Alkermes
Annual Report 2013

Plain-text annual report

Use these links to rapidly review the documentTABLE OF CONTENTSTable of ContentsUNITED STATESSECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549Form 10-KCommission file number: 1-14131ALKERMES PUBLIC LIMITED COMPANY(Exact name of registrant as specified in its charter)Ireland(State or other jurisdiction ofincorporation or organization) 98-1007018(I.R.S. EmployerIdentification No.)Connaught House1 Burlington RoadDublin 4, Ireland(Address of principal executiveoffices) (Zip code)+353-1-772-8000(Registrant's telephone number, including area code) Securities registered pursuant to Section 12(g) of the Act:Ordinary shares, $0.01 par value NASDAQ Global Select Stock MarketTitle of each class Name of each exchange on whichregistered Securities registered pursuant to Section 12(b) of the Act: None(Mark One)  ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGEACT OF 1934For the fiscal year ended March 31, 2013ORo TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGEACT OF 1934For the transition period from to  Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes  No o Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange Act. Yes o No  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 of1934 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 suchfiling requirements for the past 90 days. Yes  No o Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data Filerequired 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 suchshorter period that the registrant was required to submit and post such files): Yes  No o Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained,to the best of the registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or anyamendment to this Form 10-K. o Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reportingcompany. See the definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act. (Checkone): Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes o No  The aggregate market value of the registrant's ordinary shares held by non-affiliates of the registrant (without admitting that any person whoseshares are not included in such calculation is an affiliate) computed by reference to the price at which the ordinary shares was last sold as of the lastbusiness day of the registrant's most recently completed second fiscal quarter was $2,712,520,116. As of May 08, 2013, 134,380,999 shares of ordinary shares were issued and outstanding.DOCUMENTS INCORPORATED BY REFERENCE Portions of the definitive proxy statement for our Annual General Meeting of Shareholders' for the fiscal year ended March 31, 2013 areincorporated by reference into Part III of this report. Large accelerated filer  Accelerated filer o Non-accelerated filer o(Do not check if asmaller reporting company) Smaller Reporting company oTable of ContentsALKERMES PLC AND SUBSIDIARIESANNUAL REPORT ON FORM 10-KFOR THE FISCAL YEAR ENDED MARCH 31, 2013INDEX2PART I Item 1. Business 5 Item 1A. Risk Factors 32 Item 1B. Unresolved Staff Comments 52 Item 2. Properties 52 Item 3. Legal Proceedings 52 Item 4. Mine Safety Disclosures 52 PART II Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases ofEquity Securities 53 Item 6. Selected Financial Data 57 Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations 59 Item 7A. Quantitative and Qualitative Disclosures about Market Risk 79 Item 8. Financial Statements and Supplementary Data 82 Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosures 83 Item 9A. Controls and Procedures 83 Item 9B. Other Information 84 PART III Item 10. Directors, Executive Officers and Corporate Governance 85 Item 11. Executive Compensation 85 Item 12. Security Ownership of Certain Beneficial Owners and Management and Related StockholderMatters 85 Item 13. Certain Relationships and Related Transactions, and Director Independence 85 Item 14. Principal Accounting Fees and Services 85 PART IV Item 15. Exhibits and Financial Statement Schedules 85 SIGNATURES 86 Table of ContentsFORWARD-LOOKING STATEMENTS This document contains and incorporates by reference "forward-looking statements" within the meaning of Section 27A of the Securities Act of1933 and Section 21E of the Securities Exchange Act of 1934. In some cases, these statements can be identified by the use of forward-lookingterminology such as "may," "will," "could," "should," "would," "expect," "anticipate," "continue" or other similar words. These statements discussfuture expectations, and contain projections of results of operations or of financial condition, or state trends and known uncertainties or other forward-looking information. Forward-looking statements in this Annual Report on Form 10-K include, without limitation, statements regarding:•our expectations regarding our financial performance, including revenues, expenses, income taxes, liquidity and capital expenditures; •our expectations regarding the commercialization of our products, including the sales and marketing efforts of our partners and, forVIVITROL® (naltrexone for extended-release injectable suspension), our ability to establish and maintain successful sales andmarketing, reimbursement and distribution arrangements; •our expectations regarding our products, including the development, regulatory review (including expectations about regulatory approvaland regulatory timelines) and therapeutic and commercial potential of such products and the costs and expenses related thereto; •our expectations regarding the initiation, timing and results of clinical trials of our products; •our expectations regarding the successful manufacture of our products, by us or our partners, for clinical use or commercial sale; •the continuation of our collaborations and other significant agreements and our ability to establish and maintain successful developmentcollaborations; •our expectations regarding the financial impact of currency exchange rate fluctuations and valuations; •the impact of new accounting pronouncements; •our ability to protect our intellectual property rights, not infringe third-party intellectual property rights and the impact of recent patentlegislation; •our expectations regarding near-term changes in the nature of our market risk exposures or in management's objectives and strategieswith respect to managing such exposures; •our ability to comply with restrictive covenants of our indebtedness and our ability to fund our debt service obligations; •our expectations concerning the status, intended use and financial impact of, and arrangements involving, our properties, includingmanufacturing facilities; •our future capital requirements and capital expenditures and our ability to finance our operations and capital requirements; and •other risk factors described in "Item 1A—Risk Factors" in this Annual Report. Actual results might differ materially from those expressed or implied by these forward-looking statements because these forward-lookingstatements are subject to risks, assumptions and uncertainties. You are cautioned not to place undue reliance on forward-looking statements, whichspeak only as of the date of this Annual Report. All subsequent written and oral forward-looking statements concerning the matters addressed in thisAnnual Report and attributable to us or any person acting on our behalf are expressly qualified in their entirety by the cautionary statements contained orreferred to in this3Table of Contentssection. Except as required by applicable law or regulation, we do not undertake any obligation to update publicly or revise any forward-lookingstatements, whether as a result of new information, future events or otherwise. In light of these risks, uncertainties and assumptions, the forward-looking events discussed in this Annual Report might not occur. For more information regarding the risks and uncertainties of our business, see"Item 1A—Risk Factors." Unless otherwise indicated, information contained in this Annual Report concerning the disorders targeted by our products and the markets inwhich we operate is based on information from various sources (including industry publications, medical and clinical journals and studies, surveys andforecasts and our internal research), on assumptions that we have made, which we believe are reasonable, based on those data and other similar sourcesand on our knowledge of the markets for our products and development programs. Our internal research has not been verified by any independentsource, and we have not independently verified any third-party information. These projections, assumptions and estimates are necessarily subject to ahigh degree of uncertainty and risk due to a variety of factors, including those described in "Item 1A—Risk Factors." These and other factors couldcause results to differ materially from those expressed in the estimates included in this Annual Report.4Table of ContentsPART IItem 1. Business The following discussion contains forward-looking statements. Actual results may differ significantly from those projected in the forward-lookingstatements. See "Forward-Looking Statements" on page 3 of this Annual Report. Factors that might cause future results to differ materially from thoseprojected in the forward-looking statements also include, but are not limited to, those discussed in "Item 1A—Risk Factors" and elsewhere in thisAnnual Report. On September 16, 2011, the business of Alkermes, Inc. and the drug technologies business ("EDT") of Elan Corporation, plc ("Elan") werecombined under Alkermes plc (this combination is referred to as the "Business Combination," the "acquisition of EDT" or the "EDT acquisition"). Useof the terms such as "us," "we," "our," "Alkermes" or the "Company" in this Annual Report is meant to refer to Alkermes plc and its consolidatedsubsidiaries, except where the context makes clear that the time period being referenced is prior to September 16, 2011, in which case such terms shallrefer to Alkermes, Inc. and its consolidated subsidiaries. Prior to September 16, 2011, Alkermes, Inc. was an independent pharmaceutical companyincorporated in the Commonwealth of Pennsylvania and traded on the NASDAQ Global Select Stock Market (the "NASDAQ") under the symbol"ALKS." For a more detailed discussion of the Business Combination, please refer to the notes to our consolidated financial statements, includingNote 1, The Company, and Note 3, Acquisitions, in the accompanying consolidated financial statements.Overview Alkermes plc is a fully integrated, global biopharmaceutical company that applies its scientific expertise and proprietary technologies to developinnovative medicines that improve patient outcomes. We have a diversified portfolio of more than 20 commercial drug products and a clinical pipeline ofproduct candidates that address central nervous system ("CNS") disorders such as addiction, schizophrenia and depression. Headquartered in Dublin,Ireland, we have a research and development ("R&D") center in Waltham, Massachusetts; R&D and manufacturing facilities in Athlone, Ireland; andmanufacturing facilities in Gainesville, Georgia and Wilmington, Ohio. We leverage our formulation expertise and proprietary product platforms to develop, both with partners and on our own, innovative andcompetitively advantaged medications that can enhance patient outcomes in major therapeutic areas. We enter into select collaborations withpharmaceutical and biotechnology companies to develop significant new product candidates, based on existing drugs and incorporating our proprietaryproduct platforms. In addition, we apply our innovative formulation expertise and drug development capabilities to create our own new, proprietarypharmaceutical products.Our Strengths and Strategy The products that we develop leverage multiple proprietary technologies to create new medicines that are designed to address therapeutic areas ofsignificant unmet medical need and improve patient outcomes. As of March 31, 2013, we and our pharmaceutical and biotechnology partners had morethan 20 commercialized products sold worldwide, including the United States ("U.S."). We earn manufacturing and/or royalty revenues on net sales ofproducts commercialized by our partners and earn revenue on net sales of VIVITROL, which is a proprietary product that we manufacture, market andsell in the U.S. Our five key products are expected to generate significant revenues for us in the near- and medium-term, as they possess long patentlives, are singular or competitively advantaged products in their class and are generally in the launch phases of their commercial lives. These five keyproducts are: RISPERDAL® CONSTA® and INVEGA® SUSTENNA®/XEPLION®, both antipsychotics marketed by Ortho-McNeil-JanssenPharmaceuticals, Inc. and Janssen Pharmaceutica International, a division of Cilag International AG ("Janssen"); AMPYRA®/FAMPYRA® for theimprovement of5Table of Contentswalking in patients with multiple sclerosis and marketed by Acorda Therapeutics, Inc. ("Acorda") in the U.S. and by Biogen Idec International GmbH("Biogen Idec") outside the U.S.; BYDUREON®, the only once-weekly treatment for type 2 diabetes, which is co-developed and marketed by Bristol-Myers Squibb Company ("Bristol-Myers") and AstraZeneca PLC ("Astra Zeneca"); and VIVITROL, the only once-monthly, injectable, non-addictivetreatment for the prevention of relapse to opioid dependence following detoxification and for alcohol dependence, which is marketed by us. We have a portfolio of product candidates across all stages of development. Backed by decades of experience, we are able to streamline thetraditional drug development process with a goal of increasing the probability of late-stage product success. Our R&D approach involves little basicdiscovery and allows us to assess the viability of new pipeline candidates early and devote our resources to advancing the most promising candidatesquickly to registration-stage trials. Our R&D efforts have been highly productive and have yielded a pipeline that we expect will generate meaningfulnew drugs that will become sources of significant revenue for our company. We are increasingly focused on maintaining rights to commercialize ourleading product candidates in certain markets.Our Competitive Strengths We believe our principal competitive strengths include:•our broad and diverse product portfolio and pipeline, which, as of March 31, 2013, included more than 20 marketed products andnumerous proprietary and partnered pipeline candidates; •our five key commercial products that are expected to generate significant revenues for the company in the near- and medium-term; •our focused R&D approach that leverages proprietary technologies and our extensive experience in developing CNS treatments, with theproven ability to advance candidates from well-informed preclinical testing to cost-effective proof-of-concept studies; •our intellectual property portfolio covering composition of matter, process, formulation and/or methods-of-use for our currentlymarketed five key commercial products and for our product candidates in development; •our three established manufacturing facilities that are compliant with current Good Manufacturing Practices ("cGMP"), can producemultiple dosage forms and are fully scaled to meet the manufacturing needs of ourselves and our collaborative partners; and •our experienced management team and personnel who have grown our business to be an established biopharmaceutical company with atrack record of more than 40 years of development, regulatory, manufacturing and partnering expertise.Our Strategy Capitalize on growth from our five key commercial products. Our key commercial products are generally in their launch stages for large andgrowing disease areas, with significant opportunities for growth. We expect that the revenues that we earn from the portfolio—RISPERDAL CONSTAand INVEGA SUSTENNA/XEPLION, AMPYRA/FAMPYRA, BYDUREON and VIVITROL—will continue to increase in the near- and medium-term, as they address large and growing markets and are competitively advantaged. We expect that revenues generated from these products will enableus to meet our near- and medium-term financial goals and position the company for sustainable profitability. Continue to advance our pipeline. Our R&D approach is based on return on investment and, between us and our partners, we have a diversepipeline of new drug candidates. We currently have one proprietary product candidate in phase 3, one proprietary candidate in phase 2 and oneproprietary candidate in phase 1. We also have one partnered product candidate that is under review by the6Table of ContentsU.S. Food and Drug Administration ("FDA") and other proprietary candidates in preclinical testing. In addition, we and our collaborators are in theprocess of developing line extensions and new formulations for some of our existing commercial products. Our proprietary product candidates haveundergone extensive preclinical testing prior to reaching the clinical development stage, which we believe improves these candidates' probability ofsuccess in later-stage drug development (See "Key Development Programs" on page 10 in this Annual Report). Grow revenues and strategically invest in our late-stage pipeline. Our five key commercial products are expected to grow our revenues in thenear- and medium-term, and we will seek to invest in our late-stage pipeline to drive long-term value for the Company.Products and Development ProgramsCommercial Products Our commercial products are described in the table below, including, among other things, the territory in which the marketer has the right to sell theproduct and the source of revenues for us:Product Indication Technology Territory RevenueSource MarketerRISPERDALCONSTA SchizophreniaBipolar IDisorder Extended-releasemicrosphere Worldwide ManufacturingandRoyalty JanssenINVEGASUSTENNA/XEPLION Schizophrenia NanoCrystal® U.S.Worldwide Royalty JanssenAMPYRA/FAMPYRA Treatment toimprovewalking inpatients withmultiplesclerosis("MS"), asdemonstratedby an increasein walkingspeed OralControlledRelease("OCR")(MXDAS®) U.S.Worldwide ManufacturingandRoyalty Acorda in U.S.Biogen Idec (ex-U.S.undersublicense fromAcorda)BYDUREON Type 2diabetes Extended-releasemicrosphere Worldwide Royalty Bristol-Myersand AstraZenecaVIVITROL AlcoholdependenceOpioiddependence Extended-releasemicrosphere U.S.Russia andCommonwealthofIndependentStates ("CIS") Product salesManufacturingandRoyalty Alkermes plcJanssenTRICOR®LIPANTHYL®LIPIDILSUPRALIP Cholesterollowering NanoCrystal Worldwide Royalty AbbVie Inc.AbbottLaboratoriesZANAFLEX®CAPSULES®ZANAFLEX®TABLETSTIZANIDINEHYDROCHLORIDE(AB Rated toZANAFLEXCAPSULES) Musclespasticity OCR(SODAS®) U.S. Manufacturing(capsulesonly) andRoyalty Acorda;Actavis, Inc.(formerlyWatsonPharmaceutical)AVINZA® Chronicmoderate tosevere pain OCR(SODAS) U.S. ManufacturingandRoyalty Pfizer, Inc.("Pfizer")EMEND® Nauseaassociatedwith NanoCrystal Worldwide Manufacturingand Royalty Merck & Co. Inc.("Merck")7chemotherapyand surgeryTable of Contents We have five principal commercial products which either currently, or in the future, are expected to contribute meaningfully to our revenues. Thesefive products are discussed below:RISPERDAL CONSTA and INVEGA SUSTENNA/XEPLION RISPERDAL CONSTA (risperidone long-acting injection) and INVEGA SUSTENNA/XEPLION (paliperidone palmitate extended-releaseinjectable suspension) are long-acting atypical antipsychotics that incorporate our proprietary technologies. They are products of Janssen. RISPERDAL CONSTA uses our polymer-based microsphere injectable extended-release technology to deliver and maintain therapeuticmedication levels in the body through just one injection every two weeks. RISPERDAL CONSTA is exclusively manufactured by us and is marketedProduct Indication Technology Territory RevenueSource MarketerFOCALIN®XRRITALIN LA® AttentionDeficitHyperactivityDisorder OCR(SODAS) Worldwide ManufacturingandRoyalty Novartis AG("Novartis")MEGACE®ES Anorexia,Cachexiaassociatedwith AIDS NanoCrystal U.S. Royalty StrativaPharmaceuticals(a businessdivision of ParPharmaceuticalCompanies, Inc.)LUVOX CR® Obsessive-compulsivedisorder OCR(SODAS) U.S. ManufacturingandRoyalty JazzPharmaceuticals plc("Jazz")RAPAMUNE® Prevention ofrenaltransplantrejection NanoCrystal Worldwide Manufacturing PfizerNAPRELAN® Various mildto moderatepainindications OCR(IPDAS®) U.S.Canada Manufacturing ShionogiSunovionPharmaceuticalsCanada,Inc.VERAPAMILSRVERELAN®VERELAN®PMVERAPAMILPMVERECAPS®UNIVER Hypertension OCR(SODAS) Licensed oncountry/regionbasisthroughoutthe world ManufacturingandRoyalty (onselectformulations) UCBKremers-Urban;Cephalon;Aspen Pharma;OrientEuropharma;Actavis, Inc.DILZEMDILZEM SRDILZEM XLDILTELANACALIX CDDINISORTILAZEM CRCARDIZEM®CD Hypertensionand/orAngina OCR(SODAS) Licensed oncountry/regionbasisthroughoutthe world ManufacturingandRoyalty (forCARDIZEMCD only) Cephalon;Pfizer;Roemmers;Kun Wha;OrientEuropharma;Sanofi-Aventis;ValeantPharmaceuticalsInternational Inc.AFEDitab®CR(AB Rated toAdalat CC®) Hypertension OCR(MXDAS®) U.S. Manufacturing Actavis, Inc.LYXUMIA® Type 2diabetes inadults — United Kingdom Royalty Sanofi-AventisZONEGRAN® Hypertension — EU Royalty EisaiPharmaceuticalsand sold by Janssen worldwide. It was first approved for the treatment of schizophrenia in the U.S. in 2003 and in countries in Europe in 2002. TheFDA approved RISPERDAL CONSTA as both monotherapy and adjunctive therapy to lithium or valproate in the maintenance treatment of bipolar Idisorder in May 2009. RISPERDAL CONSTA is also approved for the maintenance treatment of bipolar I disorder in Canada, Australia and SaudiArabia.8Table of Contents INVEGA SUSTENNA uses our nanoparticle injectable extended-release technology to increase the rate of dissolution and enable the formulationof an aqueous suspension for once-monthly intramuscular administration. INVEGA SUSTENNA was approved for the acute and maintenancetreatment of schizophrenia in adults in the U.S. in 2009. Paliperidone palmitate extended-release for injectable suspension is also approved in theEuropean Union ("EU") and other countries worldwide, and is marketed and sold in the EU under the trade name XEPLION. INVEGASUSTENNA/XEPLION is manufactured and commercialized worldwide by Janssen. Revenues from Janssen accounted for approximately 35%, 48% and 83% of our consolidated revenues for the fiscal years ended March 31, 2013,2012 and 2011, respectively. See "Collaborative Arrangements" below for information about our relationship with Janssen.What is schizophrenia? Schizophrenia is a chronic, severe and disabling brain disorder. The disease is marked by positive symptoms (hallucinations and delusions) andnegative symptoms (depression, blunted emotions and social withdrawal), as well as by disorganized thinking. An estimated 2.4 million Americanshave schizophrenia, with men and women affected equally. Worldwide, it is estimated that one person in every 100 develops schizophrenia. Studieshave demonstrated that as many as 75% of patients with schizophrenia have difficulty taking their oral medication on a regular basis, which can lead toworsening of symptoms.What is bipolar I disorder? Bipolar disorder is a brain disorder that causes unusual shifts in a person's mood, energy and ability to function. It is often characterized bydebilitating mood swings, from extreme highs (mania) to extreme lows (depression). Bipolar I disorder is characterized based on the occurrence of atleast one manic episode, with or without the occurrence of a major depressive episode. Bipolar disorder is believed to affect approximately 5.7 millionAmerican adults, or about 2.6% of the U.S. population aged 18 and older in a given year. The median age of onset for bipolar disorder is 25 years.AMPYRA/FAMPYRA Dalfampridine extended-release tablets are marketed and sold in the U.S. under the trade name AMPYRA by Acorda. Prolonged-releasefampridine tablets received conditional approval in the EU in July 2011 and are marketed and sold outside the U.S. under the trade name FAMPYRAby Biogen Idec. The FDA approved AMPYRA as a treatment to improve walking in patients with MS as demonstrated by an increase in walking speedin January 2010. Efficacy was shown in people with all four major types of MS (relapsing remitting, secondary progressive, progressive relapsing andprimary progressive). It is the first and, currently, only product to be approved for this indication. The product incorporates our OCR technology.AMPYRA and FAMPYRA are manufactured by us.What is multiple sclerosis? MS is a chronic, usually progressive disease in which the immune system attacks and degrades the function of nerve fibers in the brain and spinalcord. These nerve fibers consist of long, thin fibers, or axons, surrounded by a myelin sheath, which facilitates the transmission of electrical impulses.In MS, the myelin sheath is damaged by the body's own immune system, causing areas of myelin sheath loss, also known as demyelination. Thisdamage, which can occur at multiple sites in the CNS, blocks or diminishes conduction of electrical impulses. People with MS may suffer impairmentsin any number of neurological functions. These impairments vary from individual to individual and over the course of time, depending on which partsof the brain and spinal cord are affected, and often include difficulty9Table of Contentswalking. Individuals vary in the severity of the impairments they suffer on a day-to-day basis, with impairments becoming better or worse depending onthe activity of the disease on a given day.BYDUREON We collaborated with Amylin Pharmaceuticals, Inc., now a wholly-owned subsidiary of Bristol-Myers, on the development of a once-weeklyformulation of exenatide, BYDUREON, which was approved by the FDA in January 2012 and received marketing authorization in the EU in June2011 for the treatment of type 2 diabetes. BYDUREON, a once-weekly formulation of exenatide, the active ingredient in BYETTA® (exenatide), usesour polymer-based microsphere injectable extended-release technology. Through their diabetes collaboration, Bristol-Myers and AstraZeneca co-develop and market Amylin's portfolio of products, including BYDUREON.What is type 2 diabetes? Diabetes is a disease in which the body does not produce or properly use insulin. Diabetes can result in serious health complications, includingcardiovascular, kidney and nerve disease. Diabetes is believed to affect nearly 26 million people in the U.S. and an estimated 347 million adultsworldwide. Approximately 90-95% of those affected have type 2 diabetes. An estimated 80% of people with type 2 diabetes are overweight or obese.Data indicate that weight loss (even a modest amount) supports patients in their efforts to achieve and sustain glycemic control.VIVITROL VIVITROL is the first and only once-monthly injectable medication approved by the FDA for the treatment of alcohol dependence in April 2006and the prevention of relapse to opioid dependence, following opioid detoxification, in October 2010. The medication uses our polymer-basedmicrosphere injectable extended-release technology to deliver and maintain therapeutic medication levels in the body through just one injection everyfour weeks. We developed, and currently market and sell, VIVITROL in the U.S., and Cilag sells VIVITROL in Russia and the CIS where it wasapproved for the treatment of alcohol dependence in 2008 and for opioid dependence in 2011.What are opioid dependence and alcohol dependence? Opioid dependence is a serious and chronic brain disease characterized by compulsive, prolonged self-administration of opioid substances that arenot used for a medical purpose. According to the 2011 U.S. National Survey on Drug Use and Health, an estimated 1.6 million people aged 18 or olderwere dependent on pain relievers or heroin in the U.S. Alcohol dependence is a serious and chronic brain disease characterized by cravings for alcohol, loss of control over drinking, withdrawalsymptoms and an increased tolerance for alcohol. Approximately 16 million people aged 18 or older in the U.S. are dependent on or abuse alcohol.Adherence to medication is particularly challenging with this patient population.Other Commercial Products We expect revenues from our other commercial products will decrease in the future due to existing and expected competition from genericmanufacturers. For a more detailed discussion of current and expected future revenue contributions from such products, please see "Management'sDiscussion and Analysis of Financial Condition and Results of Operations" elsewhere in this Annual Report. On April 4, 2013, we announced the approval of a restructuring plan pursuant to which we will terminate manufacturing services for certain olderproducts becoming uneconomic to produce due to decreasing demand from our customers resulting from generic competition, and we will implement a10Table of Contentscorresponding reduction in headcount of up to 130 employees at our Athlone, Ireland manufacturing facility.Key Development Programs We leverage our formulation expertise and proprietary product platforms to develop, both with partners and on our own, innovative andcompetitively advantaged medications that can enhance patient outcomes in major therapeutic areas. As part of our ongoing research and developmentefforts, we have devoted significant resources to conducting clinical studies to advance the development of new pharmaceutical products. Thediscussion below highlights our current research and development programs. Drug development involves a high degree of risk and investment, and thestatus, timing and scope of our development programs are subject to change. Important factors that could adversely affect our drug development effortsare discussed in "Item 1A—Risk Factors."Aripiprazole Lauroxil We are studying aripiprazole lauroxil, which we formerly referred to as ALKS 9070, for the treatment of schizophrenia. Aripiprazole lauroxil isdesigned to provide once-monthly dosing of a medication that converts in vivo into aripiprazole, a molecule that is commercially available under thename ABILIFY®. Aripiprazole lauroxil is our first product candidate to leverage our proprietary LinkeRx™ product platform. A phase 3 trial to assessthe efficacy, safety and tolerability of aripiprazole lauroxil in approximately 690 patients experiencing acute exacerbation of schizophrenia is currentlyongoing, and the clinical data from this study, expected in the first half of calendar-year 2014, is expected to form the basis of a New Drug Application("NDA") to the FDA for aripiprazole lauroxil for the treatment of schizophrenia. In April 2013, U.S. Patent 8,431,576, titled "Heterocyclic Compounds for the Treatment of Neurological and Psychological Disorders" issued.The allowed claims of such patent will cover a class of compounds that includes aripiprazole lauroxil. The patent will expire in the U.S. in 2030.ALKS 33 ALKS 33 is an oral opioid modulator characterized by limited hepatic metabolism and durable pharmacologic activity in modulating brain opioidreceptors. ALKS 33 has completed a phase 2 study in alcohol dependence and is currently being evaluated as a component of ALKS 5461 and ALKS3831.ALKS 5461 ALKS 5461 is a proprietary investigational medicine with a novel mechanism for the treatment of major depressive disorder ("MDD"). Themechanism of action for ALKS 5461 in the treatment of depressive symptoms is based on modulation of the opioid system in the brain, employing abalanced combination of agonism and antagonism of opioid receptors. ALKS 5461 consists of buprenorphine, a partial agonist, and ALKS 33, a potentmu-opioid antagonist, and is designed to be a once-daily, non-addictive medicine. A phase 2 study evaluating the efficacy and safety of ALKS 5461when administered once daily for four weeks in 142 patients with MDD who had an inadequate response to standard antidepressant therapies wascompleted in April 2013. Preliminary topline results from the study showed that ALKS 5461 significantly reduced depressive symptoms across a rangeof standard measures including the study's primary outcome measure, the Hamilton Depression Rating Scale (HAM-D17), the Montgomery—ÅsbergDepression Rating Scale (MADRS) and the Clinical Global Impression—Severity Scale (CGI-S). ALKS 5461 was generally well tolerated. Based onthese results, as well as the positive phase 1/2 results previously reported, Alkermes plans to request a meeting with the FDA and to advance ALKS5461 into a pivotal development program. Data from this phase 2 study will be presented at a scientific meeting in May 2013.11Table of ContentsZOHYDRO ERTM ZOHYDRO ER (hydrocodone bitartrate extended-release capsules) is a novel, oral, single-entity (without acetaminophen), controlled-releaseformulation of hydrocodone in development by Zogenix, Inc. ("Zogenix") for the U.S. market. ZOHYDRO ER utilizes our oral controlled-releasetechnology, which potentially enables longer-lasting and more consistent pain relief with fewer daily doses than the commercially available formulationsof hydrocodone. In December 2012, the FDA Anesthetic and Analgesic Drug Products Advisory Committee ("AADPAC") voted 2-11 (with1 abstention) against the approval of ZOHYDRO ER. In February 2013, in advance of the March 1, 2013 FDA PDUFA date, Zogenix announced thatit was informed by the FDA that it was unlikely to receive an action letter with respect to its ZOHYDRO ER NDA by March 1, 2013. In May 2013,Zogenix reported that it had been notified by the FDA and told that the FDA was preparing to take action on the ZOHYDRO ER NDA in the summerof 2013. In addition, Zogenix announced that it had not been provided a reason for the delay and had not been informed of any deficiencies in the NDAfor ZOHYDRO ER during the review process. We have also entered into a license and distribution agreement with Paladin Labs Inc. in respect ofZOHYDRO ER in Canada. We will earn manufacturing revenues and a royalty on U.S. and Canadian sales of ZOHYDRO ER, if approved and whencommercialized. We have maintained all rights to the product in territories outside the U.S. and Canada and expect to seek to develop and license theproduct through commercial partnerships in those territories.ALKS 3831 ALKS 3831 is a proprietary investigational medicine designed as a broad spectrum treatment for schizophrenia. ALKS 3831 is comprised ofALKS 33, a novel opioid modulator that acts as a potent mu-opioid antagonist, in combination with the established antipsychotic drug olanzapine.ALKS 3831 is designed to attenuate olanzapine-induced metabolic side effects, including weight gain, and offer the therapeutic benefits of olanzapine toa wider range of patients with schizophrenia. ALKS 3831 will also be studied to evaluate its utility in patients with schizophrenia and comorbidsubstance abuse. In January 2013, we announced positive topline results from a phase 1 study of ALKS 3831. The multicenter, randomized, double-blind, placebo- and active-controlled study was designed to compare the mean change from baseline in body weight in 106 healthy volunteers followingthree weeks of once-daily, oral administration of ALKS 3831, compared to olanzapine alone or placebo. Data from the study showed that healthyvolunteers administered ALKS 3831 demonstrated significantly less weight gain compared to healthy volunteers taking olanzapine. Weight gain is acommon and clinically relevant side effect of atypical antipsychotic medications, and olanzapine has one of the highest incidences and greatest amountsof weight gain among the widely prescribed products in this class of drugs. Based on the positive results of the phase 1 study, we plan to initiate aphase 2 study of ALKS 3831 in mid calendar-year 2013 and meet with the FDA.Other A three-month formulation of INVEGA SUSTENNA is in development by Janssen Research & Development, LLC. Two phase 3 studies areexpected to enroll approximately 1,800 patients with schizophrenia and will assess the efficacy, safety and tolerability of the three-month injectableformulation. These clinical studies are expected to be completed in the second half of calendar 2014. The investigational product is being developed byJanssen Pharmaceutica, NV, licensee of our proprietary technology for nanoparticles. Line extensions for BYDUREON are in development by Bristol-Myers. These line extensions include a dual-chamber pen device and weekly andmonthly suspension formulations using our proprietary technology for extended-release microspheres. Bristol-Myers is expected to submit data for thedual-chamber pen device for FDA review in the third quarter of calendar-year 2013.12Table of Contents In April 2013, Acorda reported positive results from an 83-subject proof-of-concept study of dalfampridine-ER 10 mg in the treatment of post-stroke deficits, as demonstrated by improvement in walking measured by the Timed 25-Foot Walk. Acorda plans to proceed with a clinical developmentprogram for this indication. A separate proof-of-concept trial including 24 participants explored the use of dalfampridine-ER 10 mg dosed twice daily inadults with cerebral palsy ("CP"). Efficacy data from the study in adults with CP suggested potential treatment activity on measures of walking andhand strength; however, these data are being analyzed by Acorda to determine if they are sufficiently robust to warrant further clinical studies. Acordaplans to present data from the post-stroke deficits and CP trials in appropriate medical forums following additional analysis of the data.Our Research and Development Expenditures We devote significant resources to R&D programs. We focus our R&D efforts on identifying novel therapeutics in areas of high unmet medicalneed. Please see "Management's Discussion and Analysis of Financial Condition and Results of Operations—Results of Operations of Alkermes" forour R&D expenditures for our prior three fiscal years.Collaborative Arrangements Our business strategy includes forming collaborations to develop and commercialize our products and, in so doing, access technological, financial,marketing, manufacturing and other resources. We have entered into several collaborative arrangements, as described below.JanssenRISPERDAL CONSTA Under a product development agreement, we collaborated with Janssen on the development of RISPERDAL CONSTA. Under the developmentagreement, Janssen provided funding to us for the development of RISPERDAL CONSTA, and Janssen is responsible for securing all necessaryregulatory approvals for the product. Under license agreements, we granted Janssen and an affiliate of Janssen exclusive worldwide licenses to use and sell RISPERDAL CONSTA.Under our license agreements with Janssen, we receive royalty payments equal to 2.5% of Janssen's net sales of RISPERDAL CONSTA in eachcountry where the license is in effect based on the quarter when the product is sold by Janssen. This royalty may be reduced in any country based onlack of patent coverage and significant competition from generic versions of the product. Janssen can terminate the license agreements upon 30 days'prior written notice to us. The licenses granted to Janssen expire on a country-by-country basis upon the later of (i) the expiration of the last patentclaiming the product in such country or (ii) fifteen years after the date of the first commercial sale of the product in such country, provided that in noevent will the license granted to Janssen expire later than the twentieth anniversary of the first commercial sale of the product in such country, with theexception of certain countries where the fifteen-year limitation shall pertain regardless. After expiration, Janssen retains a non-exclusive, royalty-freelicense to manufacture, use and sell RISPERDAL CONSTA. We exclusively manufacture RISPERDAL CONSTA for commercial sale. Under ourmanufacturing and supply agreement with Janssen, we record manufacturing revenues when product is shipped to Janssen, based on 7.5% of Janssen'snet unit sales price for RISPERDAL CONSTA for the calendar year. The manufacturing and supply agreement terminates on expiration of the license agreements. In addition, either party may terminate themanufacturing and supply agreement upon a material breach by the other party, which is not resolved within 60 days after receipt of a written noticespecifying the material breach or upon written notice in the event of the other party's insolvency or bankruptcy. Janssen may terminate the agreementupon six months' written notice to us. In the event that Janssen13Table of Contentsterminates the manufacturing and supply agreement without terminating the license agreements, the royalty rate payable to us on Janssen's net sales ofRISPERDAL CONSTA would increase from 2.5% to 5.0%.INVEGA SUSTENNA/XEPLION Under our license agreement with Janssen Pharmaceutica N.V., we granted Janssen a worldwide exclusive license under our NanoCrystaltechnology to develop, commercialize and manufacture INVEGA SUSTENNA/XEPLION and related products. Under our license agreement, we receive certain development milestone payments from Janssen and aggregate tiered royalty payments between 5%and 9% of INVEGA SUSTENNA net sales in each country where the license is in effect, with the exact royalty percentage determined based onworldwide net sales. The tiered royalty payments consist of a Patent Royalty and a Know How Royalty, both of which are determined on a county-by-country basis. The Patent Royalty, which equals 1.5% of net sales, is payable until the expiration of the last of the patents claiming the product in suchcountry. The Know How Royalty is a tiered royalty of 3.5%, 5.5% and 7.5% on aggregate worldwide net sales of below $250 million, between$250 million and $500 million, and greater than $500 million, respectively. The Know How Royalty is payable for the later of 15 years from firstcommercial sale of a Product in each individual country or March 31, 2019, subject in each case to the expiry of the license agreement. These royaltypayments may be reduced in any country based on lack of patent coverage or patent litigation, or where competing products achieve certain minimumsales thresholds. The license agreement expires upon the later of (i) March 31, 2019 or (ii) the expiration of the last of the patents subject to theagreement. After expiration, Janssen retains a non-exclusive, royalty-free license to develop, manufacture and commercialize the products. Janssen may terminate the license agreement in whole or in part upon three months' notice to us. We and Janssen have the right to terminate theagreement upon a material breach of the other party, which is not cured within a certain time period or upon the other party's bankruptcy or insolvency.Acorda Under an amended and restated license agreement, we granted Acorda an exclusive worldwide license to use and sell and, solely in accordancewith our supply agreement, to make or have made, AMPYRA/FAMPYRA. We receive certain commercial and development milestone payments,license revenues and a royalty of approximately 10% based on sales of AMPYRA/FAMPYRA by Acorda or its sub-licensee, Biogen Idec. Thisroyalty payment may be reduced in any country based on lack of patent coverage, competing products achieving certain minimum sales thresholds, andwhether Alkermes manufactures the product. In June 2009, we entered into an amendment of the amended and restated license agreement and the supply agreement with Acorda and, pursuantto such amendment, consented to the sublicense by Acorda to Biogen Idec of Acorda's rights to use and sell FAMPYRA in certain territories outside ofthe United States (to the extent that such rights were to be sublicensed to Biogen Idec pursuant to its separate collaboration and license agreement withAcorda). Under this amendment, we agreed to modify certain terms and conditions of the amended and restated license agreement and the supplyagreement with Acorda to reflect the sublicense by Acorda to Biogen Idec. Acorda has the right to terminate the license agreement upon 90 days' written notice. We have the right to terminate the license agreement forcountries in which Acorda fails to launch a product within a specified time after obtaining the necessary regulatory approval or fails to file regulatoryapprovals within a commercially reasonable time after completion and receipt of positive data from all preclinical and clinical studies required for filing amarketing authorization application. If we terminate Acorda's license in any country, we are entitled to a license from Acorda of its patent rights andknow-how14Table of Contentsrelating to the product as well as the related data, information and regulatory files, and to market the product in the applicable country, subject to aninitial payment equal to Acorda's cost of developing such data, information and regulatory files and to ongoing royalty payments to Acorda. Subject tothe termination of the license agreement, licenses granted under the license agreement terminate on a country-by-country basis on the later of(i) September 2018 or (ii) the expiration of the last to expire of our patents or the existence of a threshold level of competition in the marketplace. Under our commercial manufacturing supply agreement with Acorda, we manufacture and supply AMPYRA/FAMPYRA for Acorda (and itssub-licensees). Under the terms of the agreement, Acorda may obtain up to 25% of its total annual requirements of product from a second-sourcemanufacturer. We receive manufacturing royalties equal to 8% of net selling price for all product manufactured by us and a compensating payment forproduct manufactured and supplied by a third party. We may terminate the supply agreement upon 12 months' prior written notice to Acorda, and eitherparty may terminate the supply agreement following a material and uncured breach of the supply or license agreement or the entry into bankruptcy ordissolution proceedings of the other party. In addition, subject to early termination of the supply agreement noted above, the supply agreementterminates upon the expiry or termination of the license agreement. In January 2011, we entered into a development and supplemental agreement to our amended and restated license agreement with Acorda. Underthe terms of this agreement, we granted Acorda the right, either with us or with a third party, in each case in accordance with certain terms andconditions, to develop new formulations of dalfampridine or other aminopyridines. Under the terms of the agreement, Acorda has the right to selecteither a formulation developed by us or by a third party for commercialization. We are entitled to development fees we incur in developing formulationsunder the development and supplemental agreement and, if Acorda selects and commercializes any such formulation, to milestone payments (for newindications if not previously paid), license revenues and royalties in accordance with our amended and restated license agreement for the product, andeither manufacturing fees as a percentage of net selling price for product manufactured by us or compensating fees for product manufactured by thirdparties. If, under the development and supplemental agreement, Acorda selects a formulation not developed by us, then we will be entitled to variouscompensation payments and have the first option to manufacture such third party formulation. The development and supplemental agreement expiresupon the expiry or termination of the amended and restated license agreement and may be earlier terminated by either party following an uncured breachof the agreement by the other party. Acorda's financial obligations under this development and supplemental agreement continue for a minimum of ten years from the first commercialsale of such new formulation, and may extend for a longer period of time, depending on the intellectual property rights protecting the formulation,regulatory exclusivity and/or the absence of significant market competition. These financial obligations survive termination.Bristol-Myers In May 2000, we entered into a development and license agreement with Amylin, now a wholly-owned subsidiary of Bristol-Myers, for thedevelopment of exendin products falling within the scope of our patents, which include the once-weekly formulation of exenatide, BYDUREON.Pursuant to the development and license agreement, Bristol-Myers has an exclusive, worldwide license to our polymer-based microsphere technologyfor the development and commercialization of injectable extended-release formulations of exendins and other related compounds. We receive fundingfor research and development and will also receive royalty payments based on future product sales. Upon the achievement of certain development andcommercialization goals, we received milestone payments consisting of cash and warrants for Amylin common stock. In October 2005 and in July2006, we amended the development and license agreement. Under the amended agreement (i) we are15Table of Contentsresponsible for formulation and are principally responsible for non-clinical development of any products that may be developed pursuant to theagreement and for manufacturing these products for use in early-phase clinical trials, and (ii) we transferred certain of our technology related to themanufacture of BYDUREON to Amylin and agreed to the manufacture of BYDUREON by Bristol-Myers. Under our agreement, Bristol-Myers is responsible for commercializing exenatide products, including BYDUREON, in the U.S. and for U.S.regulatory matters relating to exenatide products, including conducting clinical trials and securing regulatory approvals. In April 2013, Bristol-Myersand AstraZeneca announced that the companies had completed their assumption of all rights related to BYETTA and BYDUREON from Eli Lilly &Company ("Lilly"), Amylin's former worldwide collaboration partner with respect to exenatide products. Through their diabetes collaboration, Bristol-Myers and AstraZeneca co-develop and market Amylin's portfolio of products, including BYDUREON. Until December 31, 2021, we will receive royalties equal to 8% of net sales from the first 40 million units of BYDUREON sold in any particularcalendar year and 5.5% of net sales from units sold beyond the first 40 million units for that calendar year. Thereafter, during the term of thedevelopment and license agreement, we will receive royalties equal to 5.5% of net sales of products sold. We received a $7.0 million milestone paymentin July 2011 upon the first commercial sale of BYDUREON in the EU, and we received a $7.0 million milestone payment upon the first commercialsale of BYDUREON in the U.S. BYDUREON was launched in the U.S. in February 2012. The development and license agreement terminates on the later of (i) 10 years from the first commercial sale of the last of the products covered bythe development and license agreement, or (ii) the expiration or invalidation of all of our patents covering such product. Upon termination, all licensesbecome non-exclusive and royalty-free. Bristol-Myers may terminate the development and license agreement for any reason upon 180 days' writtennotice to us. In addition, either party may terminate the development and license agreement upon a material default or breach by the other party that is notcured within 60 days after receipt of written notice specifying the default or breach.Other ArrangementsCivitas Therapeutics, Inc. In December 2010, we entered into an asset purchase and license agreement and equity investment agreement with Civitas Therapeutics, Inc.