Retirement Trust and the Carpenters Pension Trust Fund for Northern California as lead plaintiffs and Labaton Sucharow LLP as lead counsel. On July 25, 2016, lead plaintiffs and additional named plaintiff Automotive Industries Pension Trust Fund filed their consolidated complaint, including additional current and former officers, the Company’s Board of Directors (the “Director Defendants”), and underwriters involved with the Company’s April 2015 public offering (the “Underwriter Defendants”) as defendants. The plaintiffs allege that certain of the Company and the Officer Defendants violated sections 10(b) and 20(a) of the Securities Exchange Act of 1934,as amended, by making false and/or misleading statements about, among other things: (a) the Company’s financial performance, (b) the Company’s business prospects and drug-pricing practices, (c) the Company’s sales and promotional practices, and (d) the Company’s design, implementation, performance, and risks associated with the Company’s Prescriptions-Made-Easy program. The plaintiffs allege that certain of the Company, the Director Defendants and the Underwriter Defendants violated sections 11, 12(a)(2) and 15 of the Securities Act of 1933, as amended, (the “Securities Act”) in connection with the Company’s April 2015 public offering. The plaintiffs seek, among other things, an award of damages allegedly sustained by plaintiffs and the putative class, including a reasonable allowance for costs and attorneys’ fees. The defendants’ deadline to answer or otherwise respond to the consolidated complaint is September 9, 2016.

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Debt Agreements

6 Months Ended

Jun. 30, 2016

Debt Disclosure [Abstract]

Debt Agreements

NOTE 14 – DEBT AGREEMENTS

The Company’s outstanding debt balances as of June 30, 2016 and December 31, 2015 consisted of the following (in thousands):

	June 30, 2016			December 31, 2015
2015 Term Loan Facility	$	396,000		$	398,000
2023 Senior Notes		475,000			475,000
Exchangeable Senior Notes due 2022		400,000			400,000
Total face value		1,271,000			1,273,000
Debt discount		(119,764	)		(127,885	)
Deferred financing fees		(7,549	)		(8,359	)
Total long-term debt		1,143,687			1,136,756
Less: current maturities		4,000			4,000
Long-term debt, net of current maturities	$	1,139,687		$	1,132,756

The Company adopted ASU No. 2015-03, Interest-Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs on January 1, 2016. The amendments in this ASU require that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. See Note 1 for further details of the impact this adoption has had on the financial statements.

2015 Senior Secured Credit Facility

On May 7, 2015, HPI, the Company and certain of its subsidiaries entered into a credit agreement with Citibank, N.A., as administrative and collateral agent, and the lenders from time to time party thereto (the “credit agreement”) providing for (i) the six-year $400.0 million term loan facility (the “2015 Term Loan Facility”); (ii) an uncommitted accordion facility subject to the satisfaction of certain financial and other conditions; and (iii) one or more uncommitted refinancing loan facilities with respect to loans thereunder (the “2015 Senior Secured Credit Facility”). The initial borrower under the 2015 Term Loan Facility is HPI. The credit agreement allows for the Company and certain other subsidiaries of the Company to become borrowers under the accordion or refinancing facilities. Loans under the 2015 Term Loan Facility bear interest, at each borrower’s option, at a rate equal to either the London Inter-Bank Offer Rate (“LIBOR”), plus an applicable margin of 3.5% per year (subject to a 1.0% LIBOR floor), or the adjusted base rate plus 2.5%. The adjusted base rate is defined as the greater of (a) LIBOR (using one-month interest period) plus 1%, (b) prime rate, (c) fed funds plus ½ of 1%, and (d) 2%. The Company borrowed the full $400.0 million available under the 2015 Term Loan Facility on May 7, 2015 as a LIBOR-based borrowing.

The obligations under the credit agreement and any swap obligations and cash management obligations owing to a lender (or an affiliate of a lender) thereunder are and will be guaranteed by the Company and each of the Company’s existing and subsequently acquired or organized direct and indirect subsidiaries (other than certain immaterial subsidiaries, subsidiaries whose guarantee would result in material adverse tax consequences and subsidiaries whose guarantee is prohibited by applicable law). The obligations under the credit agreement and any such swap and cash management obligations are secured, subject to customary permitted liens and other agreed upon exceptions, by a perfected security interest in (i) all tangible and intangible assets of the borrowers and the guarantors, except for certain customary excluded assets, and (ii) all of the capital stock owned by the borrowers and guarantors thereunder (limited, in the case of the stock of certain non-U.S. subsidiaries of the borrowers, to 65% of the capital stock of such subsidiaries).

The borrowers are permitted to make voluntary prepayments at any time without payment of a premium. HPI is required to make mandatory prepayments of loans under the 2015 Term Loan Facility (without payment of a premium) with (a) net cash proceeds from certain non-ordinary course asset sales (subject to reinvestment rights and other exceptions), (b) casualty proceeds and condemnation awards (subject to reinvestment rights and other exceptions), (c) net cash proceeds from issuances of debt (other than certain permitted debt), and (d) beginning with the fiscal year ending December 31, 2016, 50% of the Company’s excess cash flow (subject to decrease to 25% or 0% if the Company’s first lien leverage ratio is less than 2.25:1 and 1.75:1, respectively). The loans under the 2015 Term Loan Facility will amortize in equal quarterly installments in an aggregate annual amount equal to 1% of the original principal amount thereof, with any remaining balance payable on the final maturity date of the loans under the 2015 Term Loan Facility.

The credit agreement contains customary representations and warranties and customary affirmative and negative covenants, including, among other things, restrictions on indebtedness, liens, investments, mergers, dispositions, prepayment of other indebtedness and dividends and other distributions, and customary events of default.

The Company was, as of June 30, 2016, and is currently in compliance with this credit agreement.

As of June 30, 2016, the fair value of the 2015 Term Loan Facility was approximately $391.1 million, categorized as a Level 2 instrument, as defined in Note 11.

2023 Senior Notes

On April 29, 2015, Horizon Financing, a wholly-owned subsidiary of the Company, completed a private placement of $475.0 million aggregate principal amount of 6.625% Senior Notes due 2023 (the “2023 Senior Notes”), to certain investment banks acting as initial purchasers who subsequently resold the 2023 Senior Notes to qualified institutional buyers as defined in Rule 144A under the Securities Act, and in offshore transactions to non-U.S. persons in reliance on Regulation S under the Securities Act.

In connection with the closing of the Hyperion acquisition on May 7, 2015, Horizon Financing merged with and into HPI and, as a result, the 2023 Senior Notes became HPI’s general unsecured senior obligations and the Company and all of the Company’s direct and indirect subsidiaries that are guarantors under the 2015 Senior Secured Credit Facility fully and unconditionally guaranteed on a senior unsecured basis HPI’s obligations under the 2023 Senior Notes.

The 2023 Senior Notes accrue interest at an annual rate of 6.625% payable semiannually in arrears on May 1 and November 1 of each year, beginning on November 1, 2015. The 2023 Senior Notes will mature on May 1, 2023, unless earlier exchanged, repurchased or redeemed.

Except as described below, the 2023 Senior Notes may not be redeemed before May 1, 2018. Thereafter, some or all of the 2023 Senior Notes may be redeemed at any time at specified redemption prices, plus accrued and unpaid interest to the redemption date. At any time prior to May 1, 2018, some or all of the 2023 Senior Notes may be redeemed at a price equal to 100% of the aggregate principal amount thereof, plus a make-whole premium and accrued and unpaid interest to the redemption date. Also prior to May 1, 2018, up to 35% of the aggregate principal amount of the 2023 Senior Notes may be redeemed at a redemption price of 106.625% of the aggregate principal amount thereof, plus accrued and unpaid interest, with the net proceeds of certain equity offerings. In addition, the 2023 Senior Notes may be redeemed in whole but not in part at a redemption price equal to 100% of the principal amount plus accrued and unpaid interest and additional amounts, if any, to, but excluding, the redemption date, if on the next date on which any amount would be payable in respect of the 2023 Senior Notes, HPI or any guarantor is or would be required to pay additional amounts as a result of certain tax-related events.

If the Company undergoes a change of control, HPI will be required to make an offer to purchase all of the 2023 Senior Notes at a price in cash equal to 101% of the aggregate principal amount thereof plus accrued and unpaid interest to, but not including, the repurchase date. If the Company or certain of its subsidiaries engages in certain asset sales, HPI will be required under certain circumstances to make an offer to purchase the 2023 Senior Notes at 100% of the principal amount thereof, plus accrued and unpaid interest to the repurchase date.

The indenture governing the 2023 Senior Notes contains covenants that limit the ability of the Company and its restricted subsidiaries to, among other things, pay dividends or distributions, repurchase equity, prepay junior debt and make certain investments, incur additional debt and issue certain preferred stock, incur liens on assets, engage in certain asset sales, merge, consolidate with or merge or sell all or substantially all of their assets, enter into transactions with affiliates, designate subsidiaries as unrestricted subsidiaries, and allow to exist certain restrictions on the ability of restricted subsidiaries to pay dividends or make other payments to the Company. Certain of the covenants will be suspended during any period in which the notes receive investment grade ratings. The indenture also includes customary events of default.

The Company was, as of June 30, 2016, and is currently in compliance with the indenture governing the 2023 Senior Notes.

As of June 30, 2016, the fair value of the 2023 Senior Notes was approximately $441.8 million, categorized as a Level 2 instrument, as defined in Note 11.

Exchangeable Senior Notes

On March 13, 2015, Horizon Investment completed a private placement of $400.0 million aggregate principal amount of Exchangeable Senior Notes to several investment banks acting as initial purchasers who subsequently resold the Exchangeable Senior Notes to qualified institutional buyers as defined in Rule 144A under the Securities Act. The net proceeds from the offering of the Exchangeable Senior Notes were approximately $387.2 million, after deducting the initial purchasers’ discount and offering expenses payable by Horizon Investment.

The Exchangeable Senior Notes are fully and unconditionally guaranteed, on a senior unsecured basis, by the Company (the “Guarantee”). The Exchangeable Senior Notes and the Guarantee are Horizon Investment’s and the Company’s senior unsecured obligations. The Exchangeable Senior Notes accrue interest at an annual rate of 2.50% payable semiannually in arrears on March 15 and September 15 of each year, beginning on September 15, 2015. The Exchangeable Senior Notes will mature on March 15, 2022, unless earlier exchanged, repurchased or redeemed. The initial exchange rate is 34.8979 ordinary shares of the Company per $1,000 principal amount of the Exchangeable Senior Notes (equivalent to an initial exchange price of approximately $28.66 per ordinary share). The exchange rate will be subject to adjustment in some events but will not be adjusted for any accrued and unpaid interest. In addition, following certain corporate events that occur prior to the maturity date or upon a tax redemption, Horizon Investment will increase the exchange rate for a holder who elects to exchange its Exchangeable Senior Notes in connection with such a corporate event or a tax redemption in certain circumstances.

Other than as described below, the Exchangeable Senior Notes may not be redeemed by the Company.

Issuer Redemptions:

Optional Redemption for Changes in the Tax Laws of a Relevant Taxing Jurisdiction: Horizon Investment may redeem the Exchangeable Senior Notes at its option, prior to March 15, 2022, in whole but not in part, in connection with certain tax-related events.

Provisional Redemption on or After March 20, 2019: On or after March 20, 2019, Horizon Investment may redeem for cash all or a portion of the Exchangeable Senior Notes if the last reported sale price of ordinary shares of the Company has been at least 130% of the exchange price then in effect for at least 20 trading days whether or not consecutive) during any 30 consecutive trading day period ending on, and including, the trading day immediately preceding the date on which Horizon Investment provide written notice of redemption. The redemption price will be equal to 100% of the principal amount of the Exchangeable Senior Notes to be redeemed, plus accrued and unpaid interest to, but not including, the redemption date; provided that if the redemption date occurs after a regular record date and on or prior to the corresponding interest payment date, Horizon Investment will pay the full amount of accrued and unpaid interest due on such interest payment date to the record holder of the Exchangeable Senior Notes on the regular record date corresponding to such interest payment date, and the redemption price payable to the holder who presents an Exchangeable Senior Note for redemption will be equal to 100% of the principal amount of such Exchangeable Senior Note.

Holder Exchange Rights:

Holders may exchange all or any portion of their Exchangeable Senior Notes at their option at any time prior to the close of business on the business day immediately preceding December 15, 2021 only upon satisfaction of one or more of the following conditions:

1. Exchange upon Satisfaction of Sale Price Condition – During any calendar quarter commencing after the calendar quarter ending on June 30, 2015 (and only during such calendar quarter), if the last reported sale price of ordinary shares of the Company for at least 20 trading days (whether or not consecutive) during the period of 30 consecutive trading days ending on the last trading day of the immediately preceding calendar quarter is greater than or equal to 130% of the applicable exchange price on each applicable trading day.

2. Exchange upon Satisfaction of Trading Price Condition – During the five business day period after any ten consecutive trading day period in which the trading price per $1,000 principal amount of Exchangeable Senior Notes for each trading day of such period was less than 98% of the product of the last reported sale price of ordinary shares of the Company and the applicable exchange rate on such trading day.

3. Exchange upon Notice of Redemption – Prior to the close of business on the business day immediately preceding December 15, 2021, if Horizon Investment provides a notice of redemption, at any time prior to the close of business on the second scheduled trading day immediately preceding the redemption date.

As of June 30, 2016, none of the above conditions had been satisfied and no exchange of Exchangeable Senior Notes had been triggered.

On or after December 15, 2021, a holder may exchange all or any portion of its Exchangeable Senior Notes at any time prior to the close of business on the second scheduled trading day immediately preceding the maturity date regardless of the foregoing conditions.

Upon exchange, Horizon Investment will settle exchanges of the Exchangeable Senior Notes by paying or causing to be delivered, as the case may be, cash, ordinary shares or a combination of cash and ordinary shares, at its election.

The Company recorded the Exchangeable Senior Notes under the guidance in Topic ASC 470-20, Debt with Conversion and Other Options, and separated them into a liability component and equity component. The carrying amount of the liability component of $268.9 million was determined by measuring the fair value of a similar liability that does not have an associated equity component. The carrying amount of the equity component of $119.1 million represented by the embedded conversion option was determined by deducting the fair value of the liability component of $268.9 million from the initial proceeds of $387.2 million ascribed to the convertible debt instrument as a whole. The initial debt discount of $131.1 million is being charged to interest expense over the life of the Exchangeable Senior Notes using the effective interest rate method.

As of June 30, 2016, the fair value of the Exchangeable Senior Notes was approximately $362.5 million, categorized as a Level 2 instrument, as defined in Note 11.

2014 Senior Secured Credit Facility

On June 17, 2014, the Company entered into a credit agreement with a group of lenders and Citibank, N.A., as administrative and collateral agent to provide the Company with $300.0 million in financing through a five-year senior secured credit facility (the “2014 Senior Secured Credit Facility”). Loans under the five-year $300.0 million term loan facility (“2014 Term Loan Facility”) bore interest, at each borrower’s option, at a rate equal to either the LIBOR, plus an applicable margin of 8.0% per year (subject to a 1.0% LIBOR floor), or the prime lending rate, plus an applicable margin equal to 7.0% per year. The Company borrowed the full $300.0 million available on the 2014 Term Loan Facility on September 19, 2014 as a LIBOR-based borrowing.  

On May 7, 2015, the Company repaid the entire $300.0 million outstanding amount under the 2014 Senior Secured Credit Facility in connection with the closing of the Hyperion acquisition and recognized a $56.8 million loss on debt extinguishment as a result of the early repayment.

Convertible Senior Notes

On November 22, 2013, the Company issued $150.0 million aggregate principal amount of 5.00% Convertible Senior Notes due 2018 (“Convertible Senior Notes”), and received net proceeds of $143.6 million, after deducting fees and expenses of $6.4 million.

During 2015, the Company entered into separate, privately-negotiated conversion agreements with certain holders of the Convertible Senior Notes (“2015 Conversions”) which were on substantially the same terms as prior conversion agreements entered into by the Company. Under the 2015 Conversions, the applicable holders agreed to convert an aggregate principal amount of $61.0 million of Convertible Senior Notes held by them and the Company agreed to settle such conversions by issuing an aggregate of 11,368,921 ordinary shares. In addition, pursuant to such conversion agreements, the Company made an aggregate cash payment of $10.0 million to the applicable holders for additional exchange consideration and $0.9 million for accrued and unpaid interest, and recognized a non-cash charge of $10.1 million related to the extinguishment of debt as a result of the note conversions. Following the closings under the 2015 Conversions, there were no Convertible Senior Notes remaining outstanding.

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Shareholders' Equity

6 Months Ended

Jun. 30, 2016

Equity [Abstract]

Shareholders' Equity

NOTE 15 – SHAREHOLDERS’ EQUITY

During the six months ended June 30, 2016, the Company issued an aggregate of 231,807 ordinary shares in connection with the exercise of stock options and received $1.7 million in proceeds.

During the six months ended June 30, 2016, the Company issued an aggregate of 552,836 ordinary shares in net settlement of vested restricted stock units.

During the six months ended June 30, 2016, the Company issued an aggregate of 13,584 ordinary shares in net settlement of vested performance stock units.

During the six months ended June 30, 2016, the Company issued an aggregate of 261,780 ordinary shares pursuant to employee stock purchase plans and received $3.2 million in proceeds.

During the six months ended June 30, 2016, the Company made payments of $4.7 million for employee withholding taxes relating to share-based awards.

In May 2016, the Company’s board of directors authorized a share repurchase program pursuant to which the Company may repurchase up to 5,000,000 of its ordinary shares. The timing and amount of repurchases, including whether the Company decides to repurchase any shares pursuant to the authorization, will depend on a variety of factors, including the price of the Company’s ordinary shares, alternative investment opportunities, the Company’s cash resources, restrictions under the Company’s credit agreement, and market conditions. As of June 30, 2016, the Company had not purchased any of its ordinary shares under this repurchase program.  

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Share-Based Incentive Plans

6 Months Ended

Jun. 30, 2016

Disclosure Of Compensation Related Costs Sharebased Payments [Abstract]

Share-Based Incentive Plans

NOTE 16 – SHARE-BASED INCENTIVE PLANS

Employee Stock Purchase Plan

2014 Employee Stock Purchase Plan. On May 17, 2014, HPI’s board of directors adopted the 2014 Employee Stock Purchase Plan (the “2014 ESPP”). On September 18, 2014, at a special meeting of the stockholders of HPI (the “Special Meeting”), HPI’s stockholders approved the 2014 ESPP. Upon consummation of the Vidara Merger, the Company assumed the 2014 ESPP. As described below, effective as of May 3, 2016, the number of ordinary shares authorized for issuance under the 2014 ESPP was reduced by 5,000,000 shares.

As of June 30, 2016, an aggregate of 4,076,279 ordinary shares were authorized and available for future issuance under the 2014 ESPP.

Share-Based Compensation Plans

2005 Stock Plan. In October 2005, HPI adopted the 2005 Stock Plan (the “2005 Plan”). Upon the signing of the underwriting agreement related to HPI’s initial public offering, on July 28, 2011, no further option grants were made under the 2005 Plan. All stock awards granted under the 2005 Plan prior to July 28, 2011 continue to be governed by the terms of the 2005 Plan. Upon consummation of the Vidara Merger, the Company assumed the 2005 Plan.

2011 Equity Incentive Plan. In July 2010, HPI’s board of directors adopted the 2011 Equity Incentive Plan (the “2011 EIP”). In June 2011, HPI’s stockholders approved the 2011 EIP, and it became effective upon the signing of the underwriting agreement related to HPI’s initial public offering on July 28, 2011. Upon consummation of the Vidara Merger, the Company assumed the 2011 EIP, and upon the effectiveness of the Horizon Pharma Public Limited Company 2014 Equity Incentive Plan (the “2014 EIP”), no additional stock awards were or will be made under the 2011 Plan, although all outstanding stock awards granted under the 2011 Plan continue to be governed by the terms of the 2011 Plan.

2014 Equity Incentive Plan and 2014 Non-Employee Equity Plan. On May 17, 2014, HPI’s board of directors adopted the 2014 EIP and the Horizon Pharma Public Limited Company 2014 Non-Employee Equity Plan (the “2014 Non-Employee Equity Plan”). At the Special Meeting, HPI’s stockholders approved the 2014 EIP and 2014 Non-Employee Equity Plan. Upon consummation of the Vidara Merger, the Company assumed the 2014 EIP and 2014 Non-Employee Equity Plan, which serve as successors to the 2011 EIP.

The 2014 EIP provides for the grant of incentive and nonstatutory stock options, stock appreciation rights, restricted stock awards, restricted stock unit awards, performance awards and other stock awards that may be settled in cash, shares or other property to the employees of the Company (or a subsidiary company). The number of ordinary shares of the Company that were initially authorized for issuance under the 2014 EIP was no more than 22,052,130, which number consisted of (i) 15,500,000 ordinary shares of the Company; plus (ii) the number of shares available for issuance pursuant to the grant of future awards under the 2011 EIP; plus (iii) any shares subject to outstanding stock awards granted under the 2011 EIP and the 2005 Plan that expire or terminate for any reason prior to exercise or settlement or are forfeited, redeemed or repurchased because of the failure to meet a contingency or condition required to vest such shares; less (iv) 10,000,000 shares, which is the additional number of shares which were previously approved as an increase to the share reserve of the 2011 EIP. On March 23, 2015, the compensation committee of the Company’s board of directors approved amending the 2014 EIP subject to shareholder approval to, among other things, increase the aggregate number of shares authorized for issuance under the 2014 EIP by an additional 14,000,000 shares. On May 6, 2015, the shareholders of the Company approved such amendment to the 2014 EIP. On February 25, 2016, the compensation committee of the Company’s board of directors approved, subject to shareholder approval, amending the 2014 EIP to, among other things, increase the aggregate number of shares authorized for issuance under the 2014 EIP beyond those remaining available for future grant under the 2014 EIP by an additional 6,000,000 shares and also approved a reduction in the number of shares authorized under our 2014 Non-Employee Equity Plan and 2014 ESPP by 1,000,000 shares and 5,000,000 shares, respectively, contingent on shareholder approval of the amendment to the 2014 EIP. On May 3, 2016, the shareholders of the Company approved the amendment to the 2014 EIP. The Company’s board of directors has authority to suspend or terminate the 2014 EIP at any time.

The 2014 Non-Employee Equity Plan provides for the grant of nonstatutory stock options, stock appreciation rights, restricted stock awards, restricted stock unit awards and other forms of stock awards that may be settled in cash, shares or other property to the non-employee directors and consultants of the Company (or a subsidiary company). The total number of ordinary shares of the Company that were initially authorized for issuance under the 2014 Non-Employee Equity Plan is 2,500,000. As described above, effective as of May 3, 2016, the number of ordinary shares authorized for issuance under the 2014 Non-Employee Equity Plan was reduced by 1,000,000 shares. The Company’s board of directors has authority to suspend or terminate the 2014 Non-Employee Equity Plan at any time.

As of June 30, 2016, an aggregate of 7,059,814 and 963,567 ordinary shares were authorized and available for future grants under the 2014 EIP and 2014 Non-Employee Equity Plan, respectively.

Stock Options

The following table summarizes stock option activity during the six months ended June 30, 2016:

	Options			Weighted Average Exercise Price		Weighted Average Contractual Term Remaining (in years)		Aggregate Intrinsic Value (in thousands)
Outstanding as of December 31, 2015		13,385,791		$	17.73
Granted		1,741,192		$	18.13
Exercised		(231,807	)	$	7.13
Forfeited		(802,169	)	$	18.34
Expired		(42,348	)	$	9.73
Outstanding as of June 30, 2016		14,050,659		$	17.94		7.92	$	41,048
Exercisable as of June 30, 2016		5,893,946		$	14.19		6.70	$	31,063

Stock options typically have a contractual term of 10 years from grant date.

The fair value of each stock option award is estimated on the date of grant using the Black-Scholes option pricing model. The determination of the fair value of each stock option is affected by the Company’s share price on the date of grant, as well as assumptions regarding a number of highly complex and subjective variables. These variables include, but are not limited to, the Company’s expected share price volatility over the expected life of the awards and actual and projected stock option exercise behavior. The weighted average fair value per share of stock option awards granted during the six months ended June 30, 2016 and 2015, and assumptions used to value stock options, are as follows:

	For the Six Months Ended June 30,
	2016		2015
Dividend yield		—		—
Risk-free interest rate	1.3% - 1.8%		1.3% - 2.3%
Weighted average expected volatility	73.8%		77.2%
Expected life (in years)		6.0		6.0
Weighted average grant-date fair value per share of    options granted	$	11.78	$	15.84

Dividend yield

The Company has never paid dividends and does not anticipate paying any dividends in the near future. Additionally, the 2015 Senior Secured Credit Facility (described in Note 14 above) contains covenants that restrict the Company from issuing dividends.

Risk-Free Interest Rate

The Company determined the risk-free interest rate by using a weighted average assumption equivalent to the expected term based on the U.S. Treasury constant maturity rate as of the date of grant.

Volatility

The Company used an average historical share price volatility of comparable companies to be representative of future share price volatility, as the Company did not have sufficient trading history for its ordinary shares.

Expected Term

Given the Company’s limited historical exercise behavior, the expected term of options granted was determined using the “simplified” method since the Company does not have sufficient historical exercise data to provide a reasonable basis upon which to estimate the expected term. Under this approach, the expected term is presumed to be the average of the vesting term and the contractual life of the option.

Forfeitures

As share-based compensation expense recognized in the condensed consolidated statements of comprehensive income (loss) is based on awards ultimately expected to vest, it has been reduced for estimated forfeitures based on actual forfeiture experience, analysis of employee turnover and other factors. ASC Topic 718, Compensation-Stock Compensation (“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.

Restricted Stock Units

The following table summarizes restricted stock unit activity for the six months ended June 30, 2016:

	Number of Units			Weighted Average Grant-Date Fair Value Per Unit
Outstanding as of December 31, 2015		3,361,746		$	18.71
Granted		683,844		$	17.00
Vested		(813,423	)	$	16.80
Forfeited		(260,100	)	$	19.01
Outstanding as of June 30, 2016		2,972,067		$	18.81

The grant-date fair value of restricted stock units is the closing price of the Company’s shares on the date of grant.  

Performance Stock Units

The following table summarizes performance stock unit (“PSU”) activity for the six months ended June 30, 2016:

	Number of Units			Weighted Average Grant-Date Fair Value Per Unit		Average Illiquidity Discount			Recorded Weighted Average Fair Value Per Unit
Outstanding as of December 31, 2015		13,049,000
Granted		260,000		$	7.99		8.2	%	$	7.34
Vested		(20,000	)	$	18.97		0.0	%	$	18.97
Forfeited		(823,000	)	$	13.69		16.1	%	$	11.48
Outstanding as of June 30, 2016		12,466,000

In January 2016, the compensation committee of the Company’s board of directors approved the grant of 260,000 PSUs to certain members of the Company’s senior leadership team.     

In 2014, the Company granted 25,000 PSUs. All other outstanding PSUs were granted in 2015 and 2016 and may vest if the Company’s total compounded annual shareholder rate of return (“TSR”) over three performance measurement periods summarized below equals or exceeds a minimum of 15%.

Vesting Tranche	Percent of  Total PSU Award			Beginning of Performance Measurement Period	End of Performance Measurement Period	Length of Performance Measurement Period (Years)
Tranche One		33.3	%	March 23, 2015	December 22, 2017		2.75
Tranche Two		33.3	%	March 23, 2015	March 22, 2018		3.00
Tranche Three		33.3	%	March 23, 2015	June 22, 2018		3.25

These outstanding PSUs granted in 2015 and 2016 will vest in amounts ranging from 25% to 100% based on the achievement of the following TSR over the three performance periods:

TSR Achieved	VestingAmount
15%	25	%
30%	50	%
45%	75	%
60%	100	%

The TSR will be based on the volume weighted average trading price (“VWAP”) of the Company’s ordinary shares over the 20 trading days ending on the last day of each of the three performance measurement periods versus the VWAP of the Company’s ordinary shares over the 20 trading days ended March 23, 2015 of $21.50. These PSUs are subject to a post vesting holding period of one year for 50% of the PSUs and two years for 50% of the PSUs for those who were members of the executive committee at the date of grant, and one year for 50% of the PSUs for all others who were not executive committee members at the date of grant.

The Company accounts for the PSUs as equity-settled awards in accordance with ASC 718. Because the value of the outstanding PSUs granted in 2015 and 2016 is dependent upon the attainment of a level of TSR, it requires the impact of the market condition to be considered when estimating the fair value of the PSUs. As a result, the Monte Carlo model is applied and the most significant valuation assumptions used include:

	For the Six Months Ended June 30,
	2016		2015
Valuation date stock price	$	17.72 - 21.07	$	22.77 - 28.53
Expected volatility		76.8% - 77.6%		67.2% - 67.3%
Risk free rate		1.0% - 1.2%		1.0% - 1.1%

The average estimated fair value of each outstanding PSU granted under the 2014 EIP is as follows (allocated between groupings based on grant-date classification):

	Number of Units		Weighted Average Fair Value Per Unit		Average Illiquidity Discount			Recorded Weighted Average Fair Value Per Unit
Executive committee members		9,173,000	$	15.18		18.3	%	$	12.40
Non-executive committee members		3,268,000	$	13.75		7.3	%	$	12.74
		12,441,000	$	14.80		15.6	%	$	12.49

For the six months ended June 30, 2016, the Company recorded $24.3 million of expense related to PSUs.

Cash Long-Term Incentive Program

On November 5, 2014, the compensation committee of the Company’s board of directors approved a performance cash long-term incentive program for the members of the Company’s executive committee and executive leadership team, including its executive officers (the “Cash Bonus Program”). Participants in the Cash Bonus Program will be eligible for a specified cash bonus. The Cash Bonus Program pool funding of approximately $16.0 million was determined based on the Company’s actual TSR over the period from November 5, 2014 to May 6, 2015, and the bonus will be earned and payable only if the TSR for the period from November 5, 2014 to November 4, 2017 is greater than 15%. The portion of the total bonus pool payable to individual participants is based on allocations established by the Company’s compensation committee. Participants must remain employed by the Company through November 4, 2017 unless a participant’s earlier departure from employment is due to death, disability, termination without cause or a change in control transaction. Bonus payments under the Cash Bonus Program, if any, will be made after November 4, 2017.

The Company accounts for the Cash Bonus Program under the liability method in accordance with ASC 718. Because vesting of the bonus pool is dependent upon the attainment of a VWAP of $18.37 or higher over the 20 trading days ending November 4, 2017, the Cash Bonus Program will be considered to be subject to a “market condition” for the purposes of ASC 718. ASC 718 requires the impact of the market condition to be considered when estimating the fair value of the bonus pool. As a result, the Monte Carlo simulation model is applied and the fair value is revalued at each reporting period. As of June 30, 2016 and December 31, 2015, the estimated fair value was $4.6 million and $6.0 million, respectively. For the six months ended June 30, 2016, the Company recorded an expense of $0.2 million to the unaudited condensed consolidated statement of comprehensive income (loss) as a result of the valuation of the Cash Bonus Program. The most significant valuation assumptions used as of June 30, 2016 include:

· Valuation Date Stock Price - $16.47.

· Expected Volatility - The expected volatility assumption of 82.35% is based on the Company’s historical volatility over the 1.35 year period ending June 30, 2016, based upon daily stock price observations.