("Civitas"). Under the terms of these agreements, we sold, assigned and transferred to Civitas our right, title and interest in our pulmonary patentportfolio and certain of our pulmonary drug delivery equipment, instruments, contracts and technical and regulatory documentation and licensed certainrelated know-how in exchange for 15% of the issued shares of the Series A Preferred Stock of Civitas and a royalty on future sales of any productsdeveloped using this pulmonary drug delivery technology. Civitas undertook a subsequent Series A Preferred Stock sale, in which we did notparticipate. Civitas also entered into an agreement to sublease our pulmonary manufacturing facility located in Chelsea, Massachusetts and has an optionto purchase our pulmonary manufacturing equipment located at this facility. In addition, we have a seat on the Civitas board of directors. In December2012, we paid Civitas $1.1 million for a promissory note which is convertible into shares of its Series B Preferred Stock. Commencing six months after its effective date, Civitas may terminate the asset purchase and license agreement for any reason upon 90 days'written notice to us. We may terminate the asset purchase and license agreement for default in the event Civitas does not meet certain minimumdevelopment performance obligations. Either party may terminate the asset purchase and license agreement upon a material default or breach by the otherparty that is not cured within 45 days after receipt of written notice specifying the default or breach.16Table of ContentsProprietary Product Platforms Our proprietary product platforms, which include technologies owned and exclusively licensed to us, address several important developmentopportunities. We have used these technologies as platforms to establish drug development, clinical development and regulatory expertise.Injectable Extended-Release Microsphere Technology Our injectable extended-release technology allows us to encapsulate small molecule pharmaceuticals, peptides and proteins, in microspheres madeof common medical polymers. The technology is designed to enable novel formulations of pharmaceuticals by providing controlled, extended release ofdrugs over time. Drug release from the microsphere is controlled by diffusion of the drug through the microsphere and by biodegradation of thepolymer. These processes can be modulated through a number of formulation and fabrication variables, including drug substance and microsphereparticle sizing and choice of polymers and excipients.LinkeRx Technology The long-acting LinkeRx technology platform is designed to enable the creation of extended-release injectable versions of antipsychotic therapiesand may also be useful in other disease areas in which long action may provide therapeutic benefits. The technology uses proprietary linker-tailchemistry to create New Molecular Entities ("NMEs") derived from known agents. These NMEs are designed to have improved clinical utility,manufacturing and ease-of-use compared to other long-acting medications.NanoCrystal Technology Our NanoCrystal technology is applicable to poorly water-soluble compounds and involves formulating and stabilizing drugs into particles that arenanometers in size. A drug in NanoCrystal form can be incorporated into a range of common dosage forms and administration routes, including tablets,capsules, inhalation devices and sterile forms for injection, with the potential for enhanced oral bioavailability, increased therapeutic effectiveness,reduced/eliminated fed/fasted variability, and sustained duration of intravenous/intramuscular release.Oral Controlled Release Technology Our OCR technologies are used to formulate, develop and manufacture oral dosage forms of pharmaceutical products that improve and control therelease characteristics and efficacy of standard dosage forms. Our OCR platform includes technologies for tailored pharmacokinetic profiles including SODAS® technology, IPDAS® technology, CODAS®technology and the MXDAS® drug absorption system, each as described below:•SODAS Technology: SODAS (Spheroidal Oral Drug Absorption System) technology involves producing uniform spherical beads of1 mm to 2 mm in diameter containing drug plus excipients and coated with product-specific modified-release polymers. Varying thenature and combination of polymers within a selectively permeable membrane enables varying degrees of modified release dependingupon the required product profile. •CODAS Technology: CODAS (Chronotherapeutic Oral Drug Absorption System) enables the delayed onset of drug releaseincorporating the use of specific polymers, resulting in a drug release profile that more accurately complements circadian patterns.17Table of Contents•IPDAS Technology: IPDAS (Intestinal Protective Drug Absorption System) technology conveys gastrointestinal protection by a widedispersion of drug candidates in a controlled and gradual manner, through the use of numerous high-density controlled-release beadscompressed into a tablet form. Release characteristics are modified by the application of polymers to the micro matrix and subsequentcoatings, which form a rate-limiting semi-permeable membrane. •MXDAS Technology: MXDAS (Matrix Drug Absorption System) formulates the drug candidate in a hydrophilic matrix andincorporates one or more hydrophilic matrix-forming polymers into a solid oral dosage form, which controls the release of drug througha process of diffusion and erosion in the gastrointestinal tract.Manufacturing and Product Supply We own and occupy manufacturing, office and laboratory facilities in: Wilmington, Ohio; Athlone, Ireland; and Gainesville, Georgia. We eitherpurchase active drug product from third parties or receive it from our third-party collaborators to formulate product using our technologies. Themanufacture of our products for clinical trials and commercial use is subject to cGMP and other regulatory agency regulations. Our manufacturing anddevelopment capabilities include formulation through process development, scale-up and full-scale commercial manufacturing and specializedcapabilities for the development and manufacturing of controlled substances. Although some materials for our drug products are currently available from a single source or a limited number of qualified sources, we attempt toacquire an adequate inventory of such materials, establish alternative sources and/or negotiate long-term supply arrangements. We believe we do nothave any significant issues in finding suppliers. However, we cannot be certain that we will continue to be able to obtain long-term supplies of ourmanufacturing materials. Our third-party service providers involved in the manufacture of our products are subject to inspection by the FDA or comparable agencies inother jurisdictions. Any delay, interruption or other issues that arise in the acquisition of active pharmaceutical ingredients ("API"), manufacture, fill-finish, packaging, or storage of our products or product candidates, including as a result of a failure of our facilities or the facilities or operations of thirdparties to pass any regulatory agency inspection, could significantly impair our ability to sell our products or advance our development efforts, as thecase may be. For information about risks relating to the manufacture of our products and product candidates, see "Item 1A—Risk Factors" andspecifically those sections entitled "—Our revenues largely depend on the actions of our third-party collaborators, and if they are not effective, ourrevenues could be materially adversely affected," "—We are subject to risks related to the manufacture of our products," "—We rely on third parties toprovide services in connection with the manufacture and distribution of our products," "—If we or our third-party providers fail to meet the stringentrequirements of governmental regulation in the manufacture of our products, we could incur substantial remedial costs and a reduction in sales and/orrevenues" and "—We rely heavily on collaborative partners in the commercialization and continued development of our products."Commercial Products We manufacture RISPERDAL CONSTA, VIVITROL and polymer for BYDUREON in our Wilmington, Ohio facility. We are currentlyoperating two RISPERDAL CONSTA lines and one VIVITROL line at commercial scale. Janssen has granted us an option, exercisable upon 30 days'advance written notice, to purchase the most recently constructed and validated RISPERDAL CONSTA manufacturing line at its then-current net bookvalue. We source our packaging operations for VIVITROL to a third-party contractor. Janssen is responsible for packaging operations forRISPERDAL CONSTA. The facility has been inspected by U.S., European (MHRA), Japanese,18Table of ContentsBrazilian and Saudi Arabian regulatory authorities for compliance with required cGMP standards for continued commercial manufacturing. We manufacture AMPYRA/FAMPYRA, RAPAMUNE and other products in our Athlone, Ireland facility. During fiscal year 2013, this facilitywas inspected by U.S., Irish, Brazilian and Korean regulatory authorities for compliance with required cGMP standards for continued commercialmanufacturing. We manufacture FOCALIN XR, RITALIN LA, AVINZA, VERAPAMIL and other products in our Gainesville, Georgia facility. The facility hasbeen inspected by U.S., Danish, Turkish and Brazilian regulatory authorities for compliance with required cGMP standards for continued commercialmanufacturing. For more information about our manufacturing facilities, see "Item 2—Properties."Clinical Products We have established, and are operating, facilities with the capability to produce clinical supplies of our injectable extended-release products at ourWilmington, Ohio facility; our NanoCrystal and OCR technology products at our Athlone, Ireland facility; and our OCR technology products at ourGainesville, Georgia facility. We have also contracted with third-party manufacturers to formulate certain products for clinical use. We require that ourcontract manufacturers adhere to cGMP in the manufacture of products for clinical use.Research & Development We devote significant resources to R&D programs. We focus our R&D efforts on finding novel therapeutics in areas of high unmet medical need.Our R&D efforts include, but are not limited to, areas such as pharmaceutical formulation, analytical chemistry, process development, engineering,scale-up and drug optimization/delivery. Please see "Management's Discussion and Analysis of Financial Condition and Results of Operations—Results of Operations of Alkermes" for our R&D expenditures for our prior three fiscal years.Permits and Regulatory Approvals We hold various licenses in respect of our manufacturing activities conducted in Wilmington, Ohio; Athlone, Ireland; and Gainesville, Georgia.The primary licenses held in this regard are FDA Registrations of Drug Establishment and Drug Enforcement Administration ("DEA"), ControlledSubstance Registration in respect of our Gainesville facility. We also hold a Manufacturers Authorization (No. M516), an Investigational MedicinalProducts Manufacturers Authorization (No. IMP008) and Certificates of Good Manufacturing Practice Compliance of a Manufacturer (Ref. 2010-096and 2010-097) from the Irish Medicines Board ("IMB") in respect of our Athlone facility, and a number of Controlled Substance Licenses granted bythe IMB. Due to certain U.S. state law requirements, we also hold certain state licenses to cover distribution activities through certain states and not inrespect of any manufacturing activities conducted in those states. We do not generally act as the product authorization holder for products incorporating our drug delivery technologies that have been developed onbehalf of a collaborator. In such cases, our collaborator would hold the relevant authorization from the FDA or other national regulator, and we wouldsupport this authorization by furnishing a copy of the Drug Master File ("DMF"), or the chemistry, manufacturing and controls data to the relevantregulator to prove adequate manufacturing data in respect of the product. We would generally update this information annually with the relevantregulator. In other cases where we are developing proprietary product candidates, such as VIVITROL, we may hold the appropriate regulatorydocumentation ourselves.19Table of ContentsMarketing, Sales and Distribution We are responsible for the marketing of VIVITROL in the U.S. We focus our sales and marketing efforts on specialist physicians in privatepractice and in public treatment systems. We use customary pharmaceutical company practices to market our product and to educate physicians, such assales representatives calling on individual physicians, advertisements, professional symposia, selling initiatives, public relations and other methods. Weprovide customer service and other related programs for our product, such as product-specific websites, insurance research services and order, deliveryand fulfillment services. Our sales force for VIVITROL in the U.S. consists of approximately 70 individuals. VIVITROL is sold directly topharmaceutical wholesalers, specialty pharmacies and a specialty distributor. Product sales of VIVITROL during the fiscal year ended March 31, 2013,to McKesson Corporation, CVS Caremark Corporation, AmerisourceBergen Drug Corporation, and Cardinal Health ("Cardinal"), representedapproximately 17%, 12%, 11% and 11%, respectively, of total VIVITROL sales. Effective April 1, 2009, we entered into an agreement with Cardinal Health Specialty Pharmaceutical Services ("Cardinal SPS"), a division ofCardinal, to provide warehouse, shipping and administrative services for VIVITROL. Our expectation for fiscal year 2014 is to continue to distributeVIVITROL through Cardinal SPS. Under our collaboration agreements with Janssen, Bristol-Myers, Acorda and other collaboration partners, these companies are responsible for thecommercialization of any products developed thereunder if and when regulatory approval is obtained.Competition We face intense competition in the development, manufacture, marketing and commercialization of our products and product candidates from manyand varied sources, such as academic institutions, government agencies, research institutions and biotechnology and pharmaceutical companies,including other companies with similar technologies. Some of these competitors are also our collaborative partners, who control the commercializationof products for which we receive manufacturing and royalty revenues. These competitors are working to develop and market other systems, products,vaccines and other methods of preventing or reducing disease, and new small-molecule and other classes of drugs that can be used with or without adrug delivery system. The biotechnology and pharmaceutical industries are characterized by intensive research, development and commercialization efforts and rapid andsignificant technological change. Many of our competitors are larger and have significantly greater financial and other resources than we do. We expectour competitors to develop new technologies, products and processes that may be more effective than those we develop. The development oftechnologically improved or different products or technologies may make our product candidates or product platforms obsolete or noncompetitivebefore we recover expenses incurred in connection with their development or realize any revenues from any commercialized product. There are other companies developing extended-release product platforms. In many cases, there are products on the market or in development thatmay be in direct competition with our products or product candidates. In addition, we know of new chemical entities that are being developed that, ifsuccessful, could compete against our product candidates. These chemical entities are being designed to work differently than our product candidatesand may turn out to be safer or to be more effective than our product candidates. Among the many experimental therapies being tested around the world,there may be some that we do not now know of that may compete with our proprietary product platforms or product candidates. Our collaborativepartners could choose a competing technology to use with their drugs instead of one of our product platforms and could develop products that competewith our products.20Table of Contents With respect to our proprietary injectable product platform, we are aware that there are other companies developing extended-release deliverysystems for pharmaceutical products. RISPERDAL CONSTA and INVEGA SUSTENNA may compete with a number of other injectable productsincluding ZYPREXA® RELPREVV® ((olanzapine) For Extended Release Injectable Suspension), which is marketed and sold by Lilly; a once-monthly injectable formulation of ABILIFY® (aripiprazole) developed by Otsuka Pharmaceutical Co., Ltd. ("Otsuka"), which was approved by theFDA in February 2013 and is commercialized under the name ABILIFY MAINTENA™; and other products currently in development. RISPERDALCONSTA and INVEGA SUSTENNA may also compete with new oral compounds currently on the market or being developed for the treatment ofschizophrenia. In the treatment of alcohol dependence, VIVITROL competes with CAMPRAL® (acamprosate calcium) sold by Forest Laboratories andANTABUSE® sold by Odyssey Pharmaceuticals ("Odyssey") as well as currently marketed drugs also formulated from naltrexone. Otherpharmaceutical companies are developing product candidates that have shown some promise in treating alcohol dependence and that, if approved by theFDA, would compete with VIVITROL. In the treatment of opioid dependence, VIVITROL competes with methadone, oral naltrexone, and SUBOXONE® (buprenorphine HCl/naloxoneHCl dehydrate sublingual tablets), SUBOXONE® (buprenorphine/naloxone) Sublingual Film, and SUBUTEX® (buprenorphine HCl sublingualtablets), each of which is marketed and sold by Reckitt Benckiser Pharmaceuticals, Inc. in the U.S. It also competes with generic versions ofSUBUTEX and SUBOXONE sublingual tablets. Other pharmaceutical companies are developing product candidates that have shown promise intreating opioid dependence and that, if approved by the FDA, would compete with VIVITROL. BYDUREON competes with established therapies for market share. Such competitive products include sulfonylureas, metformin, insulins,thiazolidinediones, glinides, dipeptidyl peptidase type IV inhibitors, insulin sensitizers, alpha-glucosidase inhibitors and sodium-glucose transporter-2inhibitors. BYDUREON also competes with other glucagon-like peptide-1 ("GLP-1") agonists, including VICTOZA® (liraglutide (rDNA origin)injection), which is marketed and sold by Novo Nordisk A/S. Other pharmaceutical companies are developing product candidates for the treatment oftype 2 diabetes that, if approved by the FDA, could compete with BYDUREON. AMPYRA/FAMPYRA is, to our knowledge, the first product that is approved as a treatment to improve walking in patients with MS. However,there are a number of FDA-approved therapies for MS disease management that seek to reduce the frequency and severity of exacerbations or slow theaccumulation of physical disability for people with certain types of MS. These products include AVONEX® from Biogen Idec, BETASERON® fromBayer HealthCare Pharmaceuticals, COPAXONE® from Teva Pharmaceutical Industries Ltd., REBIF® from Merck Serono, TYSABRI® andTECFIDERATM from Biogen Idec,, GILENYA® and EXTAVIA® from Novartis AG, and AUBAGIO® from Sanofi-Aventis. With respect to our NanoCrystal technology, we are aware that other technology approaches similarly address poorly water soluble drugs. Theseapproaches include nanoparticles, cyclodextrins, lipid-based self-emulsifying drug delivery systems, dendrimers and micelles, among others, any ofwhich could limit the potential success and growth prospects of products incorporating our NanoCrystal technology. In addition, there are manycompeting technologies to our OCR technology, some of which are owned by large pharmaceutical companies with drug delivery divisions and other,smaller drug-delivery-specific companies.Patents and Proprietary Rights Our success will be dependent, in part, on our ability to obtain and maintain patent protection for our product candidates and those of ourcollaborators, to maintain trade secret protection and to operate without infringing upon the proprietary rights of others. We have a proprietary portfolioof21Table of Contentspatent rights and exclusive licenses to patents and patent applications. We have filed numerous patent applications in the U.S. and in other countriesdirected to compositions of matter as well as processes of preparation and methods of use, including applications relating to each of our deliverytechnologies. We own more than 200 issued U.S. patents. In the future, we plan to file additional patent applications in the U.S. and in other countriesdirected to new or improved products and processes. We intend to file additional patent applications when appropriate and defend our patent positionaggressively. Our OCR technology is protected by a patent estate including patents and patent applications filed worldwide. Some of our OCR patent familiesare product specific whereas others cover generic delivery platforms (e.g., different release profiles, taste masking, etc.). The latest of the patentscovering AMPYRA/FAMPYRA, which incorporates our OCR technology, expires in 2027 in the U.S. and 2025 in Europe. Our NanoCrystal technology patent portfolio contains a number of patents granted throughout the world, including the U.S. and countries outsideof the U.S. We also have a significant number of pending patent applications covering our NanoCrystal technology. The latest of the patents coveringINVEGA SUSTENNA expires in 2019 in the U.S. and 2018 in the EU. Additional pending applications may provide a longer period of patentcoverage, if granted. We have filed patent applications worldwide that cover our microsphere technology and have a significant number of patents and pending patentapplications covering our microsphere technology. The latest of our patents covering VIVITROL, RISPERDAL CONSTA and BYDUREON expire in2029, 2023 and 2025 in the U.S., respectively, and 2021, 2021 and 2024 in Europe, respectively. We also have patent protection for our KeyDevelopment Programs. U.S. Patent No. 8,431,576, which issued in April 2013, covers a class of compounds that includes aripiprazole lauroxil andexpires in 2030 in the U.S. U.S. Patent No. 7,262,298, which covers a class of compounds that includes the opioid modulators in each of the ALKS5461 and ALKS 3831 combination products, expires in 2025 in the U.S. We have exclusive rights through licensing agreements with third parties to issued U.S. patents, a number of U.S. patent applications andcorresponding patents outside the U.S. and patent applications in many countries, subject in certain instances to the rights of the U.S. government to usethe technology covered by such patents and patent applications. Under certain licensing agreements, we are responsible for patent expenses, and we payannual license fees and/or minimum annual royalties. In addition, under these licensing agreements, we are obligated to pay royalties on future sales ofproducts, if any, covered by the licensed patents. We know of several U.S. patents issued to other parties that may relate to our products and product candidates. The manufacture, use, offer forsale, sale or import of some of our product candidates might be found to infringe on the claims of these patents. A party might file an infringementaction against us. The cost of defending such an action is likely to be high, and we might not receive a favorable ruling. We also know of patent applications filed by other parties in the U.S. and various other countries that may relate to some of our product candidatesif issued in their present form. The patent laws of the U.S. and other countries are distinct, and decisions as to patenting, validity of patents andinfringement of patents may be resolved differently in different countries. If patents are issued to any of these applicants, we or our collaborators maynot be able to manufacture, use, offer for sale or sell some of our product candidates without first getting a license from the patent holder. The patentholder may not grant us a license on reasonable terms, or it may refuse to grant us a license at all. This could delay or prevent us from developing,manufacturing or selling those of our product candidates that would require the license. We try to protect our proprietary position by filing patent applications in the U.S. and in other countries related to our proprietary technology,inventions and improvements that are important to the22Table of Contentsdevelopment of our business. Because the patent position of biotechnology and pharmaceutical companies involves complex legal and factual questions,enforceability of patents cannot be predicted with certainty. The ultimate degree of patent protection that will be afforded to biotechnology products andprocesses, including ours, in the U.S. and in other important markets, remains uncertain and is dependent upon the scope of protection decided upon bythe patent offices, courts and lawmakers in these countries. Patents, if issued, may be challenged, invalidated or circumvented. Thus, any patents that weown or license from others may not provide any protection against competitors. Our pending patent applications, those we may file in the future, orthose we may license from third parties, may not result in patents being issued. If issued, they may not provide us with proprietary protection orcompetitive advantages against competitors with similar technology. Furthermore, others may independently develop similar technologies or duplicateany technology that we have developed outside the scope of our patents. The laws of certain countries do not protect our intellectual property rights tothe same extent as do the laws of the U.S. We are involved as a plaintiff in various Paragraph IV litigations in the U.S. and a similar suit in France in respect of three different products:TRICOR 145; FOCALIN XR; and MEGACE ES. We also rely on trade secrets, know-how and technology, which are not protected by patents, to maintain our competitive position. We try toprotect this information by entering into confidentiality agreements with parties that have access to it, such as our corporate partners, collaborators,employees and consultants. Any of these parties may breach the agreements and disclose our confidential information or our competitors might learn ofthe information in some other way. If any trade secret, know-how or other technology not protected by a patent were to be disclosed to, orindependently developed by, a competitor, such event could materially adversely affect our business, results of operations, cash flows and financialcondition. For more information, see "Risk Factors—Risks Related to Our Business." Our trademarks, including VIVITROL, are important to us and are generally covered by trademark applications or registrations in the U.S. Patentand Trademark Office and the patent or trademark offices of other countries. Our partnered products also use trademarks that are owned by ourpartners, such as the marks RISPERDAL CONSTA and INVEGA SUSTENNA, which are registered trademarks of Johnson & Johnson Corp.,BYDUREON, which is a trademark of Amylin, and AMPYRA and FAMPYRA, which are registered trademarks of Acorda. Trademark protectionvaries in accordance with local law, and continues in some countries as long as the mark is used and in other countries as long as the mark is registered.Trademark registrations generally are for fixed but renewable terms.23Table of ContentsRevenues and Assets by Region For fiscal years 2013, 2012 and 2011, our revenue and assets are presented below by geographical area.RegulatoryRegulation of Pharmaceutical ProductsUnited States Our current and contemplated activities, and the products and processes that result from such activities, are subject to substantial governmentregulation. Before new pharmaceutical products may be sold in the U.S., preclinical studies and clinical trials of the products must be conducted and theresults submitted to the FDA for approval. Clinical trial programs must establish efficacy, determine an appropriate dose and regimen, and define theconditions for safe use. This is a high-risk process that requires stepwise clinical studies in which the candidate product must successfully meetpredetermined endpoints. In the U.S., the results of the preclinical and clinical testing of a product are then submitted to the FDA in the form of aBiologics License Application ("BLA"), or an NDA. In response to a BLA or NDA, the FDA may grant marketing approval, request additionalinformation or deny the application if it determines the application does not provide an adequate basis for approval. The receipt of regulatory approvaloften takes a number of years, involves the expenditure of substantial resources and depends on a number of factors, including the severity of thedisease in question, the availability of alternative treatments, potential safety signals observed in preclinical or clinical tests, and the risks and benefitsdemonstrated in clinical trials. It is impossible to predict with any certainty whether and when the FDA will grant marketing approval. The FDA mayrequire larger or additional studies or request other scientific or technical information about the product, and these additional requirements may lead tounanticipated delay or expense. Even if a product is approved, the approval may be subject to limitations (discussed below) based on the FDA'sinterpretation of the data. The FDA has developed four distinct approaches intended to make therapeutically important drugs available as rapidly as possible, especially whenthe drugs are the first available treatment or have advantages over existing treatments: accelerated approval; fast track; breakthrough therapy; and priorityreview. In the U.S., the FDA may grant "accelerated approval" status to products that treat serious or life-threatening illnesses and that provide meaningfultherapeutic benefits to patients over existing24 Year Ended March 31, (In thousands) 2013 2012 2011 Revenue by region: U.S. $380,565 $212,859 $76,700 Ireland 14,455 12,695 805 Rest of world 180,528 164,423 109,135 Assets by region: Current assets: U.S. $248,441 $209,683 $252,960 Ireland 159,544 122,077 — Rest of world 603 7,393 — Long-term assets: U.S. $233,369 $217,406 $199,488 Ireland 828,334 878,658 — Rest of world — — — Table of Contentstreatments. Under this pathway, the FDA may approve a product based on surrogate endpoints, or clinical endpoints other than survival or irreversiblemorbidity. When approval is based on surrogate endpoints or clinical endpoints other than survival or morbidity, the sponsor will be required to conductadditional post-approval clinical studies to verify and describe clinical benefit. Under the accelerated approval regulations, if the FDA concludes that adrug that has been shown to be effective can be safely used only if distribution or use is restricted, it may require certain post-marketing restrictions asnecessary to assure safe use. In addition, for all products approved under accelerated approval, sponsors may be required to submit all copies of theirpromotional materials, including advertisements, to the FDA at least 30 days prior to initial dissemination. The FDA may withdraw approval underaccelerated approval after a hearing if, for instance, post-marketing studies fail to verify any clinical benefit or it becomes clear that restrictions on thedistribution of the product are inadequate to ensure its safe use. In addition, the FDA may grant "fast track" status to products that treat serious diseases or conditions and fill an unmet medical need. Fast track isa process designed to expedite the review of such products by providing, among other things, more frequent meetings with the FDA to discuss theproduct's development plan, more frequent written correspondence from the FDA about trial design, eligibility for accelerated approval, and rollingreview, which allows submission of individually completed sections of an NDA for FDA review before the entire NDA is completed. Fast track statusdoes not ensure that a product will be developed more quickly or receive FDA approval. The FDA may also grant "breakthrough therapy" status to drugs designed to treat, alone or in combination with another drug or drugs, a serious orlife-threatening disease or condition and for which preliminary evidence suggests a substantial improvement over existing therapies. Such drugs neednot address an unmet need, but are nevertheless eligible for expedited review if they offer the potential for an improvement. Breakthrough therapy statusentitles the sponsor to earlier and more frequent meetings with the FDA regarding the development of nonclinical and clinical data and permits the FDAto offer product development or regulatory advice for the purpose of shortening the time to product approval. Breakthrough therapy status does notguarantee that a product will be developed or reviewed more quickly and does not ensure FDA approval. Finally, the FDA may grant "priority review" status to products that offer major advances in treatment or provide a treatment where no adequatetherapy exists. Priority review is intended to reduce the time it takes for the FDA to review a NDA or BLA, with the goal for completing a priorityreview being six months (compared to ten months under standard review). Regardless of the approval pathway employed, the FDA may require a sponsor to conduct additional post-marketing studies as a condition ofapproval to provide data on safety and effectiveness. If a sponsor fails to conduct the required studies, the agency may withdraw its approval. Inaddition, regardless of the approval pathway, if the FDA concludes that a drug that has been shown to be effective can be safely used only ifdistribution or use is restricted, it can mandate post-marketing restrictions as necessary to assure safe use. In such a case, the sponsor may be required toestablish rigorous systems to assure use of the product under safe conditions. These systems are usually referred to as Risk Evaluation and MitigationStrategies ("REMS"). The FDA can impose financial penalties for failing to comply with certain post-marketing commitments, including REMS. Inaddition, any changes to an approved REMS must be reviewed and approved by the FDA prior to implementation. The FDA tracks information on sideeffects and adverse events reported during clinical studies and after marketing approval. Non-compliance with regulatory authorities' safety reportingrequirements may result in civil or criminal penalties. Side effects or adverse events that are reported during clinical trials can delay, impede or preventmarketing approval. Based on new safety information that emerges after approval, the FDA can mandate product labeling changes, impose a newREMS or the addition of elements to an existing REMS, require new post-marketing studies (including additional clinical trials), or suspend orwithdraw approval of the product. These requirements may affect our ability to25Table of Contentsmaintain marketing approval of our products or require us to make significant expenditures to obtain or maintain such approvals. If we seek to makecertain types of changes to an approved product, such as adding a new indication, making certain manufacturing changes, or changing manufacturers orsuppliers of certain ingredients or components, the FDA will need to review and approve such changes in advance. In the case of a new indication, weare required to demonstrate with additional clinical data that the product is safe and effective for a use other than that initially approved. Such regulatoryreviews can result in denial or modification of the planned changes, or requirements to conduct additional tests or evaluations that can substantially delayor increase the cost of the planned changes. In addition, the FDA regulates all advertising and promotion activities for products under its jurisdiction both before and after approval. Acompany can make only those claims relating to safety and efficacy that are approved by the FDA. However, physicians may prescribe legally availabledrugs for uses that are not described in the drug's labeling. Such off-label uses are common across medical specialties and often reflect a physician'sbelief that the off-label use is the best treatment for patients. The FDA does not regulate the behavior of physicians in their choice of treatments, but theFDA regulations do impose stringent restrictions on manufacturers' communications regarding off-label uses. Failure to comply with applicable FDArequirements may subject a company to adverse publicity, enforcement action by the FDA, corrective advertising and the full range of civil and criminalpenalties available to the FDA.Outside the U.S. Our products are marketed in numerous jurisdictions outside the U.S. Most of these jurisdictions have product approval and post-approvalregulatory processes that are similar in principle to those in the U.S. In Europe, there are several tracks for marketing approval, depending on the type ofproduct for which approval is sought. Under the centralized procedure, a company submits a single application to the European Medicines Agency("EMA"). The marketing application is similar to the NDA in the U.S. and is evaluated by the Committee for Medicinal Products for Human Use("CHMP"), the expert scientific committee of the EMA. If the CHMP determines that the marketing application fulfills the requirements for quality,safety, and efficacy, it will submit a favorable opinion to the European Commission ("EC"). The CHMP opinion is not binding, but is typically adoptedby the EC. A marketing application approved by the EC is valid in all member states. In addition to the centralized procedure, Europe also has: (i) a nationalized procedure, which requires a separate application to and approvaldetermination by each country; (ii) a decentralized procedure, whereby applicants submit identical applications to several countries and receivesimultaneous approval; and (iii) a mutual recognition procedure, where applicants submit an application to one country for review and other countriesmay accept or reject the initial decision. Regardless of the approval process employed, various parties share responsibilities for the monitoring,detection, and evaluation of adverse events post-approval, including national authorities, the EMA, the EC, and the marketing authorization holder.Good Manufacturing Processes The FDA, the EMA, the competent authorities of the EU Member States and other regulatory agencies regulate and inspect equipment, facilitiesand processes used in the manufacturing of pharmaceutical and biologic products prior to approving a product. If, after receiving clearance fromregulatory agencies, a company makes a material change in manufacturing equipment, location, or process, additional regulatory review and approvalmay be required. Companies also must adhere to cGMP and product-specific regulations enforced by the FDA following product approval. The FDA,the EMA and other regulatory agencies also conduct regular, periodic visits to re-inspect equipment, facilities and processes following the initialapproval of a product. If, as a result of these inspections, it is determined that our equipment, facilities or processes do not comply with applicableregulations and26Table of Contentsconditions of product approval, regulatory agencies may seek civil, criminal or administrative sanctions and/or remedies against us, including thesuspension of our manufacturing operations.Good Clinical Practices The FDA, the EMA and other regulatory agencies promulgate regulations and standards, commonly referred to as Good Clinical Practices("GCP"), for designing, conducting, monitoring, auditing and reporting the results of clinical trials to ensure that the data and results are accurate andthat the trial participants are adequately protected. The FDA, the EMA and other regulatory agencies enforce GCP through periodic inspections of trialsponsors, principal investigators, trial sites, contract research organizations ("CROs") and institutional review boards. If our studies fail to comply withapplicable GCP, the clinical data generated in our clinical trials may be deemed unreliable, and relevant regulatory agencies may require us to performadditional clinical trials before approving our marketing applications. Noncompliance can also result in civil or criminal sanctions. We rely on thirdparties, including CROs, to carry out many of our clinical trial-related activities. Failure of such third party to comply with GCP can likewise result inrejection of our clinical trial data or other sanctions.Hatch-Waxman Act Under the U.S. Drug Price Competition and Patent Term Restoration Act of 1984 (the "Hatch-Waxman Act"), Congress created an abbreviatedFDA review process for generic versions of pioneer, or brand-name, drug products. The law also provides incentives by awarding, in certaincircumstances, non-patent-related marketing exclusivities to pioneer drug manufacturers. Newly approved drug products and changes to the conditionsof use of approved products may benefit from periods of non-patent-related marketing exclusivity in addition to any patent protection the drug productmay have. The Hatch-Waxman Act provides five years of new chemical entity ("NCE") marketing exclusivity to the first applicant to gain approval of aNDA for a product that contains an active ingredient not found in any other approved product. The FDA is prohibited from accepting any abbreviatedNDA ("ANDA") for a generic drug or 505(b)(2) application for five years from the date of approval of the NCE, or four years in the case of an ANDAor 505(b)(2) application containing a patent challenge. A 505(b)(2) application is an NDA wherein the applicant relies in part on data from clinicalstudies not conducted by or for it and for which the applicant has not obtained a right of reference; this type of application allows the sponsor to rely, atleast in part, on the FDA's findings of safety and/or effectiveness for a previously approved drug. This exclusivity will not prevent the submission orapproval of a full NDA, as opposed to an ANDA or 505(b)(2) application, for any drug, including, for example, a drug with the same active ingredient,dosage form, route of administration, strength and conditions of use. The Hatch-Waxman Act also provides three years of exclusivity for applications containing the results of new clinical investigations, other thanbioavailability studies, essential to the FDA's approval of new uses of approved products, such as new indications, dosage forms, strengths, orconditions of use. However, this exclusivity only protects against the approval of ANDAs and 505(b)(2) applications for the protected use and will notprohibit the FDA from accepting or approving ANDAs or 505(b)(2) applications for other products containing the same active ingredient. The Hatch-Waxman Act requires NDA applicants and NDA holders to provide certain information about patents related to the drug for listing inthe Orange Book. ANDA and 505(b)(2) applicants must then certify regarding each of the patents listed with the FDA for the reference product. Acertification that a listed patent is invalid or will not be infringed by the marketing of the applicant's product is called a "Paragraph IV certification." Ifthe ANDA or 505(b)(2) applicant provides such a notification of patent invalidity or noninfringement, then the FDA may accept the ANDA or505(b)(2) application four years after approval of the NDA. If a Paragraph IV certification is filed and the ANDA or 505(b)(2) application has beenaccepted as a reviewable filing by the FDA, the ANDA or 505(b)(2)27Table of Contentsapplicant must then, within 30 days, provide notice to the NDA holder and patent owner stating that the application has been submitted and providingthe factual and legal basis for the applicant's opinion that the patent is invalid or not infringed. The NDA holder or patent owner may file suit against theANDA or 505(b)(2) applicant for patent infringement. If this is done within 45 days of receiving notice of the Paragraph IV certification, a one-time 30-month stay of the FDA's ability to approve the ANDA or 505(b)(2) application is triggered. The 30-month stay begins at the end of the NDA holder'sdata exclusivity period, or, if data exclusivity has expired, on the date that the patent holder is notified. The FDA may approve the proposed productbefore the expiration of the 30-month stay if a court finds the patent invalid or not infringed, or if the court shortens the period because the parties havefailed to cooperate in expediting the litigation.Sales and Marketing We are subject to various U.S. federal and state laws pertaining to healthcare fraud and abuse, including anti-kickback laws and false claims laws.Anti-kickback laws make it illegal for a prescription drug manufacturer to solicit, offer, receive, or pay any remuneration in exchange for, or to induce,the referral of business, including the purchase or prescription of a particular drug. Due to the broad scope of the U.S. statutory provisions, the generalabsence of guidance in the form of regulations, and few court decisions addressing industry practices, it is possible that our practices might bechallenged under anti-kickback or similar laws. False claims laws prohibit anyone from knowingly and willingly presenting, or causing to be presented,for payment to third-party payors (including Medicare and Medicaid) claims for reimbursed drugs or services that are false or fraudulent, claims foritems or services not provided as claimed, or claims for medically unnecessary items or services. Activities relating to the sale and marketing of ourproducts may be subject to scrutiny under these laws. Violations of fraud and abuse laws may be punishable by criminal and/or civil sanctions,including fines and civil monetary penalties, as well as the possibility of exclusion from federal healthcare programs (including Medicare and Medicaid).In addition, federal and state authorities are paying increased attention to enforcement of these laws within the pharmaceutical industry and privateindividuals have been active in alleging violations of the laws and bringing suits on behalf of the government under the federal civil False Claims Act. Ifwe were subject to allegations concerning, or were convicted of violating, these laws, our business could be harmed. See "Item 1A—Risk Factors" andspecifically those sections entitled "—If we fail to comply with the extensive legal and regulatory requirements affecting the healthcare industry, wecould face increased costs, penalties and a loss of business," "—Revenues generated by sales of our products depend on the availability ofreimbursement from third-party payors, and a reduction in payment rate or reimbursement or an increase in our financial obligation to governmentalpayors could result in decreased sales of our products and revenue" and "—Product liability claims may adversely affect our business." Laws and regulations have been enacted by the federal government and various states to regulate the sales and marketing practices ofpharmaceutical manufacturers. The laws and regulations generally limit financial interactions between manufacturers and health care providers or requiredisclosure to the government and public of such interactions. The laws include federal "sunshine" provisions enacted in 2010 as part of thecomprehensive federal health care reform legislation. The sunshine provisions apply to pharmaceutical manufacturers with products