· Risk Free Rate – 0.49%, which is based upon the yield on U.S. Treasury Separate Trading of Registered Interest and Principal Securities with a remaining term of 1.35 years as of June 30, 2016.

Share-Based Compensation Expense

The following table summarizes share-based compensation expense included in the Company’s condensed consolidated statements of operations for the six months ended June 30, 2016 and 2015 (in thousands):

	For the Six Months Ended June 30,
	2016		2015
Share-based compensation expense:
Research and development	$	4,363	$	2,670
Sales and marketing		12,610		8,536
General and administrative		38,636		20,133
Total share-based compensation expense	$	55,609	$	31,339

No material income tax benefit has been recognized relating to share-based compensation expense and no tax benefits have been realized from exercised stock options, due to the Company’s net loss position. As of June 30, 2016, the Company estimates that pre-tax unrecognized compensation expense of $252.2 million for all unvested share-based awards, including stock options, restricted stock units and PSUs, will be recognized through the second quarter of 2020. The Company expects to satisfy the exercise of stock options and future distribution of shares for restricted stock units and PSUs by issuing new ordinary shares which have been reserved under the 2014 EIP.

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Income Taxes

6 Months Ended

Jun. 30, 2016

Income Tax Disclosure [Abstract]

Income Taxes

NOTE 17 – INCOME TAXES

The Company accounts for income taxes based upon an asset and liability approach. Deferred tax assets and liabilities represent the future tax consequences of the differences between the financial statement carrying amounts of assets and liabilities versus the tax basis of assets and liabilities. Under this method, deferred tax assets are recognized for deductible temporary differences, and operating loss and tax credit carryforwards. Deferred tax liabilities are recognized for taxable temporary differences. Deferred tax assets are reduced by valuation allowances when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. The impact of tax rate changes on deferred tax assets and liabilities is recognized in the period in which the change is enacted.

The following table presents the benefit for income taxes for the three and six months ended June 30, 2016 and 2015 (in thousands):

	For the Three Months Ended June 30,						For the Six Months Ended June 30,
	2016			2015			2016			2015
Income (loss) before benefit for income taxes	$	12,228		$	(128,866	)	$	(34,621	)	$	(146,506	)
Benefit for income taxes		(2,756	)		(160,680	)		(4,199	)		(158,767	)
Net income (loss)	$	14,984		$	31,814		$	(30,422	)	$	12,261

During the three and six months ended June 30, 2016, the Company recorded a benefit for income taxes of $2.8 million and $4.2 million, respectively, compared to $160.7 million and $158.8 million during the three and six months ended June 30, 2015, respectively. The benefit for income taxes recorded during the three and six months ended June 30, 2016 was primarily attributable to pre-tax losses incurred in higher tax rate jurisdictions which exceeded pre-tax income in lower tax rate jurisdictions during the periods. The benefit for income taxes recorded during the three and six months ended June 30, 2015 was primarily attributable to the release of valuation allowances in the United States due to the recognition of significant deferred tax liabilities as a result of the Hyperion acquisition as well as the ability to recognize a tax benefit for the Company’s U.S. tax consolidation group losses then projected to be incurred during 2015.

Deferred tax assets and liabilities arise from acquisition accounting adjustments where book values of certain assets and liabilities differ from their tax bases. Deferred tax assets and liabilities are recorded at the currently enacted rates which will be in effect at the time when the temporary differences are expected to reverse in the country where the underlying assets and liabilities are located.

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Basis of Presentation and Business Overview (Policies)

6 Months Ended

Jun. 30, 2016

Organization Consolidation And Presentation Of Financial Statements [Abstract]

Basis of Presentation

Basis of Presentation

The unaudited condensed consolidated financial statements presented herein have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim financial information and in accordance with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, the financial statements do not include all of the information and notes required by GAAP for complete financial statements. In the opinion of management, all adjustments, including normal recurring adjustments, considered necessary for a fair statement of the financial statements have been included. Operating results for the three and six months ended June 30, 2016 are not necessarily indicative of the results that may be expected for the year ending December 31, 2016. The December 31, 2015 condensed consolidated balance sheet was derived from audited financial statements, but does not include all disclosures required by GAAP.

On September 19, 2014, the businesses of Horizon Pharma, Inc. (“HPI”) and Vidara Therapeutics International Public Limited Company (“Vidara”) were combined in a merger transaction (the “Vidara Merger”), accounted for as a reverse acquisition under the acquisition method of accounting for business combinations, with HPI treated as the acquiring company in the Vidara Merger for accounting purposes. As part of the Vidara Merger, a wholly-owned subsidiary of Vidara merged with and into HPI, with HPI surviving the Vidara Merger as a wholly-owned subsidiary of Vidara. Prior to the Vidara Merger, Vidara changed its name to Horizon Pharma plc (the “Company”). Upon the consummation of the Vidara Merger, the historical financial statements of HPI became the Company’s historical financial statements.

On May 7, 2015, the Company completed its acquisition of Hyperion Therapeutics Inc. (“Hyperion”) in which the Company acquired all of the issued and outstanding shares of Hyperion’s common stock for $46.00 per share in cash or approximately $1.1 billion on a fully-diluted basis. Following the completion of the acquisition, Hyperion became a wholly-owned subsidiary of the Company and was renamed as Horizon Therapeutics, Inc.

On January 13, 2016, the Company completed its acquisition of Crealta Holdings LLC (“Crealta”) for approximately $539.7 million, including cash acquired of $24.9 million. Following the completion of the acquisition, Crealta became a wholly-owned subsidiary of the Company and was renamed as Horizon Pharma Rheumatology LLC.

On May 18, 2016, the Company entered into a definitive agreement with Boehringer Ingelheim International GmbH (“Boehringer Ingelheim International”) to acquire rights to interferon gamma-1b, which Boehringer Ingelheim International currently commercializes under the trade names IMUKIN^®, IMUKINE^®, IMMUKIN^® and IMMUKINE^® in an estimated 30 countries, primarily in Europe and the Middle East. Under the terms of the agreement, the Company paid Boehringer Ingelheim International €5.0 million ($5.6 million when converted using a Euro-to-Dollar exchange rate of 1.1132) upon signing and will pay €20.0 million upon closing, for the rights for interferon gamma-1b in all territories outside of the United States, Canada and Japan, as the Company currently holds marketing rights to interferon gamma-1b in these territories. The Company currently markets interferon gamma-1b as ACTIMMUNE^® in the United States. The Company and Boehringer Ingelheim International expect to close the transaction by year-end 2016, subject to the satisfaction of closing conditions. Under the terms of a separate agreement, the Company also licensed the U.S., European and Canadian intellectual property rights for interferon gamma-1b for the treatment of Friedreich’s ataxia (“FA”). Interferon gamma-1b is currently not indicated or approved for the treatment of FA by the U.S. Food and Drug Administration (“FDA”) or any other regulatory body.

The unaudited condensed consolidated financial statements presented herein include the results of operations of the acquired businesses from the date of acquisition. See Note 3 for further details of business acquisitions.

Unless otherwise indicated or the context otherwise requires, references to the “Company”, “we”, “us” and “our” refer to Horizon Pharma plc and its consolidated subsidiaries, including its predecessor, HPI. All references to “Vidara” are references to Horizon Pharma plc (formerly known as Vidara Therapeutics International Public Limited Company) and its consolidated subsidiaries prior to the effective time of the Vidara Merger on September 19, 2014.

The unaudited condensed consolidated financial statements presented herein include the accounts of the Company and its wholly-owned subsidiaries. All inter-company transactions and balances have been eliminated.

Recent Accounting Pronouncements

Recent Accounting Pronouncements

From time to time, the Company adopts, as of the specified effective date, new accounting pronouncements issued by the FASB or other standard setting bodies. Unless otherwise discussed, the Company believes that the impact of recently issued standards that are not yet effective will not have a material impact on the Company’s financial position or results of operations upon adoption.

In May 2014, the FASB issued Accounting Standards Update (“ASU”) No. 2014-09, Revenue from Contracts with Customers (Subtopic 606). The new standard aims to achieve a consistent application of revenue recognition within the United States, resulting in a single revenue model to be applied by reporting companies under GAAP. Under the new model, recognition of revenue occurs when a customer obtains control of promised goods or services in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. In addition, the new standard requires that reporting companies disclose the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. The new standard is required to be applied retrospectively to each prior reporting period presented or retrospectively with the cumulative effect of initially applying it recognized at the date of initial application. In March 2016 and April 2016, the FASB issued ASU No. 2016-08 and ASU No. 2016-10, respectively, which further clarify the implementation guidance on principal versus agent considerations contained in ASU No. 2014-09. In May 2016, the FASB issued ASU 2016-12, narrow-scope improvements and practical expedients which provides clarification on assessing the collectability criterion, presentation of sales taxes, measurement date for non-cash consideration and completed contracts at transition. These standards will be effective for the Company beginning in the first quarter of 2018. Early adoption is permitted, but not before December 15, 2016, the original effective date of the standard. The Company has not yet selected a transition method nor has it determined the impact of the new standard on its consolidated financial statements.

In August 2014, the FASB issued ASU No. 2014-15, Presentation of Financial Statements — Going Concern (Subtopic 205-40): Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern. ASU No. 2014-15 is intended to define management’s responsibility to evaluate whether there is substantial doubt about an organization’s ability to continue as a going concern and to provide related footnote disclosures. Substantial doubt about an entity’s ability to continue as a going concern exists when relevant conditions and events, considered in the aggregate, indicate that it is probable that the entity will be unable to meet its obligations as they become due within one year after the date that the financial statements are issued (or available to be issued). ASU No. 2014-15 provides guidance to an organization’s management, with principles and definitions that are intended to reduce diversity in the timing and content of disclosures that are commonly provided by organizations in the financial statement footnotes. ASU No. 2014-15 is effective for annual reporting periods ending after December 15, 2016 and to annual and interim periods thereafter. Early adoption is permitted. The Company adopted ASU No. 2014-15 on April 1, 2016, and the adoption did not have a material impact on the consolidated financial statements and related disclosures.

In April 2015, the FASB issued ASU No. 2015-03, Interest-Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs. The amendments in this ASU require that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. In August 2015, the FASB issued ASU No. 2015-15, which further clarifies the implementation guidance of ASU No. 2015-03. The amendments in these ASUs are effective for the financial statements issued for fiscal years beginning after December 15, 2015, and interim periods within those fiscal years. The Company adopted ASU No. 2015-03 on January 1, 2016. The following table summarizes the adjustments made to conform prior period classifications as a result of the new guidance (in thousands):

	As of December 31, 2015
	As filed			Reclassification			As adjusted
Other non-current assets	$	8,581		$	(8,359	)	$	222
Exchangeable notes, net		(283,675	)	786				(282,889	)
Long-term debt, net, net of current		(857,440	)		7,573			(849,867	)

In April 2015, the FASB issued ASU No. 2015-05: Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Fees Paid in a Cloud Computing Arrangement which provides guidance on a customer’s accounting for fees paid in a cloud computing arrangement. Under the new standard, customers will apply the same criteria as vendors to determine whether a cloud computing arrangement contains a software license or is solely a service contract. The amendments in this ASU, which may be applied prospectively or retrospectively, are effective for annual and interim periods beginning after December 15, 2015. The Company adopted ASU No. 2015-05 on January 1, 2016 and the adoption did not have a material impact on the consolidated financial statements and related disclosures.

In July 2015, the FASB issued ASU No. 2015-11, Inventory (Topic 330): Simplifying the Measurement of Inventory. Under this new guidance, entities that measure inventory using any method other than last-in, first-out or the retail inventory method will be required to measure inventory at the lower of cost and net realizable value. The amendments in this ASU, which should be applied prospectively, are effective for annual and interim periods beginning after December 15, 2016. Early adoption is permitted. The Company adopted ASU No. 2015-11 on April 1, 2016, and the adoption did not have a material impact on the consolidated financial statements and related disclosures.

In September 2015, the FASB issued ASU No. 2015-16, Business Combinations (Topic 805): Simplifying the Accounting for Measurement-Period Adjustments (“ASC 805”). Under this guidance, an acquirer is required to recognize adjustments to provisional amounts that are identified during the measurement period in the reporting period in which the adjustment amounts are determined. The amendments in this ASU require that the acquirer record, in the same period’s financial statements, the effect on earnings of changes in depreciation, amortization or other income effects, if any, as a result of the change to the provisional amounts, calculated as if the accounting had been completed at the acquisition date. The amendments in this ASU require an entity to present separately on the face of the income statement or disclose in the notes the portion of the amount recorded in current-period earnings by line item that would have been recorded in previous reporting periods if the adjustment to the provisional amounts had been recognized as of the acquisition date. The amendments in this ASU, which should be applied prospectively, are effective for annual and interim periods beginning after December 15, 2015. The Company adopted ASU No. 2015-16 on January 1, 2016, and the adoption did not have a material impact on the consolidated financial statements and related disclosures.

In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842). Under ASU No. 2016-02, an entity will be required to recognize right-of-use assets and lease liabilities on its balance sheet and disclose key information about leasing arrangements. ASU No. 2016-02 offers specific accounting guidance for a lessee, a lessor and sale and leaseback transactions. Lessees and lessors are required to disclose qualitative and quantitative information about leasing arrangements to enable a user of the financial statements to assess the amount, timing and uncertainty of cash flows arising from leases. ASU No. 2016-02 is effective for annual reporting periods beginning after December 15, 2018, including interim periods within that reporting period, with early adoption permitted. At adoption, this update will be applied using a modified retrospective approach. The Company is currently in the process of evaluating the impact of adoption of ASU No. 2016-02 on its consolidated financial statements and related disclosures.

In March 2016, the FASB Issued ASU No. 2016-09, Compensation-Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting. The updated guidance will change how companies account for certain aspects of share-based payments to employees. Entities will be required to recognize the income tax effects of awards in the statement of income when the awards vest or are settled. The guidance on accounting for an employee’s use of shares to satisfy the statutory income tax withholding obligation and for forfeitures is changing, and the update requires companies to present excess tax benefits as an operating activity on the statement of cash flows rather than as a financing activity. The amendments in this update will be effective for annual periods beginning after December 15, 2016 and interim periods within those annual periods. Early adoption is permitted. The Company is currently in the process of evaluating the impact of adoption of ASU No. 2016-09 on its consolidated financial statements and related disclosures.

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Basis of Presentation and Business Overview (Tables)

6 Months Ended

Jun. 30, 2016

Organization Consolidation And Presentation Of Financial Statements [Abstract]

Schedule of Adjustments Made to Conform Prior Period Classifications

The following table summarizes the adjustments made to conform prior period classifications as a result of the new guidance (in thousands):

	As of December 31, 2015
	As filed			Reclassification			As adjusted
Other non-current assets	$	8,581		$	(8,359	)	$	222
Exchangeable notes, net		(283,675	)	786				(282,889	)
Long-term debt, net, net of current		(857,440	)		7,573			(849,867	)

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Net Income (Loss) per Share (Tables)

6 Months Ended

Jun. 30, 2016

Earnings Per Share [Abstract]

Basic and Diluted Net Income (Loss) per Share

The following table presents basic net income (loss) per share for the three and six months ended June 30, 2016 and 2015 (in thousands, except share and per share data):

	For the Three Months Ended June30,				For the Six Months Ended June 30,
	2016		2015		2016			2015
Basic net income (loss) per share calculation:
Net income (loss)	$	14,984	$	31,814	$	(30,422	)	$	12,261
Weighted average ordinary shares outstanding		160,468,146		150,771,902		160,186,270			138,369,537
Basic net income (loss) per share	$	0.09	$	0.21	$	(0.19	)	$	0.09

The following table presents diluted net income (loss) per share for the three and six months ended June 30, 2016 and 2015 (in thousands, except share and per share data):

	For the Three Months Ended June 30,				For the Six Months Ended June 30,
	2016		2015		2016			2015
Diluted net income (loss) per share    calculation:
Net income (loss)	$	14,984	$	31,814	$	(30,422	)	$	12,261
Weighted average ordinary shares outstanding		163,920,581		159,797,319		160,186,270			145,031,882
Diluted net income (loss) per share	$	0.09	$	0.20	$	(0.19	)	$	0.08

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Business Acquisitions (Tables)

6 Months Ended

Jun. 30, 2016

Consolidated Pro Forma Financial Information

Additionally, the following table sets forth unaudited financial information and has been compiled from historical financial statements and other information, but is not necessarily indicative of the results that actually would have been achieved had the transactions occurred on the dates indicated or that may be achieved in the future (in thousands):

	For the Six Months Ended June 30,
	2015
	As reported		Pro forma adjustments			Pro forma
Net sales	$	285,962	$	64,693		$	350,655
Net income (loss)		12,261		(48,941	)		(36,680	)

Crealta Holdings LLC [Member]

Total Consideration for Acquisition

The total consideration for the acquisition was approximately $539.7 million, including cash acquired of $24.9 million, and was composed of the following before and after the measurement period adjustments (in thousands):

	Before		Adjustments		After
Cash	$	536,181	$	25	$	536,206
Net settlements on the exercise of stock options and    unrestricted units		3,526		—		3,526
Total consideration	$	539,707	$	25	$	539,732

Fair Values Assigned to Assets Acquired and Liabilities Assumed

The following table summarizes the preliminary fair values assigned to the assets acquired and the liabilities assumed by the Company, along with the resulting goodwill before and after the measurement period adjustments (in thousands): 

(Liabilities assumed) and assets acquired:	Before			Adjustments			After
Accounts payable and accrued expenses	$	(4,543	)	$	—		$	(4,543	)
Accrued trade discounts and rebates		(1,424	)		—			(1,424	)
Deferred tax liabilities		(20,835	)		—			(20,835	)
Other non-current liabilities		(6,900	)		—			(6,900	)
Contingent royalty liabilities		(51,300	)		—			(51,300	)
Cash and cash equivalents		24,893			—			24,893
Accounts receivable		10,014			—			10,014
Inventories		169,054			(1,700	)		167,354
Prepaid expenses and other current assets		1,382			—			1,382
Developed technology		417,300			1,400			418,700
Other non-current assets		275			—			275
Goodwill		1,791			325			2,116
Fair value of consideration paid	$	539,707		$	25		$	539,732

Hyperion Therapeutics, Inc. [Member]

Total Consideration for Acquisition

The total consideration for the acquisition was approximately $1.1 billion and was composed of the following (in thousands, except share and per share data):

Fully diluted equity value (21,425,909 shares at $46.00 per    share)	$	985,592
Net settlements on the exercise of stock options, restricted    stock and performance stock units		89,806
Total consideration	$	1,075,398

Fair Values Assigned to Assets Acquired and Liabilities Assumed

The following table summarizes the final fair values assigned to the assets acquired and the liabilities assumed by the Company (in thousands): 

(Liabilities assumed) and assets acquired:	Allocation
Deferred tax liabilities, net	$	(262,732	)
Accounts payable		(2,439	)
Accrued trade discounts and rebates		(9,792	)
Accrued expenses		(7,566	)
Contingent royalties		(86,800	)
Cash and cash equivalents		53,037
Short-term investments		39,049
Long-term investments		25,574
Accounts receivable, net		11,858
Inventory		13,498
Prepaid expenses and other current assets		2,533
Property and equipment		1,044
Other non-current assets		123
Developed technology		1,044,200
Goodwill		253,811
Fair value of consideration paid	$	1,075,398

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Inventories (Tables)

6 Months Ended

Jun. 30, 2016

Inventory Disclosure [Abstract]

Components of Inventories

The components of inventories as of June 30, 2016 and December 31, 2015 consisted of the following (in thousands):

	June 30, 2016		December 31, 2015
Raw materials	$	2,145	$	6,232
Work-in-process		145,827		631
Finished goods		24,130		11,513
Inventories, net	$	172,102	$	18,376

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Prepaid Expenses and Other Current Assets (Tables)

6 Months Ended

Jun. 30, 2016

Deferred Costs Capitalized Prepaid And Other Assets Disclosure [Abstract]

Prepaid Expenses and Other Current Assets

Prepaid expenses and other current assets as of June 30, 2016 and December 31, 2015 consisted of the following (in thousands):

	June 30, 2016		December 31, 2015
Prepaid income taxes	$	14,693	$	4
Medicine samples inventory		6,268		4,697
Prepaid co-pay expenses		2,023		1,881
Rabbi trust assets		2,303		773
Other prepaid expenses		8,579		8,503
Prepaid expenses and other current assets	$	33,866	$	15,858

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Property and Equipment (Tables)

6 Months Ended

Jun. 30, 2016

Property Plant And Equipment [Abstract]

Property and Equipment

Property and equipment as of June 30, 2016 and December 31, 2015 consisted of the following (in thousands):

	June 30, 2016			December 31, 2015
Machinery and equipment	$	2,843		$	2,946
Computer equipment		2,916			2,514
Software		9,593			1,360
Leasehold improvements		6,930			1,966
Other		1,689			276
		23,971			9,062
Less accumulated depreciation		(5,660	)		(3,791	)
Construction in process		1,908			3,492
Software implementation in process		1,752			5,257
Property and equipment, net	$	21,971		$	14,020

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Goodwill and Intangible Assets (Tables)

6 Months Ended

Jun. 30, 2016

Goodwill And Intangible Assets Disclosure [Abstract]

Schedule of Gross Carrying Amount of Goodwill

The gross carrying amount of goodwill as of June 30, 2016 was as follows (in thousands):

Balance at December 31, 2015	$	253,811
Acquired during the period		2,116
Balance at June 30, 2016	$	255,927

Amortizable Intangible Assets

As of June 30, 2016 and December 31, 2015, amortizable intangible assets consisted of the following (in thousands):

	June 30, 2016							December 31, 2015
	CostBasis		Accumulated Amortization			Net Book Value		Cost Basis		Accumulated Amortization			Net Book Value
Developed technology	$	2,211,195	$	(283,482	)	$	1,927,713	$	1,792,495	$	(183,446	)	$	1,609,049
Customer relationships		8,100		(1,445	)		6,655		8,100		(1,039	)		7,061
Total amortizable intangible assets	$	2,219,295	$	(284,927	)	$	1,934,368	$	1,800,595	$	(184,485	)	$	1,616,110

Estimated Future Amortization Expense

As of June 30, 2016, estimated future amortization expense was as follows (in thousands):

2016 (July to December)	$	101,376
2017		202,963
2018		202,963
2019		189,971
2020		189,752
Thereafter		1,047,343
Total	$	1,934,368

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Accrued Trade Discounts and Rebates (Tables)

6 Months Ended

Jun. 30, 2016

Accrued Trade Discounts and Rebates [Member]

Valuation And Qualifying Accounts Disclosure [Line Items]

Schedule of Accrued Liabilities / Expenses

Accrued trade discounts and rebates as of June 30, 2016 and December 31, 2015 consisted of the following (in thousands):

	June 30, 2016		December 31, 2015
Accrued wholesaler fees and commercial rebates	$	25,317	$	21,112
Accrued co-pay and other patient assistance		134,467		114,201
Accrued government rebates and chargebacks		60,890		48,456
Accrued trade discounts and rebates		220,674		183,769
Invoiced wholesaler fees and commercial rebates, co-pay    and other patient assistance, and government rebates and    chargebacks in accounts payable		36,242		—
Total customer-related accruals and allowances	$	256,916	$	183,769

Customer-related Accruals and Allowances [Member]

Valuation And Qualifying Accounts Disclosure [Line Items]

Schedule of Customer-Related Accruals and Allowances

The following table summarizes changes in the Company’s customer-related accruals and allowances from December 31, 2015 to June 30, 2016 (in thousands):

	Wholesaler Fees			Co-Pay and			Government
	and Commercial			Other Patient			Rebates and
	Rebates			Assistance			Chargebacks			Total
Balance at December 31, 2015	$	21,112		$	114,201		$	48,456		$	183,769
Current provisions relating to sales in the six months ended    June 30, 2016		51,854			816,835			127,836			996,525
Adjustments relating to prior year sales		2,931			—			(7,191	)		(4,260	)
Payments relating to sales in the six months ended    June 30, 2016		(30,410	)		(646,622	)		(74,210	)		(751,242	)
Payments relating to sales in prior years		(20,644	)		(114,201	)		(34,455	)		(169,300	)
Crealta acquisition on January 13, 2016		492			—			932			1,424
Balance at June 30, 2016	$	25,335		$	170,213		$	61,368		$	256,916

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Accrued Expenses (Tables)

6 Months Ended

Jun. 30, 2016

Accrued Expenses [Member]

Payables And Accruals [Line Items]

Schedule of Accrued Liabilities / Expenses

Accrued expenses as of June 30, 2016 and December 31, 2015 consisted of the following (in thousands):

	June 30, 2016		December 31, 2015
Payroll-related expenses	$	33,639	$	47,205
Consulting and professional services		15,097		17,160
Accrued interest		10,813		10,637
Accrued other		16,160		25,044
Accrued expenses	$	75,709	$	100,046

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Accrued Royalties (Tables)

6 Months Ended

Jun. 30, 2016

Accrued Royalties [Member]

Schedule of Accrued Liabilities / Expenses

Changes in the liability for royalties during the six months ended June 30, 2016 consisted of the following (in thousands):

Balance as of December 31, 2015	$	175,219
Assumed KRYSTEXXA and MIGERGOT accrued royalties		1,401
Assumed KRYSTEXXA and MIGERGOT contingent royalty    liabilities		51,300
Royalty payments		(18,780	)
Accretion expense		19,028
Balance as of June 30, 2016		228,168
Less: Current portion		58,008
Accrued royalties, net of current	$	170,160

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Fair Value Measurements (Tables)

6 Months Ended

Jun. 30, 2016

Fair Value Disclosures [Abstract]

Assets and Liabilities at Fair Value on Recurring Basis

The following table sets forth the Company’s financial assets and liabilities at fair value on a recurring basis as of June 30, 2016 and December 31, 2015 (in thousands):

	June 30, 2016
	Level 1		Level 2		Level 3		Total
Assets:
Bank time deposits	$	—	$	2,502	$	—	$	2,502
Money market funds		240,000		—		—		240,000
Other current assets		2,303		—		—		2,303
Total assets at fair value	$	242,303	$	2,502	$	—	$	244,805

	December 31, 2015
	Level 1		Level 2		Level 3		Total
Assets:
Bank time deposits	$	—	$	1,000	$	—	$	1,000
Money market funds		280,053		—		—		280,053
Other current assets		773		—		—		773
Total assets at fair value	$	280,826	$	1,000	$	—	$	281,826

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Commitments and Contingencies (Tables)

6 Months Ended

Jun. 30, 2016

Commitments And Contingencies Disclosure [Abstract]

Schedule of Lease Agreements in Place for Real Properties

The Company has the following lease agreements in place for real properties:

Location	Approximate Square Footage		Lease Expiry Date
Dublin, Ireland		18,900	November 4, 2029
Lake Forest, Illinois (1)		160,000	March 31, 2024
Deerfield, Illinois (2)		53,500	June 30, 2018
Brisbane, California (3)		20,100	November 30, 2019
Mannheim, Germany		14,300	December 31, 2018
Chicago, Illinois		6,500	December 31, 2018
Reinach, Switzerland		3,500	May 31, 2020

(1) In connection with the Lake Forest, Illinois lease, the Company has provided a $2.0 million letter of credit to the landlord, through a commercial bank. The Company has two separate lease agreements in place for this property, one of which, consisting of approximately 15,000 square feet, was assumed by the Company as a result of its acquisition of Crealta in January 2016 and will expire on October 31, 2017.

(2) The Company vacated the premises in Deerfield, Illinois in January 2016.

(3) The Company vacated the premises in Brisbane, California in December 2015 and entered into a sublease agreement for the property with a third party.  

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Debt Agreements (Tables)

6 Months Ended

Jun. 30, 2016

Debt Disclosure [Abstract]

Outstanding Debt Balances

The Company’s outstanding debt balances as of June 30, 2016 and December 31, 2015 consisted of the following (in thousands):

	June 30, 2016			December 31, 2015
2015 Term Loan Facility	$	396,000		$	398,000
2023 Senior Notes		475,000			475,000
Exchangeable Senior Notes due 2022		400,000			400,000
Total face value		1,271,000			1,273,000
Debt discount		(119,764	)		(127,885	)
Deferred financing fees		(7,549	)		(8,359	)
Total long-term debt		1,143,687			1,136,756
Less: current maturities		4,000			4,000
Long-term debt, net of current maturities	$	1,139,687		$	1,132,756

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Share-Based Incentive Plans (Tables)

6 Months Ended

Jun. 30, 2016

Disclosure Of Compensation Related Costs Sharebased Payments [Abstract]

Summary of Stock Option Activity

The following table summarizes stock option activity during the six months ended June 30, 2016:

	Options			Weighted Average Exercise Price		Weighted Average Contractual Term Remaining (in years)		Aggregate Intrinsic Value (in thousands)
Outstanding as of December 31, 2015		13,385,791		$	17.73
Granted		1,741,192		$	18.13
Exercised		(231,807	)	$	7.13
Forfeited		(802,169	)	$	18.34
Expired		(42,348	)	$	9.73
Outstanding as of June 30, 2016		14,050,659		$	17.94		7.92	$	41,048
Exercisable as of June 30, 2016		5,893,946		$	14.19		6.70	$	31,063

Weighted Average Fair Value per Share of Stock Option Awards Granted and Assumptions Used to Value Stock Options

The weighted average fair value per share of stock option awards granted during the six months ended June 30, 2016 and 2015, and assumptions used to value stock options, are as follows:

	For the Six Months Ended June 30,
	2016		2015
Dividend yield		—		—
Risk-free interest rate	1.3% - 1.8%		1.3% - 2.3%
Weighted average expected volatility	73.8%		77.2%
Expected life (in years)		6.0		6.0
Weighted average grant-date fair value per share of    options granted	$	11.78	$	15.84

Summary of Restricted Stock Unit Activity

The following table summarizes restricted stock unit activity for the six months ended June 30, 2016:

	Number of Units			Weighted Average Grant-Date Fair Value Per Unit
Outstanding as of December 31, 2015		3,361,746		$	18.71
Granted		683,844		$	17.00
Vested		(813,423	)	$	16.80
Forfeited		(260,100	)	$	19.01
Outstanding as of June 30, 2016		2,972,067		$	18.81

Summary of Performance Stock Unit (PSU) Activity

The following table summarizes performance stock unit (“PSU”) activity for the six months ended June 30, 2016:

	Number of Units			Weighted Average Grant-Date Fair Value Per Unit		Average Illiquidity Discount			Recorded Weighted Average Fair Value Per Unit
Outstanding as of December 31, 2015		13,049,000
Granted		260,000		$	7.99		8.2	%	$	7.34
Vested		(20,000	)	$	18.97		0.0	%	$	18.97
Forfeited		(823,000	)	$	13.69		16.1	%	$	11.48
Outstanding as of June 30, 2016		12,466,000

Summary of Vesting Tranches

In 2014, the Company granted 25,000 PSUs. All other outstanding PSUs were granted in 2015 and 2016 and may vest if the Company’s total compounded annual shareholder rate of return (“TSR”) over three performance measurement periods summarized below equals or exceeds a minimum of 15%.