reimbursed undercertain government programs and require those manufacturers to disclose annually to the federal government (for re-disclosure to the public) certainpayments made to physicians and certain other healthcare practitioners or to teaching hospitals. State laws may also require disclosure of pharmaceuticalpricing information and marketing expenditures. Given the ambiguity found in many of these laws and their implementation, our reporting actions couldbe subject to the penalty provisions of the pertinent federal and state laws and regulations.28Table of ContentsPricing and Reimbursement In the U.S. and internationally, sales of our products, including those sold by our collaborators, and our ability to generate revenues on such salesare dependent, in significant part, on the availability and level of reimbursement from third-party payors such as state and federal governments,including Medicare and Medicaid, managed care providers and private insurance plans. Private insurers may also seek to manage cost and utilization byimplementing coverage and reimbursement limitations. These include establishing formularies that govern the products that will be offered and the out-of-pocket obligations for such products. The U.S. government and governments outside the U.S. regularly consider reforming healthcare coverage and costs. Such reform may includechanges to the coverage and reimbursement of our products, which may have a significant impact on our business. Medicaid is a joint federal and stateprogram that is administered by the states for low-income and disabled beneficiaries. Under the Medicaid rebate program, we are required to pay arebate for each unit of product reimbursed by the state Medicaid programs. The amount of the rebate for each product is set by law as the greater of23.1% of average manufacturer price ("AMP") or the difference between AMP and the best price available from us to any commercial or non-federalgovernmental customer. The rebate amount must be adjusted upward where the AMP for a product's first full quarter of sales, when adjusted forincreases in the Consumer Price Index—Urban, is less than the AMP for the current quarter with the upward adjustment equal to the excess amount.The rebate amount is required to be recomputed each quarter based on our report of current AMP and best price for each of our products to the Centersfor Medicare and Medicaid Services ("CMS"). The terms of our participation in the rebate program imposes a requirement for us to report revisions toAMP or best price within a period not to exceed 12 quarters from the quarter in which the data was originally due. Any such revisions could have theimpact of increasing or decreasing our rebate liability for prior quarters, depending on the direction of the revision. In addition, if we were found to haveknowingly submitted false information to the government, the statute provides for civil monetary penalties per item of false information in addition toother penalties available to the government. Medicare is a federal program that is administered by the federal government that covers individuals age 65 and over as well as those with certaindisabilities. Medicare Part B pays physicians who administer our products under a payment methodology using average sales price ("ASP")information. Manufacturers, including us, are required to provide ASP information to the CMS on a quarterly basis. This information is used tocompute Medicare payment rates. The current payment rate for Medicare Part B drugs is ASP plus 6% outside the hospital outpatient setting and ASPplus 4% for most drugs in the hospital outpatient setting. If a manufacturer is found to have made a misrepresentation in the reporting of ASP, thestatute provides for civil monetary penalties for each misrepresentation for each day in which the misrepresentation was applied. Medicare Part D provides coverage to enrolled Medicare patients for self-administered drugs (i.e., drugs that do not need to be injected orotherwise administered by a physician). Medicare Part D is administered by private prescription drug plans approved by the U.S. government and eachdrug plan establishes its own Medicare Part D formulary for prescription drug coverage and pricing, which the drug plan may modify from time-to-time. The prescription drug plans negotiate pricing with manufacturers and may condition formulary placement on the availability of manufacturerdiscounts. Manufacturers, including us, are required to provide a 50% discount on brand name prescription drugs utilized by Medicare Part Dbeneficiaries when those beneficiaries reach the coverage gap in their drug benefits. The availability of federal funds to pay for our products under the Medicaid Drug Rebate Program and Medicare Part B requires that we extenddiscounts to certain purchasers under the Public Health Services ("PHS") pharmaceutical pricing program. Purchasers eligible for discounts include avariety of community health clinics, other entities that receive health services grants from PHS, and hospitals that serve a disproportionate share offinancially needy patients.29Table of Contents We also make our products available for purchase by authorized users of the Federal Supply Schedule ("FSS") of the General ServicesAdministration pursuant to our FSS contract with the Department of Veterans Affairs. Under the Veterans Health Care Act of 1992 (the "VHC Act"),we are required to offer deeply discounted FSS contract pricing to four federal agencies: the Department of Veterans Affairs; the Department ofDefense; the Coast Guard; and the PHS (including the Indian Health Service)—for federal funding to be made available for reimbursement of any ofour products by such federal agencies and certain federal grantees. Coverage under Medicaid, the Medicare Part B program and the PHS pharmaceuticalpricing program is also conditioned upon FSS participation. FSS pricing is negotiated periodically with the Department of Veterans Affairs. FSSpricing is intended not to exceed the price that we charge our most-favored non-federal customer for a product. In addition, prices for drugs purchasedby the Veterans Administration, Department of Defense (including drugs purchased by military personnel and dependents through the TriCare retailpharmacy program), Coast Guard, and PHS are subject to a cap on pricing equal to 76% of the non-federal average manufacturer price ("non-FAMP").An additional discount applies if non-FAMP increases more than inflation (measured by the Consumer Price Index—Urban). In addition, if we arefound to have knowingly submitted false information to the government, the VHC Act provides for civil monetary penalties per false item ofinformation in addition to other penalties available to the government.Outside the U.S. Within the EU, products are paid for by a variety of payors, with governments being the primary source of payment. Governments may determineor influence reimbursement of products. Governments may also set prices or otherwise regulate pricing. Negotiating prices with governmentalauthorities can delay commercialization of products. Governments may use a variety of cost-containment measures to control the cost of products,including price cuts, mandatory rebates, value-based pricing, and reference pricing (i.e., referencing prices in other countries and using those referenceprices to set a price). Recent budgetary pressures in many EU countries are causing governments to consider or implement various cost-containmentmeasures, such as price freezes, increased price cuts and rebates, and expanded generic substitution and patient cost-sharing. If budget pressurescontinue, governments may implement additional cost-containment measures.Other Regulations Foreign Corrupt Practices Act: We are subject to the U.S. Foreign Corrupt Practices Act ("FCPA"), which prohibits U.S. corporations and theirrepresentatives from paying, offering to pay, promising, authorizing, or making payments of anything of value to any foreign government official,government staff member, political party, or political candidate in an attempt to obtain or retain business or to otherwise influence a person working inan official capacity. In many countries, the healthcare professionals we regularly interact with may meet the FCPA's definition of a foreign governmentofficial. The FCPA also requires public companies to make and keep books and records that accurately and fairly reflect their transactions and to deviseand maintain an adequate system of internal accounting controls. We are also subject to the UK Bribery Act, which proscribes giving and receiving bribes in the public and private sectors, bribing a foreign publicofficial, and failing to have adequate procedures to prevent employees and other agents from giving bribes. Foreign corporations that conduct businessin the UK generally will be subject to the Bribery Act. Penalties under the Bribery Act include potentially unlimited fines for corporations and criminalsanctions for corporate officers under certain circumstances. Environmental, Health and Safety Laws: Our operations are subject to complex and increasingly stringent environmental, health and safety lawsand regulations in the countries where we operate and, in particular, where we have manufacturing facilities, namely the U.S. and Ireland.Environmental and health and safety authorities in the relevant jurisdictions, including the Environmental Protection30Table of ContentsAgency and the Occupational Safety and Health Administration in the U.S. and the Environmental Protection Agency and the Health and SafetyAuthority in Ireland, administer laws which regulate, among other matters, the emission of pollutants into the air (including the workplace), thedischarge of pollutants into bodies of water, the storage, use, handling and disposal of hazardous substances, the exposure of persons to hazardoussubstances, and the general health, safety and welfare of employees and members of the public. In certain cases, such laws and regulations may imposestrict liability for pollution of the environment and contamination resulting from spills, disposals or other releases of hazardous substances or wasteand/or any migration of such hazardous substances or waste. Costs, damages and/or fines may result from the presence, investigation and remediationof such contamination at properties currently or formerly owned, leased or operated by us and/or off-site locations, including where we have arrangedfor the disposal of hazardous substances or waste. In addition, we may be subject to third-party claims, including for natural resource damages, personalinjury and property damage, in connection with such contamination. Other Laws: We are subject to a variety of financial disclosure and securities trading regulations as a public company in the U.S., including lawsrelating to the oversight activities of the Securities and Exchange Commission ("SEC") and the regulations of the NASDAQ, on which our shares aretraded. We are also subject to various laws, regulations and recommendations relating to safe working conditions, laboratory practices, the experimentaluse of animals, and the purchase, storage, movement, import and export and use and disposal of hazardous or potentially hazardous substances used inconnection with our research work.Employees As of May 8, 2013, we had approximately 1,230 full-time employees. A significant number of our management and professional employees haveprior experience with pharmaceutical, biotechnology or medical product companies. We believe that we have been successful in attracting skilled andexperienced scientific and senior management personnel; however, competition for such personnel is intense. None of our employees is covered by acollective bargaining agreement. We consider our relations with our employees to be good.Available Information We were incorporated in Ireland on May 4, 2011 as a private limited company, under the name Antler Science Two Limited (registrationnumber 498284). On July 25, 2011, Antler Science Two Limited was re-registered as a public limited company under the name Antler Science Two plc.On September 14, 2011, we were re-named Alkermes plc. Our principal executive offices are located at Connaught House, 1 Burlington Road, Dublin 4, Ireland. Our telephone number is +353-1-772-8000and our website address is www.alkermes.com. Information that is contained in, and can be accessed through, our website is not incorporated into, anddoes not form a part of, this Annual Report. We make available free of charge through the Investors section of our website our Annual Reports onForm 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and all amendments to those reports as soon as reasonably practicableafter such material is electronically filed with, or furnished to, the SEC. We also make available on our website (i) the charters for the committees of ourBoard of Directors, including the Audit and Risk Committee, Compensation Committee, and Nominating and Corporate Governance Committee, and(ii) our Code of Business Conduct and Ethics governing our directors, officers and employees. We intend to disclose on our website any amendmentsto, or waivers from, our Code of Business Conduct and Ethics that are required to be disclosed pursuant to the rules of the SEC. You may read andcopy materials we file with the SEC at the SEC's Public Reference Room at 100 F Street, N.E., Washington, D.C. 20549. You may obtain informationon the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. The SEC maintains an internet site that contains reports, proxyand information statements and other information regarding issuers that file electronically with the SEC at www.sec.gov.31Table of ContentsItem 1A. Risk Factors Investing in our company involves a high degree of risk. In deciding whether to invest in our ordinary shares, you should consider carefully therisks described below in addition to the financial and other information contained in this Annual Report, including the matters addressed under thecaption "Forward-Looking Statements." If any events described by the following risks actually occur, they could materially adversely affect ourbusiness, financial condition or operating results. This could cause the market price of our ordinary shares to decline, and could cause you to lose allor a part of your investment.Our revenues largely depend on the actions of our third-party collaborators, and if they are not effective, our revenues could be materiallyadversely affected. The revenues from the sale of our products may fall below our expectations, the expectations of our partners or those of investors, which couldhave a material adverse effect on our results of operations and the price of our ordinary shares, and will depend on numerous factors, many of which areoutside our control.RISPERDAL CONSTA, AMPYRA/FAMPYRA, BYDUREON AND INVEGA SUSTENNA/XEPLION While we manufacture RISPERDAL CONSTA and AMPYRA/FAMPYRA, we are not involved in the commercialization efforts for thoseproducts. RISPERDAL CONSTA is commercialized by Janssen. AMPYRA/FAMPYRA is commercialized by Acorda in the U.S. and by BiogenIdec outside the U.S. Our revenues depend on manufacturing fees and royalties we receive from Janssen, Acorda and Biogen Idec, each of whichrelates to sales of such products by or on behalf of our partners. Accordingly, our revenues will depend in large part on the efforts of our partners, andwe will not be able to control this. Pursuant to our arrangements with Bristol-Myers and Janssen, we are not responsible for the clinical development, manufacture orcommercialization efforts for BYDUREON or INVEGA SUSTENNA/XEPLION, respectively. For these and other reasons outside of our control, our revenues from the sale of RISPERDAL CONSTA, AMPYRA/FAMPYRA,BYDUREON and INVEGA SUSTENNA/XEPLION may not meet our or our partners' expectations or those of investors.VIVITROL In December 2007, we exclusively licensed the right to commercialize VIVITROL for the treatment of alcohol dependence and opioid dependencein Russia and other countries in the CIS to Cilag. Cilag has primary responsibility for securing all necessary regulatory approvals for VIVITROL andJanssen-Cilag, an affiliate of Cilag, has full responsibility for the commercialization of the product in these countries. We receive manufacturingrevenues, and royalty revenues based upon product sales. Our revenues from the sale of VIVITROL in Russia and countries of the CIS may not besignificant and will depend on numerous factors, many of which are outside of our control.REMAINING COMMERCIAL PORTFOLIO In addition, we are not responsible for, or involved with, the sales and marketing efforts for many of our other products and, in some instances, weare also not involved in their manufacture.We rely heavily on collaborative partners in the commercialization and continued development of our products. Our arrangements with collaborative partners are critical to bringing our products to the market and successfully commercializing them. We rely onthese parties in various respects, including: providing funding for development programs and conducting preclinical testing and clinical trials with32Table of Contentsrespect to new formulations or other development activities for our marketed products; managing the regulatory approval process; and commercializingour products. Our collaborative partners may choose to use their own or other technology to develop an alternative product and withdraw their support of ourproduct, or to compete with our jointly developed product. Alternatively, proprietary products we may develop in the future could compete directly withproducts we developed with our collaborative partners. Disputes may also arise between us and a collaborative partner and may involve the ownershipof technology developed during a collaboration or other issues arising out of collaborative agreements. Such a dispute could delay the related programor result in expensive arbitration or litigation, which may not be resolved in our favor. Most of our collaborative partners can terminate their agreements with us without cause, and we cannot guarantee that any of these relationshipswill continue. Failure to make or maintain these arrangements or a delay in a collaborative partner's performance, or factors that may affect a partner'ssales, may materially adversely affect our business, financial condition, cash flows and results of operations.Our revenues may be lower than expected as a result of failure by the marketplace to accept our products or for other factors. We cannot be assured that our products will be, or will continue to be, accepted in the U.S. or in any markets outside the U.S. or that sales of ourproducts will not decline or cease in the future. A number of factors may cause revenues from sales of our products to grow at a slower than expectedrate, or even to decrease or cease, including:•perception of physicians and other members of the healthcare community as to our products' safety and efficacy relative to that ofcompeting products; •the cost-effectiveness of our products; •patient and physician satisfaction with our products; •the successful manufacture of our commercial products on a timely basis; •the cost and availability of raw materials necessary for the manufacture of our products; •the size of the markets for our products; •reimbursement policies of government and third-party payors; •unfavorable publicity concerning our products, similar classes of drugs or the industry generally; •the introduction, availability and acceptance of competing treatments, including treatments marketed and sold by our collaborators; •the reaction of companies that market competitive products; •adverse event information relating to our products or to similar classes of drugs; •changes to the product labels of our products, or of products within the same drug classes, to add significant warnings or restrictions onuse; •our continued ability to access third parties to vial, label and distribute our products on acceptable terms; •the unfavorable outcome of patent litigation, including so-called "Paragraph IV" litigation, related to any of our products; •regulatory developments related to the manufacture or continued use of our products, including the issuance of a REMS by the FDA;33Table of Contents•the extent and effectiveness of the sales and marketing and distribution support our products receive; •our collaborators' decisions as to the timing of product launches, pricing and discounting; •disputes with our collaborators relating to the marketing and sale of partnered products; •exchange rate valuations and fluctuations; and •any other material adverse developments with respect to the commercialization of our products. Our revenues will also fluctuate from quarter to quarter based on a number of other factors, including the acceptance of our products in themarketplace, our partners' orders, the timing of shipments, our ability to manufacture successfully, our yield and our production schedule. The unit coststo manufacture our products may be higher than anticipated if certain volume levels are not achieved. In addition, we may not be able to supply theproducts in a timely manner or at all.We are subject to risks related to the manufacture of our products. The manufacture of pharmaceutical products is a highly complex process in which a variety of difficulties may arise from time to time including,but not limited to, product loss due to material failure, equipment failure, vendor error, operator error, labor shortages, inability to obtain material,equipment or transportation, physical or electronic security breaches, natural disasters and many other factors. Problems with manufacturing processescould result in product defects or manufacturing failures, which could require us to delay shipment of products or recall products previously shipped, orcould impair our ability to expand into new markets or supply products in existing markets. We may not be able to resolve any such problems in atimely fashion, if at all. We rely solely on our manufacturing facility in Wilmington, Ohio for the manufacture of RISPERDAL CONSTA, VIVITROL, polymer forBYDUREON and some of our product candidates. We rely on our manufacturing facility in Athlone, Ireland for the manufacture ofAMPYRA/FAMPYRA and some of our other products using our NanoCrystal and OCR technologies. We rely on our manufacturing facility inGainesville, Georgia for the manufacture of RITALIN LA/FOCALIN XR and some of our other products using our OCR technologies. Due to regulatory and technical requirements, we have limited ability to shift production among our facilities or to outsource any part of ourmanufacturing to third parties. If we cannot produce sufficient commercial quantities of our products to meet demand, there are currently very few, ifany, third-party manufacturers capable of manufacturing our products as contract suppliers. We cannot be certain that we could reach agreement onreasonable terms, if at all, with those manufacturers. Even if we were to reach agreement, the transition of the manufacturing process to a third party toenable commercial supplies could take a significant amount of time and money, and may not be successful. Our manufacturing facilities also require specialized personnel and are expensive to operate and maintain. Any delay in the regulatory approval ormarket launch of product candidates, or suspension of the sale of our products, to be manufactured in our facilities may cause operating losses as wecontinue to operate these facilities and retain specialized personnel. In addition, any interruption in manufacturing could result in delays in meetingcontractual obligations and could damage our relationships with our collaborative partners, including the loss of manufacturing and supply rights.We rely on third parties to provide services in connection with the manufacture and distribution of our products. We rely on third parties for the timely supply of specified raw materials, equipment, contract manufacturing, formulation or packaging services,product distribution services, customer service activities and product returns processing. Although we actively manage these third-party relationships to34Table of Contentsensure continuity and quality, some events beyond our control could result in the complete or partial failure of these goods and services. Any suchfailure could materially adversely affect our business, financial condition, cash flows and results of operations. The manufacture of products and product components, including the procurement of bulk drug product, packaging, storage and distribution of ourproducts, requires successful coordination among us and multiple third-party providers. For example, we are responsible for the entire supply chain forVIVITROL, up to the sale of final product and including the sourcing of key raw materials and active pharmaceutical agents from third parties. We havelimited experience in managing a complex product distribution network. Issues with our-third party providers, including our inability to coordinate theseefforts, lack of capacity available at such third-party providers or any other problems with the operations of these third-party contractors, could requireus to delay shipment of saleable products, recall products previously shipped or could impair our ability to supply products at all. This could increaseour costs, cause us to lose revenue or market share and damage our reputation and have a material adverse effect on our business, financial condition,cash flows and results of operations. Due to the unique nature of the production of our products, there are several single-source providers of our key raw materials. For example, certainsolvents and kit components used in the manufacture of RISPERDAL CONSTA are single-sourced. We endeavor to qualify new vendors and todevelop contingency plans so that production is not impacted by issues associated with single-source providers. Nonetheless, our business could bematerially and adversely affected by issues associated with single-source providers. We are also dependent in certain cases on third parties to manufacture products. Where the manufacturing rights to the products in which ourtechnologies are applied are granted to or retained by our third-party licensee or approved sub-licensee, we have no control over the manufacturing,supply or distribution of the product.If we or our third-party providers fail to meet the stringent requirements of governmental regulation in the manufacture of our products, wecould incur substantial remedial costs and a reduction in sales and/or revenues. We and our third-party providers are generally required to comply with cGMP and are subject to inspections by the FDA or comparable agenciesin other jurisdictions to confirm such compliance. Any changes of suppliers or modifications of methods of manufacturing require amending ourapplication to the FDA or other regulatory agencies, and ultimate amendment acceptance by such agencies, prior to release of product to the applicablemarketplace. Our inability or the inability of our third-party service providers to demonstrate ongoing cGMP compliance could require us to withdrawor recall products and interrupt commercial supply of our products. Any delay, interruption or other issues that may arise in the manufacture,formulation, packaging or storage of our products as a result of a failure of our facilities or the facilities or operations of third parties to pass anyregulatory agency inspection could significantly impair our ability to develop and commercialize our products. This could increase our costs, cause us tolose revenue or market share and damage our reputation. The FDA and various regulatory agencies outside the U.S. have inspected and approved our commercial manufacturing facilities. We cannotguarantee that the FDA or any other regulatory agencies will approve any other facility we or our suppliers may operate or, once approved, that any ofthese facilities will remain in compliance with cGMP regulations. Any third party we use to manufacture bulk drug product, or package, store ordistribute our products to be sold in the U.S., must be licensed by the FDA. Failure to gain or maintain regulatory compliance with the FDA orregulatory agencies outside the U.S. could materially adversely affect our business, financial condition, cash flows and results of operations.35Table of ContentsRevenues generated by sales of our products depend on the availability of reimbursement from third-party payors, and a reduction in paymentrate or reimbursement or an increase in our financial obligation to governmental payors could result in decreased sales of our products andrevenue. In both U.S. and non-U.S. markets, sales of our products depend, in part, on the availability of reimbursement from third-party payors such asstate and federal governments, including Medicare and Medicaid in the U.S. and similar programs in other countries, managed care providers andprivate insurance plans. Deterioration in the timeliness, certainty and amount of reimbursement for our products, including the existence of barriers tocoverage of our products (such as prior authorization, criteria for use or other requirements), limitations by healthcare providers on how much, or underwhat circumstances, they will prescribe or administer our products or unwillingness by patients to pay any required co-payments could reduce the useof, and revenues generated from, our products and could have a material adverse effect on our business, financial condition, cash flows and results ofoperations. In addition, when a new medical product is approved, the availability of government and private reimbursement for that product is uncertain,as is the amount for which that product will be reimbursed. We cannot predict the availability or amount of reimbursement for our product candidates. In the U.S., federal and state legislatures, health agencies and third-party payors continue to focus on containing the cost of health care. The 2010Patient Protection and Affordable Care Act encourages the development of comparative effectiveness research and any adverse findings for ourproducts from such research may reduce the extent of reimbursement for our products. Economic pressure on state budgets may result in statesincreasingly seeking to achieve budget savings through mechanisms that limit coverage or payment for drugs. State Medicaid programs are increasinglyrequesting manufacturers to pay supplemental rebates and requiring prior authorization by the state program for use of any drug for which supplementalrebates are not being paid. Managed care organizations continue to seek price discounts and, in some cases, to impose restrictions on the coverage ofparticular drugs. Government efforts to reduce Medicaid expenses may lead to increased use of managed care organizations by Medicaid programs.This may result in managed care organizations influencing prescription decisions for a larger segment of the population and a corresponding constrainton prices and reimbursement for our products. The government-sponsored healthcare systems in Europe and many other countries are the primary payors for healthcare expenditures, includingpayment for drugs and biologics. We expect that countries may take actions to reduce expenditure on drugs and biologics, including mandatory pricereductions, patient access restrictions, suspensions of price increases, increased mandatory discounts or rebates, preference for generic products,reduction in the amount of reimbursement, and greater importation of drugs from lower-cost countries. These cost control measures likely would reduceour revenues. In addition, certain countries set prices by reference to the prices in other countries where our products are marketed. Thus, the inability tosecure adequate prices in a particular country may not only limit the marketing of products within that country, but may also adversely affect the abilityto obtain acceptable prices in other markets. In addition, public and private insurers have pursued, and continue to pursue, aggressive cost containment initiatives, including increased focus oncomparing the effectiveness, benefits and costs of similar treatments, which may result in lower reimbursement rates for our products.Patent protection for our products is important and uncertain. The following factors are important to our success:•receiving and maintaining patent and/or trademark protection for our products, product candidates, technologies and developingtechnologies, including those that are the subject of collaborations with our collaborative partners;36Table of Contents•maintaining our trade secrets; •not infringing the proprietary rights of others; and •preventing others from infringing our proprietary rights. Patent protection only provides rights of exclusivity for the term of the patent. We are able to protect our proprietary rights from unauthorized useby third parties only to the extent that our proprietary rights are covered by valid and enforceable patents or are effectively maintained as trade secrets. Inthis regard, we try to protect our proprietary position by filing patent applications in the U.S. and elsewhere related to our proprietary product inventionsand improvements that are important to the development of our business. Our pending patent applications, together with those we may file in the future,or those we may license from third parties, may not result in patents being issued. Even if issued, such patents may not provide us with sufficientproprietary protection or competitive advantages against competitors with similar technology. The development of new technologies or pharmaceuticalproducts may take a number of years, and there can be no assurance that any patents which may be granted in respect of such technologies or productswill not have expired or be due to expire by the time such products are commercialized. Although we believe that we make reasonable efforts to protect our intellectual property rights and to ensure that our proprietary technology doesnot infringe the rights of other parties, we cannot ascertain the existence of all potentially conflicting claims. Therefore, there is a risk that third partiesmay make claims of infringement against our products or technologies. We know of several U.S. patents issued in the U.S. to third parties that mayrelate to our product candidates. We also know of patent applications filed by other parties in the U.S. and various countries outside the U.S. that mayrelate to some of our product candidates if such patents are issued in their present form. If patents are issued that cover our product candidates, we maynot be able to manufacture, use, offer for sale, import or sell such product candidates without first getting a license from the patent holder. The patentholder may not grant us a license on reasonable terms or it may refuse to grant us a license at all. This could delay or prevent us from developing,manufacturing or selling those of our product candidates that would require the license. A patent holder might also file an infringement action against usclaiming that the manufacture, use, offer for sale, import or sale of our product candidates infringed one or more of its patents. Even if we believe thatsuch claims are without merit, our cost of defending such an action is likely to be high and we might not receive a favorable ruling, and the action couldbe time-consuming and distract management's attention and resources. Claims of intellectual property infringement also might require us to redesignaffected products, enter into costly settlement or license agreements or pay costly damage awards, or face a temporary or permanent injunctionprohibiting us from marketing or selling certain of our products. Even if we have an agreement to indemnify us against such costs, the indemnifyingparty may be unable to uphold its contractual obligations. If we cannot or do not license the infringed technology at all, license the technology onreasonable terms or substitute similar technology from another source, our revenue and earnings could be adversely impacted. Because the patent positions of pharmaceutical and biotechnology companies involve complex legal and factual questions, enforceability of patentscannot be predicted with certainty. The ultimate degree of patent protection that will be afforded to biotechnology products and processes, includingours, in the U.S. and in other important markets, remains uncertain and is dependent upon the scope of protection decided upon by the patent offices,courts and lawmakers in these countries. The recently enacted America Invents Act, which reformed certain patent laws in the U.S., may createadditional uncertainty. Patents, if issued, may be challenged, invalidated or circumvented. As more products are commercialized using our proprietaryproduct platforms, or as any product achieves greater commercial success, our patents become more likely to be subject to challenge by potentialcompetitors. The laws of certain countries may not protect our intellectual property rights to the same extent as do the laws37Table of Contentsof the U.S. Thus, any patents that we own or license from others may not provide any protection against competitors. Furthermore, others mayindependently develop similar technologies outside the scope of our patent coverage. We also rely on trade secrets, know-how and technology, which are not protected by patents, to maintain our competitive position. We try toprotect this information by entering into confidentiality agreements with parties that have access to it, such as our collaborative partners, licensees,employees and consultants. Any of these parties may breach the agreements and disclose our confidential information, or our competitors might learn ofthe information in some other way. To the extent that our employees, consultants or contractors use intellectual property owned by others in their workfor us, disputes may arise as to the rights in related or resulting know-how and inventions. If any trade secret, know-how or other technology notprotected by a patent were to be disclosed to, or independently developed by, a competitor, such event could materially adversely affect our business,results of operations, cash flows and financial condition.Uncertainty over intellectual property in the pharmaceutical industry has been the source of litigation, which is inherently costly andunpredictable. There is considerable uncertainty within the pharmaceutical industry about the validity, scope and enforceability of many issued patents in the U.S.and elsewhere in the world. We cannot currently determine the ultimate scope and validity of patents which may be granted to third parties in the futureor which patents might be asserted to be infringed by the manufacture, use and sale of our products. In part as a result of this uncertainty, there has been, and we expect that there may continue to be, significant litigation in the pharmaceuticalindustry regarding patents and other intellectual property rights. We may have to enforce our intellectual property rights against third parties whoinfringe our patents and other intellectual property or challenge our patent or trademark applications. For example, in the U.S., putative generics ofinnovator drug products (including products in which the innovation comprises a new drug delivery method for an existing product, such as the drugdelivery market occupied by us) may file ANDAs and, in doing so, certify that their products either do not infringe the innovator's patents or that theinnovator's patents are invalid. This often results in litigation between the innovator and the ANDA applicant. This type of litigation is commonlyknown as "Paragraph IV" litigation in the U.S. We and our collaborative partners are involved in a number of Paragraph IV litigations in the U.S. and asimilar suit in France in respect of some of our products. These litigations could result in new or additional generic competition to our marketedproducts and a potential reduction in product revenue. Litigation and administrative proceedings concerning patents and other intellectual property rights may be expensive, distracting to managementand protracted with no certainty of success. Competitors may sue us as a way of delaying the introduction of our products. Any litigation, including anyinterference or derivation proceedings to determine priority of inventions, oppositions or other post-grant review proceedings to patents in the U.S. or incountries outside the U.S., or litigation against our partners may be costly and time-consuming and could harm our business. We expect that litigationmay be necessary in some instances to determine the validity and scope of certain of our proprietary rights. Litigation may be necessary in otherinstances to determine the validity, scope and/or non-infringement of certain patent rights claimed by third parties to be pertinent to the manufacture, useor sale of our products. Ultimately, the outcome of such litigation could adversely affect the validity and scope of our patent or other proprietary rightsor hinder our ability to manufacture and market our products.38Table of ContentsOur level of indebtedness could adversely affect our business and limit our ability to plan for or respond to changes in our business. On September 25, 2012, we entered into an amendment to our $310.0 million First Lien Credit Agreement pursuant to which the First Lien CreditAgreement was amended and restated to, among other things, provide for a new tranche of term loans in an amount equal to $375.0 million, theproceeds of which, together with cash-on hand of approximately $75.0 million, were used to repay in full all monies due pursuant to our $140.0 millionSecond Lien Credit Agreement. The new term loans consisted of a $300.0 million, seven-year term loan at LIBOR plus 3.50% ("Term Loan B-1"), anda $75.0 million, four-year term loan at LIBOR plus 3.00% ("Term Loan B-2" and together with Term Loan B-1, the "2013 Term Loans"), with, foreach term loan, a LIBOR floor of 1.00%. On February 14, 2013, we further amended our amended and restated credit agreement to secure: (i) a reduction in interest payable under TermLoan B-1 to LIBOR plus 2.75% and a decrease in the LIBOR floor to 0.75%; (ii) a reduction in interest payable under Term Loan B-2 to LIBOR plus2.75% and a decrease in the LIBOR floor to 0%; and (iii) a shortened time period, from one year to six months, during which a refinancing of our termloans, as described in the amended and restated credit agreement, would trigger a 1% prepayment premium. Our existing indebtedness is guaranteed by certain of our subsidiaries. Our level of indebtedness and the terms of these financing arrangementscould adversely affect our business by, among other things:•requiring us to dedicate a substantial portion of our cash flow from operations to payments on our indebtedness, thereby reducing theavailability of our cash flow for other purposes, including business development efforts, research and development and capitalexpenditures; •limiting our flexibility in planning for, or reacting to, changes in our business and the industry in which we operate, thereby placing us ata competitive disadvantage compared to competitors with less debt; •limiting our ability to take advantage of significant business opportunities, such as potential acquisition opportunities; and •increasing our vulnerability to adverse economic and industry conditions. Our term loan facility imposes restrictive covenants on us and requires certain payments of principal and interest over time. A failure to complywith these restrictions or to make these payments could lead to an event of default that could result in an acceleration of the indebtedness. Our futureoperating results may not be sufficient to ensure compliance with these covenants or to remedy any such default. In the event of an acceleration of thisindebtedness, we may not have or be able to obtain sufficient funds to make any accelerated payments.We rely on a limited number of pharmaceutical wholesalers to distribute our product. As is typical in the pharmaceutical industry, we rely upon pharmaceutical wholesalers in connection with the distribution of our products. Asignificant amount of our product is sold to end-users through the three largest wholesalers in the U.S. market, Cardinal Health Inc.,AmerisourceBergen Corp., and McKesson Corp. If we are unable to maintain our business relationships with these major pharmaceutical wholesalerson commercially acceptable terms, if the buying patterns of these wholesalers fluctuate due to seasonality, wholesaler buying decisions or other factorsoutside of our control, such events could materially adversely affect our business, results of operations, cash flows and financial condition.39Table of ContentsWe have limited experience in the commercialization of products. We assumed responsibility for the marketing and sale of VIVITROL in the U.S. from Cephalon in December 2008. VIVITROL is the firstcommercial product for which we have had sole responsibility for commercialization, including but not limited to sales, marketing, distribution andreimbursement-related activities. We are increasingly focused on maintaining rights to commercialize our leading product candidates in certain markets. We have limited commercialization experience. We may not be able to attract and retain qualified personnel to serve in our sales and marketingorganization, to develop an effective distribution network or to otherwise effectively support our commercialization activities. The cost of establishingand maintaining a sales and marketing organization may exceed its cost-effectiveness. If we fail to develop sales and marketing capabilities, if salesefforts are not effective or if the costs of developing sales and marketing capabilities exceed their cost-effectiveness, such events could materiallyadversely affect our business, results of operations, cash flows and financial condition.Our product platforms or product development efforts may not produce safe, efficacious or commercially viable products and, if we are unable todevelop new products, our business may suffer. Our long-term viability and growth will depend upon the successful development of new products from our research and development activities.Product development is very expensive and involves a high degree of risk. Only a small number of research and development programs result in thecommercialization of a product. Success in preclinical work or early stage clinical trials does not ensure that later stage or larger scale clinical trials willbe successful. Conducting clinical trials is a complex, time-consuming and expensive process. Our ability to complete our clinical trials in a timelyfashion depends in large part on a number of key factors including protocol design, regulatory and institutional review board approval, the rate of patientenrollment in clinical trials, and compliance with extensive current Good Clinical Practices ("cGCP"). In addition, since we fund the development of our proprietary product candidates, there is a risk that we may not be able to continue to fund allsuch development efforts to completion or to provide the support necessary to perform the clinical trials, obtain regulatory approvals or market anyapproved products on a worldwide basis. We expect the development of products for our own account to consume substantial resources. If we are ableto develop commercial products on our own, the risks associated with these programs may be greater than those associated with our programs withcollaborative partners. For factors that may affect the market acceptance of our products approved for sale, see "—We face competition in the biotechnology andpharmaceutical industries." If our delivery technologies or product development efforts fail to result in the successful development andcommercialization of product candidates, if our collaborative partners decide not to pursue development and/or commercialization of our productcandidates or if new products do not perform as anticipated, such events could materially adversely affect our business, results of operations, cash flowsand financial condition.The FDA or regulatory agencies outside the U.S. may not approve our product candidates or may impose limitations upon any product approval. We must obtain government approvals before marketing or selling our drug candidates in the U.S. and in jurisdictions outside the U.S. The FDAand comparable regulatory agencies in other countries impose substantial and rigorous requirements for the development, production and commercialintroduction of drug products. These include preclinical, laboratory and clinical testing procedures, sampling activities, clinical trials and other costly andtime-consuming procedures. In addition, regulation is not static, and regulatory agencies, including the FDA, evolve in their staff, interpretations40Table of Contentsand practices and may impose more stringent requirements than currently in effect, which may adversely affect our planned drug development and/orour commercialization efforts. Satisfaction of the requirements of the FDA and of other regulatory agencies typically takes a significant number of yearsand can vary substantially based upon the type, complexity and novelty of the drug candidate. The approval procedure and the time required to obtainapproval also varies among countries. Regulatory agencies may have varying interpretations of the same data, and