Vesting Tranche	Percent of  Total PSU Award			Beginning of Performance Measurement Period	End of Performance Measurement Period	Length of Performance Measurement Period (Years)
Tranche One		33.3	%	March 23, 2015	December 22, 2017		2.75
Tranche Two		33.3	%	March 23, 2015	March 22, 2018		3.00
Tranche Three		33.3	%	March 23, 2015	June 22, 2018		3.25

These outstanding PSUs granted in 2015 and 2016 will vest in amounts ranging from 25% to 100% based on the achievement of the following TSR over the three performance periods:

TSR Achieved	VestingAmount
15%	25	%
30%	50	%
45%	75	%
60%	100	%

Summary of Significant Valuation Assumptions

The Company accounts for the PSUs as equity-settled awards in accordance with ASC 718. Because the value of the outstanding PSUs granted in 2015 and 2016 is dependent upon the attainment of a level of TSR, it requires the impact of the market condition to be considered when estimating the fair value of the PSUs. As a result, the Monte Carlo model is applied and the most significant valuation assumptions used include:

	For the Six Months Ended June 30,
	2016		2015
Valuation date stock price	$	17.72 - 21.07	$	22.77 - 28.53
Expected volatility		76.8% - 77.6%		67.2% - 67.3%
Risk free rate		1.0% - 1.2%		1.0% - 1.1%

Summary of Average Estimated Fair Value of PSU

The average estimated fair value of each outstanding PSU granted under the 2014 EIP is as follows (allocated between groupings based on grant-date classification):

	Number of Units		Weighted Average Fair Value Per Unit		Average Illiquidity Discount			Recorded Weighted Average Fair Value Per Unit
Executive committee members		9,173,000	$	15.18		18.3	%	$	12.40
Non-executive committee members		3,268,000	$	13.75		7.3	%	$	12.74
		12,441,000	$	14.80		15.6	%	$	12.49

Summary of Share-Based Compensation Expense

The following table summarizes share-based compensation expense included in the Company’s condensed consolidated statements of operations for the six months ended June 30, 2016 and 2015 (in thousands):

	For the Six Months Ended June 30,
	2016		2015
Share-based compensation expense:
Research and development	$	4,363	$	2,670
Sales and marketing		12,610		8,536
General and administrative		38,636		20,133
Total share-based compensation expense	$	55,609	$	31,339

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Income Taxes (Tables)

6 Months Ended

Jun. 30, 2016

Income Tax Disclosure [Abstract]

Benefit for Income Taxes

The following table presents the benefit for income taxes for the three and six months ended June 30, 2016 and 2015 (in thousands):

	For the Three Months Ended June 30,						For the Six Months Ended June 30,
	2016			2015			2016			2015
Income (loss) before benefit for income taxes	$	12,228		$	(128,866	)	$	(34,621	)	$	(146,506	)
Benefit for income taxes		(2,756	)		(160,680	)		(4,199	)		(158,767	)
Net income (loss)	$	14,984		$	31,814		$	(30,422	)	$	12,261

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Basis of Presentation and Business Overview - Additional Information (Detail) $ / shares in Units, Pharmacy in Thousands, € in Millions					6 Months Ended
	May 18, 2016 USD ($) Country $ / €	May 18, 2016 EUR (€) Country $ / €	Jan. 13, 2016 USD ($)	May 07, 2015 USD ($) $ / shares	Jun. 30, 2016 USD ($) Pharmacy	Jun. 30, 2016 EUR (€) Pharmacy
Basis Of Presentation [Line Items]
Percentage of patients filled prescriptions through prescriptions made easy program					99.80%	99.80%
Aggregate commercial value of patient access programs					$ 816,800,000
Estimated number of pharmacies | Pharmacy					10	10
Maximum [Member]
Basis Of Presentation [Line Items]
Patients with co-pay amounts under filling prescriptions through prescriptions made easy program					$ 10
Hyperion Therapeutics, Inc. [Member]
Basis Of Presentation [Line Items]
Business acquisition date					May 07, 2015	May 07, 2015
Common stock, price per share | $ / shares				$ 46.00
Consideration transferred				$ 1,075,398,000
Payments to acquire rights				$ 1,100,000,000
Crealta Holdings LLC [Member]
Basis Of Presentation [Line Items]
Business acquisition date					Jan. 13, 2016	Jan. 13, 2016
Consideration transferred			$ 539,732,000
Cash acquired from acquisition			24,900,000
Payments to acquire rights			$ 536,206,000
Boehringer Ingelheim International GmbH [Member]
Basis Of Presentation [Line Items]
Business acquisition agreement date	May 18, 2016	May 18, 2016
Number of estimated countries commercializes under trade names | Country	30	30
Payments to acquire rights	$ 5,600,000	€ 5.0				€ 20.0
Currency exchange rate | $ / €	1.1132	1.1132

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Basis of Presentation and Business Overview - Schedule of Adjustments Made to Conform Prior Period Classifications (Detail) - USD ($) $ in Thousands	Jun. 30, 2016	Dec. 31, 2015
Basis Of Presentation [Line Items]
Other non-current assets	$ 6,156	$ 222
Exchangeable notes, net	(290,310)	(282,889)
Long-term debt, net, net of current	$ (849,377)	(849,867)
ASU 2015-03 [Member]
Basis Of Presentation [Line Items]
Other non-current assets		222
Exchangeable notes, net		(282,889)
Long-term debt, net, net of current		(849,867)
ASU 2015-03 [Member] | As Filed [Member]
Basis Of Presentation [Line Items]
Other non-current assets		8,581
Exchangeable notes, net		(283,675)
Long-term debt, net, net of current		(857,440)
ASU 2015-03 [Member] | Reclassification [Member]
Basis Of Presentation [Line Items]
Other non-current assets		(8,359)
Exchangeable notes, net		786
Long-term debt, net, net of current		$ 7,573

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Net Income (Loss) per Share - Basic and Diluted Net Income (Loss) per Share (Detail) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
Basic net income (loss) per share calculation:
Net income (loss)	$ 14,984	$ 31,814	$ (30,422)	$ 12,261
WEIGHTED AVERAGE ORDINARY SHARES OUTSTANDING—Basic	160,468,146	150,771,902	160,186,270	138,369,537
Basic net income (loss) per share	$ 0.09	$ 0.21	$ (0.19)	$ 0.09
Diluted net income (loss) per share calculation:
Net income (loss)	$ 14,984	$ 31,814	$ (30,422)	$ 12,261
WEIGHTED AVERAGE ORDINARY SHARES OUTSTANDING—Diluted	163,920,581	159,797,319	160,186,270	145,031,882
Diluted net income (loss) per share	$ 0.09	$ 0.20	$ (0.19)	$ 0.08

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Net Income Loss per Share - Additional Information (Detail) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015	Dec. 31, 2015	Mar. 13, 2015
Earnings Per Share [Line Items]
Senior notes	$ 849,377		$ 849,377		$ 849,867
Incremental common shares attributable to dilutive effect of conversion of Exchangeable Senior Notes	0	851,500	0	294,286
Exchangeable Senior Notes [Member]
Earnings Per Share [Line Items]
Interest rate	2.50%		2.50%
Horizon Investment [Member] | Exchangeable Senior Notes [Member]
Earnings Per Share [Line Items]
Senior notes	$ 400,000		$ 400,000			$ 400,000
Interest rate	2.50%		2.50%
Maturity year of debt instrument			2022
Equity Awards [Member]
Earnings Per Share [Line Items]
Securities excluded from computation of diluted net income (loss) per share	14,000,000	4,300,000	13,400,000	3,400,000

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Business Acquisitions - Additional Information (Detail) $ / shares in Units, $ in Thousands, € in Millions						3 Months Ended		6 Months Ended
	Dec. 31, 2016 EUR (€)	May 18, 2016 USD ($) $ / €	May 18, 2016 EUR (€) $ / €	Jan. 13, 2016 USD ($)	May 07, 2015 USD ($) $ / shares	Jun. 30, 2016 USD ($)	Jun. 30, 2015 USD ($)	Jun. 30, 2016 USD ($)	Jun. 30, 2016 EUR (€)	Jun. 30, 2015 USD ($)
Business Acquisition [Line Items]
Percentage of estimated cash flows expected to be realized								90.00%	90.00%
Net sales						$ 257,378	$ 172,821	$ 462,068		$ 285,962
KRYSTEXXA Developed Technology [Member] | Developed Technology [Member]
Business Acquisition [Line Items]
Finite-lived intangible assets estimated useful life								12 years	12 years
MIGERGOT Developed Technology [Member] | Developed Technology [Member]
Business Acquisition [Line Items]
Finite-lived intangible assets estimated useful life								10 years	10 years
RAVICTI Developed Technology [Member] | Developed Technology [Member]
Business Acquisition [Line Items]
Finite-lived intangible assets estimated useful life								11 years	11 years
BUPHENYL Developed Technology [Member] | Developed Technology [Member]
Business Acquisition [Line Items]
Finite-lived intangible assets estimated useful life								7 years	7 years
Boehringer Ingelheim International GmbH [Member]
Business Acquisition [Line Items]
Cash consideration		$ 5,600	€ 5.0						€ 20.0
Currency exchange rate | $ / €		1.1132	1.1132
Boehringer Ingelheim International GmbH [Member] | Scenario Forecast [Member]
Business Acquisition [Line Items]
Cash consideration | €	€ 20.0
Crealta Holdings LLC [Member]
Business Acquisition [Line Items]
Cash consideration				$ 536,206
Total consideration				539,732
Cash acquired from acquisition				24,900
Acquisition related costs						1,600		$ 11,700
Net increase in goodwill						300
Inventory				167,354
Inventory measurement period adjustments						1,700
Preliminary fair value of liability						51,300		51,300
Crealta Holdings LLC [Member] | Commercial Supply Agreements [Member]
Business Acquisition [Line Items]
Contingent liability						6,900		6,900
Crealta Holdings LLC [Member] | Fair Value Adjustment to Inventory [Member]
Business Acquisition [Line Items]
Inventory						161,900		161,900
Crealta Holdings LLC [Member] | KRYSTEXXA and MIGERGOT [Member] | Developed Technology [Member]
Business Acquisition [Line Items]
Amortization of inventory step up						9,100		16,500
Crealta Holdings LLC [Member] | KRYSTEXXA Developed Technology [Member]
Business Acquisition [Line Items]
Net sales								$ 36,000
Crealta Holdings LLC [Member] | KRYSTEXXA Developed Technology [Member] | Developed Technology [Member]
Business Acquisition [Line Items]
Present value at discount rate								27.00%	27.00%
Crealta Holdings LLC [Member] | MIGERGOT Developed Technology [Member]
Business Acquisition [Line Items]
Net sales								$ 2,000
Crealta Holdings LLC [Member] | MIGERGOT Developed Technology [Member] | Developed Technology [Member]
Business Acquisition [Line Items]
Present value at discount rate								23.00%	23.00%
Crealta Holdings LLC [Member] | General and Administrative [Member]
Business Acquisition [Line Items]
Acquisition related costs						1,100		$ 11,000
Crealta Holdings LLC [Member] | Research and Development [Member]
Business Acquisition [Line Items]
Acquisition related costs						300		300
Crealta Holdings LLC [Member] | Cost of Goods Sold [Member]
Business Acquisition [Line Items]
Acquisition related costs						200		400
Crealta Holdings LLC [Member] | Before [Member]
Business Acquisition [Line Items]
Cash consideration				536,181
Total consideration				539,707
Inventory				169,054
Crealta Holdings LLC [Member] | Before [Member] | Fair Value Adjustment to Inventory [Member]
Business Acquisition [Line Items]
Inventory				$ 163,600
Hyperion Therapeutics, Inc. [Member]
Business Acquisition [Line Items]
Cash consideration					$ 1,100,000
Total consideration					1,075,398
Acquisition related costs						1,000	45,900	300		47,900
Inventory					$ 13,498
Preliminary fair value of liability						86,800		$ 86,800
Business acquisition share price | $ / shares					$ 46.00
Income tax rate reconciliation, tax settlement, domestic percent								39.00%	39.00%
Business acquisition, valuation allowance recognized							105,100
Hyperion Therapeutics, Inc. [Member] | Fair Value Adjustment to Inventory [Member]
Business Acquisition [Line Items]
Inventory						8,700		$ 8,700
Hyperion Therapeutics, Inc. [Member] | Developed Technology [Member]
Business Acquisition [Line Items]
Present value at discount rate								8.50%	8.50%
Hyperion Therapeutics, Inc. [Member] | RAVICTI Developed Technology [Member]
Business Acquisition [Line Items]
Net sales								$ 76,400		19,000
Hyperion Therapeutics, Inc. [Member] | BUPHENYL Developed Technology [Member]
Business Acquisition [Line Items]
Net sales								7,800		3,900
Hyperion Therapeutics, Inc. [Member] | General and Administrative [Member]
Business Acquisition [Line Items]
Acquisition related costs						1,300	$ 36,900	600		$ 37,900
Hyperion Therapeutics, Inc. [Member] | Research and Development [Member]
Business Acquisition [Line Items]
Acquisition related costs						200		200
Hyperion Therapeutics, Inc. [Member] | Cost of Goods Sold [Member]
Business Acquisition [Line Items]
Acquisition related costs						100		100
Hyperion Therapeutics, Inc. [Member] | Other Expense, Net [Member]
Business Acquisition [Line Items]
Acquisition related costs						$ 9,000		$ 10,000

XML

Business Acquisitions - Total Consideration for Acquisition Including Cash Acquired (Detail) - Crealta Holdings LLC [Member] $ in Thousands	Jan. 13, 2016 USD ($)
Business Acquisition [Line Items]
Cash	$ 536,206
Net settlements on the exercise of stock options and unrestricted units	3,526
Total consideration	539,732
Before [Member]
Business Acquisition [Line Items]
Cash	536,181
Net settlements on the exercise of stock options and unrestricted units	3,526
Total consideration	539,707
Adjustments [Member]
Business Acquisition [Line Items]
Cash	25
Total consideration	$ 25

XML

Business Acquisitions - Fair Values Assigned to Assets Acquired and Liabilities Assumed (Detail) - USD ($) $ in Thousands	Jan. 13, 2016	May 07, 2015	Jun. 30, 2016	Jan. 31, 2016	Dec. 31, 2015	May 31, 2015
Business Acquisition [Line Items]
Goodwill			$ 255,927		$ 253,811
Crealta Holdings LLC [Member]
Business Acquisition [Line Items]
Accounts payable and accrued expenses	$ (4,543)
Accrued trade discounts and rebates	(1,424)
Deferred tax liabilities	(20,835)
Other non-current liabilities	(6,900)
Contingent royalties	(51,300)
Cash and cash equivalents	24,893
Accounts receivable, net	10,014
Inventories	167,354
Prepaid expenses and other current assets	1,382
Other non-current assets	275
Goodwill	2,116
Fair value of consideration paid	539,732
Crealta Holdings LLC [Member] | Before [Member]
Business Acquisition [Line Items]
Accounts payable and accrued expenses	(4,543)
Accrued trade discounts and rebates	(1,424)
Deferred tax liabilities	(20,835)
Other non-current liabilities	(6,900)
Contingent royalties	(51,300)
Cash and cash equivalents	24,893
Accounts receivable, net	10,014
Inventories	169,054
Prepaid expenses and other current assets	1,382
Other non-current assets	275
Goodwill	1,791			$ 1,800
Fair value of consideration paid	539,707
Crealta Holdings LLC [Member] | Adjustments [Member]
Business Acquisition [Line Items]
Inventories	(1,700)
Goodwill	325
Fair value of consideration paid	25
Crealta Holdings LLC [Member] | Developed Technology [Member]
Business Acquisition [Line Items]
Intangible assets	418,700
Crealta Holdings LLC [Member] | Developed Technology [Member] | Before [Member]
Business Acquisition [Line Items]
Intangible assets	417,300
Crealta Holdings LLC [Member] | Developed Technology [Member] | Adjustments [Member]
Business Acquisition [Line Items]
Intangible assets	$ 1,400
Hyperion Therapeutics, Inc. [Member]
Business Acquisition [Line Items]
Accrued trade discounts and rebates		$ (9,792)
Contingent royalties		(86,800)
Cash and cash equivalents		53,037
Accounts receivable, net		11,858
Inventories		13,498
Prepaid expenses and other current assets		2,533
Other non-current assets		123
Goodwill		253,811
Fair value of consideration paid		1,075,398
Deferred tax liabilities, net		(262,732)
Accounts payable		(2,439)
Accrued expenses and other current liabilities		(7,566)
Short-term investments		39,049
Long-term investments		25,574
Property and equipment		1,044
Hyperion Therapeutics, Inc. [Member] | Before [Member]
Business Acquisition [Line Items]
Goodwill						$ 253,800
Hyperion Therapeutics, Inc. [Member] | Developed Technology [Member]
Business Acquisition [Line Items]
Intangible assets		$ 1,044,200