approval by one regulatory agencydoes not ensure approval by regulatory agencies in other jurisdictions. In addition, the FDA or regulatory agencies outside the U.S. may choose not tocommunicate with or update us during clinical testing and regulatory review periods. The ultimate decision by the FDA or other regulatory agenciesregarding drug approval may not be consistent with prior communications. See "—Our revenues may be lower than expected as a result of failure bythe marketplace to accept our products or for other factors." This product development process can last many years, be very costly and still be unsuccessful. Regulatory approval by the FDA or regulatoryagencies outside the U.S. can be delayed, limited or not granted at all for many reasons, including:•a product candidate may not demonstrate safety and efficacy for each target indication in accordance with FDA standards or standards ofother regulatory agencies; •poor rate of patient enrollment, including limited availability of patients who meet the criteria for certain clinical trials; •data from preclinical testing and clinical trials may be interpreted by the FDA or other regulatory agencies in different ways than we orour partners interpret it; •the FDA or other regulatory agencies might not approve our or our partners' manufacturing processes or facilities; •the FDA or other regulatory agencies may not approve accelerated development timelines for our product candidates; •the failure of third-party clinical research organizations and other third-party service providers and independent clinical investigators tomanage and conduct the trials, to perform their oversight of the trials or to meet expected deadlines; •the failure of our clinical investigational sites and the records kept at such sites, including the clinical trial data, to be in compliance withthe FDA's GCP, or EU legislation governing GCP, including the failure to pass FDA, EMA or EU Member State inspections of clinicaltrials; •the FDA or other regulatory agencies may change their approval policies or adopt new regulations; •adverse medical events during the trials could lead to requirements that trials be repeated or extended, or that a program be terminated orplaced on clinical hold, even if other studies or trials relating to the program are successful; and •the FDA or other regulatory agencies may not agree with our or our partners' regulatory approval strategies or components of our or ourpartners' filings, such as clinical trial designs. In addition, our product development timelines may be impacted by third-party patent litigation. In summary, we cannot be sure that regulatoryapproval will be granted for drug candidates that we submit for regulatory review. Our ability to generate revenues from the commercialization and saleof additional drug products will be limited by any failure to obtain these approvals. In addition, stock prices have declined significantly in certaininstances where companies have failed to obtain FDA approval of a drug candidate or if the timing of FDA approval is delayed. If the FDA's or anyother41Table of Contentsregulatory agency's response to any application for approval is delayed or not favorable for any of our product candidates, our stock price could declinesignificantly. Even if regulatory approval to market a drug product is granted, the approval may impose limitations on the indicated use for which the drugproduct may be marketed and additional post-approval requirements with which we would need to comply in order to maintain the approval of suchproducts. Our business could be seriously harmed if we do not complete these studies and the FDA, as a result, requires us to change related sections ofthe marketing label for our products. In addition, adverse medical events that occur during clinical trials or during commercial marketing of our productscould result in legal claims against us and the temporary or permanent withdrawal of our products from commercial marketing, which could seriouslyharm our business and cause our stock price to decline.Clinical trials for our product candidates are expensive, and their outcome is uncertain. Conducting clinical trials is a lengthy, time-consuming and expensive process. Before obtaining regulatory approvals for the commercial sale ofany products, we or our partners must demonstrate, through preclinical testing and clinical trials, that our product candidates are safe and effective foruse in humans. We have incurred, and we will continue to incur, substantial expense for preclinical testing and clinical trials. Our preclinical and clinical development efforts may not be successfully completed. Completion of clinical trials may take several years or more.The length of time can vary substantially with the type, complexity, novelty and intended use of the product candidate. The commencement and rate ofcompletion of clinical trials may be delayed by many factors, including:•the potential delay by a collaborative partner in beginning the clinical trial; •the inability to recruit clinical trial participants at the expected rate; •the failure of clinical trials to demonstrate a product candidate's safety or efficacy; •the inability to follow patients adequately after treatment; •unforeseen safety issues; •the inability to manufacture sufficient quantities of materials used for clinical trials; and •unforeseen governmental or regulatory delays. In addition, we have opened clinical sites and are enrolling patients in a number of countries where our experience is more limited. For example,the phase 3 study of aripiprazole lauroxil is underway in many countries around the world, including in Eastern Europe and Asia. We depend onindependent clinical investigators, contract research organizations and other third-party service providers and our collaborators in the conduct of clinicaltrials for our product candidates and in the accurate reporting of results from such clinical trials. We rely heavily on these parties for successfulexecution of our clinical trials but do not control many aspects of their activities. For example, while the investigators are not our employees, we areresponsible for ensuring that each of our clinical trials is conducted in accordance with the general investigational plan and protocols for the trial. Thirdparties may not complete activities on schedule or may not conduct our clinical trials in accordance with regulatory requirements or our stated protocols. The results from preclinical testing and early clinical trials often have not predicted results of later clinical trials. A number of new drugs haveshown promising results in early clinical trials, but subsequently failed to establish sufficient safety and efficacy data to obtain necessary regulatoryapprovals. Clinical trials conducted by us, by our collaborative partners or by third parties on our42Table of Contentsbehalf may not demonstrate sufficient safety and efficacy to obtain the requisite regulatory approvals for our product candidates. If a product candidate fails to demonstrate safety and efficacy in clinical trials or if third parties fail to conduct clinical trials in accordance with theirobligations, the development, approval and commercialization of our product candidates may be delayed or prevented and such events could materiallyadversely affect our business, results of operations, cash flows and financial condition.The commercial use of our products may cause unintended side effects or adverse reactions, or incidents of misuse may occur, which couldadversely affect our business and stock price. We cannot predict whether the commercial use of our products will produce undesirable or unintended side effects that have not been evident in theuse of, or in clinical trials conducted for, such products to date. Additionally, incidents of product misuse may occur. These events, among others, couldresult in product recalls, product liability actions or withdrawals or additional regulatory controls (including additional regulatory scrutiny andrequirements for additional labeling), all of which could have a material adverse effect on our business, results of operations, cash flows and financialcondition. In addition, the reporting of adverse safety events involving our products and public rumors about such events could cause our product salesor stock price to decline or experience periods of volatility.If we fail to comply with the extensive legal and regulatory requirements affecting the healthcare industry, we could face increased costs, penaltiesand a loss of business. Our activities, and the activities of our collaborators and third-party providers, are subject to comprehensive government regulation. Governmentregulation by various national, state and local agencies, which includes detailed inspection of, and controls over, research and laboratory procedures,clinical investigations, product approvals and manufacturing, marketing and promotion, adverse event reporting, sampling, distribution, recordkeeping,storage, and disposal practices, and achieving compliance with these regulations, substantially increases the time, difficulty and costs incurred inobtaining and maintaining the approval to market newly developed and existing products. Government regulatory actions can result in delay in therelease of products, seizure or recall of products, suspension or revocation of the authority necessary for their production and sale, and other civil orcriminal sanctions, including fines and penalties. Pharmaceutical and biotechnology companies have been the target of lawsuits and investigationsalleging violations of government regulation, including claims asserting submission of incorrect pricing information, impermissible off-label promotionof pharmaceutical products, payments intended to influence the referral of healthcare business, submission of false claims for governmentreimbursement, antitrust violations or violations related to environmental matters. Changes in laws affecting the healthcare industry could also adversely affect our revenues and profitability, including new laws, regulations orjudicial decisions, or new interpretations of existing laws, regulations or decisions, related to patent protection and enforcement, healthcare availability,and product pricing and marketing. Changes in FDA regulations and regulations issued by regulatory agencies outside of the U.S., including new ordifferent approval requirements, timelines and processes, may also delay or prevent the approval of new products, require additional safety monitoring,labeling changes, restrictions on product distribution or other measures that could increase our costs of doing business and adversely affect the marketfor our products. The enactment in the U.S. of healthcare reform, new legislation or implementation of existing statutory provisions on importation oflower-cost competing drugs from other jurisdictions and legislation on comparative effectiveness research are examples of previously enacted andpossible future changes in laws that could adversely affect our business.43Table of Contents While we continually strive to comply with these complex requirements, we cannot guarantee that we, our employees, our collaborators, ourconsultants or our contractors are or will be in compliance with all potentially applicable U.S. federal and state regulations and/or laws or all potentiallyapplicable regulations and/or laws outside the U.S. and interpretations of the applicability of these laws to marketing practices. If we or our agents fail tocomply with any of those regulations and/or laws, a range of actions could result, including, but not limited to, the termination of clinical trials, thefailure to approve a product candidate, restrictions on our products or manufacturing processes, withdrawal of our products from the market, significantfines, exclusion from government healthcare programs or other sanctions or litigation. Additionally, while we have implemented numerous riskmitigation measures, we cannot guarantee that we will be able to effectively mitigate all operational risks. Failure to effectively mitigate all operationalrisks may materially adversely affect our product supply, which could have a material adverse effect on our product sales and/or revenues and results ofoperations.We face competition in the biotechnology and pharmaceutical industries. We face intense competition in the development, manufacture, marketing and commercialization of our products and product candidates from manyand varied sources, such as academic institutions, government agencies, research institutions and biotechnology and pharmaceutical companies,including other companies with similar technologies, and we can provide no assurance that we will be able to compete successfully. Some of thesecompetitors are also our collaborative partners, who control the commercialization of products for which we receive manufacturing and/or royaltyrevenues. These competitors are working to develop and market other systems, products, vaccines and other methods of preventing or reducing disease,and new small-molecule and other classes of drugs that can be used with or without a drug delivery system. The biotechnology and pharmaceutical industries are characterized by intensive research, development and commercialization efforts and rapid andsignificant technological change. Many of our competitors are larger and have significantly greater financial and other resources than we do. As a result,we expect that our competitors may develop new technologies, products and processes that may be more effective than those we develop. They mayalso develop their products more rapidly than us, complete any applicable regulatory approval process sooner than we can or offer their newlydeveloped products at prices lower than our prices. The development of technologically improved or different products or technologies may make ourproduct candidates or product platforms obsolete or noncompetitive before we recover expenses incurred in connection with their development or realizeany revenues from any commercialized product. There are other companies developing extended-release product platforms. In many cases, there are products on the market or in development thatmay be in direct competition with our products or product candidates. In addition, we know of new chemical entities that are being developed that, ifsuccessful, could compete against our product candidates. These chemical entities are being designed to work differently than our product candidatesand may turn out to be safer or to be more effective than our product candidates. Among the many experimental therapies being tested around the world,there may be some that we do not now know of that may compete with our proprietary product platforms or product candidates. Our collaborativepartners could choose a competing technology to use with their drugs instead of one of our product platforms and could develop products that competewith our products. With respect to our proprietary injectable product platform, we are aware that there are other companies developing extended-release deliverysystems for pharmaceutical products. RISPERDAL CONSTA and INVEGA SUSTENNA may compete with a number of other injectable productsincluding ZYPREXA RELPREVV ((olanzapine) For Extended Release Injectable Suspension), which is marketed and sold by Lilly; a once-monthlyinjectable formulation of ABILIFY (aripiprazole) developed by Otsuka, which was approved by the FDA in February 2013 and is commercializedunder44Table of Contentsthe name ABILIFY MAINTENA; and other products currently in development. RISPERDAL CONSTA and INVEGA SUSTENNA may alsocompete with new oral compounds currently on the market or being developed for the treatment of schizophrenia. In the treatment of alcohol dependence, VIVITROL competes with CAMPRAL (acamprosate calcium) sold by Forest Laboratories andANTABUSE sold by Odyssey as well as currently marketed drugs also formulated from naltrexone. Other pharmaceutical companies are developingproduct candidates that have shown some promise in treating alcohol dependence and that, if approved by the FDA, would compete with VIVITROL. In the treatment of opioid dependence, VIVITROL competes with methadone, oral naltrexone, and SUBOXONE (buprenorphine HCl/naloxoneHCl dehydrate sublingual tablets), SUBOXONE (buprenorphine/naloxone) Sublingual Film, and SUBUTEX (buprenorphine HCl sublingual tablets),each of which is marketed and sold by Reckitt Benckiser Pharmaceuticals, Inc. in the U.S. It also competes with generic versions of SUBUTEX andSUBOXONE sublingual tablets. Other pharmaceutical companies are developing product candidates that have shown promise in treating opioiddependence and that, if approved by the FDA, would compete with VIVITROL. BYDUREON competes with established therapies for market share. Such competitive products include sulfonylureas, metformin, insulins,thiazolidinediones, glinides, dipeptidyl peptidase type IV inhibitors, insulin sensitizers, alpha-glucosidase inhibitors and sodium-glucose transporter-2inhibitors. BYDUREON also competes with other GLP-1 agonists, including VICTOZA (liraglutide (rDNA origin) injection), which is marketed andsold by Novo Nordisk A/S. Other pharmaceutical companies are developing product candidates for the treatment of type 2 diabetes that, if approved bythe FDA, could compete with BYDUREON. AMPYRA/FAMPYRA is, to our knowledge, the first product that is approved as a treatment to improve walking in patients with MS. However,there are a number of FDA-approved therapies for MS disease management that seek to reduce the frequency and severity of exacerbations or slow theaccumulation of physical disability for people with certain types of MS. These products include AVONEX® from Biogen Idec, BETASERON® fromBayer HealthCare Pharmaceuticals, COPAXONE® from Teva Pharmaceutical Industries Ltd., REBIF® from Merck Serono, TYSABRI® andTECFIDERATM from Biogen Idec, GILENYA® and EXTAVIA® from Novartis AG, and AUBAGIO® from Sanofi-Aventis. With respect to our NanoCrystal technology, we are aware that other technology approaches similarly address poorly water soluble drugs. Theseapproaches include nanoparticles, cyclodextrins, lipid-based self-emulsifying drug delivery systems, dendrimers and micelles, among others, any ofwhich could limit the potential success and growth prospects of products incorporating our NanoCrystal technology. In addition, there are manycompeting technologies to our OCR technology, some of which are owned by large pharmaceutical companies with drug delivery divisions and other,smaller drug-delivery-specific companies. If we are unable to compete successfully in the biotechnology and pharmaceutical industries, such events could materially adversely affect ourbusiness, results of operations, cash flows and financial condition.We may not become profitable on a sustained basis. At March 31, 2013, our accumulated deficit was $499.9 million, which was primarily the result of net losses incurred from 1987, the yearAlkermes, Inc., was founded, through March 31, 2013, partially offset by net income over previous fiscal years. There can be no assurance we willachieve sustained profitability.45Table of Contents A major component of our revenue is dependent on our partners' and our ability to commercialize, and our and our partners' ability to manufactureeconomically, our marketed products. Our ability to achieve sustained profitability in the future depends, in part, on our ability to:•obtain and maintain regulatory approval for our products and product candidates, and for our partnered products, both in the U.S. and inother countries; •efficiently manufacture our products; •support the commercialization of our products by our collaborative partners; •successfully market and sell VIVITROL in the U.S.; •support the commercialization of VIVITROL in Russia and the countries of the CIS by our partner Cilag; •enter into agreements to develop and commercialize our products and product candidates; •develop, have manufactured or expand our capacity to manufacture and market our products and product candidates; •obtain adequate reimbursement coverage for our products from insurance companies, government programs and other third-partypayors; •obtain additional research and development funding from collaborative partners or funding for our proprietary product candidates; and •achieve certain product development milestones. In addition, the amount we spend will impact our profitability. Our spending will depend, in part, on:•the progress of our research and development programs for our product candidates and for our partnered product candidates, includingclinical trials; •the time and expense that will be required to pursue FDA and/or non-U.S. regulatory approvals for our products and whether suchapprovals are obtained; •the time and expense required to prosecute, enforce and/or challenge patent and other intellectual property rights; •the cost of building, operating and maintaining manufacturing and research facilities; •the cost of third-party manufacture; •the number of product candidates we pursue, particularly proprietary product candidates; •how competing technological and market developments affect our product candidates; •the cost of possible acquisitions of technologies, compounds, product rights or companies; •the cost of obtaining licenses to use technology owned by others for proprietary products and otherwise; •the costs of potential litigation; and •the costs associated with recruiting and compensating a highly skilled workforce in an environment where competition for suchemployees may be intense. We may not achieve all or any of these goals and, thus, we cannot provide assurances that we will ever be profitable on a sustained basis orachieve significant revenues. Even if we do achieve some or all of these goals, we may not achieve significant or sustained commercial success.46Table of ContentsWe may require additional funds to complete our programs, and such funding may not be available on commercially favorable terms or at all, andmay cause dilution to our existing shareholders. We may require additional funds to complete any of our programs, and we may seek funds through various sources, including debt and equityofferings, corporate collaborations, bank borrowings, arrangements relating to assets, sale of royalty streams we receive on our products or otherfinancing methods or structures. The source, timing and availability of any financings will depend on market conditions, interest rates and other factors.If we are unable to raise additional funds on terms that are favorable to us or at all, we may have to cut back significantly on one or more of ourprograms or give up some of our rights to our product platforms, product candidates or licensed products. If we issue additional equity securities orsecurities convertible into equity securities to raise funds, our shareholders will suffer dilution of their investment, and it may adversely affect the marketprice of our ordinary shares.Product liability claims may adversely affect our business. The administration of drugs in humans, whether in clinical studies or commercially, carries the inherent risk of product liability claims whether ornot the drugs are actually the cause of an injury. Our products or product candidates may cause, or may appear to have caused, injury or dangerous druginteractions, and we may not learn about or understand those effects until the product or product candidate has been administered to patients for aprolonged period of time. We are subject from time to time to lawsuits based on product liability and related claims. We currently carry product liabilityinsurance coverage in such amounts as we believe are sufficient for our business. However, this coverage may not be sufficient to satisfy any liabilitiesthat may arise. As our development activities progress and we continue to have commercial sales, this coverage may be inadequate, we may be unable toobtain adequate coverage at an acceptable cost or at all, or our insurer may disclaim coverage as to a future claim. This could prevent or limit ourcommercialization of our products. We may not be successful in defending ourselves in the litigation and, as a result, our business could be materiallyharmed. These lawsuits may result in large judgments or settlements against us, any of which could have a negative effect on our financial condition andbusiness if in excess of our insurance coverage. Additionally, lawsuits can be expensive to defend, whether or not they have merit, and the defense ofthese actions may divert the attention of our management and other resources that would otherwise be engaged in managing our business. Additionally, product recalls may be issued at our discretion or at the direction of the FDA, other government agencies or other entities havingregulatory control for pharmaceutical product sales. We cannot assure you that product recalls will not occur in the future or that, if such recalls occur,such recalls will not adversely affect our business, results of operations, cash flows and financial condition or reputation.Our business involves environmental, health and safety risks. Our business involves the controlled use of hazardous materials and chemicals and is subject to numerous environmental, health and safety lawsand regulations and to periodic inspections for possible violations of these laws and regulations. Under certain of those laws and regulations, we couldbe liable for any contamination at our current or former properties or third-party waste disposal sites. In addition to significant remediation costs,contamination can give rise to third-party claims for fines, penalties, natural resource damages, personal injury and damage (including property damage).The costs of compliance with environmental, health and safety laws and regulations are significant. Any violations, even if inadvertent or accidental, ofcurrent or future environmental, health or safety laws or regulations, the cost of compliance with any resulting order or fine and any liability imposed inconnection with any contamination for which we may be responsible could materially adversely affect our business, results of operations, cash flowsand financial condition.47Table of ContentsAdverse credit and financial market conditions may exacerbate certain risks affecting our business. As a result of adverse credit and financial market conditions, organizations that reimburse for use of our products, such as government healthadministration authorities and private health insurers, may be unable to satisfy such obligations or may delay payment. In addition, federal and statehealth authorities may reduce reimbursements (including Medicare and Medicaid reimbursements in the U.S.) or payments, and private insurers mayincrease their scrutiny of claims. We are also dependent on the performance of our collaborative partners, and we sell our products to our collaborativepartners through contracts that may not be secured by collateral or other security. Accordingly, we bear the risk if our partners are unable to payamounts due to us thereunder. Due to the recent tightening of global credit and the volatility in the financial markets, there may be a disruption or delayin the performance of our third-party contractors, suppliers or collaborative partners. If such third parties are unable to pay amounts owed to us orsatisfy their commitments to us, or if there are reductions in the availability or extent of reimbursement available to us, our business and results ofoperations would be adversely affected.Currency exchange rates may affect revenues. We conduct a large portion of our business in international markets. For example, we derive a majority of our RISPERDAL CONSTA revenuesand all of our FAMPYRA and XEPLION revenues from sales in countries other than the U.S., and these sales are denominated in non-U.S. dollar("USD") currencies. Such revenues fluctuate when translated to USD as a result of changes in currency exchange rates. We currently do not hedge thisexposure. An increase in the USD relative to other currencies in which we have revenues will cause our non-USD revenues to be lower than with astable exchange rate. A large increase in the value of the USD relative to such non-USD currencies could have a material adverse effect on ourrevenues, results of operations, cash flows and financial condition. As a result of the Business Combination, we incur substantial operating costs in Ireland. We face exposure to changes in the exchange ratio of theUSD and the Euro arising from expenses and payables at our Irish operations that are settled in Euro. The impact of changes in the exchange ratio of theUSD and the Euro on our USD-denominated manufacturing and royalty revenues earned in countries other than the U.S. is partially offset by theopposite impact of changes in the exchange ratio of the USD and the Euro on operating expenses and payables incurred at our Irish operations that aresettled in Euro. For the fiscal year ended March 31, 2013, an average 10% weakening in the USD relative to the Euro would have resulted in anincrease to our expenses denominated in Euro of $7.5 million.We may not be able to retain our key personnel. Our success depends largely upon the continued service of our management and scientific staff and our ability to attract, retain and motivate highlyskilled technical, scientific, manufacturing, management, regulatory compliance and selling and marketing personnel. The loss of key personnel or ourinability to hire and retain personnel who have technical, scientific, manufacturing, management, regulatory compliance or commercial backgroundscould materially adversely affect our research and development efforts and our business.Future transactions may harm our business or the market price of our ordinary shares. We regularly review potential transactions related to technologies, products or product rights and businesses complementary to our business. Thesetransactions could include:•mergers;48Table of Contents•acquisitions; •strategic alliances; •licensing agreements; and •co-promotion agreements. We may choose to enter into one or more of these transactions at any time, which may cause substantial fluctuations in the market price of ourordinary shares. Moreover, depending upon the nature of any transaction, we may experience a charge to earnings, which could also materiallyadversely affect our results of operations and could harm the market price of our ordinary shares. If we are unable to successfully integrate the companies, businesses or properties that we acquire, such events could materially adversely affect ourbusiness, results of operations, cash flows and financial condition. Merger and acquisition transactions, including the Business Combination involvevarious inherent risks, including:•uncertainties in assessing the value, strengths and potential profitability of, and identifying the extent of all weaknesses, risks, contingentand other liabilities of, the respective parties; •the potential loss of key customers, management and employees of an acquired business; •the consummation of financing transactions, acquisitions or dispositions and the related effects on our business; •the ability to achieve identified operating and financial synergies from an acquisition in the amounts and within the timeframe predicted; •problems that could arise from the integration of the respective businesses, including the application of internal control processes to theacquired business; •difficulties that could be encountered in managing international operations; and •unanticipated changes in business, industry, market or general economic conditions that differ from the assumptions underlying ourrationale for pursuing the transaction. Any one or more of these factors could cause us not to realize the benefits anticipated from a transaction. Moreover, any acquisition opportunities we pursue could materially affect our liquidity and capital resources and may require us to incur additionalindebtedness, seek equity capital or both. Future acquisitions could also result in our assuming more long-term liabilities relative to the value of theacquired assets than we have assumed in our previous acquisitions. Further, acquisition accounting rules require changes in certain assumptions madesubsequent to the measurement period as defined in current accounting standards, to be recorded in current period earnings, which could affect ourresults of operations.Our actual financial position and results of operations may differ materially from the unaudited pro forma financial data included in this AnnualReport. The pro forma financial data contained in this Annual Report are presented for illustrative purposes only and may not be an indication of what ourfinancial condition or results of operations would have been had the Business Combination been completed on the dates indicated. The pro formafinancial data have been derived from the audited and unaudited historical financial statements of Alkermes, Inc. and EDT, and certain adjustments andassumptions have been made regarding the combined company after giving effect to the Business Combination. Accordingly, the actual financial49Table of Contentscondition and results of operations of the combined company following the Business Combination may not be consistent with, or evident from, this proforma financial data. In addition, the assumptions used in preparing the pro forma financial information may not prove to be accurate, and other factors may affect ourfinancial condition or results of operations. Any potential decline in our financial condition or results of operations may cause significant variations inour share price.If goodwill or other intangible assets become impaired, we could have to take significant charges against earnings. In connection with the accounting for the Business Combination, we recorded a significant amount of goodwill and other intangible assets. Underaccounting principles generally accepted in the U.S. ("GAAP"), we must assess, at least annually and potentially more frequently, whether the value ofgoodwill and other indefinite-lived intangible assets have been impaired. Amortizing intangible assets will be assessed for impairment in the event of animpairment indicator. Any reduction or impairment of the value of goodwill or other intangible assets will result in a charge against earnings, whichcould materially adversely affect our results of operations and shareholders' equity in future periods.Our investments are subject to general credit, liquidity, market and interest rate risks, which may be exacerbated by volatility in the U.S. creditmarkets. As of March 31, 2013, a significant amount of our investments were invested in U.S. government treasury and agency securities. Our investmentobjectives are, first, to preserve liquidity and conserve capital and, second, to generate investment income. Should our investments cease paying orreduce the amount of interest paid to us, our interest income would suffer. In addition, general credit, liquidity, market and interest risks associated withour investment portfolio may have an adverse effect on our financial condition.Our effective tax rate may increase. As a global biotechnology company, we are subject to taxation in a number of different jurisdictions. As a result, our effective tax rate is derivedfrom a combination of applicable tax rates in the various places that we operate. In preparing our financial statements, we estimate the amount of tax thatwill become payable in each of these places. Our effective tax rate may fluctuate depending on a number of factors, including the distribution of ourprofits or losses between the jurisdictions where we operate, differences in interpretation of tax laws, etc. In addition, the tax laws of any jurisdiction inwhich we operate may change in the future, which could impact our effective tax rate. Tax authorities in the jurisdictions in which we operate may auditthe Company. If we are unsuccessful in defending any tax positions adopted in our submitted tax returns, we may be required to pay taxes for priorperiods, interest, fines or penalties, and may be obligated to pay increased taxes in the future, any of which could have a material adverse effect on ourbusiness, financial condition, results of operations and growth prospects.The Business Combination of Alkermes, Inc. and EDT may limit our ability to use our tax attributes to offset taxable income, if any, generatedfrom such Business Combination. For U.S. federal income tax purposes, a corporation is generally considered tax resident in the place of its incorporation. Because we areincorporated in Ireland, we should be deemed an Irish corporation under these general rules. However, Section 7874 of the Internal Revenue Code of1986, as amended ("the Code") generally provides that a corporation organized outside the U.S. that acquires substantially all of the assets of acorporation organized in the U.S. will be treated as a U.S. corporation (and, therefore, a U.S. tax resident) for U.S. federal income tax purposes ifshareholders of50Table of Contentsthe acquired U.S. corporation own at least 80% (of either the voting power or the value) of the stock of the acquiring foreign corporation after theacquisition by reason of holding stock in the domestic corporation, and the "expanded affiliated group" (as defined in Section 7874) that includes theacquiring corporation does not have substantial business activities in the country in which it is organized. In addition, Section 7874 provides that if a corporation organized outside the U.S. acquires substantially all of the assets of a corporation organizedin the U.S., the taxable income of the U.S. corporation during the period beginning on the date the first assets are acquired as part of the acquisition,through the date which is ten years after the last date assets are acquired as part of the acquisition, shall be no less than the income or gain recognized byreason of the transfer during such period or by reason of a license of property by the expatriated entity after such acquisition to a foreign affiliate duringsuch period, which is referred to as the "inversion gain," if shareholders of the acquired U.S. corporation own at least 60% (of either the voting poweror the value) of the stock of the acquiring foreign corporation after the acquisition by reason of holding stock in the domestic corporation, and the"expanded affiliated group" of the acquiring corporation does not have substantial business activities in the country in which it is organized. Inconnection with the Business Combination, Alkermes, Inc. transferred certain intellectual property to one of our Irish subsidiaries, and it is expected thatAlkermes, Inc. had sufficient net operating loss carryforwards available to substantially offset any taxable income generated from this transfer. If thisrule was to apply to the Business Combination, among other things, Alkermes, Inc. would not have been able to use any of the approximately$274 million of U.S. Federal net operating loss ("NOL") and $38 million of U.S. state NOL carryforwards that it had as of March 31, 2011 to offsetany taxable income generated as part of the Business Combination or as a result of the transfer of intellectual property. We do not believe that either ofthese limitations should apply as a result of the Business Combination. However, the U.S. Internal Revenue Service (the "IRS") could assert a contraryposition, in which case we could become involved in tax controversy with the IRS regarding possible additional U.S. tax liability. If we were to beunsuccessful in resolving any such tax controversy in our favor, we could be liable for significantly greater U.S. federal and state income tax than weanticipate being liable for through the Business Combination, including as a result of the transfer of intellectual property, which would place furtherdemands on our cash needs.Litigation and/or arbitration may result in financial losses or harm our reputation and may divert management resources. We may be the subject of certain claims, including product liability claims and those asserting violations of securities laws and derivative actions.We cannot predict with certainty the eventual outcome of any future litigation, arbitration or third-party inquiry. We may not be successful in defendingourselves or asserting our rights in new lawsuits, investigations or claims that may be brought against us and, as a result, our business could bematerially harmed. These lawsuits, arbitrations, investigations or claims may result in large judgments or settlements against us, any of which couldhave a negative effect on our financial performance and business. Additionally, lawsuits, arbitrations and investigations can be expensive to defend,whether or not the lawsuit, arbitration or investigation has merit, and the defense of these actions may divert the attention of our management and otherresources that would otherwise be engaged in running our business.Our business could be negatively affected as a result of the actions of activist shareholders. Proxy contests have been waged against many companies in the biopharmaceutical industry over the last few years. If faced with a proxy contest,we may not be able to respond successfully to the51Table of Contentscontest, which would be disruptive to our business. Even if we are successful, our business could be adversely affected by a proxy contest involving usbecause:•responding to proxy contests and other actions by activist shareholders can be costly and time-consuming, disrupting operations anddiverting the attention of management and employees, and can lead to uncertainty; •perceived uncertainties as to future direction may result in the loss of potential acquisitions, collaborations or in-licensing opportunities,and may make it more difficult to attract and retain qualified personnel and business partners; and •if individuals are elected to a board of directors with a specific agenda, it may adversely affect our ability to effectively and timelyimplement our strategic plan and create additional value for our shareholders. These actions could cause the market price of our ordinary shares to experience periods of volatility.Item 1B. Unresolved Staff Comments None.Item 2. Properties We lease approximately 8,500 square feet of corporate office space in Dublin, Ireland, which houses our corporate headquarters. This lease expiresin 2022 and includes a tenant option to terminate in 2017. We lease approximately 115,000 square feet of space in Waltham, Massachusetts, whichhouses corporate offices, administrative areas and laboratories. This lease expires in 2020 and includes a tenant option to extend the term for up to twofive-year periods. We own manufacturing, office and laboratory sites in Wilmington, Ohio (approximately 195,000 square feet); Athlone, Ireland (approximately460,000 square feet); and Gainesville, Georgia (approximately 90,000 square feet). We have a sublease agreement in place for a commercial manufacturing facility we lease in Chelsea, Massachusetts designed for clinical andcommercial manufacturing of inhaled products based on our pulmonary technology that we are currently sub-letting. The lease term is for fifteen years,expiring in 2015, with a tenant option to extend the term for up to two five-year periods. We believe that our current and planned facilities are adequatefor our current and near-term preclinical, clinical and commercial manufacturing requirements.Item 3. Legal Proceedings From time to time, we may be subject to legal proceedings and claims in the ordinary course of business. For example, we are currently involved invarious sets of Paragraph IV litigations in the U.S. and a similar suit in France in respect of certain of three different products: TRICOR 145,FOCALIN XR, and MEGACE ES. We are not aware of any such proceedings or claims that we believe will have, individually or in the aggregate, amaterial adverse effect on our business, results of operations, cash flows and financial condition.Item 4. Mine Safety Disclosures Not Applicable.52Table of ContentsPART IIItem 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity SecuritiesMarket and shareholder information Our ordinary shares are traded on the NASDAQ Global Select Stock Market under the symbol "ALKS." Set forth below for the indicated periodsare the high and low closing sales prices for our ordinary shares. The share price for the period prior to September 16, 2011 is that of Alkermes, Inc.,while the share price for the period after September 16, 2011 is that of Alkermes plc. There were 256 shareholders of record for our ordinary shares on May 8, 2013. In addition, the last reported sale price of our ordinary shares asreported on the NASDAQ Global Select Stock Market on May 8, 2013 was $29.85.Dividends No dividends have been paid on the ordinary shares to date, and we do not expect to pay cash dividends thereon in the foreseeable future. Weanticipate that we will retain all earnings, if any, to support our operations and our proprietary drug development programs. Any future determination asto the payment of dividends will be at the sole discretion of our board of directors and will depend on our financial condition, results of operations,capital requirements and other factors our board of directors deems relevant.Securities authorized for issuance under equity compensation plans For information regarding securities authorized for issuance under equity compensation plans, see Part III, Item 12, "Security Ownership ofCertain Beneficial Owners and Management," which incorporates by reference to the Proxy Statement relating to our 2013 Annual Meeting ofShareholders (the "2013 Proxy Statement").Repurchase of equity securities On September 16, 2011, our board of directors authorized the continuation of the Alkermes, Inc. program to repurchase up to $215.0 million ofour ordinary shares at the discretion of management from time to time in the open market or through privately negotiated transactions. We did notpurchase any shares under this program during the fiscal year ended March 31, 2013. As of March 31, 2013, we had purchased a total of 8,866,342shares at a cost of $114.0 million.Irish taxes applicable to U.S. holders The following is a general summary of the main Irish tax considerations applicable to the purchase, ownership and disposition of our ordinaryshares by U.S. holders. It is based on existing Irish law and practices in effect on April 30, 2013, and on discussions and correspondence with the IrishRevenue Commissioners. Legislative, administrative or judicial changes may modify the tax consequences described below.53 Fiscal 2013 Fiscal 2012 High Low High Low 1st Quarter $18.64 $15.12 $18.60 $13.06 2nd Quarter 20.87 17.22 19.52 13.91 3rd Quarter 20.88 18.08 18.03 13.88 4th Quarter 23.81 19.28 19.50 16.14 Table of Contents The statements do not constitute tax advice and are intended only as a general guide. Furthermore, this information applies only to ordinary sharesheld as capital assets and does not apply to all categories of shareholders, such as dealers in securities, trustees, insurance companies, collectiveinvestment schemes and shareholders who acquire, or who are deemed to acquire their ordinary shares by virtue of an office or employment. Thissummary is not exhaustive and shareholders should consult their own tax advisers as to the tax consequences in Ireland, or other relevant jurisdictionswhere we operate, including the acquisition, ownership and disposition of ordinary shares.Withholding tax on dividends. While we have no current plans to pay dividends, dividends on our ordinary shares would generally be subject to Irish dividend withholding tax("DWT") at the standard rate of income tax, which is currently 20%, unless an exemption applies. Dividends on our ordinary shares that are owned byresidents of the U.S. and held beneficially through the Depositary Trust Company ("DTC") will not be subject to DWT provided that the address of thebeneficial owner of the ordinary shares in the records of the broker is in the U.S. Dividends on our ordinary shares that are owned by residents of the U.S. and held directly (outside of DTC) will not be subject to DWT providedthat the shareholder has completed the appropriate Irish DWT form and this form remains valid. Such shareholders must provide the appropriate IrishDWT form to our transfer agent at least seven business days before the record date for the first dividend payment to which they are entitled. If any shareholder who is resident in the U.S. receives a dividend subject to DWT, he or she should generally be able to make an application for arefund from the Irish Revenue Commissioners on the prescribed form.Income tax on dividends Irish income tax, if any, may arise in respect of dividends paid by us. However, a shareholder who is neither resident nor ordinarily resident inIreland and who is entitled to an exemption from DWT, generally has no liability for Irish income tax or to the universal social charge on a dividendfrom us unless he or she holds his or her ordinary shares through a branch or agency in Ireland which carries out a trade on his or her behalf.Irish tax on capital gains. A shareholder who is neither resident nor ordinarily resident in Ireland and does not hold our ordinary shares in connection with a trade orbusiness carried on by such shareholder in Ireland through a branch or agency should not be within the charge to Irish tax on capital gains on a disposalof our ordinary shares.Capital acquisitions tax Irish capital acquisitions tax ("CAT") is comprised principally of gift tax and inheritance tax. CAT could apply to a gift or inheritance of ourordinary shares irrespective of the place of residence, ordinary residence or domicile of the parties. This is because our ordinary shares are regarded asproperty situated in Ireland as our share register must be held in Ireland. The person who receives the gift or inheritance has primary liability for CAT. CAT is levied at a rate of 33% above certain tax-free thresholds. The appropriate tax-free threshold is dependent upon (i) the relationship betweenthe donor and the recipient, and (ii) the aggregation of the values of previous gifts and inheritances received by the recipient from persons within thesame category of relationship for CAT purposes. Gifts and inheritances passing between54Table of Contentsspouses are exempt from CAT. Our shareholders should consult their own tax advisers as to whether CAT is creditable or deductible in computing anydomestic tax liabilities.Stamp duty Irish stamp duty, if any, may become payable in respect of ordinary share transfers. However, a transfer of our ordinary shares from a seller whoholds shares through DTC to a buyer who holds the acquired shares through DTC will not be subject to Irish stamp duty. A transfer of our ordinaryshares (i) by a seller who holds ordinary shares outside of DTC to any buyer, or (ii) by a seller who holds the ordinary shares through DTC to a buyerwho holds the acquired ordinary shares outside of DTC, may be subject to Irish stamp duty, which is currently at the rate of 1% of the price paid or themarket value of the ordinary shares acquired, if greater. The person accountable for payment of stamp duty is the buyer or, in the case of a transfer byway of a gift or for less than market value, all parties to the transfer. A shareholder who holds ordinary shares outside of DTC may transfer those ordinary shares into DTC without giving rise to Irish stamp dutyprovided that the shareholder would be the beneficial owner of the related book-entry interest in those ordinary shares recorded in the systems of DTC,and in exactly the same proportions, as a result of the transfer and at the time of the transfer into DTC there is no sale of those book-entry interests to athird party being contemplated by the shareholder. Similarly, a shareholder who holds ordinary shares through DTC may transfer those ordinary sharesout of DTC without giving rise to Irish stamp duty provided that the shareholder would be the beneficial owner of the ordinary shares, and in exactlythe same proportions, as a result of the transfer, and at the time of the transfer out of DTC there is no sale of those ordinary shares to a third party beingcontemplated by the shareholder. In order for the share registrar to be satisfied as to the application of this Irish stamp duty treatment where relevant, theshareholder must confirm to us that the shareholder would be the beneficial owner of the related book-entry interest in those ordinary shares recorded inthe systems of DTC, and in exactly the same proportions or vice-versa, as a result of the transfer and there is no agreement for the sale of the relatedbook-entry interest or the ordinary shares or an interest in the ordinary shares, as the case may be, by the shareholder to a third party beingcontemplated.Stock Performance Graph The information contained in the performance graph shall not be deemed to be "soliciting material" or to be "filed" with the SEC, and suchinformation shall not be incorporated by reference into any future filing under the Securities Act or Exchange Act, except to the extent that Alkermesspecifically incorporates it by reference into such filing. The following graph compares the yearly percentage change in the cumulative total shareholder return on our ordinary shares for the last five fiscalyears, with the cumulative total return on the Nasdaq Stock Market (U.S. and Foreign) Index and the Nasdaq Biotechnology Index. It is important tonote that information set forth in the graph below with respect to the time period prior to September 16, 2011 refers to the common stock performanceof Alkermes, Inc., while that information with respect to the time period after September 16, 2011 refers to the ordinary share performance ofAlkermes plc. The comparison assumes $100 was invested on March 31, 2008 in our common stock and55Table of Contentsin each of the foregoing indices and further assumes reinvestment of any dividends. We did not declare or pay any dividends on our common stock orordinary shares during the comparison period.Comparison of Cumulative Total Returns 56 2008 2009 2010 2011 2012 2013 Alkermes 100 102 109 109 156 199 NASDAQ Stock Market (U.S.) Index 100 68 107 126 141 151 NASDAQ Biotechnology Index 100 87 120 133 164 214 Table of ContentsItem 6. Selected Financial Data The selected historical financial data set forth below at March 31, 2013 and 2012 and for the years ended March 31, 2013, 2012 and 2011 arederived from our audited consolidated financial statements, which are included elsewhere in this Annual Report. The selected historical financial data setforth below at March 31, 2011, 2010 and 2009 and for the years ended March 31, 2010 and 2009 are derived from audited consolidated financialstatements, which are not included in this Annual Report. The selected historical financial data for the period prior to September 16, 2011 is that ofAlkermes, Inc., while the selected historical financial data for the period after September 16, 2011 is that of Alkermes plc. The following selected consolidated financial data should be read in conjunction with our consolidated financial statements, the related notes and"Management's Discussion and Analysis of Financial Condition and Results of Operations" included elsewhere in this Annual Report. The historicalresults are not necessarily indicative of the results to be expected for any future period.57 Year Ended March 31, 2013 2012(1) 2011 2010 2009 (In thousands, except per share data) Consolidated Statements ofOperations Data: REVENUES: Manufacturing and royalty revenues $510,900 $326,444 $156,840 $149,917 $150,091 Product sales, net 58,107 41,184 28,920 20,245 4,467 Research and development revenue 6,541 22,349 880 3,117 42,087 Net collaborative profit(2) — — — 5,002 130,194 Total revenues 575,548 389,977 186,640 178,281 326,839 EXPENSES: Cost of goods manufactured andsold 170,466 127,578 52,185 49,438 43,396 Research and development 140,013 141,893 97,239 95,363 89,478 Selling, general andadministrative(3) 125,758 137,632 82,847 76,514 59,008 Amortization of acquired intangibleassets 41,852 25,355 — — — Restructuring(4) 12,300 — — — — Impairment of long-lived assets(5) 3,346 45,800 — — — Total expenses 493,735 478,258 232,271 221,315 191,882 OPERATING INCOME (LOSS) 81,813 (88,281) (45,631) (43,034) 134,957 OTHER EXPENSE, NET (46,372) (26,111) (860) (1,667) (3,945) INCOME (LOSS) BEFORE INCOMETAXES 35,441 (114,392) (46,491) (44,701) 131,012 PROVISION (BENEFIT) FORINCOME TAXES 10,458 (714) (951) (5,075) 507 NET INCOME (LOSS) $24,983 $(113,678)$(45,540)$(39,626)$130,505 EARNINGS (LOSS) PER COMMONSHARE: BASIC $0.19 $(0.99)$(0.48)$(0.42)$1.37 DILUTED $0.18 $(0.99)$(0.48)$(0.42)$1.36 WEIGHTED AVERAGE NUMBEROF COMMON SHARESOUTSTANDING: BASIC 131,713 114,702 95,610 94,839 95,161 DILUTED 137,100 114,702 95,610 94,839 96,252 Table of Contents58 Year Ended March 31, 2013 2012(1) 2011 2010 2009 (In thousands, except per share data) Consolidated Balance Sheet Data: Cash, cash equivalents and investments $304,179 $246,138 $294,730 $350,193 $404,482 Total assets 1,470,291 1,435,217 452,448 515,600 566,486 Long-term debt(6) 369,008 444,460 — — 75,888 Shareholders' equity 952,374 853,852 392,018 412,616 434,888 (1)On September 16, 2011, the business of Alkermes, Inc., and EDT were combined under Alkermes plc. We paid Elan$500.0 million in cash and issued Elan 31.9 million ordinary shares of the Company, which had a fair value of approximately$525.1 million on the closing date, for the EDT business. Alkermes, Inc.'s results are included for all periods being presented,whereas the results of the acquiree, EDT, are included only after the date of acquisition, September 16, 2011, through the end ofthe period. (2)Includes $120.7 million recognized as revenue upon the termination of the VIVITROL collaboration with Cephalon, Inc. duringthe year ended March 31, 2009. (3)Includes $29.1 million and $1.1 million of expenses in the years ended March 31, 2012 and 2011, respectively, related to theacquisition of EDT, which consists primarily of banking, legal and accounting expenses. (4)Represents a one-time charge in connection with the restructuring plan related to our Athlone, Ireland manufacturing facilityrecorded in the year ended March 31, 2013. The charge consists of severance payments and other employee-related expenses. (5)Includes an impairment charge of $3.3 million related to the impairment of certain of our equipment located at our Wilmington,Ohio manufacturing facility in the year ended March 31, 2013, and an impairment charge of $45.8 million related to theimpairment of certain of our IPR&D in the year ended March 31, 2012. (6)At March 31, 2013, long-term debt includes both the current and long-term portion of the 2013 Term Loans. The 2013 TermLoans were entered into to refinance our $310.0 million first lien term loan (the "First Lien Term Loan") and the $140.0 millionsecond lien term loan (the "Second Lien Term Loan" and, together with the First Lien Term Loan, the "2012 Term Loans"),which were originally entered into in September 2011. At March 31, 2012, long-term debt includes both the current and long-term portion of the 2012 Term Loans. At March 31, 2009, long-term debt included both the current and long-term portion of theNon-Recourse RISPERDAL CONSTA secured 7% Notes (the "non-recourse 7% Notes"). The non-recourse 7% Notes wereissued by RC Royalty Sub LLC, a wholly-owned subsidiary of Alkermes, Inc. ("Royalty Sub") on February 1, 2005 and werenon-recourse to Alkermes, Inc. These notes were fully redeemed on July 1, 2010 in advance of the previously scheduled maturitydate of January 1, 2012. Royalty Sub was dissolved during the year ended March 31, 2012.Table of ContentsItem 7. Management's Discussion and Analysis of Financial Condition and Results of Operations The following should be read in conjunction with our consolidated financial statements and related notes beginning on page F-1 of this AnnualReport. The following discussion contains forward-looking statements. Actual results may differ significantly from those projected in the forward-looking statements. See "Forward-Looking Statements." Factors that might cause future results to differ materially from those projected in the forward-looking statements also include, but are not limited to, those discussed in "Item 1A—Risk Factors" and elsewhere in this Annual Report.Overview We develop medicines that address the unmet needs and challenges of people living with chronic diseases. A fully integrated globalbiopharmaceutical company, we apply proven scientific expertise, proprietary technologies and global development capabilities to the creation ofinnovative treatments for major clinical conditions with a focus on CNS disorders, such as schizophrenia, addiction and depression. We create new,proprietary pharmaceutical products for our own account, and we collaborate with other pharmaceutical and biotechnology companies. We areincreasingly focused on maintaining rights to commercialize our leading product candidates in certain markets. On September 16, 2011, the business of Alkermes, Inc. and EDT were combined under the Business Combination in a transaction accounted foras a reverse acquisition with Alkermes, Inc. treated as the accounting acquirer. As a result, the operating results of the acquiree, EDT, are included onlyafter the date of acquisition, September 16, 2011. Prior to September 16, 2011, the operating results are that of Alkermes, Inc. For a more detaileddiscussion of the Business Combination, refer to Note 1, The Company, and Note 3, Acquisitions, in the accompanying Notes to Consolidated FinancialStatements for the year ended March 31, 2013.Executive Summary We and our pharmaceutical and biotechnology partners have more than 20 commercialized products sold worldwide, including in the U.S. We earnmanufacturing and/or royalty revenues on net sales of products commercialized by our partners and earn revenue on net sales of VIVITROL, which is aproprietary product that we manufacture, market and sell in the U.S. Our five key products are expected to generate significant revenues for us in thenear- and medium-term, as they possess long patent lives, are singular or competitively advantaged products in their class and are generally in the launchphases of their commercial lives. These five key products are: RISPERDAL CONSTA and INVEGA SUSTENNA/XEPLION;AMPYRA/FAMPYRA; BYDUREON; and VIVITROL. For the year ended March 31, 2013, we reported $575.5 million in revenues which represented an increase of 48% over the year ended March 31,2012. Revenues from our five key products accounted for 59% of our total consolidated revenues for the year ended March 31, 2013. For the yearended March 31, 2013, total operating expenses increased by $15.5 million, as compared to the year ended March 31, 2012, due primarily to theaddition of a full twelve months of activity from the former EDT business. In September 2012, we entered into an amendment (the "Refinancing") to the First Lien Term Loan pursuant to which the First Lien Term Loanwas amended and restated to, among other things, provide for a new tranche of term loans in an amount equal to $375.0 million, the proceeds of which,together with cash-on hand of approximately $75.0 million, were used to repay in full all monies due pursuant to the Second Lien Term Loan. The newterm loan facility includes the 2013 Term Loans and each of the 2013 Term Loans included a LIBOR floor of 1.0%. In February 2013, we further amended the 2013 Term Loans (the "Repricing") to secure: (i) a reduction in interest payable under Term Loan B-1to LIBOR plus 2.75% and a decrease in the59Table of ContentsLIBOR floor to 0.75%; (ii) a reduction in interest payable under Term Loan B-2 to LIBOR plus 2.75% and a decrease in the LIBOR floor to 0%; and(c) a shortened time period, from one year to six months, during which a refinancing of our term loans, as described in the amended and restated creditagreement, would trigger a 1% prepayment premium. In connection with the Refinancing and Repricing, we incurred a charge of $19.7 million, whichwas recorded within "Interest Expense," and we expect to save approximately $91.4 million in contractual cash interest expense through the remaininglife of the 2013 Term Loans.Results of OperationsManufacturing and Royalty Revenues Manufacturing revenues are earned from the sale of products under arrangements with our collaborators when product is shipped to them at anagreed upon price. Royalties are earned on our collaborators' sales of products that incorporate our technologies. Royalties are generally recognized inthe period the products are sold by our collaborators. The following table compares manufacturing and royalty revenues earned in the years endedMarch 31, 2013, 2012 and 2011: Our long-acting, antipsychotic franchise consists of RISPERDAL CONSTA and INVEGA SUSTENNA/XEPLION. Under our RISPERDALCONSTA supply and license agreements with Janssen, we earn manufacturing revenues at 7.5% of Janssen's unit net sales price of RISPERDALCONSTA and royalty revenues at 2.5%. Under our INVEGA SUSTENNA/XEPLION agreement with Janssen, we earn royalties on end-market salesof INVEGA SUSTENNA/XEPLION of 5% up to the first $250 million in calendar-year sales, 7% on calendar-year sales of between $250 million and$500 million, and 9% on calendar-year sales exceeding $500 million. The royalty rate resets at the beginning of each calendar-year to 5%. The decrease in RISPERDAL CONSTA manufacturing and royalty revenues for the year ended March 31, 2013, as compared to the year endedMarch 31, 2012, was primarily due to a 24% decrease in the number of units shipped to Janssen and a 9% decrease in royalties. The decrease inroyalties was due to a decrease in Janssen's end-market sales of RISPERDAL CONSTA from $1,540.3 million during the year ended March 31, 2012to $1,399.1 million during the year ended March 31, 2013. The increase in RISPERDAL CONSTA manufacturing and royalty revenues for the yearended March 31, 2012, as compared to the year ended March 31, 2011, was primarily due to an 8% increase in the number of units shipped to Janssenand a 1% increase in royalties. The increase in royalties was due to an increase in Janssen's end-market sales of RISPERDAL CONSTA from$1,525.6 million during the year ended March 31, 2011 to $1,540.3 million during the year ended March 31, 2012.60 Years Ended March 31, ChangeFavorable/(Unfavorable) (In millions) 2013 2012 2011 2013 - 2012 2012 - 2011 Manufacturing and royalty revenues: RISPERDAL CONSTA $133.6 $168.3 $154.3 $(34.7)$14.0 INVEGA SUSTENNA/XEPLION 63.5 18.0 — 45.5 18.0 AMPYRA/FAMPYRA 65.0 24.6 — 40.4 24.6 RITALIN LA & FOCALIN XR 40.3 23.1 — 17.2 23.1 TRICOR 145 37.5 27.8 — 9.7 27.8 VERELAN 23.8 14.2 — 9.6 14.2 BYDUREON 16.4 1.5 — 14.9 1.5 Other 130.8 48.9 2.5 81.9 46.4 Manufacturing and royalty revenues $510.9 $326.4 $156.8 $184.5 $169.6 Table of Contents The increase in royalty revenues from INVEGA SUSTENNA/XEPLION in the year ended March 31, 2013, as compared to the year endedMarch 31, 2012, was due to having a full twelve months of INVEGA SUSTENNA/XEPLION royalties in the year ended March 31, 2013 and anincrease in end-market sales of the product. Janssen's end-market sales of INVEGA SUSTENNA/XEPLION in the years ended March 31, 2013 and2012 were $920.0 million and $473.6 million, respectively. In the year ended March 31, 2012, we earned a royalty from Janssen for sales made duringthe period of September 16, 2011, the closing date of the Business Combination, through March 31, 2012. We expect revenues from our long-acting atypical antipsychotic franchise to continue to grow, as INVEGA SUSTENNA/XEPLION is launchedaround the world. A number of companies, including us, are working to develop products to treat schizophrenia and/or bipolar disorder that maycompete with RISPERDAL CONSTA and INVEGA SUSTENNA/XEPLION. Increased competition may lead to reduced unit sales of RISPERDALCONSTA and INVEGA SUSTENNA/XEPLION, as well as increasing pricing pressure. RISPERDAL CONSTA is covered by a patent until 2021 inthe EU and 2023 in the U.S., and INVEGA SUSTENNA/XEPLION is covered by a patent until 2018 in the EU and 2019 in the U.S., and as such, wedo not anticipate any generic versions in the near-term for either of these products. The increase in royalty revenues from AMPYRA/FAMPYRA was due to having a full twelve months of AMPYRA/FAMPYRA royalties in theyear ended March 31, 2013, an increase in demand for AMPYRA in the U.S. and an increase in the number of countries in which FAMPYRA is sold.Acorda's end-market sales of AMPYRA/FAMPYRA in the year ended March 31, 2013 and 2012 were $329.4 million and $249.7 million,respectively. In the year ended March 31, 2012, we earned a royalty from Acorda for sales made during the period of September 16, 2011, the closingdate of the Business Combination, through March 31, 2012. We expect AMPYRA/FAMPYRA sales to continue to grow as Acorda continues topenetrate the U.S. market with AMPYRA and Biogen Idec continues to launch FAMPYRA in the rest of the world. AMPYRA is covered by a patentuntil 2027 in the U.S. and FAMPYRA is covered by a patent until 2025 in the EU, and as such, we do not anticipate any generic versions of theseproducts in the near-term. A number of companies are working to develop products to treat multiple sclerosis that may compete withAMPYRA/FAMPYRA, which may negatively impact future sales of the products. The increase in royalty revenues from RITALIN LA & FOCALIN XR, TRICOR 145, and VERELAN and the other manufacturing and royaltyrevenues were primarily due to the addition of the portfolio of commercialized products from the former EDT business. Included in other manufacturingand royalty revenues is $50.0 million related to the exercise of an option to license certain of our intellectual property that is not used in our key clinicaldevelopment programs or commercial products. A number of our mature products, including RITALIN LA and VERELAN currently face genericcompetition. In November 2012, a generic version of TRICOR 145 was introduced to the market, and as a result, we have seen a reduction in the salesof TRICOR 145. A generic version of certain doses of FOCALIN XR is expected to occur at any time. As a result of these generic entries, we expectsales of these products to decline over the next few fiscal years. Certain of our manufacturing and royalty revenues are earned in countries outside of the U.S. and are denominated in currencies in which theproduct is sold. See "Item 7A. Quantitative and Qualitative Disclosures about Market Risk" for information on currency exchange rate risk related toour revenues.Product Sales, Net Our product sales, net consist of sales of VIVITROL in the U.S. to wholesalers, specialty distributors and specialty pharmacies. The followingtable presents the adjustments to arrive at61Table of ContentsVIVITROL product sales, net for sales of VIVITROL in the U.S. during the years ended March 31, 2013, 2012 and 2011: The increase in product sales, gross for the year ended March 31, 2013, as compared to the year ended March 31, 2012, was due to a 36% increasein the number of units sold. The increase in product sales, gross for the year ended March 31, 2012, as compared to the year ended March 31, 2011,was primarily due to a 34% increase in the number of units sold into the distribution channel and a 9% increase in price. The increases in Medicaidrebates and chargebacks during the year ended March 31, 2013, as compared to the year ended March 31, 2012, was primarily due to the increase inVIVITROL sales during the period. The increases in chargebacks during the year ended March 31, 2012, as compared to the year ended March 31,2011, was primarily due to the increase in the price of VIVITROL and increased 340B/PHS pricing discounts. We expect VIVITROL sales, net to continue to grow as we continue to penetrate the opioid dependence indication market in the U.S. In addition,we anticipate that Janssen-Cilag will increase sales of VIVITROL in Russia and the CIS, which are recorded as manufacturing and royalty revenues,and there exists the potential to launch the product in other countries around the world. A number of companies, including us, are working to developproducts to treat addiction, including alcohol and opioid dependence that may compete with VIVITROL, which may negatively impact future sales ofVIVITROL. Increased competition may lead to reduced unit sales of VIVITROL, as well as increasing pricing pressure. VIVITROL is covered by apatent that will expire in the U.S. in 2029 and in Europe in 2021 and, as such, we do not anticipate any generic versions of this product in the near-term.Research and Development Revenue62 Year EndedMarch 31, 2013 Year EndedMarch 31, 2012 Year EndedMarch 31, 2011 (In millions) Amount % of Sales Amount % of Sales Amount % of Sales Product sales, gross $78.5 100.0%$57.6 100.0%$39.3 100.0%Adjustments to productsales, gross: Medicaid rebates (5.9) (7.5)% (4.6) (8.0)% (3.1) (8.0)%Chargebacks (5.4) (6.9)% (4.1) (7.1)% (2.4) (6.1)%Product returns(1) 0.2 0.3% (1.3) (2.3)% (0.8) (2.0)%Co-pay assistance (3.2) (4.1)% (1.6) (2.8)% (0.6) (1.5)%Other (6.1) (7.8)% (4.8) (8.3)% (3.5) (8.9)% Total adjustments (20.4) (26.0)% (16.4) (28.5)% (10.4) (26.5)% Product sales, net $58.1 74.0%$41.2 71.5%$28.9 73.5% (1)Prior to August 1, 2012, product returns was a reserve for inventory in the channel; an estimate to defer the recognition ofrevenue on shipments of VIVITROL to our customers until the product left the distribution channel as we did not have thehistory to reasonably estimate returns related to these shipments. Beginning on August 1, 2012, we changed the method ofrevenue recognition to recognize revenue upon delivery to our customers and provide for a reserve for future returns. Thischange in the method of revenue recognition resulted in a one-time $1.7 million increase to product sales, net, which wasrecognized during the three months ended September 30, 2012. Years Ended March 31, ChangeFavorable/(Unfavorable) (In millions) 2013 2012 2011 2013 - 2012 2012 - 2011 Research and development revenue $6.5 $22.3 $0.9 $(15.8)$21.4 Table of Contents Research and development ("R&D") revenue is generally earned for services performed and milestones achieved under arrangements with ourcollaborators. The decrease in R&D revenue for the year ended March 31, 2013, as compared to the year ended March 31, 2012, was primarily due to$14.0 million in BYDUREON milestone payments we received during the year ended March 31, 2012. Under our agreement with Amylin, we receiveda $7.0 million milestone payment related to the first commercial sale of BYDUREON in the EU in July 2011 and a $7.0 million milestone paymentrelated to the first commercial sale of BYDUREON in the U.S. in February 2012. During the year ended March 31, 2012, we also received a$3.0 million milestone payment upon receipt of regulatory approval for VIVITROL in Russia for the opioid dependence indication.Costs and ExpensesCost of Goods Manufactured and Sold The increase in cost of goods manufactured and sold in the year ended March 31, 2013, as compared to the year ended March 31, 2012, wasprimarily due to an increase of $48.5 million in cost of goods manufactured from the EDT portfolio of commercialized products and a $4.2 millionincrease in VIVITROL cost of goods manufactured and sold, partially offset by a $10.4 million decrease in RISPERDAL CONSTA cost of goodsmanufactured. The increase in cost of goods manufactured from the EDT portfolio of commercialized products is primarily due to having a full twelvemonths of cost of goods manufactured expense in the year ended March 31, 2013. The increase in VIVITROL cost of goods manufactured and sold isdue to a 25% increase in the amount of VIVITROL sold in the U.S. and shipped to Russia for resale by Cilag. The decrease in RISPERDAL CONSTAcost of goods manufactured is due to a 24% decrease in the amount of RISPERDAL CONSTA shipped to Janssen. The increase in cost of goods manufactured and sold in the year ended March 31, 2012, as compared to the year ended March 31, 2011, wasprimarily due to the addition of $70.0 million of cost of goods manufactured from the addition of EDT's portfolio of commercialized products and a$3.0 million increase in VIVITROL cost of goods manufactured and sold primarily due to an increase in the number of VIVITROL units sold.Research and Development Expenses For each of our R&D programs, we incur both external and internal expenses. External R&D expenses include costs related to clinical and non-clinical activities performed by contract research organizations, consulting fees, laboratory services, purchases of drug product materials and third-partymanufacturing development costs. Internal R&D expenses include employee-related expenses, occupancy costs, depreciation and general overhead. Wetrack external R&D expenses for each of our development programs, however, internal R&D expenses are not tracked by individual program as theybenefit multiple programs or our technologies in general.63 Years Ended March 31, ChangeFavorable/(Unfavorable) (In millions) 2013 2012 2011 2013 - 2012 2012 - 2011 Cost of goods manufactured and sold $170.5 $127.6 $52.2 $(42.9)$(75.4) Table of Contents The following table sets forth our external R&D expenses relating to our individual Key Development Programs and all other developmentprograms, and our internal R&D expenses by the nature of such expenses: These amounts are not necessarily predictive of future R&D expenditures. In an effort to allocate our spending most effectively, we continuallyevaluate the products under development, based on the performance of such products in preclinical and/or clinical trials, our expectations regarding thelikelihood of their regulatory approval and our view of their commercial viability, among other factors. The increase in R&D expenses related to the aripiprazole lauroxil program in the year ended March 31, 2013, as compared to the year endedMarch 31, 2012, was primarily due to the continuation of the phase 3 study, initiated in December 2011, to assess the efficacy, safety and tolerability ofaripiprazole lauroxil in approximately 690 patients experiencing acute exacerbation of schizophrenia. The increase in R&D expenses related to theALKS 5461 program in the year ended March 31, 2013, as compared to the year ended March 31, 2012, was primarily due to the phase 2 study ofALKS 5461, initiated in January 2012, to evaluate the efficacy and safety of ALKS 5461 in approximately 130 patients with MDD. The results of thisphase 2 study were announced in April 2013. The decrease in R&D expenses related to the ALKS 37 program in the year ended March 31, 2013, ascompared to the year ended March 31, 2012, was due to the decision in May 2012 not to advance ALKS 37 after the results from the phase 2bmulticenter, randomized, double-blind, placebo-controlled, repeat-dose study did not satisfy our pre-specified criteria for advancing into phase 3 clinicaltrials. The increase in R&D expenses related to the aripiprazole lauroxil program in the year ended March 31, 2012, as compared to the year endedMarch 31, 2011, was primarily due to increased work leading up to and the initiation of the phase 3 study in December 2011. The increase in R&Dexpenses related to the ALKS 37 program in the year ended March 31, 2012, as compared to the year ended March 31, 2011, was primarily due toincreased work leading up to and the initiation of two phase 2b studies of ALKS 37, which began in July 2011 and October 2011. The increase in total internal R&D expenses in the year ended March 31, 2013, as compared to the year ended March 31, 2012, and for the yearended March 31, 2012, as compared to the year ended March 31, 2011, are primarily due to the addition of the former EDT business in September2011.64 Years Ended March 31, ChangeFavorable/(Unfavorable) (In millions) 2013 2012 2011 2013 - 2012 2012 - 2011 External R&D Expenses: Key development programs: Aripiprazole lauroxil $40.2 $21.8 $6.5 $(18.4)$(15.3)ALKS 5461 8.3 — — (8.3) — ALKS 37 3.4 23.5 11.1 20.1 (12.4)ALKS 3831 2.9 — — (2.9) — Other development programs 12.7 26.6 30.2 13.9 3.6 Total external expenses 67.5 71.9 47.8 4.4 (24.1) Internal R&D expenses: Employee-related 52.9 48.3 33.1 (4.6) (15.2)Occupancy 5.0 5.1 6.0 0.1 0.9 Depreciation 5.8 4.7 2.7 (1.1) (2.0)Other 8.8 11.9 7.6 3.1 (4.3) Total internal R&D expenses 72.5 70.0 49.4 (2.5) (20.6) Research and development expenses $140.0 $141.9 $97.2 $1.9 $(44.7) Table of Contents We expect an increase in R&D expenses in the year ended March 31, 2014 primarily due to increased R&D investment as certain of our keydevelopment programs, most notably ALKS 5461 and ALKS 3831, continue to advance through the pipeline and as aripiprazole lauroxil nearscompletion of its phase 3 clinical trial.Selling, General and Administrative Expenses The decrease in selling, general and administrative ("SG&A") expenses for the year ended March 31, 2013, as compared to the year endedMarch 31, 2012, was primarily due to a $26.0 million decrease in professional service expense, partially offset by an $11.4 million increase inemployee-related expenses. The decrease in professional service expense was primarily due to $29.1 million of costs incurred in connection with theBusiness Combination during the year ended March 31, 2012. The increase in employee-related expense was primarily due to having a full twelvemonths of employee-related expenses from the former EDT business as well as an increase in share-based compensation expense due in part to theincrease in the number of eligible participants in our equity plans as a result of the Business Combination, and the fact that recent equity grants havebeen awarded with higher grant-date fair values than older grants due to the increase in our stock price. The increase in SG&A costs for the year ended March 31, 2012, as compared to the year ended March 31, 2011, was primarily due to an increaseof $24.7 million in professional service expenses, $8.0 million in employee-related expenses and $3.0 million in marketing expense from theAlkermes, Inc., business, as well as the addition of $18.3 million of SG&A expense for the former EDT business. The increase in professional serviceswas primarily due to costs incurred in connection with the Business Combination. The increase in employee-related expenses was primarily due to anincrease in headcount and share-based compensation expense as recent equity grants have been awarded with higher grant-date fair values than oldergrants, and the increase in marketing expenses was due to an analysis we performed to determine the marketability of our existing products and productcandidates.Amortization of Acquired Intangible Assets The intangible assets being amortized in the year ended March 31, 2013 and 2012 were acquired as part of the Business Combination. Inconnection with the Business Combination, we acquired certain amortizable intangible assets with a fair value of $643.2 million, which are expected tobe amortized over 12 to 13 years. We amortize our amortizable intangible assets using the economic use method, which reflects the pattern that theeconomic benefits of the intangible assets are consumed as revenue is generated from the underlying patent or contract. Based on our most recentanalysis, amortization of intangible assets included within our consolidated balance sheet at March 31, 2013 is expected to be approximately$50.0 million, $60.0 million, $65.0 million, $70.0 million and $70.0 million in the fiscal years ending March 31, 2014 through 2018, respectively. We also acquired $92.7 million of goodwill in connection with the Business Combination, which is considered an indefinite-lived asset and is notamortized, but is subject to an annual review for65 Years Ended March 31, ChangeFavorable/(Unfavorable) (In millions) 2013 2012 2011 2013 - 2012 2012 - 2011 Selling, general and administrative $125.8 $137.6 $82.8 $11.8 $(54.8) Years Ended March 31, ChangeFavorable/(Unfavorable) (In millions) 2013 2012 2011 2013 - 2012 2012 - 2011 Amortization of acquired intangible assets $41.9 $25.4 $— $(16.5)$(25.4) Table of Contentsimpairment or when circumstances indicate the fair value may be below its carrying value. Our goodwill solely relates to, and has been assigned to, areporting unit which consists of the former EDT business. We performed our annual goodwill impairment test during the three months endedDecember 31, 2012 and determined that the fair value of the former EDT business reporting unit was substantially in excess of its respective carryingvalue and there was no impairment in the value of this asset.Restructuring On April 4, 2013, we approved a restructuring plan related to our Athlone, Ireland manufacturing facility consistent with the evolution of ourproduct portfolio and designed to improve operational performance in the future. Under the restructuring plan, we will terminate manufacturing servicesfor certain older products becoming uneconomic to produce due to decreasing demand from its customers resulting from generic competition. We expectto continue to generate revenues from the manufacturing of these products during fiscal year 2014 and, for certain of these products, into fiscal year2015. As a result of the termination of these services, we expect to implement a corresponding reduction in headcount of up to 130 employees. Therestructuring plan commenced immediately and will be implemented over a period of approximately two years. This restructuring plan is expected toresult in estimated annual cost savings of between $15.0 million to $20.0 million by fiscal year 2016 and beyond. In conjunction with the restructuring plan, we recorded a one-time restructuring charge, expected to be settled in cash payments, related toseverance and other employee-related expenses of $12.3 million in the year ended March 31, 2013, as we determined that an obligation had beenincurred, it was probable that the obligation would be paid and the amount of the obligation could be reasonably estimated. The total amount of therestructuring charges is accrued at March 31, 2013. As part of the restructuring plan, we also expect to incur non-cash charges resulting from the accelerated depreciation of certain manufacturingassets, currently estimated to be approximately $10.0 million and $7.0 million in the years ended March 31, 2014 and 2015, respectively.Impairment of Long-Lived Assets During the three months ended March 31, 2013, we performed an impairment analysis on certain of our manufacturing equipment dedicated to theproduction of VIVITROL. We determined that the manufacturing space previously assigned to VIVITROL will be used for the scale-up of thearipiprazole lauroxil manufacturing line. As such, certain equipment, originally purchased by Cephalon in connection with our VIVITROL collaborationand later acquired by us upon the termination of the VIVITROL collaboration, was determined to have no future use. We recorded an impairment charge of $3.3 million which represents the net carrying value of the equipment less the proceeds received upon thesale of certain of this equipment.66 Years Ended March 31, ChangeFavorable/(Unfavorable) (In millions) 2013 2012 2011 2013 - 2012 2012 - 2011 Restructuring $12.3 $— $— $(12.3)$— Years Ended March 31, ChangeFavorable/(Unfavorable) (In millions) 2013 2012 2011 2013 - 2012 2012 - 2011 Impairment of long-lived assets $3.3 $45.8 $— $42.5 $(45.8) Table of Contents During the year ended March 31, 2012, and after finalization of the purchase accounting for the Business Combination, we identified events andchanges in circumstances, such as correspondence from regulatory authorities and further clinical trial results related to three product candidates,including Megestrol for use in Europe, acquired as part of the Business Combination which indicated that the assets may be impaired. Accordingly, weperformed an analysis to measure the amount of the impairment loss, if any. We performed the valuation of the IPR&D from the viewpoint of a marketparticipant through the use of a discounted cash flow model. The model contained certain key assumptions including: the cost to bring the productsthrough the clinical trial and regulatory approval process; the gross margin a market participant would likely earn if the product were approved for sale;the cost to sell the approved product; and a discount factor based on an industry average weighted average cost of capital. Based on the analysisperformed, we determined that the IPR&D was impaired and recorded an impairment charge of $45.8 million.Other Expense, Net The increase in interest expense for the year ended March 31, 2013, as compared to the year ended March 31, 2012, is primarily due to theRefinancing and Repricing transactions. The Refinancing and Repricing transactions were considered a restructuring of our 2012 Term Loans andinvolved multiple lenders who were considered a part of a loan syndicate. For accounting purposes, certain of the debt restructuring was treated either asan extinguishment or modification of the 2012 Term Loans. The treatment of the debt restructuring and the $19.7 million charge to interest expense inconnection with the Refinancing and Repricing is as follows: The increase in interest expense for the year ended March 31, 2012, as compared to the year ended March 31, 2011, was primarily due to our entryinto $450.0 million of term loan financing in July 2011. The 2012 Term Loans became effective upon the closing of the Business Combination inSeptember 2011. Included in interest expense during the year ended March 31, 2012 are commitment fees of $5.9 million which were incurred duringthe period from when we priced the 2012 Term Loans, effective July 1, 2011, to when the 2012 Term Loans were funded in September 2011.67 Years Ended March 31, ChangeFavorable/(Unfavorable) (In millions) 2013 2012 2011 2013 - 2012 2012 - 2011 Interest income $0.8 $1.5 $2.7 $(0.7)$(1.2)Interest expense (49.0) (28.1) (3.3) (20.9) (24.8)Other income (expense), net 1.8 0.5 (0.3) 1.3 0.8 Total other expense, net $(46.4)$(26.1)$(0.9)$(20.3)$(25.2) (In millions) September 2012Refinancing February 2013Repricing Total Extinguished debt: Unamortized deferred financing costs $4.6 $1.6 $6.2 Unamortized original issue discount 2.7 1.4 4.1 Modified debt: Debt financing costs 2.0 0.8 2.8 Original issue discount 0.1 — 0.1 Prepayment penalty 2.8 3.7 6.5 Total $12.2 $7.5 $19.7 Table of ContentsProvision for Income Taxes Our income tax expense for the year ended March 31, 2013 consists of a current income tax provision of $12.5 million and a deferred income taxbenefit of $2.0 million. The current income tax provision is primarily due to U.S. federal and state taxes of $8.2 million and $2.6 million respectively onincome earned in the U.S., and foreign withholding taxes of $1.7 million. The deferred income tax benefit is primarily due to a benefit of $2.0 million inIreland as a result of the reversals of deferred tax liabilities for intangible assets for which the book basis exceeds the tax basis. The intangible assets arebeing amortized for book purposes over the life of the assets. Our effective tax rate is 29.5%, which is higher than the Irish statutory tax rate of 12.5% due to a number of factors, including income taxable at arate higher than the Irish statutory rate, losses in certain tax jurisdictions for which no tax benefit is currently available and various expenses notdeductible for income tax purposes. Our income tax benefit for the year ended March 31, 2012 consists of a current income tax provision of $14.0 million and a deferred income taxbenefit of $14.7 million. The current income tax provision is primarily due to a provision of $13.1 million on the taxable transfer of the BYDUREONintellectual property from the U.S. to Ireland. The deferred tax benefit is primarily due to a benefit of $4.6 million from the partial release of the Irishdeferred tax liability relating to acquired intellectual property that was established in connection with the Business Combination and a benefit of$9.9 million due to the partial release of an existing U.S. Federal valuation allowance as a consequence of the Business Combination. In connection withthe Business Combination, we were incorporated, and are headquartered, in Dublin, Ireland. As a result, our statutory tax rate decreased from 34% inthe U.S. to 12.5% in Ireland. As of March 31, 2013, we had $438.3 million of Irish Net Operating Loss ("NOL") carryforwards, $70.4 million of U.S. federal NOLcarryforwards and $8.7 million of state NOL carryforwards which either expire on various dates through 2032 or can be carried forward indefinitely.These loss carryforwards are available to reduce certain future Irish and U.S. taxable income, if any. These loss carryforwards are subject to review andpossible adjustment by the appropriate taxing authorities. These loss carryforwards, which may be utilized in any future period, may be subject tolimitations based upon changes in the ownership of our stock. We have performed a review of ownership changes in accordance with the U.S. InternalRevenue Code and have determined that it is more likely than not that, as a result of the Business Combination, we have experienced a change ofownership. As a consequence, our U.S. federal NOL carryforwards and tax credit carryforwards are subject to an annual limitation of $127.0 million. At March 31, 2013 we determined, based on the weight of all available positive and negative evidence, on a jurisdiction by jurisdiction basis, that itis more likely than not that a significant portion of our net deferred tax assets will not be realized, and a valuation allowance has been recorded.However, if we demonstrate consistent profitability in the future, the evaluation of the recoverability of the net deferred tax assets could change and thevaluation allowance could be released in whole or in part.68 Years Ended March 31, ChangeFavorable/(Unfavorable) (In millions) 2013 2012 2011 2013 - 2012 2012 - 2011 Income tax expense (benefit) $10.5 $(0.7)$(1.0)$(11.2)$(0.3) Table of ContentsLiquidity and Capital Resources Our financial condition is summarized as follows:Sources and Uses of Cash We expect that funds generated from results of operations will be sufficient to finance our anticipated working capital and other cash requirements,such as capital expenditures and principal and interest payments for the foreseeable future. In the event business conditions were to deteriorate, we couldrely on borrowings under the 2013 Term Loans, which has an incremental facility capacity in the amount of $140.0 million, plus additional amounts aslong as we meet certain conditions, including a specified leverage ratio. Information about our cash flows, by category, is presented in the accompanying consolidated statements of cash flows. The following tablesummarizes our cash flows for the years ended March 31, 2013, 2012 and 2011:Operating Activities Cash provided by operating activities increased in the year ended March 31, 2013, as compared to the year ended March 31, 2012, which wasprimarily due to an increase in cash provided from net income of $150.4 million. This was partially offset by a decrease in cash from working capital,most notably from a decrease in cash from accounts receivable of $14.2 million and a decrease in cash from deferred revenue of $9.4 million. Cash used by operating activities decreased in the year ended March 31, 2012, as compared to the year ended March 31, 2011, which wasprimarily due to a decrease in cash used in net income of $8.6 million and $6.6 million of payments made in connection with the early redemption of ournon-recourse 7% Notes during the year ended March 31, 2011. This was partially offset by changes in working capital, most notably from a decrease incash provided by receivables of $16.4 million and an increase in cash used to purchase inventory, prepaid expenses and other assets of $10.1 million.During the year ended March 31, 2011, we redeemed the balance of our non-recourse 7% Notes in full at 101.75% of the outstanding principal balancein accordance with the terms of the Indenture for the non-recourse 7% Notes. We allocated $6.6 million of the principal payments made during the yearended March 31, 2011 to operating activities to account for the original issue discount on the non-recourse 7% Notes, and the remaining $45.4 millionof principal payments was allocated to financing activities in the consolidated statement of cash flows.69(In millions) March 31,2013 March 31,2012 Cash and cash equivalents $97.0 $83.6 Investments—short-term 124.4 106.8 Investments—long-term 82.8 55.7 Total cash and investments $304.2 $246.1 Working capital $322.7 $250.0 Outstanding borrowings—current and long-term $369.0 $444.5 Years Ended March 31, (In millions) 2013 2012 2011 Cash and cash equivalents, beginning of period $83.6 $38.4 $79.3 Cash provided by (used in) operating activities 126.5 (2.5) (5.9)Cash (used in) provided by investing activities (68.1) (417.1) 5.6 Cash (used in) provided by financing activities (45.0) 464.8 (40.6) Cash and cash equivalents, end of period $97.0 $83.6 $38.4 Table of ContentsInvesting Activities The increase in cash flows provided by investing activities in the year ended March 31, 2013, as compared to the year ended March 31, 2012, wasprimarily due to $500.0 million of cash used in the purchase of the former EDT business in September 2011, partially offset by an increase in the netpurchase of investments of $139.8 million. During the year ended March 31, 2013, we made net purchases of investments of $45.0 million whereas inthe year ended March 31, 2012, we made net sales of investments of $94.8 million due in part to fund the purchase of the former EDT business. The increase in cash flows provided by investing activities in the year ended March 31, 2012, as compared to the year ended March 31, 2011, wasprimarily due to the $500.0 million of cash we paid to acquire EDT and a $7.6 million increase in cash used to acquire property, plant and equipment,partially offset by a $79.7 million increase in the net sales of investments. We expect to spend approximately $20.0 million during the nine months ended December 31, 2013 for capital expenditures. Amounts included asconstruction in progress in the consolidated balance sheets primarily include capital expenditures at our manufacturing facility in Ohio. We continue toevaluate our manufacturing capacity based on expectations of demand for our products and will continue to record such amounts within construction inprogress until such time as the underlying assets are placed into service, or we determine we have sufficient existing capacity and the assets are nolonger required, at which time we would recognize an impairment charge. We continue to periodically evaluate whether facts and circumstances indicatethat the carrying value of these long-lived assets to be held and used may not be recoverable.Financing Activities The increase in cash flows used in financing activities in