XML

Business Acquisitions - Total Consideration for Acquisition (Detail) - Hyperion Therapeutics, Inc. [Member] $ in Thousands	May 07, 2015 USD ($)
Business Acquisition [Line Items]
Fully diluted equity value (21,425,909 shares at $46.00 per share)	$ 985,592
Net settlements on the exercise of stock options, restricted stock and performance stock units	89,806
Total consideration	$ 1,075,398

XML

Business Acquisitions - Total Consideration for Acquisition (Parenthetical) (Detail) - Hyperion Therapeutics, Inc. [Member]	May 07, 2015 $ / shares shares
Business Acquisition [Line Items]
Fully diluted equity shares | shares	21,425,909
Price per share | $ / shares	$ 46.00

XML

Business Acquisitions - Consolidated Pro Forma Financial Information (Detail) $ in Thousands	6 Months Ended
	Jun. 30, 2015 USD ($)
Business Acquisition [Line Items]
Net sales	$ 350,655
Net income (loss)	(36,680)
Before [Member]
Business Acquisition [Line Items]
Net sales	285,962
Net income (loss)	12,261
Adjustments [Member]
Business Acquisition [Line Items]
Net sales	64,693
Net income (loss)	$ (48,941)

XML

Inventories - Components of Inventories (Detail) - USD ($) $ in Thousands	Jun. 30, 2016	Dec. 31, 2015
Inventory Disclosure [Abstract]
Raw materials	$ 2,145	$ 6,232
Work-in-process	145,827	631
Finished goods	24,130	11,513
Inventories, net	$ 172,102	$ 18,376

XML

Inventories - Additional Information (Detail) - USD ($) $ in Thousands	3 Months Ended	6 Months Ended
	Jun. 30, 2016	Jun. 30, 2016	Dec. 31, 2015
Inventory [Line Items]
Work-in-process	$ 145,827	$ 145,827	$ 631
Finished goods	24,130	24,130	$ 11,513
Crealta Holdings LLC [Member] | KRYSTEXXA and MIGERGOT [Member] | Developed Technology [Member]
Inventory [Line Items]
Work-in-process	135,500	135,500
Finished goods	9,900	9,900
Amortization of inventory step up	$ 9,100	$ 16,500

XML

Prepaid Expenses and Other Current Assets - Prepaid Expenses and Other Current Assets (Detail) - USD ($) $ in Thousands	Jun. 30, 2016	Dec. 31, 2015
Deferred Costs Capitalized Prepaid And Other Assets Disclosure [Abstract]
Prepaid income taxes	$ 14,693	$ 4
Medicine samples inventory	6,268	4,697
Prepaid co-pay expenses	2,023	1,881
Rabbi trust assets	2,303	773
Other prepaid expenses	8,579	8,503
Prepaid expenses and other current assets	$ 33,866	$ 15,858

XML

Property and Equipment - Property and Equipment (Detail) - USD ($) $ in Thousands	Jun. 30, 2016	Dec. 31, 2015
Property, Plant and Equipment [Line Items]
Property, plant and equipment, gross	$ 23,971	$ 9,062
Less accumulated depreciation	(5,660)	(3,791)
Property and equipment, net	21,971	14,020
Machinery and Equipment [Member]
Property, Plant and Equipment [Line Items]
Property, plant and equipment, gross	2,843	2,946
Computer Equipment [Member]
Property, Plant and Equipment [Line Items]
Property, plant and equipment, gross	2,916	2,514
Software [Member]
Property, Plant and Equipment [Line Items]
Property, plant and equipment, gross	9,593	1,360
Leasehold Improvements [Member]
Property, Plant and Equipment [Line Items]
Property, plant and equipment, gross	6,930	1,966
Other [Member]
Property, Plant and Equipment [Line Items]
Property, plant and equipment, gross	1,689	276
Construction in Process [Member]
Property, Plant and Equipment [Line Items]
Property and equipment, net	1,908	3,492
Software implementation in process [Member]
Property, Plant and Equipment [Line Items]
Property and equipment, net	$ 1,752	$ 5,257

XML

Property and Equipment - Additional Information (Detail) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
Property Plant And Equipment [Abstract]
Depreciation expense	$ 1.1	$ 0.6	$ 2.1	$ 1.2

XML

Goodwill and Intangible Assets - Schedule of Gross Carrying Amount of Goodwill (Detail) $ in Thousands	6 Months Ended
	Jun. 30, 2016 USD ($)
Goodwill And Intangible Assets Disclosure [Abstract]
Beginning balance	$ 253,811
Acquired during the period	2,116
Ending balance	$ 255,927

XML

Goodwill and Intangible Assets - Additional Information (Detail) - USD ($)	1 Months Ended		3 Months Ended		6 Months Ended
	Jan. 31, 2016	May 31, 2015	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015	Jan. 13, 2016	Dec. 31, 2015	May 07, 2015
Finite-Lived Intangible Assets [Line Items]
Goodwill			$ 255,927,000		$ 255,927,000			$ 253,811,000
Amortization expense of developed technology			50,800,000	$ 31,800,000	100,400,000	$ 49,500,000
Developed Technology [Member] | RAVICTI Developed Technology [Member]
Finite-Lived Intangible Assets [Line Items]
Capitalized intangible asset		$ 1,021,600,000
Developed Technology [Member] | BUPHENYL Developed Technology [Member]
Finite-Lived Intangible Assets [Line Items]
Capitalized intangible asset		22,600,000
Developed Technology [Member] | KRYSTEXXA Developed Technology [Member]
Finite-Lived Intangible Assets [Line Items]
Capitalized intangible asset	$ 392,700,000
Developed Technology [Member] | MIGERGOT Developed Technology [Member]
Finite-Lived Intangible Assets [Line Items]
Capitalized intangible asset	24,600,000		26,000,000
Capitalized intangible asset, measurement period adjustment			1,400,000
Hyperion Therapeutics, Inc. [Member]
Finite-Lived Intangible Assets [Line Items]
Goodwill									$ 253,811,000
Hyperion Therapeutics, Inc. [Member] | As Filed [Member]
Finite-Lived Intangible Assets [Line Items]
Goodwill		$ 253,800,000
Crealta Holdings LLC [Member]
Finite-Lived Intangible Assets [Line Items]
Goodwill							$ 2,116,000
Net increase in goodwill			300,000
Accumulated goodwill impairment losses			$ 0		$ 0
Crealta Holdings LLC [Member] | As Filed [Member]
Finite-Lived Intangible Assets [Line Items]
Goodwill	$ 1,800,000						$ 1,791,000

XML

Goodwill and Intangible Assets - Amortizable Intangible Assets (Detail) - USD ($) $ in Thousands	Jun. 30, 2016	Dec. 31, 2015
Finite-Lived Intangible Assets [Line Items]
Cost Basis	$ 2,219,295	$ 1,800,595
Accumulated Amortization	(284,927)	(184,485)
Net Book Value	1,934,368	1,616,110
Developed Technology [Member]
Finite-Lived Intangible Assets [Line Items]
Cost Basis	2,211,195	1,792,495
Accumulated Amortization	(283,482)	(183,446)
Net Book Value	1,927,713	1,609,049
Customer Relationships [Member]
Finite-Lived Intangible Assets [Line Items]
Cost Basis	8,100	8,100
Accumulated Amortization	(1,445)	(1,039)
Net Book Value	$ 6,655	$ 7,061

XML

Goodwill and Intangible Assets - Estimated Future Amortization Expense (Detail) - USD ($) $ in Thousands	Jun. 30, 2016	Dec. 31, 2015
Goodwill And Intangible Assets Disclosure [Abstract]
2016 (July to December)	$ 101,376
2017	202,963
2018	202,963
2019	189,971
2020	189,752
Thereafter	1,047,343
Net Book Value	$ 1,934,368	$ 1,616,110

XML

Accrued Trade Discounts and Rebates - Schedule of Accrued Trade Discounts and Rebates (Detail) - USD ($) $ in Thousands	Jun. 30, 2016	Dec. 31, 2015
Accrued Wholesaler Fees And Commercial Rebates [Member]
Valuation And Qualifying Accounts Disclosure [Line Items]
Total customer-related accruals and allowances	$ 25,317	$ 21,112
Accrued Co-Pay and Other Patient Assistance [Member]
Valuation And Qualifying Accounts Disclosure [Line Items]
Total customer-related accruals and allowances	134,467	114,201
Accrued Government Rebates and Chargebacks [Member]
Valuation And Qualifying Accounts Disclosure [Line Items]
Total customer-related accruals and allowances	60,890	48,456
Accrued Trade Discounts and Rebates [Member]
Valuation And Qualifying Accounts Disclosure [Line Items]
Total customer-related accruals and allowances	220,674	183,769
Invoiced Wholesaler Fees and Commercial Rebates, Co pay and Other Patient Assistance, and Government Rebates and Chargebacks in Accounts Payable [Member]
Valuation And Qualifying Accounts Disclosure [Line Items]
Total customer-related accruals and allowances	36,242
Customer-related Accruals and Allowances [Member]
Valuation And Qualifying Accounts Disclosure [Line Items]
Total customer-related accruals and allowances	$ 256,916	$ 183,769

XML

Accrued Trade Discounts and Rebates - Schedule of Customer-Related Accruals and Allowances (Detail) $ in Thousands	6 Months Ended
	Jun. 30, 2016 USD ($)
Wholesaler Fees and Commercial Rebates [Member]
Valuation And Qualifying Accounts Disclosure [Line Items]
Beginning Balance	$ 21,112
Current provisions relating to sales in the six months ended June 30, 2016	51,854
Adjustments relating to prior year sales	2,931
Payments relating to sales in the six months ended June 30, 2016	(30,410)
Payments relating to sales in prior years	(20,644)
Crealta acquisition on January 13, 2016	492
Ending Balance	25,335
Co-Pay and Other Patient Assistance [Member]
Valuation And Qualifying Accounts Disclosure [Line Items]
Beginning Balance	114,201
Current provisions relating to sales in the six months ended June 30, 2016	816,835
Payments relating to sales in the six months ended June 30, 2016	(646,622)
Payments relating to sales in prior years	(114,201)
Ending Balance	170,213
Government Rebates and Chargebacks [Member]
Valuation And Qualifying Accounts Disclosure [Line Items]
Beginning Balance	48,456
Current provisions relating to sales in the six months ended June 30, 2016	127,836
Adjustments relating to prior year sales	(7,191)
Payments relating to sales in the six months ended June 30, 2016	(74,210)
Payments relating to sales in prior years	(34,455)
Crealta acquisition on January 13, 2016	932
Ending Balance	61,368
Customer-related Accruals and Allowances [Member]
Valuation And Qualifying Accounts Disclosure [Line Items]
Beginning Balance	183,769
Current provisions relating to sales in the six months ended June 30, 2016	996,525
Adjustments relating to prior year sales	(4,260)
Payments relating to sales in the six months ended June 30, 2016	(751,242)
Payments relating to sales in prior years	(169,300)
Crealta acquisition on January 13, 2016	1,424
Ending Balance	$ 256,916

XML

Accrued Expenses - Schedule of Accrued Expenses (Detail) - USD ($) $ in Thousands	Jun. 30, 2016	Dec. 31, 2015
Payables And Accruals [Abstract]
Payroll-related expenses	$ 33,639	$ 47,205
Consulting and professional services	15,097	17,160
Accrued interest	10,813	10,637
Accrued other	16,160	25,044
Accrued expenses	$ 75,709	$ 100,046

XML

Accrued Expenses - Additional Information (Detail) - USD ($) $ in Thousands	Jun. 30, 2016	Dec. 31, 2015
Schedule Of Accrued Expenses [Line Items]
Accrued payroll-related expenses	$ 33,639	$ 47,205
Hyperion Therapeutics, Inc. [Member] | Severance and related employee costs [Member]
Schedule Of Accrued Expenses [Line Items]
Accrued payroll-related expenses	1,700
Crealta Holdings LLC [Member] | Severance and related employee costs [Member]
Schedule Of Accrued Expenses [Line Items]
Accrued payroll-related expenses	$ 2,700

XML

Accrued Royalties - Schedule of Changes in Liability for Royalties (Detail) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Dec. 31, 2015
Business Combinations [Abstract]
Beginning balance	$ 175,219
Assumed KRYSTEXXA and MIGERGOT accrued royalties	1,401
Assumed KRYSTEXXA and MIGERGOT contingent royalty liabilities	51,300
Royalty payments	(18,780)
Accretion expense	19,028	$ 7,021
Ending balance	228,168
Less: Current portion	58,008		$ 51,700
Accrued royalties, net of current	$ 170,160		$ 123,519

XML

Fair Value Measurements - Additional Information (Detail) - USD ($)	6 Months Ended	12 Months Ended
	Jun. 30, 2016	Dec. 31, 2015
Fair Value Disclosures [Abstract]
Transfers from level 1 to level 2, assets	$ 0	$ 0
Transfers from level 2 to level 1, assets	0	0
Transfers of assets into level 3	0	0
Transfers of assets out of level 3	$ 0	$ 0

XML

Fair Value Measurements - Assets and Liabilities at Fair Value on Recurring Basis (Detail) - Fair Value Measurements, Recurring Basis [Member] - USD ($) $ in Thousands	Jun. 30, 2016	Dec. 31, 2015
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total assets at fair value	$ 244,805	$ 281,826
Level 1 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total assets at fair value	242,303	280,826
Level 2 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total assets at fair value	2,502	1,000
Bank Time Deposits [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total assets at fair value	2,502	1,000
Bank Time Deposits [Member] | Level 2 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total assets at fair value	2,502	1,000
Money Market Funds [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total assets at fair value	240,000	280,053
Money Market Funds [Member] | Level 1 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total assets at fair value	240,000	280,053
Other Current Assets [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total assets at fair value	2,303	773
Other Current Assets [Member] | Level 1 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total assets at fair value	$ 2,303	$ 773

XML

Commitments and Contingencies - Schedule of Lease Agreements in Place for Real Properties (Detail)	6 Months Ended
	Jun. 30, 2016 ft²
Dublin Office [Member]
Loss Contingencies [Line Items]
Approximate Square Footage	18,900
Lease Expiry Date	Nov. 04, 2029
Lake Forest Office [Member]
Loss Contingencies [Line Items]
Approximate Square Footage	160,000	[1]
Lease Expiry Date	Mar. 31, 2024	[1]
Deerfield Office [Member]
Loss Contingencies [Line Items]
Approximate Square Footage	53,500	[2]
Lease Expiry Date	Jun. 30, 2018	[2]
Brisbane Office [Member]
Loss Contingencies [Line Items]
Approximate Square Footage	20,100	[3]
Lease Expiry Date	Nov. 30, 2019	[3]
Mannheim Office [Member]
Loss Contingencies [Line Items]
Approximate Square Footage	14,300
Lease Expiry Date	Dec. 31, 2018
Chicago Office [Member]
Loss Contingencies [Line Items]
Approximate Square Footage	6,500
Lease Expiry Date	Dec. 31, 2018
Reinach Office [Member]
Loss Contingencies [Line Items]
Approximate Square Footage	3,500
Lease Expiry Date	May 31, 2020

[1] In connection with the Lake Forest, Illinois lease, the Company has provided a $2.0 million letter of credit to the landlord, through a commercial bank. The Company has two separate lease agreements in place for this property, one of which, consisting of approximately 15,000 square feet, was assumed by the Company as a result of its acquisition of Crealta in January 2016 and will expire on October 31, 2017.

[2] The Company vacated the premises in Deerfield, Illinois in January 2016.

[3] The Company vacated the premises in Brisbane, California in December 2015 and entered into a sublease agreement for the property with a third party.

XML

Commitments and Contingencies - Schedule of Lease Agreements in Place for Real Properties (Parenthetical) (Detail) - Lake Forest Office [Member] $ in Millions	6 Months Ended
	Jun. 30, 2016 USD ($) ft² Agreement
Loss Contingencies [Line Items]
Letter of credit | $	$ 2.0
Approximate Square Footage	160,000	[1]
Lease Expiry Date	Mar. 31, 2024	[1]
Number Of Lease Agreements | Agreement	2
First Lease [Member]
Loss Contingencies [Line Items]
Approximate Square Footage	15,000
Lease Expiry Date	Oct. 31, 2017

[1] In connection with the Lake Forest, Illinois lease, the Company has provided a $2.0 million letter of credit to the landlord, through a commercial bank. The Company has two separate lease agreements in place for this property, one of which, consisting of approximately 15,000 square feet, was assumed by the Company as a result of its acquisition of Crealta in January 2016 and will expire on October 31, 2017.

XML

Commitments and Contingencies - Additional Information (Detail) $ in Millions	1 Months Ended	3 Months Ended		6 Months Ended
	Nov. 30, 2015 USD ($)	Jun. 30, 2016 USD ($) $ / €	Jun. 30, 2015 USD ($)	Jun. 30, 2016 USD ($) $ / €	Jun. 30, 2015 USD ($)
Loss Contingencies [Line Items]
Minimum annual royalty obligations		$ 7.5		$ 7.5
Alleged Unpaid Rebates and Administrative Fees [Member]
Loss Contingencies [Line Items]
Loss contingency, damages sought, value	$ 166.2
Cost of Goods Sold [Member]
Loss Contingencies [Line Items]
Royalty and royalty accretion expense recognized in cost of goods sold		10.9	$ 19.4	$ 21.4	$ 23.0
Crealta Holdings LLC [Member] | Commercial Supply Agreements [Member]
Loss Contingencies [Line Items]
Manufacturing and supply agreement initiation date				2007-03
Binding purchase commitment				$ 2.2
Purchase obligation percentage				80.00%
Contingent liability		$ 6.9		$ 6.9
Jagotec AG [Member]
Loss Contingencies [Line Items]
Term of commitment made by the company to purchase tablets				5 years
Written notice period for termination of agreement				2 years
Manufacturing and supply agreement initiation date				2007-08
Purchase commitment expiration date				Apr. 15, 2019
Sanofi-Aventis U.S [Member]
Loss Contingencies [Line Items]
Manufacturing and supply agreement initiation date				2011-05
Boehringer Ingelheim [Member]
Loss Contingencies [Line Items]
Manufacturing and supply agreement initiation date				2013-07
Manufacturing and supply agreement amendment date				Jun. 01, 2015
Binding purchase commitment				$ 14.6
Currency exchange rate | $ / €		1.1108		1.1108
Patheon [Member]
Loss Contingencies [Line Items]
Manufacturing and supply agreement initiation date				2013-11
Binding purchase commitment				$ 2.5
Aralez Pharmaceuticals Inc. [Member]
Loss Contingencies [Line Items]
Percentage of royalty on net sales				10.00%
Royalty expiration period upon first commercial sale in united states				10 years
Genentech Inc [Member]
Loss Contingencies [Line Items]
Net sales threshold				$ 3.7
Genentech Inc [Member] | November 25, 2014 [Member]
Loss Contingencies [Line Items]
Percentage of royalty on net sales				45.00%
Additional percentage of royalty on net sales				10.00%
Genentech Inc [Member] | November 26, 2014 through May 5, 2018 [Member] | Minimum [Member]
Loss Contingencies [Line Items]
Percentage of royalty on net sales				20.00%
Additional percentage of royalty on net sales				1.00%
Genentech Inc [Member] | November 26, 2014 through May 5, 2018 [Member] | Maximum [Member]
Loss Contingencies [Line Items]
Percentage of royalty on net sales				30.00%
Additional percentage of royalty on net sales				9.00%
Connetics Corporation [Member]
Loss Contingencies [Line Items]
Percentage of royalty on net sales				0.25%
Net sales threshold				$ 1,000.0
Additional percentage of royalty on net sales				0.50%
Percentage of royalty on net sales upon regulatory approval				4.00%
LODOTRA and RAYOS Developed Technology [Member]
Loss Contingencies [Line Items]
Purchase commitment based on tablet and its pricing				$ 2.1
DUEXIS [Member]
Loss Contingencies [Line Items]
Purchase commitment based on tablet and its pricing				$ 5.6
PENNSAID 2% [Member]
Loss Contingencies [Line Items]
Manufacturing and supply agreement initiation date				2014-10
Binding purchase commitment				$ 4.4
Supply agreement expiry date				Dec. 31, 2029
RAVICTI and BUPHENYL [Member]
Loss Contingencies [Line Items]
Purchase commitment outstanding purchase orders		$ 4.6		$ 4.6

XML

Legal Proceedings - Additional Information (Detail) - USD ($) $ in Millions	1 Months Ended	6 Months Ended
	Nov. 30, 2015	Jun. 30, 2016
Alleged Unpaid Rebates and Administrative Fees [Member]
Legal Proceedings [Line Items]
Loss contingency, damages sought, value	$ 166.2
U.S. Patent No. 8,404,215 [Member]
Legal Proceedings [Line Items]
Expiry of patent		2032-03
U.S. Patent No. 8,642,012 [Member]
Legal Proceedings [Line Items]
Expiry of patent		2030-09
U.S. Patent No. 5,968,979 [Member]
Legal Proceedings [Line Items]
Expired date of patent		Feb. 07, 2015
Extended Expiry date of patent		Feb. 07, 2016
Final extension term granted by USPTO		1267 days
PENNSAID 2% [Member]
Legal Proceedings [Line Items]
Prevention period from approving the ANDA		30 months
Actavis Settlement Agreement [Member]
Legal Proceedings [Line Items]
Settlement and license agreement date		Oct. 01, 2015
Non-exclusive license agreement term		180 days
License agreement generic entry date		Dec. 23, 2022
Perrigo Settlement Agreement [Member]
Legal Proceedings [Line Items]
Settlement and license agreement date		May 06, 2015
Effective date of settlement and license agreement		Jan. 10, 2029
Taro Settlement Agreement [Member]
Legal Proceedings [Line Items]
Settlement and license agreement date		Sep. 09, 2015
Effective date of settlement and license agreement		Jan. 10, 2029
Teligent Settlement Agreement [Member]
Legal Proceedings [Line Items]
Settlement and license agreement date		May 09, 2016
Effective date of settlement and license agreement		Jan. 10, 2029
Amneal settlement agreement [Member]
Legal Proceedings [Line Items]
Settlement and license agreement date		Apr. 18, 2016
Effective date of settlement and license agreement		Jan. 10, 2029

XML

Debt Agreements - Outstanding Debt Balances (Detail) - USD ($) $ in Thousands	Jun. 30, 2016	Dec. 31, 2015
Debt Instrument [Line Items]
Total face value	$ 1,271,000	$ 1,273,000
Debt discount	(119,764)	(127,885)
Deferred financing fees	(7,549)	(8,359)
Total long-term debt	1,143,687	1,136,756
Less: current maturities	4,000	4,000
Long-term debt, net of current maturities	1,139,687	1,132,756
2015 Term Loan Facility [Member]
Debt Instrument [Line Items]
Total face value	396,000	398,000
2023 Senior Notes [Member]
Debt Instrument [Line Items]
Total face value	475,000	475,000
Exchangeable Senior Notes due 2022 [Member]
Debt Instrument [Line Items]
Total face value	$ 400,000	$ 400,000

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Debt Agreements - Outstanding Debt Balances (Parenthetical) (Detail)	6 Months Ended
	Jun. 30, 2016
2023 Senior Notes [Member]
Debt Instrument [Line Items]
Maturity date of debt instrument	May 01, 2023
Exchangeable Senior Notes due 2022 [Member]
Debt Instrument [Line Items]
Maturity date of debt instrument	Mar. 15, 2022

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Debt Agreements - Additional Information (Detail)					6 Months Ended		12 Months Ended
	May 07, 2015 USD ($)	Apr. 29, 2015 USD ($)	Jun. 17, 2014 USD ($)	Nov. 22, 2013 USD ($)	Jun. 30, 2016 USD ($) d $ / shares	Jun. 30, 2015 USD ($)	Dec. 31, 2015 USD ($) shares	Mar. 13, 2015 USD ($)	Sep. 19, 2014 USD ($)
Debt Instrument [Line Items]
Senior notes					$ 849,377,000		$ 849,867,000
Initial debt discount					119,764,000		127,885,000
Convertible Senior Notes				$ 150,000,000			61,000,000
Aggregate principal amount outstanding					1,271,000,000		1,273,000,000
Convertible Senior Notes [Member]
Debt Instrument [Line Items]
Interest rate				5.00%
Non-cash charge related to extinguishment of debt							$ 10,100,000
Net proceeds received				$ 143,600,000
Notes fees				$ 6,400,000
Initial conversion, number of shares | shares							11,368,921
Cash payment to holders							$ 10,000,000
Accrued and unpaid interest							900,000
Aggregate principal amount outstanding							$ 0
2023 Senior Notes [Member]
Debt Instrument [Line Items]
Debt instrument, fair value					$ 441,800,000
Interest rate		6.625%
Maturity date of debt instrument					May 01, 2023
Debt instrument redemption description					The 2023 Senior Notes may be redeemed at any time at specified redemption prices, plus accrued and unpaid interest to the redemption date. At any time prior to May?1, 2018, some or all of the 2023 Senior Notes may be redeemed at a price equal to 100% of the aggregate principal amount thereof, plus a make-whole premium and accrued and unpaid interest to the redemption date. Also prior to May?1, 2018, up to 35% of the aggregate principal amount of the 2023 Senior Notes may be redeemed at a redemption price of 106.625% of the aggregate principal amount thereof, plus accrued and unpaid interest, with the net proceeds of certain equity offerings. In addition, the 2023 Senior Notes may be redeemed in whole but not in part at a redemption price equal to 100% of the principal amount plus accrued and unpaid interest and additional amounts, if any, to, but excluding, the redemption date, if on the next date on which any amount would be payable in respect of the 2023 Senior Notes, HPI or any guarantor is or would be required to pay additional amounts as a result of certain tax related events.
2023 Senior Notes [Member] | Prior to May 1, 2018 [Member]
Debt Instrument [Line Items]
Redemption price as percentage of aggregate principal amount		106.625%
2023 Senior Notes [Member] | Prior to May 1, 2018, Some or All of Aggregate Principal Amount [Member]
Debt Instrument [Line Items]
Redemption price as percentage of aggregate principal amount		100.00%
2023 Senior Notes [Member] | After May 1, 2018, in Whole But Not in Part [Member]
Debt Instrument [Line Items]
Redemption price as percentage of aggregate principal amount		100.00%
2023 Senior Notes [Member] | Hyperion Therapeutics, Inc. [Member]
Debt Instrument [Line Items]
Senior notes		$ 475,000,000
Interest rate		6.625%
Maturity date of debt instrument					May 01, 2023
Debt instrument redemption description					If the Company undergoes a change of control, HPI will be required to make an offer to purchase all of the 2023 Senior Notes at a price in cash equal to 101% of the aggregate principal amount thereof plus accrued and unpaid interest to, but not including, the repurchase date. If the Company or certain of its subsidiaries engages in certain asset sales, HPI will be required under certain circumstances to make an offer to purchase the 2023 Senior Notes at 100% of the principal amount thereof, plus accrued and unpaid interest to the repurchase date.
Redemption price percentage of principal amount of debt instrument on change of control		101.00%
2023 Senior Notes [Member] | Maximum [Member] | Prior to May 1, 2018 [Member]
Debt Instrument [Line Items]
Redemption amount as percentage of aggregate principal amount		35.00%
Exchangeable Senior Notes [Member]
Debt Instrument [Line Items]
Debt instrument, fair value					$ 362,500,000
Interest rate					2.50%
Maturity date of debt instrument					Mar. 15, 2022
Redemption price as percentage of aggregate principal amount					100.00%
Debt Instrument, Convertible, Conversion Ratio (in shares per $1,000 principal amount)					34.8979
Debt Instrument, Convertible, Conversion Price (in dollars per share) | $ / shares					$ 28.66
Debt instrument convertible minimum percentage					130.00%
Debt instrument number of trading days | d					20
Debt instrument consecutive trading days					30 days
Carrying amount of liability component					$ 268,900,000
Carrying amount of equity component					119,100,000
Initial proceeds from convertible debt instrument					387,200,000	$ 387,181,000
Initial debt discount					$ 131,100,000
Exchangeable Senior Notes [Member] | Conversion Condition One [Member]
Debt Instrument [Line Items]
Debt instrument convertible minimum percentage					130.00%
Debt instrument number of trading days | d					20
Debt instrument consecutive trading days					30 days
Exchangeable Senior Notes [Member] | Conversion Condition Two [Member]
Debt Instrument [Line Items]
Debt instrument number of trading days | d					5
Debt instrument consecutive trading days					10 days
Convertible senior notes, principal payment					$ 1,000,000
Debt instrument convertible maximum percentage					98.00%
Exchangeable Senior Notes [Member] | Horizon Investment [Member]
Debt Instrument [Line Items]
Senior notes					$ 400,000,000			$ 400,000,000
Interest rate					2.50%
Net proceeds from senior notes					$ 387,200,000
2015 Term Loan Facility [Member]
Debt Instrument [Line Items]
Line of credit facility maximum borrowing capacity	$ 400,000,000
LIBOR floor rate	1.00%
Interest rate description					Loans under the 2015 Term Loan Facility bear interest, at each borrower’s option, at a rate equal to either the London Inter-Bank Offer Rate (“LIBOR”), plus an applicable margin of 3.5% per year (subject to a 1.0% LIBOR floor), or the adjusted base rate plus 2.5%. The adjusted base rate is defined as the greater of (a) LIBOR (using one-month interest period) plus 1%, (b) prime rate, (c) fed funds plus ½ of 1%, and (d) 2%.
Cut off percentage for defining limited liability subsidiaries, portion of capital stock held maximum	65.00%
Proceeds from debt issuances, percentage on excess cash flow	50.00%
Proceeds from debt issuances, reduction percentage on excess cash flow	25.00%
Proceeds from debt issuances, percentage on first lien leverage ratio	0.00%
Principal amount of loan, amortization percentage	1.00%
Credit agreement, description					HPI is required to make mandatory prepayments of loans under the 2015 Term Loan Facility (without payment of a premium) with (a) net cash proceeds from certain non-ordinary course asset sales (subject to reinvestment rights and other exceptions), (b) casualty proceeds and condemnation awards (subject to reinvestment rights and other exceptions), (c) net cash proceeds from issuances of debt (other than certain permitted debt), and (d) beginning with the fiscal year ending December 31, 2016, 50% of the Company’s excess cash flow (subject to decrease to 25% or 0% if the Company’s first lien leverage ratio is less than 2.25:1 and 1.75:1, respectively). The loans under the 2015 Term Loan Facility will amortize in equal quarterly installments in an aggregate annual amount equal to 1% of the original principal amount thereof, with any remaining balance payable on the final maturity date of the loans under the 2015 Term Loan Facility.
2015 Term Loan Facility [Member] | Hyperion Therapeutics, Inc. [Member] | 2015 Offering [Member]
Debt Instrument [Line Items]
Debt instrument, fair value					$ 391,100,000
2015 Term Loan Facility [Member] | Maximum [Member]
Debt Instrument [Line Items]
First lien leverage ratio	225.00%
2015 Term Loan Facility [Member] | Minimum [Member]
Debt Instrument [Line Items]
First lien leverage ratio	175.00%
2015 Term Loan Facility [Member] | London Interbank Offered Rate (LIBOR) [Member]
Debt Instrument [Line Items]
Debt instrument variable rate	3.50%
Line of credit facility borrowing capacity	$ 400,000,000
2015 Term Loan Facility [Member] | Adjusted Base Rate [Member]
Debt Instrument [Line Items]
Debt instrument variable rate	2.50%
2014 Term Loan Facility [Member]
Debt Instrument [Line Items]
Interest rate description					Term Loan Facility”) bore interest, at each borrower’s option, at a rate equal to either the LIBOR, plus an applicable margin of 8.0% per year (subject to a 1.0% LIBOR floor), or the prime lending rate, plus an applicable margin equal to 7.0% per year.
Proceeds from credit facility			$ 300,000,000
Credit facility maturity term			5 years
Repayment of debt outstanding amount	$ 300,000,000
Non-cash charge related to extinguishment of debt	$ 56,800,000
2014 Term Loan Facility [Member] | London Interbank Offered Rate (LIBOR) [Member]
Debt Instrument [Line Items]
Debt instrument variable rate			8.00%
Line of credit facility borrowing capacity									$ 300,000,000
2014 Term Loan Facility [Member] | Prime Rate [Member]
Debt Instrument [Line Items]
Debt instrument variable rate			7.00%
2014 Term Loan Facility [Member] | London Interbank Offered Rate LIBOR Floor [Member]
Debt Instrument [Line Items]
Debt instrument variable rate			1.00%