the year ended March 31, 2013, as compared to the year ended March 31, 2012, wasprimarily due to the $444.1 million of cash received upon the issuance of the 2012 Term Loans in September 2011. During the year ended March 31,2013, we used $74.2 million of cash in the Refinancing attributable to financing activities, and $4.2 million of cash for principal payments on our long-term debt, which was offset by a $13.5 million increase in cash received from our employees upon the exercise of stock awards. The increase in cash provided by financing activities during the year ended March 31, 2012, as compared to the year ended March 31, 2011, wasprimarily due to our entry into the 2012 Term Loans and an increase of $14.7 million of cash received from our employees upon the exercise of stockawards. At March 31, 2013, our investments consisted of the following: Our investment objectives are, first, to preserve liquidity and conserve capital and, second, to generate investment income. We mitigate credit riskin our cash reserves by maintaining a well-diversified portfolio that limits the amount of investment exposure as to institution, maturity and investmenttype. However, the value of these securities may be adversely affected by the instability of the global financial markets, which could, in turn, adverselyimpact our financial position and our overall liquidity. Our available-for-sale investments consist primarily of short- and long-term70 GrossUnrealized AmortizedCost EstimatedFair Value (In millions) Gains Losses Investments—short-term $124.3 $0.1 $— $124.4 Investments—long-term available-for-sale 81.8 — (0.2) 81.6 Investments—long-term held-to-maturity 1.2 — — 1.2 Total $207.3 $0.1 $(0.2)$207.2 Table of ContentsU.S. government and agency debt securities, debt securities issued by foreign agencies and backed by foreign governments, and corporate debtsecurities. Our held-to-maturity investments consist of investments that are restricted and held as collateral under certain letters of credit related to certainof our lease agreements. We classify available-for-sale investments in an unrealized loss position, which do not mature within 12 months, as long-term investments. Wehave the intent and ability to hold these investments until recovery, which may be at maturity, and it is more likely than not that we would not berequired to sell these securities before recovery of their amortized cost. At March 31, 2013, we performed an analysis of our investments withunrealized losses for impairment and determined that they are temporarily impaired. At March 31, 2013 and 2012, none and 7%, respectively, of our investments are valued using unobservable, or Level 3 inputs, to determine fairvalue as they are not actively trading and fair values could not be derived from quoted market prices. During the year ended March 31, 2013, the twosecurities that were included in Level 3 at March 31, 2012 were transferred out of Level 3 as trading in these securities resumed during the period.Borrowings At March 31, 2013, our borrowings consisted of $371.6 million of term loan financing under the 2013 Term Loans. Please refer to Note 11, Long-Term Debt, in the accompanying Notes to Consolidated Financial Statements for a discussion of our outstanding term loans.Contractual Obligations The following table summarizes our obligations to make future payments under our current contracts at March 31, 2013: As interest on Term Loan B-1 is based on three-month LIBOR, we assumed LIBOR to be 0.75%, which is the LIBOR rate floor under the termsof Term Loan B-1. As there is no LIBOR rate floor under Term Loan B-2, we assumed one-month LIBOR to be 0.20%, which was the one-monthLIBOR rate at March 31, 2013. This table excludes any liabilities pertaining to uncertain tax positions as we cannot make a reliable estimate of theperiod of cash settlement with the respective taxing authorities. At March 31, 2013, we have $1.2 million of net liabilities associated with uncertain taxpositions and we expect a net reduction in the amount of the $1.2 million due to the expected resolution of certain matters over the next 12 months. In September 2006, we entered into a license agreement with the Rensselaer Polytechnic Institute ("RPI") which granted us exclusive rights to afamily of opioid receptor compounds discovered at RPI. Under the terms of the agreement, RPI granted us an exclusive worldwide license to certainpatents and patent applications relating to its compounds designed to modulate opioid receptors. We are71Contractual Obligations Total Less ThanOne Year(Fiscal 2014) One toThree Years(Fiscal2015 - 2016) Three toFive Years(Fiscal2017 - 2018) More thanFive Years(After Fiscal2019) (In thousands) 2013 Term Loans—Principal $371,625 $6,750 $13,500 $67,875 $283,500 2013 Term Loans—Interest 72,697 12,524 24,401 20,987 14,785 Operating lease obligations 27,348 3,838 8,038 7,122 8,350 Purchase obligations 72,277 72,277 — — — Capital expansion programs 3,722 3,722 — — — Total contractual cashobligations $547,669 $99,111 $45,939 $95,984 $306,635 Table of Contentsresponsible for the continued research and development of any resulting product candidates. We are obligated to pay annual fees of up to $0.2 million,and tiered royalty payments of between 1% and 4% of annual net sales in the event any products developed under the agreement are commercialized. Inaddition, we are obligated to make milestone payments in the aggregate of up to $9.1 million upon certain agreed-upon development events. All amountspaid to RPI to date under this license agreement have been expensed and are included in R&D expenses. Due to the contingent nature of the payments under the RPI arrangement, we cannot predict the amount or period in which royalty, milestone andother payments may be made and accordingly they are not included in the table of contractual maturities.Off-Balance Sheet Arrangements At March 31, 2013, we were not a party to any off-balance sheet arrangements that have, or are reasonably likely to have, a current or future effecton our financial condition, changes in financial condition, revenue or expenses, results of operations, liquidity, capital expenditures or capital resources.Critical Accounting Estimates Our consolidated financial statements are prepared in accordance with GAAP. In connection with the preparation of our financial statements, weare required to make assumptions and estimates about future events, and apply judgments on historical experience, current trends and other factors thatmanagement believes to be relevant at the time our consolidated financial statements are prepared. On a regular basis, we review the accounting policies,assumptions, estimates and judgments to ensure that our financial statements are presented fairly and in accordance with GAAP. However, becausefuture events and their effects cannot be determined with certainty, actual results could differ from our assumptions and estimates, and such differencescould be material. Our significant accounting policies are discussed in Note 2, Summary of Significant Accounting Policies, of the Notes to Consolidated FinancialStatements. We believe that the following accounting estimates are the most critical to aid in fully understanding and evaluating our reported financialresults, and they require our most difficult, subjective or complex judgments, resulting from the need to make estimates about the effect of matters thatare inherently uncertain. We have reviewed these critical accounting estimates and related disclosures with the Audit and Risk Committee of our boardof directors.Manufacturing and Royalty Revenue Our manufacturing and royalty revenues are earned under the terms of collaboration agreements with pharmaceutical companies, the mostsignificant of which include Janssen for RISPERDAL CONSTA and INVEGA SUSTENNA/XEPLION, Acorda for AMPYRA/FAMPYRA andBristol-Myers for BYDUREON. Manufacturing revenues are recognized when persuasive evidence of an arrangement exists, delivery has occurredand title to the product and associated risk of loss has passed to the customer, the sales price is fixed or determinable and collectability is reasonablyassured. The sales price for certain of our manufacturing revenues is based on the end-market sales price earned by our collaborative partners. As the end-market sale occurs after we have shipped our product and the risk of loss has passed to our collaborative partner, we estimate the sales price for ourproduct based on information supplied to us by our collaborative partners, our historical transaction experience and other third-party data. Differencesbetween the actual manufacturing revenues and estimated manufacturing revenues are reconciled and adjusted for in the period in which they becomeknown, which is generally the following quarter.72Table of Contents Royalty revenues are related to the sale of products by our collaborative partners that incorporate our technologies. Royalties are earned under theterms of a license agreement in the period the products are sold by our collaborative partner, and the royalty earned can be reliably measured andcollectability is reasonably assured. Sales information is provided to us by our collaborative partners and may require estimates to be made. Differencesbetween actual royalty revenues and estimated royalty revenues are reconciled and adjusted for in the period in which they become known, which isgenerally the following quarter.Product Sales, Net We recognize revenue from product sales of VIVITROL when persuasive evidence of an arrangement exists, and title to the product andassociated risk of loss has passed to the customer, the sales price is fixed or determinable and collectability is reasonably assured. We sell VIVITROLto pharmaceutical wholesalers, specialty distributors and specialty pharmacies. VIVITROL product sales are recorded net of sales reserves and allowances. Sales of many pharmaceutical products in the U.S. are subject toincreased pricing pressure from managed care groups, institutions, government agencies and other groups seeking discounts. We and otherpharmaceutical and biotechnology companies selling products in the U.S. market are required to provide statutorily defined rebates and discounts tovarious U.S. government and state agencies in order to participate in the Medicaid program and other government-funded programs. The sensitivity ofour estimates can vary by program and type of customer. Estimates associated with Medicaid and other U.S. government allowances may becomesubject to adjustment in a subsequent period. We record VIVITROL product sales net of the following significant categories of product salesallowances:•Medicaid Rebates—we record accruals for rebates to states under the Medicaid Drug Rebate Program as a reduction of sales when theproduct is shipped into the distribution channel. We rebate individual states for all eligible units purchased under the Medicaid programbased on a rebate per unit calculation, which is based on our Average Manufacturer Price ("AMP"). We estimate expected unit sales andrebates per unit under the Medicaid program and adjust our rebate estimates based on actual unit sales and rebates per unit. To date,actual Medicaid rebates have not differed materially from our estimates; •Chargebacks—wholesaler and specialty pharmacy chargebacks are discounts that occur when contracted customers purchase directlyfrom an intermediary wholesale purchaser. Contracted customers, which consist primarily of federal government agencies purchasingunder the FSS, generally purchase the product at its contracted price, plus a mark-up from the wholesaler. The wholesaler, in-turn,charges back to us the difference between the price initially paid by the wholesaler and the contracted price paid to the wholesaler by thecustomer. The allowance for wholesaler chargebacks is based on actual and expected utilization of these programs. Wholesalerchargebacks could exceed historical experience and our estimates of future participation in these programs. To date, actual wholesalerchargebacks have not differed materially from our estimates; •Product Returns—we record an estimate for product returns at the time our customer takes title to our product. We estimate the liabilitybased on our historical return levels and specifically identified anticipated returns due to known business conditions and product expirydates. Once VIVITROL is returned, it is destroyed. At March 31, 2013, our product return reserve rate is estimated to be approximately2% of our product sales.Prior to August 2012, we deferred the recognition of revenue on shipments of VIVITROL to our customers until the product left thedistribution channel as we did not have sufficient history to reasonably estimate returns related to VIVITROL shipments. We estimatedproduct shipments out of the distribution channel through data provided by external sources, including73Table of Contentsinformation on inventory levels provided by our customers in the distribution channel, as well as prescription information. In order tomatch the cost of goods related to products shipped to customers with the associated revenue, we deferred the recognition of the cost ofgoods to the period in which the associated revenue is recognized;•Co-pay assistance—we have a program whereby a patient can receive up to $500 per month towards their co-payment, co-insurance ordeductible, provided the patient meets certain eligibility criteria. Reserves are recorded upon the sale of VIVITROL. Our provisions for VIVITROL sales and allowances reduced gross VIVITROL sales as follows:Investments We hold investments in U.S. government and agency obligations, debt securities issued by non-U.S. agencies and backed by governments outsidethe U.S. and corporate debt securities. In addition, we hold strategic equity investments, which include the common stock of public companies we haveor had a collaborative arrangement with. Substantially all of our investments are classified as "available-for-sale" and are recorded at their estimated fairvalue. The valuation of our available-for-sale securities for purposes of determining the amount of gains and losses is based on the specific identificationmethod. Our held-to-maturity investments are restricted investments held as collateral under certain letters of credit related to our lease arrangements andare recorded at amortized cost. The earnings on our investment portfolio may be adversely affected by changes in interest rates, credit ratings, collateral value, the overall strengthof credit markets and other factors that may result in other-than-temporary declines in the value of the securities. On a quarterly basis, we review the fairmarket value of our investments in comparison to amortized cost. If the fair market value of a security is less than its carrying value, we perform ananalysis to assess whether we intend to sell or whether we would more likely than not be required to sell the security before the expected recovery of the74(In millions) MedicaidRebates Chargebacks ProductReturns Co-PayAssistance Other Total Balance, April 1, 2011 $1.3 $0.1 $2.5 $— $1.2 $5.1 Provision: Current period 4.6 4.2 3.8 2.3 4.9 19.8 Prior period — — — — — — Total 4.6 4.2 3.8 2.3 4.9 19.8 Actual: Current period (3.3) (4.1) — (2.2) (4.2) (13.8)Prior period (1.1) (0.1) (2.5) — (1.1) (4.8) Total (4.4) (4.2) (2.5) (2.2) (5.3) (18.6) Balance, March 31, 2012 $1.5 $0.1 $3.8 $0.1 $0.8 $6.3 Provision: Current period 6.0 5.4 3.7 3.2 6.1 24.4 Prior period (0.1) — (3.9) — — (4.0) Total 5.9 5.4 (0.2) 3.2 6.1 20.4 Actual: Current period (4.2) (5.4) (0.5) (3.3) (5.6) (19.0)Prior period (1.3) (0.1) — (0.3) (1.7) Total (5.5) (5.5) (0.5) (3.3) (5.9) (20.7) Balance, March 31, 2013 $1.9 $— $3.1 $— $1.0 $6.0 Table of Contentsamortized cost basis. Where we intend to sell a security, or may be required to do so, the security's decline in fair value is deemed to be other-than-temporary, and the full amount of the unrealized loss is recorded within earnings as an impairment loss. Regardless of our intent to sell a security, weperform additional analysis on all securities with unrealized losses to evaluate losses associated with the creditworthiness of the security. Credit lossesare identified where we do not expect to receive cash flows sufficient to recover the amortized cost basis of a security. For equity securities, when assessing whether a decline in fair value below our cost basis is other-than-temporary, we consider the fair marketvalue of the security, the duration of the security's decline and the financial condition of the issuer. We then consider our intent and ability to hold theequity security for a period of time sufficient to recover our carrying value. Where we have determined that we lack the intent and ability to hold anequity security to its expected recovery, the security's decline in fair value is deemed to be other-than-temporary and is recorded within earnings as animpairment loss. We classify our financial assets and liabilities as Level 1, 2 or 3 within the fair value hierarchy. Fair values determined by Level 1 inputs utilizequoted prices (unadjusted) in active markets for identical assets or liabilities. Fair values determined by Level 2 inputs are based on a market approachusing quoted prices obtained from brokers or dealers for similar securities or for securities for which we have limited visibility into their tradingvolumes. Valuations of these financial instruments do not require a significant degree of judgment. Fair values determined by Level 3 inputs utilizeunobservable data points for the asset. Our Level 3 investments are valued using discounted cash flow models that include assumptions such asestimates for interest rates, the timing of cash flows, expected holding periods and risk adjusted discount rates, which include provisions for default andliquidity risk. We also consider assumptions market participants would use in their estimate of fair value, such as collateral underlying the securities, thecreditworthiness of the issuers, associated guarantees, bid and ask prices and callability features. While we believe the valuation methodologies areappropriate, the use of valuation methodologies is highly judgmental and changes in methodologies can have a material impact on our results ofoperations.Share-Based Compensation We have a share-based compensation plan, which includes incentive stock options, non-qualified stock options and restricted stock units. SeeNote 2, Summary of Significant Accounting Policies, and Note 14, Share-Based Compensation in our Notes to Consolidated Financial Statements for acomplete discussion of our share-based compensation plans. The fair value of restricted stock units is equal to the closing price of our stock on the date of grant. The fair value of stock option awards isdetermined through the use of a Black-Scholes option-pricing model. The Black-Scholes model requires us to estimate certain subjective assumptions.These assumptions include the expected option term, which takes into account both the contractual term of the option and the effect of our employees'expected exercise and post-vesting termination behavior, expected volatility of our ordinary shares over the option's expected term, which is developedusing both the historical volatility of our ordinary shares and implied volatility from our publicly traded options, the risk-free interest rate over theoption's expected term, and an expected annual dividend yield. Due to the differing exercise and post-vesting termination behavior of our employees andnon-employee directors, we establish separate Black-Scholes input assumptions for three distinct employee populations: our senior management; ournon-employee directors; and all other employees.75Table of ContentsFor the year ended March 31, 2013, 2012 and 2011, the ranges in weighted-average assumptions were as follows: In addition to the above, we apply judgment in developing estimates of award forfeitures. For the year ended March 31, 2013, we used anestimated forfeiture rate of zero for our non-employee directors, 1.75% for members of senior management and 8.25% for all other employees. For all of the assumptions used in valuing stock options and estimating award forfeitures, our historical experience is generally the starting pointfor developing our assumptions, which may be modified to reflect information available at the time of grant that would indicate that the future isreasonably expected to differ from the past.Amortization and Impairment of Long-Lived Assets Long-lived assets other than goodwill, which is separately tested for impairment, are evaluated for impairment whenever events or changes incircumstances indicate the carrying value of an asset may not be recoverable. When evaluating long-lived assets for potential impairment, we firstcompare the carrying value of the asset to the asset's estimated future cash flows (undiscounted and without interest charges). If the estimated futurecash flows are less than the carrying value of the asset, we calculate an impairment loss. The impairment loss calculation compares the carrying value ofthe asset to the asset's estimated fair value, which may be based on estimated future cash flows (discounted and with interest charges). We recognize animpairment loss if the amount of the asset's carrying value exceeds the asset's estimated fair value. If we recognize an impairment loss, the adjustedcarrying amount of the asset becomes its new cost basis. For a depreciable long-lived asset, the new cost basis will be depreciated over the remaininguseful life of that asset. When reviewing long-lived assets for impairment, we group long-lived assets with other assets and liabilities at the lowest level for whichidentifiable cash flows are largely independent of the cash flows of other assets and liabilities. Our impairment loss calculations contain uncertaintiesbecause they require management to make assumptions and to apply judgment to estimate future cash flows and asset fair values, including forecastinguseful lives of the assets and selecting the discount rate that reflects the risk inherent in future cash flows. Our amortizable intangible assets include technology and collaborative arrangements that were acquired as part of the Business Combination.These intangible assets are being amortized as revenue is generated from these products, which we refer to as the economic benefit amortization model.This amortization methodology involves calculating a ratio of actual current period sales to total anticipated sales for the life of the product and applyingthis ratio to the carrying amount of the intangible asset. An analysis of the anticipated product sales generated from our amortizable intangible assets isperformed at least annually during our planning cycle, and this analysis serves as the basis for the calculation of our economic benefit amortizationmodel. We amortize our amortizable intangible assets using the economic use method, which reflects the pattern in which the economic benefits of theintangible assets are consumed. In order to determine the pattern in which the economic benefits of our intangible assets are consumed, we estimated thefuture revenues to be earned under our collaboration agreements and our NanoCrystal and OCR technology-based intangible assets from the date ofacquisition to the end of their respective useful76 Year Ended March 31, 2013 2012 2011Expected option term 5 - 7 years 5 - 7 years 5 - 7 yearsExpected stock volatility 47% - 49% 47% - 51% 46% - 51%Risk-free interest rate 0.61% - 1.18% 0.82% - 2.5% 1.11% - 3.42%Expected annual dividend yield — — —Table of Contentslives. The factors used to estimate such future revenues include: (i) our and our collaborative partners' projected future sales of the existing commercialproducts based on these intangible assets; (ii) our projected future sales of new products based on these intangible assets which we anticipate will belaunched commercially; (iii) the patent lives of the technologies underlying such existing and new products; and (iv) our expectations regarding the entryof generic and/or other competing products into the markets for such existing and new products. These factors involve known and unknown risks anduncertainties, many of which are beyond our control and could cause the actual economic benefits of these intangible assets to be materially differentfrom our estimates. We allocate the value of our intangible assets to match the expected revenue pattern. Based on our most recent analysis, amortization of intangibleassets included within our consolidated balance sheet at March 31, 2013, is expected to be approximately $50.0 million, $60.0 million, $65.0 million,$70.0 million and $70.0 million in the fiscal years ending March 31, 2014 through 2018, respectively. Although we believe such available informationand assumptions are reasonable, given the inherent risks and uncertainties underlying our expectations regarding such future revenues, there is thepotential for our actual results to vary significantly from such expectations. If revenues are projected to change, the related amortization of the intangibleasset will change in proportion to the change in revenue. If there are any indications that the assumptions underlying our most recent analysis would be different than those utilized within our currentestimates, our analysis would be updated and may result in a significant change in the anticipated lifetime revenue of the products associated with ouramortizable intangible assets. For example, the occurrence of an adverse event could substantially increase the amount of amortization expenseassociated with our acquired intangible assets as compared to previous periods or our current expectations, which may result in a significant negativeimpact on our future results of operations.Goodwill We evaluate goodwill for impairment annually in the quarter ended December 31, and whenever events or changes in circumstances indicate theircarrying value may not be recoverable. The goodwill for each reporting unit is tested using a two-step process. A reporting unit is an operating segment,as defined by the segment reporting accounting standards, or a component of an operating segment. A component of an operating segment is a reportingunit if the component constitutes a business for which discrete financial information is available and is reviewed by management. Two or morecomponents of an operating segment may be aggregated and deemed a single reporting unit for goodwill impairment testing purposes if the componentshave similar economic characteristics. As of December 31, 2012, we have one operating segment and two reporting units. Our goodwill, which solelyrelates to the EDT acquisition in the fiscal year ended March 31, 2012, has been assigned to one reporting unit which consists of the former EDTbusiness. The first step of the goodwill impairment test requires us to compare the fair value of the reporting unit to its respective carrying value, whichincludes goodwill. If the fair value of the reporting unit exceeds its carrying value, the goodwill is not considered impaired. If the carrying value ishigher than the fair value, there is an indication that an impairment may exist and the second step is required. In step two, the implied fair value ofgoodwill is calculated as the excess of the fair value of a reporting unit over the fair values assigned to its assets and liabilities. If the implied fair valueof goodwill is less than the carrying value of the reporting unit's goodwill, the difference is recognized as an impairment loss. We worked with a third-party valuation firm and established fair value for the purpose of impairment testing by using an average of the incomeapproach and the market approach. The income approach employs a discounted cash flow model that takes into account: (i) assumptions that market77Table of Contentsparticipants would use in their estimates of fair value; (ii) current period actual results; and (iii) budgeted results for future periods that have been vettedby senior management. The discounted cash flow model incorporates the same fundamental pricing concepts used to calculate fair value in anacquisition due diligence process and a discount rate that takes into consideration our estimated cost of capital adjusted for the uncertainty inherent in anacquisition. The market approach employs market multiples for comparable publicly traded companies in the pharmaceutical and biotechnologyindustries obtained from industry sources, taking into consideration the nature, scope and size of the acquired reporting unit. In the market approach,estimates of fair value are established using an average of both revenue and EBITDA multiples, adjusted for the reporting unit's performance relative topeer companies. We determined that the fair value of the former EDT business reporting unit was substantially in excess of its respective carrying value and therewas no impairment in the value of this asset as of December 31, 2012. A decline in the estimated fair value of a reporting unit could result in goodwillimpairment, and a related non-cash impairment charge against earnings, if the estimated fair value for the reporting unit is less than the carrying value ofthe net assets of the reporting unit, including its goodwill. A large decline in estimated fair value of a reporting unit could result in an adverse effect onour financial condition and results of operations. In order to evaluate the sensitivity of the fair value calculations relating to our goodwill impairmentassessment, we applied a hypothetical decrease to the estimated fair value of the former EDT business reporting unit and we determined that a decreasein fair value of at least 47% would be required before this reporting unit would have a carrying value in excess of its fair value.Acquisitions—Purchase Price Allocation In accordance with accounting guidance for business combinations, we allocate the purchase price of an acquired business to its identifiable assetsand liabilities based on estimated fair values. The excess of the purchase price over the amount allocated to the assets and liabilities, if any, is recorded asgoodwill. We adjust the preliminary purchase price allocation as necessary, up to one year after the acquisition closing date as we obtain moreinformation regarding asset values and liabilities assumed. Our intangible assets consist primarily of collaboration agreements and technology associated with human therapeutic products that we acquired aspart of the Business Combination. When significant identifiable intangible assets are acquired, we engage an independent third-party valuation firm toassist in determining the fair values of these assets as of the acquisition date. Discounted cash flow models are typically used in these valuations, whichrequire the use of significant estimates and assumptions, including but not limited to:•estimating the timing of and expected costs to complete the in-process projects; •projecting regulatory approvals; •estimating future cash flows from product sales resulting from completed products and in-process projects; and •developing appropriate discount rates and probability rates by project. We believe the fair values assigned to the intangible assets acquired are based upon reasonable estimates and assumptions given available facts andcircumstances as of the acquisition dates. If these projects are not successfully developed, the sales and profitability of the company may be adverselyaffected in future periods. Additionally, the value of the acquired intangible assets may become impaired. No assurance can be given, however, that theunderlying assumptions used to estimate expected product sales, development costs or profitability, or the events associated with such products, willtranspire as estimated.78Table of ContentsIncome Taxes We use the asset and liability method of accounting for deferred income taxes. Our most significant tax jurisdictions are the Irish and U.S. federalgovernments and states. Significant estimates are required in determining our provision for income taxes. Some of these estimates are based onmanagement's interpretations of jurisdiction-specific tax laws or regulations and the likelihood of settlement related to tax audit issues. Various internaland external factors may have favorable or unfavorable effects on our future effective income tax rate. These factors include, but are not limited to,changes in tax laws, regulations and/or rates, changing interpretations of existing tax laws or regulations, changes in estimates of prior years' items,likelihood of settlement, and changes in overall levels of income before taxes. In evaluating our ability to recover our deferred tax assets, we consider allavailable positive and negative evidence including our past operating results, the existence of cumulative income in the most recent fiscal years, changesin the business in which we operate and our forecast of future taxable income. In determining future taxable income, we are responsible for assumptionsutilized including the amount of state, federal and international pre-tax operating income, the reversal of temporary differences and the implementation offeasible and prudent tax planning strategies. These assumptions require significant judgment about the forecasts of future taxable income and areconsistent with the plans and estimates that we are using to manage the underlying businesses. At March 31, 2013, we determined, based on the weightof all available positive and negative evidence, on a jurisdiction by jurisdiction basis, that it is more likely than not that a significant portion of the netdeferred tax assets will not be realized, and a valuation allowance has been recorded. However, if we demonstrate consistent profitability in the future,the evaluation of the recoverability of the deferred tax asset could change and the valuation allowance could be released in part or in whole. We account for uncertain tax positions using a "more-likely-than-not" threshold for recognizing and resolving uncertain tax positions. Theevaluation of uncertain tax positions is based on factors that include, but are not limited to, changes in tax law, the measurement of tax positions taken orexpected to be taken in tax returns, the effective settlement of matters subject to audit, new audit activity and changes in facts or circumstances related toa tax position. We evaluate uncertain tax positions on a quarterly basis and adjust the level of the liability to reflect any subsequent changes in therelevant facts surrounding the uncertain positions. Our liabilities for uncertain tax positions can be relieved only if the contingency becomes legallyextinguished through either payment to the taxing authority or the expiration of the statute of limitations, the recognition of the benefits associated withthe position meet the more-likely-than-not threshold or the liability becomes effectively settled through the examination process. We consider matters tobe effectively settled once the taxing authority has completed all of its required or expected examination procedures, including all appeals andadministrative reviews; we have no plans to appeal or litigate any aspect of the tax position, and we believe that it is highly unlikely that the taxingauthority would examine or re-examine the related tax position. We also accrue for potential interest and penalties related to unrecognized tax benefits inincome tax expense.Recent Accounting Pronouncements Please refer to Note 2, Summary of Significant Accounting Policies, "New Accounting Pronouncements" in our Consolidated Financial Statementsfor a discussion of new accounting standards.Item 7A. Quantitative and Qualitative Disclosures about Market Risk We hold securities in our investment portfolio that are sensitive to market risks. Our securities with fixed interest rates may have their market valueadversely impacted by a rise in interest rates, while floating rate securities may produce less income than expected if interest rates fall. Due in part tothese factors, our future investment income may fall short of expectation due to a fall in interest rates or we may suffer losses in principal if we areforced to sell securities that decline in market value79Table of Contentsdue to changes in interest rates. However, because we classify our investments in debt securities as available-for-sale, no gains or losses are recognizeddue to changes in interest rates unless such securities are sold prior to maturity or declines in fair value are determined to be other-than-temporary.Should interest rates fluctuate by 10%, our interest income would change by an immaterial amount over an annual period. Due to the conservative natureof our short-term and long-term investments and our investment policy, we do not believe that we have a material exposure to interest rate risk as ourinvestment policies specify credit quality standards for our investments and limit the amount of credit exposure from any single issue, issuer or type ofinvestment. We do not believe that inflation and changing prices have had a material impact on our results of operations, and as over 78% of our investmentsare in debt securities issued by the U.S. government, our exposure to liquidity and credit risk is not believed to be significant. In accordance with the terms of the 2012 Term Loans, we entered into two interest rate cap agreements and an interest rate swap agreement tomitigate the interest rate risk on $225.0 million principal amount of the 2012 Term Loans, however, in connection with the Refinancing, there is nolonger a requirement that we enter into such instruments to mitigate our interest rate risk. At March 31, 2013, an interest rate cap and an interest rateswap agreement have yet to mature and remain outstanding. The interest rate cap, with a notional amount of $160.0 million, protects us if three-monthLIBOR were to reach 3% from the date of issuance through December 13, 2013. The interest rate swap protects us if three-month LIBOR were to reach2.057% from December 3, 2012 through September 3, 2014. Term Loan B-1 bears interest at three-month LIBOR plus 2.75% with a LIBOR floor of 0.75%. As the three-month LIBOR rate was 0.28% atMarch 31, 2013, and the LIBOR floor under Term Loan B-1 is 0.75%; and as our interest rate cap and swap fixes our interest rate at 3% for$160.0 million principal amount and 2.057% for $65.0 million principal amount, respectively, we do not expect changes in the three-month LIBOR tohave a material effect on our financial statements through March 31, 2014. Term Loan B-2 bears interest at one-month LIBOR plus 2.75% with no LIBOR floor. At March 31, 2013, the one-month LIBOR rate was 0.20%.A 10% increase in the one-month LIBOR rate would increase our interest expense in the year ended March 31, 2014 by an immaterial amount. We do not use derivative financial instruments for speculative trading purposes. The counterparties to our interest rate cap and interest rate swapcontracts are multinational commercial banks. We believe the risk of counterparty nonperformance is remote.Currency Exchange Rate Risk Manufacturing and royalty revenues we receive on certain of our significant products, including RISPERDAL CONSTA, XEPLION,FAMPYRA, TRICOR 145, BYDUREON, FOCALIN XR and RITALIN LA are a percentage of the net sales made by our collaborative partners. Asignificant portion of these sales are made in countries outside the U.S. and are denominated in currencies in which the product is sold, which ispredominantly the Euro. The manufacturing and royalty payments on these non-U.S. sales are calculated initially in the currency in which the sale ismade and are then converted into USD to determine the amount that our partners pay us for manufacturing and royalty revenues. Fluctuations in theexchange ratio of the USD and these non-U.S. currencies will have the effect of increasing or decreasing our manufacturing and royalty revenues evenif there is a constant amount of sales in non-U.S. currencies. For example, if the USD weakens against a non-U.S. currency, then our manufacturingand royalty revenues will increase given a constant amount of sales in such non-U.S. currency. For the year ended March 31, 2013, an average 10%strengthening of the USD relative to the currencies in which these products are sold would have resulted in our manufacturing and royalty revenuesbeing reduced by approximately $14.9 million.80Table of Contents As a result of the Business Combination, we incur substantial operating costs in Ireland. We face exposure to changes in the exchange ratio of theUSD and the Euro arising from expenses and payables at our Irish operations that are settled in Euro. The impact of changes in the exchange ratio of theUSD and the Euro on our USD denominated manufacturing and royalty revenues earned in countries other than the U.S. is partially offset by theopposite impact of changes in the exchange ratio of the USD and the Euro on operating expenses and payables incurred at our Irish operations that aresettled in Euro. For the fiscal year ended March 31, 2013, an average 10% weakening in the USD relative to the Euro would have resulted in anincrease to our expenses denominated in Euro of $7.5 million.81Table of ContentsItem 8. Financial Statements and Supplementary DataSelected Quarterly Financial Data All financial statements, other than the quarterly financial data as required by Item 302 of Regulation S-K summarized above, required to be filedhereunder, are filed as an exhibit hereto, are listed under Item 15(a) (1) and (2), and are incorporated herein by reference.82(In thousands, except per share data) FirstQuarter SecondQuarter ThirdQuarter FourthQuarter Total Year Ended March 31, 2013 REVENUES: Manufacturing and royalty revenues $138,380 $107,327 $118,274 $146,919 $510,900 Product sales, net 12,372 15,192 15,917 14,626 58,107 Research and development revenue 1,487 1,459 1,718 1,877 6,541 Total revenues 152,239 123,978 135,909 163,422 575,548 EXPENSES: Cost of goods manufactured and sold 42,070 41,491 38,914 47,991 170,466 Research and development 37,806 35,088 31,319 35,800 140,013 Selling, general and administrative 29,784 31,428 29,867 34,679 125,758 Amortization of acquired intangible assets 10,434 10,547 10,549 10,322 41,852 Restructuring — — — 12,300 12,300 Impairment of long-lived assets — — — 3,346 3,346 Total expenses 120,094 118,554 110,649 144,438 493,735 OPERATING INCOME (LOSS) 32,145 5,424 25,260 18,984 81,813 OTHER (EXPENSE), NET (8,948) (21,709) (4,597) (11,118) (46,372) INCOME (LOSS) BEFORE INCOME TAXES 23,197 (16,285) 20,663 7,866 35,441 INCOME TAX PROVISION 764 422 4,405 4,867 10,458 NET INCOME (LOSS) $22,433 $(16,707)$16,258 $2,999 $24,983 EARNINGS (LOSS) PER SHARE—BASIC $0.17 $(0.13)$0.12 $0.02 $0.19 EARNINGS (LOSS) PER SHARE—DILUTED $0.17 $(0.13)$0.12 $0.02 $0.18 Year Ended March 31, 2012 REVENUES: Manufacturing and royalty revenues $48,940 $54,039 $112,780 $110,685 $326,444 Product sales, net 9,686 9,887 10,597 11,014 41,184 Research and development revenue 3,257 8,052 2,266 8,774 22,349 Total revenues 61,883 71,978 125,643 130,473 389,977 EXPENSES: Cost of goods manufactured and sold 16,219 17,530 42,752 51,077 127,578 Research and development 28,050 28,160 40,493 45,190 141,893 Selling, general and administrative 31,497 36,234 35,469 34,432 137,632 Amortization of acquired intangible assets — 1,817 11,896 11,642 25,355 Impairment of long-lived assets — — — 45,800 45,800 Total expenses 75,766 83,741 130,610 188,141 478,258 OPERATING INCOME (LOSS) (13,883) (11,763) (4,967) (57,668) (88,281)OTHER INCOME (EXPENSE), NET 591 (6,842) (9,763) (10,097) (26,111) INCOME (LOSS) BEFORE INCOME TAXES (13,292) (18,605) (14,730) (67,765) (114,392) INCOME TAX (BENEFIT) PROVISION (54) 3,650 98 (4,408) (714) NET INCOME (LOSS) $(13,238)$(22,255)$(14,828)$(63,357)$(113,678) BASIC AND DILUTED (LOSS) PER SHARE $(0.14)$(0.22)$(0.11)$(0.49)$(0.99) Table of ContentsItem 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure Not applicable.Item 9A. Controls and ProceduresDisclosure Controls and Procedures and Internal Control over Financial ReportingControls and Procedures Our management has evaluated, with the participation of our principal executive officer and principal financial officer, the effectiveness of ourdisclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended), as ofMarch 31, 2013. Based upon that evaluation, our principal executive officer and principal financial officer concluded that, as of the end of the periodcovered by this report, our disclosure controls and procedures were effective to provide reasonable assurance that (a) the information required to bedisclosed by us in the reports that we file or submit under the Securities Exchange Act is recorded, processed, summarized and reported within the timeperiods specified in the SEC's rules and forms, and (b) such information is accumulated and communicated to our management, including our principalexecutive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosure. In designing and evaluating ourdisclosure controls and procedures, our management recognized that any controls and procedures, no matter how well designed and operated, canprovide only reasonable assurance of achieving the desired control objectives, and our management necessarily was required to apply its judgment inevaluating the cost-benefit relationship of possible controls and procedures.Changes in Internal Control over Financial Reporting There were no changes in our internal control over financial reporting during the quarter ended March 31, 2013 that have materially affected, or arereasonably likely to materially affect, our internal control over financial reporting.Management's Annual Report on Internal Control over Financial Reporting Our management is responsible for establishing and maintaining adequate internal control over our financial reporting as defined in Rules 13a-15(f) and 15d-15(f). Internal control over financial reporting is defined in Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act as a processdesigned by, or under the supervision of, the issuer's principal executive and principal financial officers, or persons performing similar functions, andeffected by the issuer's board of directors, management and other personnel to provide reasonable assurance regarding the reliability of financialreporting and the preparation of financial statements for external purposes in accordance with GAAP and includes those policies and procedures that:•pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect our transactions and dispositions of the assetsof the issuer; •provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance withGAAP, and that receipts and expenditures of the issuer are being made only in accordance with authorizations of management anddirectors of the issuer; and •provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the issuer'sassets that could have a material effect on the financial statements.83Table of Contents Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Projections of any evaluationof effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree ofcompliance with the policies or procedures may deteriorate. Our management assessed the effectiveness of our internal control over financial reporting as of March 31, 2013. In making this assessment,management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission ("COSO") in Internal Control—Integrated Framework. Based on this assessment, our management has concluded that, as of March 31, 2013, our internal control over financial reporting was effective. The effectiveness of our internal control over financial reporting as of March 31, 2013 has been audited by PricewaterhouseCoopers LLP, anindependent registered public accounting firm, as stated in their report, which is included herein.Item 9B. Other Information On May 21, 2013, with such authority delegated to it by our Board of Directors, the Audit and Risk Committee of our Board approved a change toour fiscal year-end from March 31 to December 31. We will file the report for the transition period ending December 31, 2013 in our Annual Report onForm 10-K.84Table of ContentsPART IIIItem 10. Directors, Executive Officers and Corporate Governance The information required by this item is incorporated herein by reference to the 2013 Proxy Statement.Item 11. Executive Compensation The information required by this item is incorporated herein by reference to the 2013 Proxy Statement.Item 12. Security Ownership of Certain Beneficial Owners and Management The information required by this item is incorporated herein by reference to the 2013 Proxy Statement.Item 13. Certain Relationships and Related Transactions and Director Independence The information required by this item is incorporated herein by reference to the 2013 Proxy Statement.Item 14. Principal Accounting Fees and Services The information required by this item is incorporated herein by reference to the 2013 Proxy Statement.PART IVItem 15. Exhibits and Financial Statement Schedules85(a)(1) Consolidated Financial Statements—The consolidated financial statements of Alkermes plc, required by this item are submitted in a separatesection beginning on page F-1 of this Form 10-K.(2) Financial Statement Schedules—All schedules have been omitted because the absence of conditions under which they are required orbecause the required information is included in the consolidated financial statements or notes thereto.Table of ContentsSIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signedon its behalf by the undersigned, thereunto duly authorized.POWER OF ATTORNEY Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of theRegistrant and in the capacities and on the dates indicated. Each person whose signature appears below in so signing also makes, constitutes and appoints Richard F. Pops and James M. Frates, and each ofthem, his true and lawful attorney-in-fact, with full power of substitution, for him in any and all capacities, to execute and cause to be filed with theSecurities and Exchange Commission any and all amendments to this Form 10-K, with exhibits thereto and other documents in connection therewith,and hereby ratifies and confirms all that said attorney-in-fact or his substitute or substitutes may do or cause to be done by virtue hereof.86 ALKERMES PLC By: /s/ RICHARD F. POPSRichard F. PopsChairman and Chief Executive OfficerMay 23, 2013 Signature Title Date /s/ RICHARD F. POPSRichard F. Pops Chairman and Chief Executive Officer(Principal Executive Officer) May 23, 2013/s/ JAMES M. FRATESJames M. Frates Senior Vice President and Chief FinancialOfficer (Principal Financial and AccountingOfficer) May 23, 2013/s/ DAVID W. ANSTICEDavid W. Anstice Director May 23, 2013/s/ FLOYD E. BLOOMFloyd E. Bloom Director May 23, 2013/s/ ROBERT A. BREYERRobert A. Breyer Director May 23, 2013Table of Contents87Signature Title Date /s/ WENDY L. DIXONWendy L. Dixon Director May 23, 2013/s/ GERALDINE HENWOODGeraldine Henwood Director May 23, 2013/s/ PAUL J. MITCHELLPaul J. Mitchell Director May 23, 2013/s/ MARK B. SKALETSKYMark B. Skaletsky Director May 23, 2013/s/ NANCY J. WYSENSKINancy J. Wysenski Director May 23, 2013Table of ContentsEXHIBIT INDEX 88Exhibit No. Description of Exhibit 2.1++Business Combination Agreement and Plan of Merger, dated as of May 9, 2011, by and amongElan, Alkermes, Inc., Alkermes plc and certain other parties (Incorporated by reference to Annex Ato the proxy statement/prospectus forming a part of the Registration Statement on Form S-4, asamended (Registration No. 333-175078), which was declared effective by the Securities andExchange Commission on August 4, 2011.) 3.1++Amended and Restated Memorandum and Articles of Association of Alkermes plc (Incorporated byreference to Exhibit 3.1 to the Alkermes plc Current Report on Form 8-K filed on September 16,2011.) 10.3++Lease Agreement, dated as of April 22, 2009 between PDM Unit 850, LLC, and Alkermes, Inc.(Incorporated by reference to Exhibit 10.5 to the Alkermes, Inc. Annual Report on Form 10-K forthe fiscal year ended March 31, 2009 (File No. 001-14131).) 10.4++First Amendment to Lease Agreement between Alkermes, Inc. and PDM Unit 850, LLC, dated as ofJune 18, 2009 (Incorporated by reference to Exhibit 10.2 to the Alkermes, Inc. Quarterly Report onForm 10-Q for the quarter ended June 30, 2009 (File No. 001-14131).) 10.5++*License Agreement, dated as of February 13, 1996, between Medisorb TechnologiesInternational L.P. and Janssen Pharmaceutica Inc. (U.S.) (assigned to Alkermes, Inc. in July 2006).(Incorporated by reference to Exhibit 10.19 to the Alkermes, Inc. Annual Report on Form 10-K forthe fiscal year ended March 31, 1996 (File No. 000-19267).) 10.6++*License Agreement, dated as of February 21, 1996, between Medisorb TechnologiesInternational L.P. and Janssen Pharmaceutica International (worldwide except United States)(assigned to Alkermes, Inc. in July 2006). (Incorporated by reference to Exhibit 10.20 to theAlkermes, Inc. Annual Report on Form 10-K for the fiscal year ended March 31, 1996 (FileNo. 000-19267).) 10.7++**Manufacturing and Supply Agreement, dated August 6, 1997, by and among Alkermes ControlledTherapeutics Inc. II, Janssen Pharmaceutica International and Janssen Pharmaceutica, Inc. (assignedto Alkermes, Inc. in July 2006). (Incorporated by reference to Exhibit 10.19 to the Alkermes, Inc.Annual Report on Form 10-K for the fiscal year ended March 31, 2002 (File No. 001-14131).) 10.8++***Third Amendment To Development Agreement, Second Amendment To Manufacturing and SupplyAgreement and First Amendment To License Agreements by and between Janssen PharmaceuticaInternational Inc. and Alkermes Controlled Therapeutics Inc. II, dated April 1, 2000 (assigned toAlkermes, Inc. in July 2006) (with certain confidential information deleted). (Incorporated byreference to Exhibit 10.5 to the Alkermes, Inc. Quarterly Report on Form 10-Q for the quarter endedDecember 31, 2004 (File No. 001-14131).)Table of Contents89Exhibit No. Description of Exhibit 10.9++***Fourth Amendment To Development Agreement and First Amendment To Manufacturing andSupply Agreement by and between Janssen Pharmaceutica International Inc. and AlkermesControlled Therapeutics Inc. II, dated December 20, 2000 (assigned to Alkermes, Inc. in July 2006)(with certain confidential information deleted). (Incorporated by reference to Exhibit 10.4 to theAlkermes, Inc. Quarterly Report on Form 10-Q for the quarter ended December 31, 2004 (FileNo. 001-14131).) 10.10++**Addendum to Manufacturing and Supply Agreement, dated August 2001, by and among AlkermesControlled Therapeutics Inc. II, Janssen Pharmaceutica International and JanssenPharmaceutica, Inc. (assigned to Alkermes, Inc. in July 2006). (Incorporated by reference toExhibit 10.19(b) to the Alkermes, Inc. Annual Report on Form 10-K for the fiscal year endedMarch 31, 2002 (File No. 001-14131).) 10.11++**Letter Agreement and Exhibits to Manufacturing and Supply Agreement, dated February 1, 2002, byand among Alkermes Controlled Therapeutics Inc. II, Janssen Pharmaceutica International andJanssen Pharmaceutica, Inc. (assigned to Alkermes, Inc. in July 2006). (Incorporated by reference toExhibit 10.19(a) to the Alkermes, Inc. Annual Report on Form 10-K for the fiscal year endedMarch 31, 2002 (File No. 001-14131).) 10.12++***Amendment to Manufacturing and Supply Agreement by and between JPI PharmaceuticaInternational, Janssen Pharmaceutica Inc. and Alkermes Controlled Therapeutics Inc. II, datedDecember 22, 2003 (assigned to Alkermes, Inc. in July 2006) (with certain confidential informationdeleted). (Incorporated by reference to Exhibit 10.8 to the Alkermes, Inc. Quarterly Report onForm 10-Q for the quarter ended December 31, 2004 (File No. 001-14131).) 10.13++***Fourth Amendment To Manufacturing and Supply Agreement by and between JPI PharmaceuticaInternational, Janssen Pharmaceutica Inc. and Alkermes Controlled Therapeutics Inc. II, datedJanuary 10, 2005 (assigned to Alkermes, Inc. in July 2006) (with certain confidential informationdeleted). (Incorporated by reference to Exhibit 10.9 to the Alkermes, Inc. Quarterly Report onForm 10-Q for the quarter ended December 31, 2004 (File No. 001-14131).) 10.14++***Agreement by and between JPI Pharmaceutica International, Janssen Pharmaceutica Inc. andAlkermes Controlled Therapeutics Inc. II, dated December 21, 2002 (assigned to Alkermes, Inc. inJuly 2006) (with certain confidential information deleted). (Incorporated by reference to Exhibit 10.6to the Alkermes, Inc. Quarterly Report on Form 10-Q for the quarter ended December 31, 2004(File No. 001-14131).) 10.15++***Amendment to Agreement by and between JPI Pharmaceutica International, JanssenPharmaceutica Inc. and Alkermes Controlled Therapeutics Inc. II, dated December 16, 2003(assigned to Alkermes, Inc. in July 2006) (with certain confidential information deleted).(Incorporated by reference to Exhibit 10.7 to the Alkermes, Inc. Quarterly Report on Form 10-Q forthe quarter ended December 31, 2004 (File No. 001-14131).)Table of Contents90Exhibit No. Description of Exhibit 10.16++****Second Amendment, dated as of August 16, 2012, to the License Agreement, dated as ofFebruary 13, 1996, as amended, by and between Alkermes, Inc. ("Alkermes") and JanssenPharmaceutica, Inc. ("Janssen US") and the License Agreement, dated as of February 21, 1996, asamended, by and between Alkermes and JPI Pharmaceutica International, a division of Cilag GmbHInternational ("JPI") (Janssen US and JPI together, "Janssen"), and the Fifth Amendment, dated asof August 16, 2012, to the Manufacturing and Supply Agreement, dated as of August 6, 1997, asamended, by and between Alkermes and Janssen. (Incorporated herein by reference to Exhibit 10.3of the Alkermes plc Quarterly Report on Form 10-Q for the quarter ended September 30, 2012). 10.17++Amended and Restated License Agreement, dated September 26, 2003, by and between AcordaTherapeutics, Inc. and Elan Corporation, plc (Incorporated by reference to Exhibit 10.14 of theAcorda Therapeutics, Inc. Quarterly Report on Form 10-Q/A for the period ended March 31, 2011(File No.000-50513; film No. 11821367)). 10.18++Amendment No. 1 Agreement and Sublicense Consent Between Elan Corporation, plc and AcordaTherapeutics, Inc. dated June 30, 2009. (Incorporated herein by reference to Exhibit 10.56 to AcordaTherapeutics, Inc.'s Quarterly Report on Form 10-Q filed on August 10, 2009 (File No.000-50513;film No. 09999376)). 10.19++Amendment No. 2, dated as of March 29, 2012, to the Amended and Restated License Agreement,dated September 26, 2003, as amended and the Supply Agreement, dated September 26, 2003, asamended (Incorporated by reference to Exhibit 10.46 of the Acorda Therapeutics, Inc. AnnualReport on Form 10-K filed on February 28, 2013 (File No.000-50513; film no. 13653677)). 10.20++Amendment No. 3, dated as of February 14, 2013, to the Amended and Restated LicenseAgreement, dated September 26, 2003, as amended and the Supply Agreement, dated September 26,2003, as amended (Incorporated by reference to Exhibit 10.1 of the Acorda Therapeutics, Inc.Quarterly Report on Form 10-Q filed on May 10, 2013 (File No. 000-50513; film No. 13831684) 10.21#******Development and Supplemental Agreement between Elan Pharma International Limited and AcordaTherapeutics, Inc. dated January 14, 2011. 10.22#******Supply Agreement, dated September 26, 2003, by and between Acorda Therapeutics, Inc. and ElanCorporation, plc. 10.23#******License Agreement by and among Elan Pharmaceutical Research Corp., d/b/a Nanosystems and ElanPharma International Limited and Janssen Pharmaceutica N.V. dated as of March 31, 1999. 10.24#First Amendment, dated as of July 31, 2003, to the License Agreement by and among Elan DrugDelivery, Inc. (formerly Elan Pharmaceutical Research Corp.) and Elan Pharma International Limitedand Janssen Pharmaceutica NV dated March 31, 1999. 10.25#******Agreement Amendment No. 2, dated as of July 31, 2009, to the License Agreement by and amongElan Pharmaceutical Research Corp., d/b/a Nanosystems and Elan Pharma International Limited andJanssen Pharmaceutica N.V. dated as of March 31, 1999, as amended by the First Amendment,dated as of July 31, 2003.Table of Contents91Exhibit No. Description of Exhibit 10.26+++Employment agreement, dated as of December 12, 2007, by and between Richard F. Pops andAlkermes, Inc. (Incorporated by reference to Exhibit 10.1 to the Alkermes, Inc. Quarterly Report onForm 10-Q for the quarter ended December 31, 2007 (File No. 001-14131).) 10.27+++Amendment to Employment Agreement by and between Alkermes, Inc. and Richard F. Pops.(Incorporated by reference to Exhibit 10.5 to the Alkermes, Inc. Current Report on Form 8-K filedon October 7, 2008 (File No. 001-14131).) 10.28+++Amendment No. 2 to Employment Agreement by and between Alkermes, Inc. and Richard F. Pops,dated September 10, 2009. (Incorporated by reference to Exhibit 10.2 to the Alkermes, Inc. CurrentReport on Form 8-K filed on September 11, 2009 (File No. 001-14131).) 10.29+++Form of Employment Agreement, dated as of December 12, 2007, by and between Alkermes, Inc.and each of Kathryn L. Biberstein, Elliot W. Ehrich, M.D., James M. Frates, Michael J. Landine,Gordon G. Pugh. (Incorporated by reference to Exhibit 10.3 to the Alkermes, Inc. Quarterly Reporton Form 10-Q for the quarter ended December 31, 2007 (File No. 001-14131).) 10.30+++Form of Amendment to Employment Agreement by and between Alkermes, Inc. and each of each ofKathryn L. Biberstein, Elliot W. Ehrich, M.D., James M. Frates, Michael J. Landine, Gordon G.Pugh. (Incorporated by reference to Exhibit 10.7 to the Alkermes, Inc. Current Report on Form 8-Kfiled on October 7, 2008 (File No. 001-14131).) 10.31+++Form of Covenant Not to Compete, of various dates, by and between Alkermes, Inc. and each ofKathryn L. Biberstein and James M. Frates. (Incorporated by reference to Exhibit 10.15 to theAlkermes, Inc. Annual Report on Form 10-K for the year ended March 31, 2008 (File No. 001-14131).) 10.32+++Form of Covenant Not to Compete, of various dates, by and between Alkermes, Inc. and each ofElliot W. Ehrich, M.D., Michael J. Landine, and Gordon G. Pugh. (Incorporated by reference toExhibit 10.15(a) to the Alkermes, Inc. Annual Report on Form 10-K for the year ended March 31,2008 (File No. 001-14131).) 10.33+++Form of Indemnification Agreement by and between Alkermes, Inc. and each of its directors andexecutive officers (Incorporated by reference to Exhibit 10.1 to the Alkermes, Inc. Current Report onForm 8-K filed on March 25, 2010 (File No. 001-14131).) 10.34+++Alkermes, Inc. 1998 Equity Incentive Plan as Amended and Approved on November 2, 2006.(Incorporated by reference to Exhibit 10.1 to the Alkermes, Inc. Quarterly Report on Form 10-Q forthe fiscal quarter ended December 31, 2006 (File No. 001-14131).) 10.35+++Form of Stock Option Certificate pursuant to Alkermes, Inc. 1998 Equity Incentive Plan.(Incorporated by reference to Exhibit 10.37 to the Alkermes, Inc. Annual Report on Form 10-K forthe fiscal year ended March 31, 2006 (File No. 001-14131).) 10.36+++Alkermes, Inc. Amended and Restated 1999 Stock Option Plan. (Incorporated by reference toAppendix A to the Alkermes, Inc. Definitive Proxy Statement on Form DEF 14/A filed on July 27,2007 (File No. 001-14131).)Table of Contents92Exhibit No. Description of Exhibit 10.37+++Form of Incentive Stock Option Certificate pursuant to the 1999 Stock Option Plan, as amended.(Incorporated by reference to Exhibit 10.35 to the Alkermes, Inc. Annual Report on Form 10-K forthe fiscal year ended March 31, 2006 (File No. 001-14131).) 10.38+++Form of Non-Qualified Stock Option Certificate pursuant to the 1999 Stock Option Plan, asamended. (Incorporated by reference to Exhibit 10.36 to the Alkermes, Inc. Annual Report onForm 10-K for the fiscal year ended March 31, 2006 (File No. 001-14131).) 10.39+++Alkermes, Inc. 2002 Restricted Stock Award Plan as Amended and Approved on November 2,2006. (Incorporated by reference to Exhibit 10.3 to the Alkermes, Inc. Quarterly Report onForm 10-Q for the fiscal quarter ended December 31, 2006 (File No. 001-14131).) 10.40+++Amendment to Alkermes, Inc. 2002 Restricted Stock Award Plan. (Incorporated by reference toAppendix B to the Alkermes, Inc. Definitive Proxy Statement on Form DEF 14/A filed on July 27,2007 (File No. 001-14131).) 10.41+++2006 Stock Option Plan for Non-Employee Directors. (Incorporated by reference to Exhibit 10.4 tothe Alkermes, Inc. Quarterly Report on Form 10-Q for the fiscal quarter ended September 30, 2006(File No. 001-14131).) 10.42+++Amendment to 2006 Stock Option Plan for Non-Employee Directors. (Incorporated by reference toAppendix C to the Alkermes, Inc. Definitive Proxy Statement on Form DEF 14/A filed on July 27,2007 (File No. 001-14131).) 10.43+++Alkermes, Inc. 2008 Stock Option and Incentive Plan (Incorporated by reference to Exhibit 10.1 tothe Alkermes, Inc. Current Report on Form 8-K filed on October 7, 2008 (File No. 001-14131).) 10.44+++Alkermes, Inc. 2008 Stock Option and Incentive Plan, Stock Option Award Certificate (IncentiveStock Option), as amended (Incorporated by reference to Exhibit 10.27(a) to the Alkermes, Inc.Annual Report on Form 10-K for the fiscal year ended March 31, 2010 (File No. 001-14131).) 10.45+++Alkermes, Inc. 2008 Stock Option and Incentive Plan, Stock Option Award Certificate (Non-Qualified Option), as amended (Incorporated by reference to Exhibit 10.27(b) to the Alkermes, Inc.Annual Report on Form 10-K for the fiscal year ended March 31, 2010 (File No. 001-14131).) 10.46+++Alkermes, Inc. 2008 Stock Option and Incentive Plan, Stock Option Award Certificate (Non-Employee Director) (Incorporated by reference to Exhibit 10.4 to the Alkermes, Inc. Current Reporton Form 8-K filed on October 7, 2008 (File No. 001-14131).) 10.47+++Alkermes, Inc. 2008 Stock Option and Incentive Plan, Restricted Stock Unit Award Certificate(Time Vesting Only). (Incorporated by reference to Exhibit 10.1 to the Alkermes, Inc. CurrentReport on Form 8-K filed on May 22, 2009 (File No. 001-14131).) 10.48+++Alkermes, Inc. 2008 Stock Option and Incentive Plan, Restricted Stock Unit Award Certificate(Performance Vesting Only). (Incorporated by reference to Exhibit 10.2 to the Alkermes, Inc.Current Report on Form 8-K filed on May 22, 2009 (File No. 001-14131).)Table of Contents93Exhibit No. Description of Exhibit 10.49++****Development and License Agreement, dated as of May 15, 2000, by and between AlkermesControlled Therapeutics Inc. II and Amylin Pharmaceuticals, Inc., as amended on October 24, 2005and July 17, 2006 (assigned, as amended, to Alkermes, Inc. in July 2006). (Incorporated byreference to Exhibit 10.28 to the Alkermes, Inc. Annual Report on Form 10-K for the fiscal yearended March 31, 2010 (File No. 001-14131).) 10.50++Amendment to First Lien Credit Agreement, dated September 25, 2012, among Alkermes, Inc.,Alkermes plc, the guarantors party thereto, the lenders party thereto, Morgan Stanley SeniorFunding, Inc. as Administrative Agent and Collateral Agent and the arrangers and agents partythereto (Incorporated herein by reference to Exhibit 10.1 of the Alkermes plc Current Report onForm 8-K filed on September 25, 2012). 10.51++Amendment No. 2, dated as of February 14, 2013, to Amended and Restated Credit Agreement,dated as of September 16, 2011, as amended and restated on September 25, 2012, amongAlkermes, Inc., Alkermes plc, the guarantors party thereto, the lenders party thereto, Morgan StanleySenior Funding, Inc. as Administrative Agent and Collateral Agent and the arrangers and agentsparty thereto (Incorporated herein by reference to Exhibit 10.1 of the Alkermes plc Current Reporton Form 8-K filed on February 19, 2013). 10.52#Amendment No. 3 and Waiver to Amended and Restated Credit Agreement, dated as of May 22,2013, among Alkermes, Inc., Alkermes plc, Alkermes Pharma Ireland Limited, Alkermes USHoldings, Inc., Morgan Stanley Senior Funding, Inc. as Administrative Agent and Collateral Agentand the lenders party thereto. 10.53++Intellectual Property Transfer Agreement, dated as of September 15, 2011 between Alkermes, Inc.,Alkermes Controlled Therapeutics, Inc. and Alkermes Pharma Holdings Limited (Incorporated byreference to Exhibit 10.3 to the Alkermes plc Current Report on Form 8-K filed on September 16,2011.) 10.54+++Form of Deed of Indemnification for Alkermes plc Officers (Incorporated by reference toExhibit 10.1 to the Alkermes plc Current Report on Form 8-K filed on September 20, 2011.) 10.55+++Form of Deed of Indemnification for Alkermes plc Directors/Secretary (Incorporated by reference toExhibit 10.2 to the Alkermes plc Current Report on Form 8-K filed on September 20, 2011.) 10.56+++Form of Deed of Indemnification for Alkermes, Inc. and Subsidiaries Directors/Secretary(Incorporated by reference to Exhibit 10.3 to the Alkermes plc Current Report on Form 8-K filed onSeptember 20, 2011.) 10.57+++Shane Cooke Offer Letter, dated as of September 15, 2011 (Incorporated by reference toExhibit 10.5 to the Alkermes plc Current Report on Form 8-K filed on September 20, 2011.) 10.58+++Employment Agreement by and between Alkermes Pharma Ireland Limited and Shane Cooke, datedas of September 16, 2011 (Incorporated by reference to Exhibit 10.6 to the Alkermes plc CurrentReport on Form 8-K filed on September 20, 2011.)Table of Contents94Exhibit No. Description of Exhibit 10.59+++James L. Botkin Offer Letter, dated as of September 15, 2011 (Incorporated by reference toExhibit 10.7 to the Alkermes plc Current Report on Form 8-K filed on September 20, 2011.) 10.60+++Employment Agreement by and between Alkermes Gainesville LLC and James L. Botkin, dated asof September 16, 2011 (Incorporated by reference to Exhibit 10.8 to the Alkermes plc CurrentReport on Form 8-K filed on September 20, 2011.) 10.61+++Alkermes plc 2011 Stock Option and Incentive Plan (Incorporated by reference to Exhibit 10.1 tothe Alkermes plc Current Report on Form 8-K filed on December 8, 2011 (File No. 001-35299)). 10.62+++Alkermes plc 2011 Stock Option and Incentive Plan, as amended (Incorporated herein by referenceto Exhibit 10.1 to the Alkermes plc Current Report on Form 8-K filed on August 6, 2012). 10.63#+Alkermes plc 2011 Stock Option and Incentive Plan, Stock Option Award Certificate (IncentiveStock Option), as amended. 10.64#+Alkermes plc 2011 Stock Option and Incentive Plan, Stock Option Award Certificate (Non-Qualified Option), as amended. 10.65+++Employment Agreement by and between Alkermes, Inc. and Mark P. Stejbach, dated as ofFebruary 29, 2012 (Incorporated by reference to Exhibit 10.1 to the Alkermes plc Current Report onForm 8-K filed on March 5, 2012 (File No. 001-35299)). 10.66+++Offer Letter between Alkermes, Inc. and Mark P. Stejbach, effective as of February 15, 2012(Incorporated by reference to Exhibit 10.2 to the Alkermes plc Current Report on Form 8-K filed onMarch 5, 2012 (File No. 001-35299)). 10.67+++Employment agreement, dated as of July 30, 2012, by and between Rebecca J. Peterson andAlkermes, Inc. (Incorporated herein by reference to Exhibit 10.1 of the Alkermes plc QuarterlyReport on Form 10-Q for the quarter ended September 30, 2012). 10.68+++Fiscal 2013 Alkermes plc Affiliated Company Reporting Officer Performance Plan (Incorporated byreference to Exhibit 10.1 to the Alkermes plc Current Report on Form 8-K filed on March 30, 2012(File No. 001-35299)). 10.69+++Amended and Restated Fiscal 2013 Alkermes plc Affiliated Company Reporting OfficerPerformance Pay Plan (Incorporated herein by reference to Exhibit 10.2 of the Alkermes plcQuarterly Report on Form 10-Q for the quarter ended September 30, 2012). 10.70+++Fiscal 2014 Alkermes plc Affiliated Company Reporting Officer Performance Pay Plan(Incorporated herein by reference to Exhibit 10.1 of the Alkermes plc Current Report on Form 8-Kfiled on April 1, 2013). 10.71+++Amended and Restated Fiscal Year December 2013 Alkermes plc Affiliated Company ReportingOfficer Performance Pay Plan (Incorporated by reference to Exhibit 10.1 of the Alkermes plcCurrent Report on Form 8-K filed on May 23, 2013). 21.1 List of subsidiaries 23.1 Consent of PricewaterhouseCoopers LLPTable of Contents95Exhibit No. Description of Exhibit 24.1 Power of Attorney (included on the signature pages hereto) 31.1 Certification Pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934 31.2 Certification Pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934 32.1 Certification Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of theSarbanes-Oxley Act of 2002 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 a management contract or any compensatory plan, contract or arrangement. ++Previously filed. +++XBRL (Extensible Business Reporting Language) information is furnished and not filed or a part of a registration statement orprospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, is deemed not filed for purposes of Section 18 of theSecurities Exchange Act of 1934, and is not otherwise subject to liability under these Sections. #Filed herewith. *Confidential status has been granted for certain portions thereof pursuant to a Commission Order granted September 3, 1996.Such provisions have been filed separately with the Commission. **Confidential status has been granted for certain portions thereof pursuant to a Commission Order granted September 16, 2002.Such provisions have been separately filed with the Commission. ***Confidential status has been granted for certain portions thereof pursuant to a Commission Order granted September 26, 2005.Such provisions have been filed separately with the Commission. ****Confidential status has been granted for certain portions thereof pursuant to a Commission Order granted June 28, 2010. Suchprovisions have been filed separately with the Commission. *****Confidential status has been granted for certain portions thereof pursuant to a Commission Order granted December 10, 2012.Such provisions have been filed separately with the Commission. ******Certain portions of this exhibit have been omitted pursuant to a request for confidentiality. Such omitted portions have been filedseparately with the Commission.Table of ContentsReport of Independent Registered Public Accounting Firm To the Board of Directors and Shareholders of Alkermes plc: In our opinion, the accompanying consolidated balance sheets and the related statements of operations and comprehensive income (loss), ofshareholders' equity and of cash flows present fairly, in all material respects, the financial position of Alkermes plc and its subsidiaries at March 31,2013 and 2012, and the results of their operations and their cash flows for each of the three years in the period ended March 31, 2013 in conformitywith accounting principles generally accepted in the United States of America. Also in our opinion, the Company maintained, in all material respects,effective internal control over financial reporting as of March 31, 2013 based on criteria established in Internal Control—Integrated Framework issuedby the Committee of Sponsoring Organizations of the Treadway Commission (COSO). The Company's management is responsible for these financialstatements, for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financialreporting, included in Management's Annual Report on Internal Control over Financial Reporting under Item 9A. Our responsibility is to expressopinions on these financial statements and on the Company's internal control over financial reporting based on our integrated audits. We conducted ouraudits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan andperform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement and whether effective internalcontrol over financial reporting was maintained in all material respects. Our audits of the financial statements included examining, on a test basis,evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made bymanagement, and evaluating the overall financial statement presentation. Our audit of internal control over financial reporting included obtaining anunderstanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design andoperating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considerednecessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. A company's internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financialreporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company'sinternal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail,accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions arerecorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts andexpenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) providereasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company's assets that could have amaterial effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of anyevaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that thedegree of compliance with the policies or procedures may deteriorate./s/ PRICEWATERHOUSECOOPERS LLPBoston, MassachusettsMay 23, 2013F-1Table of ContentsALKERMES PLC AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS March 31, 2013 and 2012 2013 2012 (In thousands, except shareand per share amounts) ASSETS CURRENT ASSETS: Cash and cash equivalents $96,961 $83,601 Investments—short-term 124,391 106,846 Receivables 124,620 96,381 Inventory 43,483 39,759 Prepaid expenses and other current assets 19,133 12,566 Total current assets 408,588 339,153 PROPERTY, PLANT AND EQUIPMENT, NET 288,435 302,995 INTANGIBLE ASSETS—NET 575,993 617,845 GOODWILL 92,740 92,740 INVESTMENTS—LONG-TERM 82,827 55,691 OTHER ASSETS 21,708 26,793 TOTAL ASSETS $1,470,291 $1,435,217 LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES: Accounts payable and accrued expenses $76,910 $79,154 Deferred revenue—current 2,270 6,910 Long-term debt—current 6,750 3,100 Total current liabilities 85,930 89,164 LONG-TERM DEBT 362,258 441,360 DEFERRED REVENUE—LONG-TERM 8,866 7,578 DEFERRED TAX LIABILITIES, NET—LONG-TERM 37,603 34,512 OTHER LONG-TERM LIABILITIES 23,260 8,751 Total liabilities 517,917 581,365 COMMITMENTS AND CONTINGENCIES (Note 18) SHAREHOLDERS' EQUITY: Preferred stock, par value, $0.01 per share; 50,000,000 shares authorized; zero issuedand outstanding at March 31, 2013 and 2012, respectively — — Ordinary shares, par value, $0.01 per share; 450,000,000 shares authorized;134,065,107 and 130,212,530 shares issued; 133,751,610 and 130,177,452 sharesoutstanding at March 31, 2013 and 2012, respectively 1,338 1,300 Treasury stock, at cost (313,497 and 35,078 shares at March 31, 2013 and 2012,respectively) (5,380) (571)Additional paid-in capital 1,458,857 1,380,742 Accumulated other comprehensive loss (2,518) (2,713)Accumulated deficit (499,923) (524,906) Total shareholders' equity 952,374 853,852 TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $1,470,291 $1,435,217 The accompanying notes are an integral part of these consolidated financial statements.F-2Table of ContentsALKERMES PLC AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATONS AND COMPREHENSIVE INCOME (LOSS) Years Ended March 31, 2013, 2012 and 2011 2013 2012 2011 (In thousands, except per shareamounts) REVENUES: Manufacturing and royalty revenues $510,900 $326,444 $156,840 Product sales, net 58,107 41,184 28,920 Research and development revenue 6,541 22,349 880 Total revenues 575,548 389,977 186,640 EXPENSES: Cost of goods manufactured and sold 170,466 127,578 52,185 Research and development 140,013 141,893 97,239 Selling, general and administrative 125,758 137,632 82,847 Amortization of acquired intangible assets 41,852 25,355 — Restructuring 12,300 — — Impairment of long-lived assets 3,346 45,800 — Total expenses 493,735 478,258 232,271 OPERATING INCOME (LOSS) 81,813 (88,281) (45,631) OTHER EXPENSE, NET: Interest income 841 1,516 2,728 Interest expense (48,994) (28,111) (3,298)Other income (expense), net 1,781 484 (290) Total other expense, net (46,372) (26,111) (860) INCOME (LOSS) BEFORE INCOME TAXES 35,441 (114,392) (46,491)PROVISION (BENEFIT) FOR INCOME TAXES 10,458 (714) (951) NET INCOME (LOSS) $24,983 $(113,678)$(45,540) EARNINGS (LOSS) PER COMMON SHARE: Basic $0.19 $(0.99)$(0.48) Diluted $0.18 $(0.99)$(0.48) WEIGHTED AVERAGE NUMBER OF COMMON SHARESOUTSTANDING: Basic 131,713 114,702 95,610 Diluted 137,100 114,702 95,610 COMPREHENSIVE INCOME (LOSS): Net income (loss) $24,983 $(113,678)$(45,540)Unrealized gains (losses) on marketable securities, net of tax: Holding gains, net of tax 703 627 379 Less: Reclassification adjustment for gains included in net income (loss) (1,030) — — Unrealized (losses) gains on marketable securities (327) 627 379 Unrealized (losses) gains on derivative contracts: Unrealized losses on derivative contracts, net of tax (72) (327) — Less: Reclassification adjustment for losses included in net income (loss) 594 — — Unrealized gains (losses) on derivative contracts 522 (327) — COMPREHENSIVE INCOME (LOSS) $25,178 $(113,378)$(45,161)  The accompanying notes are an integral part of these consolidated financial statements.F-3Table of ContentsALKERMES PLC AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITYYears Ended March 31, 2013, 2012 and 2011 Non-votingCommon Stock Ordinary Shares AccumulatedOtherComprehensiveLoss (Income) Treasury Stock AdditionalPaid-InCapital AccumulatedDeficit Shares Amount Shares Amount Shares Amount Total (In thousands, except share data) BALANCE—March 31, 2010 104,815,328 $1,047 382,632 $4 $910,326 $(3,392)$(365,688) (9,945,265)$(129,681)$412,616 Issuance ofcommon stockunder employeestock plans 956,179 8 — — 6,150 — — — — 6,158 Receipt ofAlkermes' stockfor the purchaseof stock optionsor to satisfyminimum taxwithholdingobligationsrelated to stockbased awards — — — — — — — (123,943) (1,414) (1,414)Share-basedcompensationexpense — — — — 19,819 — — — — 19,819 Unrealized gainon marketablesecurities, netof tax of $225 — — — — — 379 — — — 379 Net loss — — — — — — (45,540) — — (45,540)BALANCE—March 31, 2011 105,771,507 $1,055 382,632 $4 $936,295 $(3,013)$(411,228) (10,069,208)$(131,095)$392,018 Issuance ofcommon stockto ElanCorporation, plcin connectionwith thepurchase ofElan DrugTechnologies 31,900,000 319 — — 524,755 — — — — 525,074 Issuance ofordinary sharesunder employeestock plans 2,398,422 24 — — 20,840 — — — — 20,864 Receipt ofAlkermes' stockfor the purchaseof stock optionsor to satisfyminimum taxwithholdingobligationsrelated to stockbased awards — — — — — — — (205,901) (3,676) (3,676)Share-basedcompensationexpense — — — — 28,615 — — — — 28,615 Excess tax benefitfrom share-basedcompensation — — — — 4,335 — — — — 4,335 Conversion ofnon-votingcommon stockto commonstock 382,632 4 (382,632) (4) — — — — — — Cancellation oftreasury stock (10,240,031) (102) — — (134,098) — — 10,240,031 134,200 — Unrealized gainson marketablesecurities, netof tax of $372 — — — — — 627 — — — 627 Unrealized loss oncash flowhedge, net oftax of $(194) — — — — — (327) — — — (327)Net loss — — — — — — (113,678) — — (113,678)BALANCE—March 31, 2012 130,212,530 $1,300 — $— $1,380,742 $(2,713)$(524,906) (35,078)$(571)$853,852 Issuance ofcommon stockunder employeestock plans 3,852,577 38 — — 34,322 — — — — 34,360 Receipt ofAlkermes' stockfor the purchaseof stock optionsor to satisfyminimum taxwithholdingobligationsrelated to stockbased awards — — — — — — — (278,419) (4,809) (4,809)Share-basedcompensationexpense — — — — 34,926 — — — — 34,926 Excess tax benefitfrom share-basedcompensation — — — — 8,867 — — — — 8,867 Unrealized gainson marketable The accompanying notes are an integral part of these consolidated financial statements.F-4securities — — — — — 703 — — — 703 Unrealized loss oncash flow hedge — — — — — (72) — — — (72)Reclassificationof unrealizedgains torealized gains — — — — — (1,030) — — — (1,030)Reclassificationof unrealizedlosses torealized losses — — — — — 594 — — — 594 Net income — — — — — — 24,983 — — 24,983 BALANCE—March 31, 2013 134,065,107 $1,338 — $— $1,458,857 $(2,518)$(499,923) (313,497)$(5,380)$952,374 Table of ContentsALKERMES PLC AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS Years Ended March 31, 2013, 2012 and 2011 2013 2012 2011 (In thousands) CASH FLOWS FROM OPERATING ACTIVITIES: Net income (loss) $24,983 $(113,678)$(45,540)Adjustments to reconcile net income (loss) to cash flows from operatingactivities: Depreciation and amortization 73,751 47,884 8,652 Share-based compensation expense 34,716 28,826 19,832 Loss on debt refinancing transactions 19,670 — — Prepayment penalties in connection with debt refinancing transactions (6,533) — — Excess tax benefit from share-based compensation (8,867) (4,335) — Impairment of long-lived assets 3,346 45,800 Deferred income taxes (2,113) (14,556) — Principal payments on long-term debt attributable to original issue discount (2,657) — — Loss on purchase of non-recourse RISPERDAL CONSTA secured 7%Notes — — 841 Payment or purchase of non-recourse RISPERDAL CONSTA secured 7%notes attributable to original issue discount — — (6,611)Other non-cash charges 5,698 4,342 1,861 Changes in assets and liabilities, excluding the effect of acquisitions: Receivables (28,239) (14,014) 2,347 Inventory, prepaid expenses and other assets (6,577) (4,879) 5,211 Accounts payable and accrued expenses 19,406 15,552 6,954 Deferred revenue (3,351) 6,068 635 Other long-term liabilities 3,318 508 (88) Cash flows provided by (used in) operating activities 126,551 (2,482) (5,906) CASH FLOWS FROM INVESTING ACTIVITIES: Additions to property, plant and equipment (22,217) (16,988) (9,401)Proceeds from the sale of equipment 193 35 395 Acquisition of Elan Drug Technologies, net of cash acquired — (494,774) — Investment in Acceleron Pharmaceuticals, Inc. — (231) (501)Promissory note issued to Civitas Therapeutics, Inc. (1,116) — — Purchases of investments (303,945) (228,229) (370,375)Sales and maturities of investments 258,937 323,028 385,511 Cash flows (used in) provided by investing activities (68,148) (417,159) 5,629 CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from the issuance of ordinary shares for share-based compensationarrangements 34,360 20,864 6,158 Excess tax benefit from share-based compensation 8,867 4,335 — Proceeds from the issuance of long-term debt 366,483 444,100 — Employee taxes paid related to net share settlement of equity awards (4,809) (3,676) (1,414)Principal payments of long-term debt (449,944) (775) — Payment or purchase of non-recourse RISPERDAL CONSTA secured 7%notes — — (45,397) Cash flows (used in) provided by financing activities (45,043) 464,848 (40,653) NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 13,360 45,207 (40,930) The accompanying notes are an integral part of these consolidated financial statements.F-5CASH AND CASH EQUIVALENTS—Beginning of period 83,601 38,394 79,324 CASH AND CASH EQUIVALENTS—End of period $96,961 $83,601 $38,394 SUPPLEMENTAL CASH FLOW DISCLOSURE: Cash paid for interest $7,656 $21,658 $1,684 Cash paid for taxes $5,921 $10,068 $60 Non-cash investing and financing activities: Purchased capital expenditures included in accounts payable and accruedexpenses $2,450 $3,416 $424 Investment in Civitas Therapeutics, Inc. $1,116 $1,547 $1,320 Issuance of common stock used in the acquisition of Elan Drug Technologies $— $525,074 $— Table of ContentsALKERMES PLC AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 1. THE COMPANY Alkermes plc (the "Company") is a fully integrated, global biopharmaceutical company that applies its scientific expertise and proprietarytechnologies to develop innovative medicines that improve patient outcomes. The Company has a diversified portfolio of more than 20 commercial drugproducts and a substantial clinical pipeline of product candidates that address central nervous system ("CNS") disorders such as addiction,schizophrenia and depression. Headquartered in Dublin, Ireland, Alkermes plc has a research and development ("R&D") center in Waltham,Massachusetts; R&D and manufacturing facilities in Athlone, Ireland; and manufacturing facilities in Gainesville, Georgia and Wilmington, Ohio. On September 16, 2011, the business of Alkermes, Inc. and the drug technologies business ("EDT") of Elan Corporation, plc ("Elan") werecombined under the Company (this combination is referred to as the "Business Combination", the "acquisition of EDT" or the "EDT acquisition") in atransaction accounted for as a reverse acquisition with Alkermes, Inc. treated as the accounting acquirer. As a result, the historical financial statements ofAlkermes, Inc. are included in the comparative prior periods. Use of the terms such as "us," "we," "our," "Alkermes" or the "Company" is meant torefer to Alkermes plc and its consolidated subsidiaries, except where context makes clear that the time period being referenced is prior to September 16,2011, in which case such terms shall refer to Alkermes, Inc. and its consolidated subsidiaries. Prior to September 16, 2011, Alkermes, Inc. was anindependent pharmaceutical company incorporated in the Commonwealth of Pennsylvania and traded on the NASDAQ Global Select Stock Marketunder the symbol "ALKS."2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIESPrinciples of Consolidation The consolidated financial statements include the accounts of Alkermes plc and its wholly-owned subsidiaries: Alkermes Ireland HoldingsLimited; Alkermes Science Three Limited; Alkermes Pharma Ireland Limited; Alkermes Finance Ireland Limited; Alkermes Science One Limited;Alkermes Finance S.à r.l.; Alkermes Finance Ireland (No. 2) Limited; Alkermes U.S. Holdings, Inc.; Alkermes, Inc.; Eagle Holdings USA, Inc.;Alkermes Controlled Therapeutics, Inc.; Alkermes Europe, Ltd.; and Alkermes Gainesville LLC. Intercompany accounts and transactions have beeneliminated.Use of Estimates The preparation of the Company's consolidated financial statements in accordance with accounting principles generally accepted in the UnitedStates ("U.S.") ("GAAP") requires management to make estimates, judgments and assumptions that may affect the reported amounts of assets,liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. On an on-going basis, the Company evaluates its estimatesand judgments and methodologies, including those related to revenue recognition and related allowances, its collaborative relationships, clinical trialexpenses, the valuation of inventory, impairment and amortization of intangibles and long-lived assets, share-based compensation, income taxesincluding the valuation allowance for deferred tax assets, valuation of investments and derivative instruments, litigation and restructuring charges. TheCompany bases its estimates on historical experience and on various other assumptions that are believed to be reasonable, the results of which form thebasis for making judgments about the carrying values of assets and liabilities. Actual results may differ from these estimates under differentassumptions or conditions.F-6Table of ContentsALKERMES PLC AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)Cash and Cash Equivalents The Company values its cash and cash equivalents at cost plus accrued interest, which the Company believes approximates their market value. TheCompany considers only those investments which are highly liquid, readily convertible into cash and that mature within three months from the date ofpurchase to be cash equivalents.Investments The Company has investments in various types of securities including U.S. government and agency obligations, debt securities issued by foreignagencies and backed by foreign governments and corporate debt securities. The Company generally holds its interest-bearing investments with majorfinancial institutions and in accordance with documented investment policies. The Company limits the amount of credit exposure to any one financialinstitution or corporate issuer. At March 31, 2013, substantially all these investments are classified as available-for-sale and are recorded at fair value. Holding gains and losses on available-for-sale investments are considered "unrealized" and are reported within "Accumulated other comprehensiveincome (loss)," a component of shareholders' equity. The Company uses the specific identification method for reclassifying unrealized gains and lossesinto earnings when investments are sold. The Company conducts periodic reviews to identify and evaluate each investment that has an unrealized loss,in accordance with the meaning of other-than-temporary impairment and its application to certain investments, as required by GAAP. An unrealized lossexists when the current fair value of an individual security is less than its amortized cost basis. Unrealized losses on available-for-sale securities that aredetermined to be temporary, and not related to credit loss, are recorded in accumulated other comprehensive income (loss). For available-for-sale debt securities with unrealized losses, the Company performs an analysis to assess whether it intends to sell or whether itwould more likely than not be required to sell the security before the expected recovery of the amortized cost basis. If the Company intends to sell asecurity, or may be required to do so, the security's decline in fair value is deemed to be other-than-temporary and the full amount of the unrealized lossis recorded within earnings as an impairment loss. Regardless of the Company's intent to sell a security, the Company performs additional analysis onall securities with unrealized losses to evaluate losses associated with the creditworthiness of the security. Credit losses are identified where theCompany does not expect to receive cash flows sufficient to recover the amortized cost basis of a security. Certain of the Company's money market funds and held-to-maturity investments are restricted investments held as collateral under letters of creditrelated to certain of the Company's service provider agreements and lease agreements, respectively, and are included in "Investments—short-term" and"Investments—long-term", respectively, in the consolidated balance sheets.Fair Value of Financial Instruments The Company's financial assets and liabilities are recorded at fair value and are classified as Level 1, 2 or 3 within the fair value hierarchy, asdescribed in the accounting standards for fair valueF-7Table of ContentsALKERMES PLC AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)measurement. The Company's financial assets and liabilities consist of cash equivalents and investments and are classified within the fair value hierarchyas follows:Level 1—these valuations are based on a market approach using quoted prices in active markets for identical assets. Valuations of these productsdo not require a significant degree of judgment. Assets utilizing Level 1 inputs include investments in money market funds and U.S. treasurysecurities;Level 2—these valuations are based on a market approach using quoted prices obtained from brokers or dealers for similar securities or forsecurities for which the Company has limited visibility into their trading volumes. Valuations of these financial instruments do not require asignificant degree of judgment. Assets and liabilities utilizing Level 2 inputs include U.S. government agency debt securities, debt securitiesissued and backed by foreign governments, investments in corporate debt securities that are trading in the credit markets and an interest rate capand swap contract;Level 3—these valuations are based on an income approach using certain inputs that are unobservable and are significant to the overall fair valuemeasurement. Valuations of these products require a significant degree of judgment. At March 31, 2013, the Company did not have any assetsor liabilities utilizing Level 3 inputs. The carrying amounts reflected in the consolidated balance sheets for cash and cash equivalents, accounts receivable, other current assets, accountspayable and accrued expenses approximate fair value due to their short-term nature.Inventory Inventory is stated at the lower of cost or market value. Cost is determined using the first-in, first-out method. Included in inventory are rawmaterials used in production of pre-clinical and clinical products, which have alternative future use and are charged to R&D expense when consumed.Property, Plant and Equipment Property, plant and equipment are recorded at cost, subject to review for impairment whenever events or changes in circumstances indicate that thecarrying amount of the assets may not be recoverable. Expenditures for repairs and maintenance are charged to expense as incurred and major renewalsand improvements are capitalized. Depreciation is calculated using the straight-line method over the following estimated useful lives of the assets:F-8Asset group TermBuildings and improvements 15 - 40 yearsFurniture, fixtures and equipment 3 - 10 yearsLeasehold improvements Shorter of usefullife or lease termTable of ContentsALKERMES PLC AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)Business Acquisitions The Company's consolidated financial statements include the operations of an acquired business after the completion of the acquisition. TheCompany accounts for acquired businesses using the acquisition method of accounting. The acquisition method of accounting for acquired businessesrequires, among other things, that most assets acquired and liabilities assumed be recognized at their estimated fair values as of the acquisition date, andthat the fair value of acquired in-process research and development ("IPR&D") be recorded on the balance sheet. Also, transaction costs are expensed asincurred. Any excess of the purchase price over the assigned values of the net assets acquired is recorded as goodwill. Contingent consideration, if any,is included within the acquisition cost and is recognized at its fair value on the acquisition date. A liability resulting from contingent consideration isremeasured to fair value at each reporting date until the contingency is resolved. Changes in fair value are recognized in earnings.Goodwill and Intangible Assets Goodwill represents the excess cost of the Company's investment in the net assets of acquired companies over the fair value of the underlyingidentifiable net assets at the date of acquisition. The Company's goodwill, which solely relates to the EDT acquisition in the fiscal year ended March 31,2012, has been assigned to a reporting unit which consists of the former EDT business. A reporting unit is an operating segment or sub-segment towhich goodwill is assigned when initially recorded. Goodwill is reviewed for impairment utilizing a two-step process. The first step requires the Company to compare the fair value of the reportingunit to its respective carrying value, which includes goodwill. If the fair value of the reporting unit exceeds its carrying value, the goodwill is notconsidered impaired. If the carrying value is higher than the fair value, there is an indication that an impairment may exist and the second step isrequired. In step two, the implied fair value of goodwill is calculated as the excess of the fair value of a reporting unit over the fair values assigned to itsassets and liabilities. If the implied fair value of goodwill is less than the carrying value of the reporting unit's goodwill, the difference is recognized asan impairment loss. The Company's finite-lived intangible assets consist of core developed technology and collaboration agreements and are recorded at fair value at thetime of their acquisition and are stated within the Company's consolidated balance sheets net of accumulated amortization and impairments. The finite-lived intangible assets are amortized over their estimated useful life using the economic use method, which reflects the pattern that the economic benefitsof the intangible assets are consumed as revenue is generated from the underlying patent or contract. The useful lives of the Company's intangible assetsare primarily based on the legal or contractual life of the underlying patent or contract, which does not include additional years for the potential extensionor renewal of the contract or patent. The Company's intangible assets were all acquired as part of the EDT acquisition in the fiscal year ended March 31,2012, as described in Note 3, Acquisitions.Impairment of Long-Lived Assets The Company reviews long-lived assets to be held and used for impairment whenever events or changes in circumstances indicate that the carryingamount of the assets may not be recoverable. Conditions that would necessitate an impairment assessment include a significant decline in the observablemarket value of an asset, a significant change in the extent or manner in which an asset isF-9Table of ContentsALKERMES PLC AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)used, or a significant adverse change that would indicate that the carrying amount of an asset or group of assets is not recoverable. Determination ofrecoverability is based on an estimate of undiscounted future cash flows resulting from the use of the asset and its eventual disposition. In the event thatsuch cash flows are not expected to be sufficient to recover the carrying amount of the assets, the assets are written-down to their estimated fair values.Long-lived assets to be disposed of are carried at fair value less costs to sell them.Asset Retirement Obligations The Company recognized an asset retirement obligation for an obligation to remove leasehold improvements and other related activities at theconclusion of the Company's lease for its manufacturing facility located in Chelsea, Massachusetts, which it presently subleases. The carrying amountof the asset retirement obligation at March 31, 2013 and 2012, was $2.0 million and $1.9 million, respectively, and is included within "Other Long-Term Liabilities" in the accompanying consolidated balance sheets. The following table shows changes in the carrying amount of the Company's asset retirement obligation for the years ended March 31, 2013 and2012:Revenue RecognitionCollaborative Arrangements The Company has entered into a number of collaboration agreements with pharmaceutical companies including Ortho-McNeil-JanssenPharmaceuticals, Inc. and Janssen Pharmaceutica International, a division of Cilag International AG ("Janssen") for RISPERDAL® CONSTA® andINVEGA® SUSTENNA®/XEPLION®, Acorda Therapeutics, Inc. ("Acorda") for AMPYRA®/FAMPYRA® and Amylin Pharmaceuticals, Inc.