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Shareholders' Equity - Additional Information (Detail) - USD ($) $ in Thousands		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2016	Jun. 30, 2015	May 31, 2016	Dec. 31, 2015
Subsidiary, Sale of Stock [Line Items]
Shares issued in connection with the exercise of stock options		231,807
Proceeds from exercise of stock options		$ 1,658	$ 3,888
Ordinary shares issued	161,126,363	161,126,363			160,069,067
Proceeds in connection with issuance of ordinary shares			475,627
Payments for employee withholding taxes related to share-based payment		$ 4,734	$ 1,956
Shares repurchased during period	0
Maximum [Member]
Subsidiary, Sale of Stock [Line Items]
Shares authorized under repurchase program				5,000,000
Employee Stock Purchase Plans [Member]
Subsidiary, Sale of Stock [Line Items]
Ordinary shares issued	261,780	261,780
Proceeds in connection with issuance of ordinary shares		$ 3,200
Payments for employee withholding taxes related to share-based payment		$ 4,700
Restricted Stock Units [Member]
Subsidiary, Sale of Stock [Line Items]
Ordinary shares issued	552,836	552,836
Performance Stock Units [Member]
Subsidiary, Sale of Stock [Line Items]
Ordinary shares issued	13,584	13,584

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Share-Based Incentive Plans - Additional Information (Detail) - USD ($)						1 Months Ended	6 Months Ended		12 Months Ended
	May 03, 2016	Feb. 25, 2016	Mar. 23, 2015	Dec. 31, 2014	Jul. 28, 2011	Jan. 31, 2016	Jun. 30, 2016	Jun. 30, 2015	Dec. 31, 2015	Nov. 05, 2014	May 17, 2014
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Options, Granted							1,741,192
Stock options contractual term							10 years
Share-based compensation expense							$ 55,609,000	$ 31,339,000
Expected volatility assumption based on historical volatility, in percentage							73.80%	77.20%
Tax benefit recognized from stock-based compensation expense							$ 0
Tax benefits realized from stock options exercised							0
Pre-tax unrecognized compensation expense for all unvested share-based awards							$ 252,200,000
Cash Long-Term Incentive Program [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Trading days							20 days
Implied 20-day VWAP							$ 18.37
Bonus payable under cash bonus program										$ 16,000,000
Cash Bonus Program, description							Participants in the Cash Bonus Program will be eligible for a specified cash bonus. The Cash Bonus Program pool funding of approximately $16.0 million was determined based on the Company’s actual TSR over the period from November 5, 2014 to May 6, 2015, and the bonus will be earned and payable only if the TSR for the period from November 5, 2014 to November 4, 2017 is greater than 15%. The portion of the total bonus pool payable to individual participants is based on allocations established by the Company’s compensation committee. Participants must remain employed by the Company through November 4, 2017 unless a participant’s earlier departure from employment is due to death, disability, termination without cause or a change in control transaction. Bonus payments under the Cash Bonus Program, if any, will be made after November 4, 2017.
Estimated fair value of award							$ 4,600,000		$ 6,000,000
Expense related to Cash Bonus Program							$ 200,000
Valuation date stock price							$ 16.47
Expected volatility assumption based on historical volatility, in percentage							82.35%
Expected volatility assumption based on historical volatility, in Years							1 year 4 months 6 days
Risk free rate							0.49%
Risk free rate remaining term							1 year 4 months 6 days
Performance Stock Units [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Number of Units, Granted						260,000	260,000
Options granted				25,000
Trading days			20 days
Implied 20-day VWAP			$ 21.50
Share-based compensation expense							$ 24,300,000
Performance Stock Units [Member] | Members of Executive Committee [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
One year mandatory post vest holding period percentage							50.00%
Two year mandatory post vest holding period percentage							50.00%
Performance Stock Units [Member] | Non-Executive Committee Members [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
One year mandatory post vest holding period percentage							50.00%
Maximum [Member] | TSR [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Percentage of outstanding PSU award vesting amount range							100.00%
Maximum [Member] | Performance Stock Units [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Valuation date stock price							$ 21.07	$ 28.53
Minimum [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Cash bonus payment date							Nov. 04, 2017
Minimum [Member] | Cash Long-Term Incentive Program [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Cash Bonus Program, percentage							15.00%
Minimum [Member] | TSR [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Percentage of outstanding PSU award vesting amount range							25.00%
Minimum [Member] | Performance Stock Units [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Valuation date stock price							$ 17.72	$ 22.77
2014 ESPP [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Reduction in number of shares authorized for issuance	5,000,000	5,000,000
Common stock shares authorized							4,076,279
Common stock shares reserved for future issuance							4,076,279
2005 Plan [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Options, Granted					0
2014 EIP [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Common stock shares authorized							7,059,814				15,500,000
Common stock shares reserved for future issuance							7,059,814
Common stock shares, number of additional shares authorized		6,000,000	14,000,000
2014 EIP [Member] | Performance Stock Units [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Number of Units, Granted							12,441,000
2014 EIP [Member] | Performance Stock Units [Member] | Members of Executive Committee [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Number of Units, Granted							9,173,000
2014 EIP [Member] | Performance Stock Units [Member] | Non-Executive Committee Members [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Number of Units, Granted							3,268,000
2014 EIP [Member] | Maximum [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Common stock shares authorized											22,052,130
2011 EIP [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Common stock shares authorized											10,000,000
2014 Non-Employee Equity Plan [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Reduction in number of shares authorized for issuance	1,000,000	1,000,000
Common stock shares authorized							963,567				2,500,000
Common stock shares reserved for future issuance							963,567

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Share-Based Incentive Plans - Summary of Stock Option Activity (Detail) $ / shares in Units, $ in Thousands	6 Months Ended
	Jun. 30, 2016 USD ($) $ / shares shares
Disclosure Of Compensation Related Costs Sharebased Payments [Abstract]
Options, Outstanding Beginning Balance | shares	13,385,791
Options, Granted | shares	1,741,192
Options, Exercised | shares	(231,807)
Options, Forfeited | shares	(802,169)
Options, Expired | shares	(42,348)
Options, Outstanding Ending Balance | shares	14,050,659
Options, Exercisable as of June 30, 2016 | shares	5,893,946
Weighted Average Exercise Price, Outstanding Beginning Balance | $ / shares	$ 17.73
Weighted Average Exercise Price, Granted | $ / shares	18.13
Weighted Average Exercise Price, Exercised | $ / shares	7.13
Weighted Average Exercise Price, Forfeited | $ / shares	18.34
Weighted Average Exercise Price, Expired | $ / shares	9.73
Weighted Average Exercise Price, Outstanding Ending Balance | $ / shares	17.94
Weighted Average Exercise Price, Exercisable as of June 30, 2016 | $ / shares	$ 14.19
Weighted Average Contractual Term Remaining (in years) Outstanding as of June 30, 2016	7 years 11 months 1 day
Weighted Average Contractual Term Remaining (in years) Exercisable as of June 30, 2016	6 years 8 months 12 days
Aggregate Intrinsic Value, Outstanding as of December 31, 2015 | $	$ 41,048
Aggregate Intrinsic Value, Exercisable as of June 30, 2016 | $	$ 31,063

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Share-Based Incentive Plans - Weighted Average Fair Value per Share of Stock Option Awards Granted and Assumptions Used to Value Stock Options (Detail) - $ / shares	6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015
Disclosure Of Compensation Related Costs Sharebased Payments [Abstract]
Risk-free interest rate, minimum	1.30%	1.30%
Risk-free interest rate, maximum	1.80%	2.30%
Weighted average expected volatility	73.80%	77.20%
Expected life (in years)	6 years	6 years
Weighted average grant-date fair value per share of options granted	$ 11.78	$ 15.84

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Share-Based Incentive Plans - Summary of Restricted Stock Unit Activity (Detail) - Restricted Stock Units [Member]	6 Months Ended
	Jun. 30, 2016 $ / shares shares
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Number of Units, Outstanding Beginning Balance | shares	3,361,746
Number of Units, Granted | shares	683,844
Number of Units, Vested | shares	(813,423)
Number of Units, Forfeited | shares	(260,100)
Number of Units, Outstanding Ending Balance | shares	2,972,067
Weighted Average Grant-Date Fair Value Per Unit, Outstanding Beginning Balance | $ / shares	$ 18.71
Weighted Average Grant-Date Fair Value Per Unit, Granted | $ / shares	17.00
Weighted Average Grant-Date Fair Value Per Unit, Vested | $ / shares	16.80
Weighted Average Grant-Date Fair Value Per Unit, Forfeited | $ / shares	19.01
Weighted Average Grant-Date Fair Value Per Unit, Outstanding Ending Balance | $ / shares	$ 18.81

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Share-Based Incentive Plans - Summary of Performance Stock Unit (PSU) Activity (Detail) - Performance Stock Units [Member] - $ / shares	1 Months Ended	6 Months Ended
	Jan. 31, 2016	Jun. 30, 2016
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Number of Units, Outstanding Beginning Balance	13,049,000	13,049,000
Number of Units, Granted	260,000	260,000
Number of Units, Vested		(20,000)
Number of Units, Forfeited		(823,000)
Number of Units, Outstanding Ending Balance		12,466,000
Weighted Average Grant-Date Fair Value Per Unit, Granted		$ 7.99
Weighted Average Grant-Date Fair Value Per Unit, Vested		18.97
Weighted Average Grant-Date Fair Value Per Unit, Forfeited		$ 13.69
Average Illiquidity discount, Granted		8.20%
Average Illiquidity discount, Vested		0.00%
Average Illiquidity discount, Forfeited		16.10%
Recorded Weighted Average Fair Value Per Unit, Granted		$ 7.34
Recorded Weighted Average Fair Value Per Unit, Forfeited		$ 11.48

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Share-Based Incentive Plans - Summary of Vesting Tranches (Detail)	6 Months Ended
	Jun. 30, 2016
Performance Stock Units [Member] | Tranche One [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Percent of Total PSU Award	33.30%
Beginning of Performance Measurement Period	Mar. 23, 2015
End of Performance Measurement Period	Dec. 22, 2017
Performance Stock Units [Member] | Tranche Two [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Percent of Total PSU Award	33.30%
Beginning of Performance Measurement Period	Mar. 23, 2015
End of Performance Measurement Period	Mar. 22, 2018
Performance Stock Units [Member] | Tranche Three [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Percent of Total PSU Award	33.30%
Beginning of Performance Measurement Period	Mar. 23, 2015
End of Performance Measurement Period	Jun. 22, 2018
Performance Stock Units [Member] | Vesting Amount 25% [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Percent of Total PSU Award	25.00%
TSR Achieved Percentage	15.00%
Performance Stock Units [Member] | Vesting Amount 50% [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Percent of Total PSU Award	50.00%
TSR Achieved Percentage	30.00%
Performance Stock Units [Member] | Vesting Amount 75% [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Percent of Total PSU Award	75.00%
TSR Achieved Percentage	45.00%
Performance Stock Units [Member] | Vesting Amount 100% [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Percent of Total PSU Award	100.00%
TSR Achieved Percentage	60.00%
Initial Performance Stock Units [Member] | Tranche One [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Length of Performance Measurement Period (Years)	2 years 9 months
Initial Performance Stock Units [Member] | Tranche Two [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Length of Performance Measurement Period (Years)	3 years
Initial Performance Stock Units [Member] | Tranche Three [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Length of Performance Measurement Period (Years)	3 years 3 months

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Share-Based Incentive Plans - Summary of Significant Valuation Assumption (Detail) - $ / shares	6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Risk free rate, minimum	1.30%	1.30%
Risk free rate, maximum	1.80%	2.30%
Performance Stock Units [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Expected volatility, minimum	76.80%	67.20%
Expected volatility, maximum	77.60%	67.30%
Risk free rate, minimum	1.00%	1.00%
Risk free rate, maximum	1.20%	1.10%
Performance Stock Units [Member] | Minimum [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Valuation date stock price	$ 17.72	$ 22.77
Performance Stock Units [Member] | Maximum [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Valuation date stock price	$ 21.07	$ 28.53

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Share-Based Incentive Plans - Summary of Average Estimated Fair Value of PSU after Applicable Discount of Illiquidity (Detail) - Performance Stock Units [Member] - $ / shares	1 Months Ended	6 Months Ended
	Jan. 31, 2016	Jun. 30, 2016
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Number of Units, Granted	260,000	260,000
Weighted Average Fair Value Per Unit		$ 7.99
Average Illiquidity Discount		8.20%
Recorded Weighted Average Fair Value Per Unit		$ 7.34
2014 EIP [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Number of Units, Granted		12,441,000
Weighted Average Fair Value Per Unit		$ 14.80
Average Illiquidity Discount		15.60%
Recorded Weighted Average Fair Value Per Unit		$ 12.49
2014 EIP [Member] | Executive Committee Members [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Number of Units, Granted		9,173,000
Weighted Average Fair Value Per Unit		$ 15.18
Average Illiquidity Discount		18.30%
Recorded Weighted Average Fair Value Per Unit		$ 12.40
2014 EIP [Member] | Non-Executive Committee Members [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Number of Units, Granted		3,268,000
Weighted Average Fair Value Per Unit		$ 13.75
Average Illiquidity Discount		7.30%
Recorded Weighted Average Fair Value Per Unit		$ 12.74

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Share-Based Incentive Plans - Summary of Stock-Based Compensation Expense (Detail) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Total share-based compensation expense	$ 55,609	$ 31,339
Research and Development [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Total share-based compensation expense	4,363	2,670
Sales and Marketing [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Total share-based compensation expense	12,610	8,536
General and Administrative [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Total share-based compensation expense	$ 38,636	$ 20,133

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Income Taxes - Benefit for Income Taxes (Detail) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
Income Tax Disclosure [Abstract]
Income (loss) before benefit for income taxes	$ 12,228	$ (128,866)	$ (34,621)	$ (146,506)
Benefit for income taxes	(2,756)	(160,680)	(4,199)	(158,767)
NET INCOME (LOSS)	$ 14,984	$ 31,814	$ (30,422)	$ 12,261

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Income Taxes - Additional Information (Detail) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
Income Tax Disclosure [Abstract]
Benefit for income taxes	$ (2,756)	$ (160,680)	$ (4,199)	$ (158,767)