("Amylin"), now a wholly-owned subsidiary of Bristol-Myers Squibb Company ("Bristol-Myers") for BYDUREON®. These collaborativearrangements typically include upfront payments, funding of R&D, payments based upon achievement of pre-clinical and clinical developmentmilestones, manufacturing services, sales milestones and royalties on product sales. On April 1, 2011, the Company adopted new authoritative guidance on revenue recognition for multiple element arrangements. The guidance,which applies to multiple element arrangements entered into or materially modified on or after April 1, 2011, amends the criteria for separating andallocating consideration in a multiple element arrangement by modifying the fair value requirements for revenue recognition and eliminating the use ofthe residual method. The fair value of deliverables under the arrangement may be derived using a "best estimate of selling price" if vendor-specificobjectiveF-10(In thousands) CarryingAmount Balance, April 1, 2011 $1,692 Accretion expense 170 Balance, March 31, 2012 $1,862 Accretion expense 187 Balance, March 31, 2013 $2,049 Table of ContentsALKERMES PLC AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)evidence and third-party evidence is not available. Deliverables under the arrangement will be separate units of accounting provided that (i) a delivereditem has value to the customer on a stand-alone basis, and (ii) if the arrangement includes a general right of return relative to the delivered item, deliveryor performance of the undelivered item is considered probable and substantially in the control of the vendor. The Company did not enter into anysignificant multiple element arrangements or materially modify any of its existing multiple element arrangements during the year ended March 31, 2013.The Company's existing collaboration agreements continue to be accounted for under previously issued revenue recognition guidance for multipleelement arrangements, as described below. Whenever the Company determines that an arrangement should be accounted for as a single unit of accounting, the Company determines the periodover which the performance obligations will be performed and revenue will be recognized. Revenue will be recognized using either a proportionalperformance or straight-line method. The Company recognizes revenue using the proportional performance method when the level of effort required tocomplete its performance obligations under an arrangement can be reasonably estimated and such performance obligations are provided on a best-effortsbasis. Earned arrangement consideration is typically used as the measure of performance. The amount of revenue recognized under the proportionalperformance method is determined by multiplying the total expected payments under the contract, excluding royalties and payments contingent uponachievement of substantive milestones, by the ratio of earned arrangement consideration to estimated total arrangement consideration to be earned underthe arrangement. Revenue is limited to the lesser of the cumulative amount of payments received or the cumulative amount of revenue earned, asdetermined using the proportional performance method, as of the period ending date. If the Company cannot reasonably estimate the total arrangement consideration to be earned under an arrangement, the Company recognizesrevenue under the arrangement on a straight-line basis over the period the Company is expected to complete its performance obligations. Revenue islimited to the lesser of the cumulative amount of payments received or the cumulative amount of revenue earned, as determined using the straight-linemethod, as of the period ending date. Significant management judgment is required in determining the consideration to be earned under an arrangement and the period over which theCompany is expected to complete its performance obligations under an arrangement. Steering committee services that are not inconsequential orperfunctory and that are determined to be performance obligations are combined with other research services or performance obligations required underan arrangement, if any, in determining the level of effort required in an arrangement and the period over which the Company expects to complete itsaggregate performance obligations. Many of the Company's collaboration agreements entitle it to additional payments upon the achievement of performance-based milestones. If theachievement of a milestone is considered probable at the inception of the collaboration, the related milestone payment is included with othercollaboration consideration, such as upfront payments and research funding, in the Company's revenue model. Milestones that involve substantial efforton the Company's part and the achievement of which are not considered probable at the inception of the collaboration are considered "substantivemilestones."F-11Table of ContentsALKERMES PLC AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Contingent consideration received from the achievement of a substantive milestone subsequent to April 1, 2011, is recognized in its entirety in theperiod in which the milestone is achieved, which the Company believes is more consistent with the substance of its performance under its variouscollaboration agreements. A milestone is defined as an event (i) that can only be achieved based in whole or in part on either the entity's performance oron the occurrence of a specific outcome resulting from the entity's performance, (ii) for which there is substantive uncertainty at the date the arrangementis entered into that the event will be achieved, and (iii) that would result in additional payments being due to the entity. A milestone is substantive if theconsideration earned from the achievement of the milestone is consistent with the Company's performance required to achieve the milestone, or theincrease in value to the collaboration resulting from the Company's performance, relates solely to the Company's past performance, and is reasonablerelative to all of the other deliverables and payments within the arrangement. The Company's collaboration agreements with its partners provide forpayments to the Company upon the achievement of development milestones, such as the completion of clinical trials or regulatory approval for drugcandidates. Milestone payments received prior to April 1, 2011 from arrangements where the Company has continuing performance obligations have beendeferred and are recognized through the application of a proportional performance model where the milestone payment is recognized over the relatedperformance period or, in full, when there are no remaining performance obligations. The Company makes its best estimate of the period of time for theperformance period. The Company will continue to recognize milestone payments received prior to April 1, 2011 in this manner. As of March 31, 2013,the Company has deferred revenue of $4.3 million from milestone payments received prior to April 1, 2011 that will be recognized through the use of aproportional performance model through 2018. Amounts received prior to satisfying the above revenue recognition criteria are recorded as deferred revenue in the accompanying consolidatedbalance sheets. Although the Company follows detailed guidelines in measuring revenue, certain judgments affect the application of its revenue policy.For example, in connection with the Company's existing collaboration agreements, the Company has recorded on its balance sheet short-term and long-term deferred revenue based on its best estimate of when such revenue will be recognized. Short-term deferred revenue consists of amounts that areexpected to be recognized as revenue in the next 12 months. Amounts that the Company expects will not be recognized within the next 12 months areclassified as long-term deferred revenue. However, this estimate is based on the Company's current operating plan and, if its operating plan shouldchange in the future, the Company may recognize a different amount of deferred revenue over the next 12-month period. The estimate of deferred revenue also reflects management's estimate of the periods of the Company's involvement in certain of its collaborations.The Company's performance obligations under these collaborations consist of participation on steering committees and the performance of otherresearch and development services. In certain instances, the timing of satisfying these obligations can be difficult to estimate. Accordingly, theCompany's estimates may change in the future. Such changes to estimates would result in a change in revenue recognition amounts. If these estimatesand judgments change over the course of these agreements, it may affect the timing and amount of revenue that the Company recognizes and records infuture periods. At March 31, 2013, the Company had short-term and long-term deferred revenue of $2.3 million and $8.9 million, respectively, relatedto its collaborations.F-12Table of ContentsALKERMES PLC AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Manufacturing revenues—The Company recognizes manufacturing revenues from the sale of products it manufactures for resale by itscollaborative partners. Manufacturing revenues are recognized when persuasive evidence of an arrangement exists, delivery has occurred and title to theproduct and associated risk of loss has passed to the customer, the sales price is fixed or determinable and collectability is reasonably assured. The salesprice for certain of the Company's manufacturing revenues is based on the end-market sales price earned by its collaborative partners. As the end-marketsale occurs after the Company has shipped its product and the risk of loss has passed to its collaborative partner, the Company estimates the sales pricefor its product based on information supplied to it by the Company's collaborative partners, its historical transaction experience and other third-partydata. Differences between the actual manufacturing revenues and estimated manufacturing revenues are reconciled and adjusted for in the period inwhich they become known. Royalty revenues—The Company recognizes royalty revenues related to the sale of products by its collaborative partners that incorporates theCompany's technology. Royalties are earned under the terms of a license agreement in the period the products are sold by the Company's collaborativepartner and collectability is reasonably assured. Certain of the Company's royalty revenues are recognized by the Company based on informationsupplied to the Company by its collaborative partners and require estimates to be made. Differences between the actual royalty revenues and estimatedroyalty revenues are reconciled and adjusted for in the period in which they become known, which is generally the following quarter. Research and development revenues—R&D revenue consists of funding that compensates the Company for formulation, pre-clinical and clinicaltesting under R&D arrangements. The Company generally bills its partners under R&D arrangements using a full-time equivalent ("FTE") or hourlyrate, plus direct external costs, if any.Product Sales, Net The Company's product sales consist of sales of VIVITROL in the U.S. to wholesalers, specialty distributors and specialty pharmacies. Productsales are recognized from the sale of VIVITROL when persuasive evidence of an arrangement exists, title to the product and associated risk of loss haspassed to the customer, which is considered to occur when the product has been received by the customer, the sales price is fixed or determinable andcollectability is reasonably assured. The Company records its product sales net of the following significant categories of sales discounts and allowances as a reduction of product salesat the time VIVITROL is shipped:•Medicaid Rebates—the Company records accruals for rebates to states under the Medicaid Drug Rebate Program as a reduction of saleswhen the product is shipped into the distribution channel. The Company rebates individual states for all eligible units purchased underthe Medicaid program based on a rebate per unit calculation, which is based on its Average Manufacturer Price ("AMP"). The Companyestimates expected unit sales and rebates per unit under the Medicaid program and adjusts its rebate estimates based on actual unit salesand rebates per unit. •Chargebacks—wholesaler and specialty pharmacy chargebacks are discounts that occur when contracted customers purchase directlyfrom an intermediary wholesale purchaser. Contracted customers, which consist primarily of federal government agencies purchasingunder the federalF-13Table of ContentsALKERMES PLC AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)supply schedule, generally purchase the product at its contracted price, plus a mark-up from the wholesaler. The wholesaler, in-turn,charges back to the Company the difference between the price initially paid by the wholesaler and the contracted price paid to thewholesaler by the customer. The allowance for chargebacks is based on actual and expected utilization of these programs. Chargebackscould exceed historical experience and the Company's estimates of future participation in these programs. To date, actual chargebackshave not differed materially from the Company's estimates.•Product Returns—in August 2012, the Company changed the way in which revenue is recognized on VIVITROL product sales. Priorto August 1, 2012, the Company did not have sufficient history to reasonably estimate returns related to VIVITROL shipments and,therefore, the Company deferred the recognition of revenue on shipments of VIVITROL until the product left the distribution channel. InAugust 2012, it was determined there was sufficient history to reliably estimate returns, and revenue on the sales of VIVITROL is nowrecognized upon delivery to wholesalers, distributors and pharmacies, which is the point in time the customer assumes the risks andrewards of ownership. This change in the method of revenue recognition resulted in a one-time $1.7 million increase to "Product sales,net" in the accompanying consolidated statements of operations and comprehensive income (loss), which was recognized during thethree months ended September 30, 2012.Based on this revised revenue recognition policy, a reserve is now estimated for future product returns on VIVITROL gross productsales. This estimate is based on historical return rates as well as specifically identified anticipated returns due to known businessconditions and product expiry dates. Return amounts are recorded as a deduction to arrive at VIVITROL product sales, net. OnceVIVITROL is returned, it is destroyed. At March 31, 2013, the product return reserve was estimated to be approximately 2% of productsales and amounts to $3.2 million.•Co-pay assistance—the Company has a program whereby a patient can receive up to $500 per month towards their co-payment, co-insurance or deductible, provided the patient meets certain eligibility criteria. Reserves are recorded upon the sale of VIVITROL.Risk-Management Instruments The Company's derivative activities are initiated within the guidelines of documented corporate risk management policies and do not createadditional risk because gains and losses on derivative contracts offset losses and gains on the liabilities being hedged. At March 31, 2013, theCompany's risk management instruments consisted of an interest rate swap agreement and an interest rate cap agreement. The objective of the interestrate cap and swap agreements are to limit the impact of fluctuations in interest rates in earnings related to the Company's long-term debt. The interest ratecap and swap agreements are not designated as hedging instruments and are recorded at fair value. The associated gains and losses related to the interestrate cap are recognized in "Other income (expense), net" and the associated gains and losses related to the interest rate swap are recognized in "Interestexpense" during the period of change. Refer to Note 12, Derivative Instruments, for additional information related to the Company's risk managementinstruments.F-14Table of ContentsALKERMES PLC AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)Foreign Currency The Company's functional and reporting currency is the U.S. dollar. Transactions in foreign currencies are recorded at the exchange rate prevailingon the date of the transaction. The resulting monetary assets and liabilities are translated into U.S. dollars at exchange rates prevailing on the subsequentbalance sheet date. Gains and losses as a result of translation adjustments are recorded within "Other income (expense), net" in the accompanyingconsolidated statement of operations and comprehensive income (loss). During the years ended March 31, 2013, 2012 and 2011, the Company recordeda gain on foreign currency translation of $0.1 million, $0.5 million and none, respectively.Concentrations Financial instruments that potentially subject the Company to concentrations of credit risk are accounts receivable and marketable securities.Billings to large pharmaceutical and biotechnology companies account for the majority of the Company's accounts receivable, and collateral is generallynot required from these customers. To mitigate credit risk, the Company monitors the financial performance and credit worthiness of its customers. Thefollowing represents revenue and receivables from the Company's customers exceeding 10% of the total in each category as of, and for the years ended,March 31: The Company generally holds its interest-bearing investments with major financial institutions and in accordance with documented investmentpolicies and the Company limits the amount of credit exposure to any one financial institution or corporate issuer. The Company's investment objectivesare, first, to assure liquidity and conservation of capital and, second, to obtain investment income.F-15 2013 2012 2011 Customer Receivables Revenue Receivables Revenue Receivables Revenue Janssen 32% 35% 30% 48% 75% 83%Acorda 15% 11% 11% — — — Table of ContentsALKERMES PLC AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)Geographic Information Company revenues by geographic location, as determined by the location of the customer, and the location of its assets, are as follows:Research and Development Expenses For each of the R&D programs, the Company incurs both external and internal expenses. External R&D expenses include costs related to clinicaland non-clinical activities performed by contract research organizations, consulting fees, laboratory services, purchases of drug product materials andthird-party manufacturing development costs. Internal R&D expenses include employee-related expenses, occupancy costs, depreciation and generaloverhead. The Company tracks external R&D expenses for each of its development programs, however, internal R&D expenses are not tracked byindividual program as they benefit multiple programs or its technologies in general.Share-Based Compensation The Company's share-based compensation programs grant awards which include stock options and restricted stock units ("RSUs"), which vestwith the passage of time and, to a limited extent, vest based on the achievement of certain performance or market criteria. Certain of the Company'semployees are retirement eligible under the terms of the Company's stock option plans (the "Plans"), and stock option awards to these employeesgenerally vest in full upon retirement. Since there are no effective future service requirements for these employees, the fair value of these awards isexpensed in full on the grant date.Stock Options Stock option grants to employees generally expire ten years from the grant date and generally vest one-fourth per year over four years from theanniversary of the date of grant, provided the employee remains continuously employed with the Company, except as otherwise provided in the plan.StockF-16 Year Ended March 31, (In thousands) 2013 2012 2011 Revenue by region: U.S. $380,565 $212,859 $76,700 Ireland 14,455 12,695 805 Rest of world 180,528 164,423 109,135 Assets by region: Current assets: U.S. $248,441 $209,683 $252,960 Ireland 159,544 122,077 — Rest of world 603 7,393 — Long-term assets: U.S. $233,369 $217,406 $199,488 Ireland 828,334 878,658 — Rest of world — — — Table of ContentsALKERMES PLC AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)option grants to directors are for ten-year terms and generally vest over a one-year period provided the director continues to serve on the Company'sboard of directors through the vesting date, except as otherwise provided in the plan. The estimated fair value of options is recognized over the requisiteservice period, which is generally the vesting period. Share-based compensation expense is based on awards ultimately expected to vest. Forfeitures areestimated based on historical experience at the time of grant and revised in subsequent periods if actual forfeitures differ from those estimates. The fair value of stock option grants is based on estimates as of the date of grant using a Black-Scholes option valuation model. The Companyuses historical data as the basis for estimating option terms and forfeitures. Separate groups of employees that have similar historical stock optionexercise and forfeiture behavior are considered separately for valuation purposes. The ranges of expected terms disclosed below reflect differentexpected behavior among certain groups of employees. Expected stock volatility factors are based on a weighted average of implied volatilities fromtraded options on the Company's ordinary shares and historical stock price volatility of the Company's ordinary shares, which is determined based on areview of the weighted average of historical daily price changes of the Company's ordinary shares. The risk-free interest rate for periods commensuratewith the expected term of the share option is based on the U.S. treasury yield curve in effect at the time of grants. The dividend yield on the Company'sordinary shares is estimated to be zero as the Company has not paid and does not expect to pay dividends. The exercise price of options granted prior toOctober 7, 2008 equals the average of the high and low of the Company's ordinary shares traded on the NASDAQ Global Select Stock Market on thedate of grant. Beginning with the adoption of the Alkermes, Inc. 2008 Stock Option and Incentive Plan (the "2008 Plan"), the exercise price of optiongrants made after October 7, 2008 is equal to the closing price of the Company's ordinary shares traded on the NASDAQ Global Select Stock Marketon the date of grant. The fair value of each stock option grant was estimated on the grant date with the following weighted-average assumptions:Time-Vested Restricted Stock Units Time-vested RSUs awarded to employees generally vest one-fourth per year over four years from the anniversary of the date of grant, provided theemployee remains continuously employed with the Company. Shares of the Company's ordinary shares are delivered to the employee upon vesting,subject to payment of applicable withholding taxes. The fair value of time-vested RSUs is based on the market value of the Company's stock on the dateof grant. Compensation expense, including the effect of forfeitures, is recognized over the applicable service period.F-17 Year Ended March 31, 2013 2012 2011Expected option term 5 - 7 years 5 - 7 years 5 - 7 yearsExpected stock volatility 47% - 49% 47% - 51% 46% - 51%Risk-free interest rate 0.61% - 1.18% 0.82% - 2.5% 1.11% - 3.42%Expected annual dividend yield — — —Table of ContentsALKERMES PLC AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)Income Taxes The Company recognizes income taxes under the asset and liability method. Deferred income taxes are recognized for differences between thefinancial reporting and tax bases of assets and liabilities at enacted statutory tax rates in effect for the years in which the differences are expected toreverse. The effect on deferred taxes of a change in tax rates is recognized in income in the period that includes the enactment date. The Companyaccounts for uncertain tax positions using a "more-likely-than-not" threshold for recognizing and resolving uncertain tax positions. The evaluation ofuncertain tax positions is based on factors including, but not limited to, changes in tax law, the measurement of tax positions taken or expected to betaken in tax returns, the effective settlement of matters subject to audit, new audit activity and changes in facts or circumstances related to a tax position.The Company evaluates this tax position on a quarterly basis. The Company also accrues for potential interest and penalties related to unrecognized taxbenefits in income tax expense.Comprehensive Income (Loss) Comprehensive income (loss) consists of net income (loss) and other comprehensive income (loss). Other comprehensive income (loss) includeschanges in equity that are excluded from net income (loss), such as unrealized holding gains and losses on available-for-sale marketable securities andunrealized gains and losses on cash flow hedges.Earnings (Loss) per Share Basic earnings (loss) per share are calculated based upon net income (loss) available to holders of common shares divided by the weighted averagenumber of shares outstanding. For the calculation of diluted earnings per share, the Company uses the weighted average number of shares outstanding,as adjusted for the effect of potential dilutive securities, including stock options and RSUs.Segment Information The Company operates as one business segment, which is the business of developing, manufacturing and commercializing medicines designed toyield better therapeutic outcomes and improve the lives of patients with serious diseases. The Company's chief decision maker, the Chairman and ChiefExecutive Officer, reviews the Company's operating results on an aggregate basis and manages the Company's operations as a single operating unit.Employee Benefit Plans401(K) Plan The Company maintains a 401(k) retirement savings plan (the "401(k) Plan"), which covers substantially all of its U.S.-based employees. Eligibleemployees may contribute up to 100% of their eligible compensation, subject to certain Internal Revenue Service ("IRS") limitations. ThroughMarch 31, 2012, the Company matched 50% of the first 6% of employee pay and beginning April 1, 2012, the Company matches 100% of employeecontributions up to the first 5% of employee pay, up to IRS limits. Employee and Company contributions are fully vested when made. During the yearsended March 31, 2013, 2012 and 2011, the Company contributed $4.1 million, $2.5 million and $2.0 million, respectively, to match employee deferralsunder the 401(k) Plan.F-18Table of ContentsALKERMES PLC AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)Defined Contribution Plan The Company maintains a defined contribution plan for its Ireland-based employees (the "defined contribution plan"). The defined contributionplan provides for eligible employees to contribute up to the maximum of 40%, depending upon their age, of their total taxable earnings subject to anearnings cap of €115,000. The Company provides a match of up to 18% of taxable earnings depending upon an individual's contribution level. Duringthe years ended March 31, 2013, 2012 and 2011, the Company contributed $3.7 million, $1.8 million and none, respectively, in contributions to thedefined contribution plan.Reclassifications An amount equal to $45.8 million that was previously classified as "Amortization of acquired intangibles" in the year ended March 31, 2012, hasbeen reclassified to "Impairment of long-lived assets" in the accompanying consolidated statements of operations and comprehensive income (loss) andstatement of cash flows to conform to current period presentation. Similarly, $3.7 million and $1.4 million that were previously classified as "Proceeds from the issuance of ordinary shares under share-basedcompensation arrangements" in the years ended March 31, 2012 and 2011, respectively, have been reclassified to "Employee taxes paid related to netshare settlement of equity awards" in the accompanying consolidated statements of cash flows to conform to current period presentation.New Accounting Pronouncements From time to time, new accounting pronouncements are issued by the Financial Accounting Standards Board ("FASB") or other standard-settingbodies that are adopted by the Company as of the specified effective date. Unless otherwise discussed, the Company believes that the impact of recentlyissued standards that are not yet effective will not have a material impact on its financial position or results of operations upon adoption.3. ACQUISITIONS On September 16, 2011, the Company acquired EDT from Elan in a transaction accounted for under the acquisition method of accounting forbusiness combinations, in exchange for $500.0 million in cash and 31.9 million ordinary shares of Alkermes, Inc., valued at $525.1 million, based on astock price of $16.46 per share on the acquisition date. Under the acquisition method of accounting, the assets acquired and liabilities assumed wererecorded as of the acquisition date, at their respective fair values. The reported consolidated financial condition and results of operations after completionof the acquisition reflect these fair values. EDT's results of operations are included in the consolidated financial statements from the date of acquisition. Prior to the acquisition, EDT, which was a division of Elan, developed and manufactured pharmaceutical products that deliver clinical benefits topatients using EDT's experience and proprietary drug technologies in collaboration with other pharmaceutical companies worldwide. EDT's twoprincipal drug technology platforms are the oral controlled release platform ("OCR") and the bioavailability enhancement platform, including EDT'sNanoCrystal® technology.F-19Table of ContentsALKERMES PLC AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)3. ACQUISITIONS (Continued) During the year ended March 31, 2012, the Company incurred approximately $29.1 million in expenses related to the EDT acquisition, whichprimarily consisted of banking, legal, accounting and valuation-related expenses. These expenses have been recorded within "Selling, general andadministrative expenses" in the accompanying consolidated statement of operations and comprehensive income (loss). During the year ended March 31,2012, the Company's results of operations included revenues of $165.0 million and net loss of $6.3 million from the acquired EDT business. The purchase price of the EDT business was as follows (in thousands): The purchase price allocation resulted in the following amounts being allocated to the assets acquired and liabilities assumed at the acquisition datebased upon their respective fair values, summarized below (in thousands): Asset categories acquired in the EDT acquisition included working capital, fixed assets and identifiable intangible assets, including IPR&D. The intangible assets acquired included the following (in thousands): On the acquisition date, EDT had several collaboration agreements in place with third-party pharmaceutical companies related to the developmentand commercialization of a number of products including INVEGA® SUSTENNA®/XEPLION®, AMPYRA®/FAMPYRA®, TRICOR 145®,RITALINF-20Upfront payment in accordance with the merger agreement $500,000 Equity consideration in accordance with the merger agreement 525,074 Total purchase price $1,025,074 Cash $5,225 Receivables 59,398 Inventory 29,669 Prepaid expenses and other current assets 1,806 Property plant and equipment 210,558 Acquired identifiable intangible assets 689,000 Goodwill 92,740 Other assets 4,360 Accounts payable and accrued expenses (18,650)Deferred tax liabilities (48,448)Other long-term liabilities (584) Total $1,025,074 Collaboration agreements $499,700 NanoCrystal technology 74,600 OCR technology 66,300 In-process research and development 45,800 Trademark 2,600 Total $689,000 Table of ContentsALKERMES PLC AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)3. ACQUISITIONS (Continued)LA®, FOCALIN® XR. , EMEND® and VERELAN®/VERAPAMIL®. For a complete listing of commercial products utilizing the NanoCrystaltechnology and Oral Controlled Release technology, including the product indication, collaborative partner, and revenue source, please refer to our"Commercial Products Table" on page 7 of this Annual Report. The Company determined the value of each collaboration agreement through the use of the excess earnings method. The Company estimated futurerevenues to be earned under EDT's collaboration agreements for the remainder of the year ended March 31, 2012 through the fiscal year endingMarch 31, 2027, and reduced such future revenues by (i) a projected gross margin percentage, (ii) an estimate of operating expenses to be incurredrelated to these agreements, and (iii) contributory asset charges for working capital and fixed assets. The Company then applied an estimated tax rate,determined based upon the jurisdictions in which the underlying intangible assets are taxed, to arrive at the excess earnings. The Company converted the excess earnings attributable to the collaboration agreements to a present value using a discount rate of 14.5%. Thisdiscount rate is equal to the Internal Rate of Return ("IRR") the Company calculated as part of the EDT acquisition. The IRR represents the return amarket participant would expect to generate through the acquisition of EDT as well as the level of risk reflected in the financial projections used as thebasis for the Company's valuation analysis. Based on the valuation performed, the Company estimated its collaboration agreements to have a value onthe acquisition date of $499.7 million. The Company determined the useful life of the collaboration agreements to be 12 years, which is the Company's best estimate as to the remaininglife of the intellectual property for the products underlying the collaboration agreements and the life of the collaboration agreements themselves. The Company determined the value of the NanoCrystal and OCR technologies through the use of the income approach, specifically the relief-from-royalty method. The Company estimated the savings in royalties that EDT would otherwise have had to pay if it had not owned the NanoCrystal andOCR technologies and had to license it from a third party with rights of use substantially equivalent to ownership. The Company estimated the presentvalue of the stream of future estimated after-tax royalty payments for the remainder of the year ended March 31, 2012 through the fiscal year endingMarch 31, 2027. The Company converted the after-tax royalty payments to a present value using the same discount rate of 14.5% as used in the analysisof the collaboration agreements. Based on the valuation performed, the Company estimated its NanoCrystal and OCR technologies to have a value onthe acquisition date of $74.6 million and $66.3 million, respectively. The Company determined the useful life of the NanoCrystal and OCR technologies to be 13 and 12 years, respectively, which is the Company'sbest estimate as to the remaining life of the intellectual property. Intangible assets associated with IPR&D related to three EDT product candidates. The estimated fair value for the collaboration agreements andIPR&D was determined using the excess earnings approach. The excess earnings approach includes projecting revenue and costs attributable to theassociated collaboration agreement or product candidate and then subtracting the required return related to other contributory assets used in the businessto determine any residual excess earnings attributable to the collaboration agreement or product candidate. The after-tax excess earnings are thendiscounted to present value using an appropriate discount rate. During the fourth quarter of fiscal yearF-21Table of ContentsALKERMES PLC AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)3. ACQUISITIONS (Continued)2012, and after finalization of the purchase accounting for the Business Combination, the Company identified events and changes in circumstance, suchas correspondence from regulatory authorities and further clinical trial results related to the three product candidates acquired as part of the BusinessCombination, which indicated that the assets may be impaired. Accordingly, the Company recorded an impairment charge of $45.8 million within"Impairment of long-lived assets" in the accompanying statement of operations and comprehensive income (loss). See Note 8, Goodwill and IntangibleAssets for additional details. The estimated fair value of the EDT trademark was determined using the relief from royalty method. The Company did not expect to use the EDTtrademark beyond March 31, 2012 and, as a result, the Company amortized the full value of the trademark during the year ended March 31, 2012. The excess of purchase price over the fair value amounts assigned to the assets acquired and liabilities assumed represents the goodwill amountresulting from the acquisition. The Company does not expect any portion of this goodwill to be deductible for tax purposes. The goodwill attributable tothe acquisition of EDT has been recorded as a noncurrent asset and is not amortized, but is subject to an annual review for impairment. The factors thatcontributed to the recognition of goodwill included the synergies that are specific to the Company's business and not available to market participants,including the Company's unique ability to leverage its knowledge in the areas of drug delivery and development of innovative medicines to improvepatients' lives, the acquisition of a talented workforce that brings translational medicine expertise to the Company's preclinical compounds and theCompany's ability to utilize its research capacity to develop additional compounds using the acquired technologies.Pro forma financial information (unaudited) The following unaudited pro forma information presents the combined results of operations for years ended March 31, 2012 and 2011 as if theacquisition of EDT had been completed on April 1, 2010. The unaudited pro forma results do not reflect any material adjustments, operating efficienciesor potential cost savings which may result from the consolidation of operations but do reflect certain adjustments expected to have a continuing impacton the combined results.F-22 Year Ended March 31, (In thousands, except per share data) 2012 2011 Revenues $500,105 $450,222 Net (loss) income $(108,782)$10,265 Basic and diluted (loss) earnings per common share $(0.84)$0.08 Table of ContentsALKERMES PLC AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)4. INVESTMENTS Investments consist of the following:F-23 Gross Unrealized Losses (In thousands) AmortizedCost Gains Less thanOne Year Greater thanOne Year EstimatedFair Value March 31, 2013 Short-term investments: Available-for-sale securities: U.S. government and agency debt securities $102,093 $29 $(1)$— $102,121 Corporate debt securities 10,946 27 — — 10,973 International government agency debt securities 10,089 8 (1) — 10,096 123,128 64 (2) — 123,190 Money market funds 1,201 — — — 1,201 124,329 64 (2) — 124,391 Long-term investments: Available-for-sale securities: U.S. government and agency debt securities 60,047 — (17) — 60,030 Corporate debt securities 18,725 — (26) (162) 18,537 International government agency debt securities 3,060 — — — 3,060 81,832 — (43) (162) 81,627 Held-to-maturity securities: Certificates of deposit 1,200 — — — 1,200 83,032 — (43) (162) 82,827 Total investments $207,361 $64 $(45)$(162)$207,218 Table of ContentsALKERMES PLC AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)4. INVESTMENTS (Continued) The proceeds from the sales and maturities of marketable securities, excluding strategic equity investments, which were primarily reinvested andresulted in realized gains and losses, were as follows:F-24 Gross Unrealized Losses (In thousands) AmortizedCost Gains Less thanOne Year Greater thanOne Year EstimatedFair Value March 31, 2012 Short-term investments: Available-for-sale securities: U.S. government and agency debt securities $62,925 $67 $(17)$— $62,975 International government agency debt securities 25,646 22 (2) — 25,666 Corporate debt securities 12,324 27 — — 12,351 100,895 116 (19) — 100,992 Held-to-maturity securities: Certificates of deposit 4,236 — — — 4,236 U.S. government obligations 417 — — — 417 4,653 — — — 4,653 Money market funds 1,201 — — — 1,201 106,749 116 (19) — 106,846 Long-term investments: Available-for-sale securities: U.S. government and agency debt securities 35,493 — (70) — 35,423 International government agency debt securities 10,257 — (20) — 10,237 Corporate debt securities 8,009 — — (660) 7,349 Strategic investments 644 838 — — 1,482 54,403 838 (90) (660) 54,491 Held-to-maturity securities: Certificates of deposit 1,200 — — — 1,200 55,603 838 (90) (660) 55,691 Total investments $162,352 $954 $(109)$(660)$162,537 Year Ended March 31, (In thousands) 2013 2012 2011 Proceeds from the sales and maturities of marketable securities $258,937 $323,028 $385,511 Realized gains $39 $47 $77 Realized losses $5 $11 $32 Table of ContentsALKERMES PLC AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)4. INVESTMENTS (Continued) In addition, during the year ended March 31, 2013, the Company sold $4.7 million of its held-to-maturity securities. These securities were held ascollateral for certain lease agreements that ended in June 2012. There were no gains or losses recognized on the sale of these investments. TheCompany's available-for-sale and held-to-maturity securities at March 31, 2013 have contractual maturities in the following periods: At March 31, 2013, the Company believes that the unrealized losses on its available-for-sale investments are temporary. The investments withunrealized losses consist primarily of corporate debt securities. In making the determination that the decline in fair value of these securities wastemporary, the Company considered various factors, including but not limited to: the length of time each security was in an unrealized loss position; theextent to which fair value was less than cost; financial condition and near-term prospects of the issuers; and the Company's intent not to sell thesesecurities, and the assessment that it is more likely than not that the Company would not be required to sell these securities before the recovery of theiramortized cost basis. The Company's investment in Acceleron Pharma, Inc. ("Acceleron") was $8.7 million at March 31, 2013 and 2012, which is recorded within"Other assets" in the accompanying consolidated balance sheets. The Company accounts for its investment in Acceleron under the cost method asAcceleron is a privately-held company over which the Company does not exercise significant influence. The Company continues to monitor thisinvestment to evaluate whether any decline in its value has occurred that would be other-than-temporary, based on the implied value from any recentrounds of financing completed by Acceleron, market prices of comparable public companies and general market conditions. The Company's investment in Civitas Therapeutics, Inc. ("Civitas") was $0.8 million and $2.0 million at March 31, 2013 and 2012, respectively,which is recorded within "Other assets" in the accompanying consolidated balance sheets. The Company accounts for its investment in Civitas under theequity method as the Company has an approximately 11% ownership position in Civitas, has a seat on the board of directors and believes it may be ableto exercise significant influence over the operating and financial policies of Civitas. During the year ended March 31, 2012, Civitas issued 14.3 million shares of Series A preferred stock in exchange for $12.5 million. TheCompany did not participate in the financing, however, it received 12.4% of these Series A preferred shares in accordance with the terms of itsarrangement with Civitas and recorded an increase to its investment in Civitas of $1.5 million. The Company has deferred the recognition of the gain onits investment in Civitas and will recognize it into "Other (expense) income, net", ratably over a period of approximately four years, in the Company'sconsolidated statement of operations and comprehensive income (loss). During the year ended March 31, 2013, the Company recorded a reduction in itsinvestment in Civitas of $1.2 million, which represented the Company's proportionate share of Civitas' net losses for this period.F-25 Available-for-sale Held-to-maturity (In thousands) AmortizedCost EstimatedFair Value AmortizedCost EstimatedFair Value Within 1 year $80,388 $80,399 $1,200 $1,200 After 1 year through 5 years 124,572 124,418 — — Total $204,960 $204,817 $1,200 $1,200 Table of ContentsALKERMES PLC AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)4. INVESTMENTS (Continued) In December 2012, the Company and four other existing investors agreed to provide Civitas with a promissory note in the amount of $9.0 million.The promissory note will pay 6% interest per year, is payable on demand at any time on or after December 18, 2013, and is convertible into eithercommon or preferred shares of Civitas upon a majority vote of the promissory note holders on or after December 18, 2013, or in the event of a qualifiedfinancing as defined in the Note Purchase Agreement. The Company's share of the promissory note, $1.1 million, was recorded within "Prepaidexpenses and other current assets" in the accompanying consolidated balance sheets.5. FAIR VALUE The following table presents information about the Company's assets and liabilities that are measured at fair value on a recurring basis and indicatesthe fair value hierarchy and the valuation techniques the Company utilized to determine such fair value: F-26(In thousands) March 31,2013 Level 1 Level 2 Level 3 Assets: Cash equivalents $1,201 $1,201 $— $— U.S. government and agency debt securities 162,151 75,025 87,126 — International government agency debt securities 13,156 — 13,156 — Corporate debt securities 29,510 — 29,510 — Total $206,018 $76,226 $129,792 $— Liabilities: Interest rate swap contract $(541) — (541) — Total $(541)$— $(541)$— March 31,2012 Level 1 Level 2 Level 3 Assets: Cash equivalents $1,201 $1,201 $— $— U.S. government and agency debt securities 98,398 98,398 — — International government agency debt securities 35,903 30,902 — 5,001 Corporate debt securities 19,700 — 14,045 5,655 Strategic equity investments 1,482 1,482 — — Interest rate cap contracts 20 — 20 — $156,704 $131,983 $14,065 $10,656 Liabilities: Interest rate swap contract $(522) — (522) — Total $(522)$— $(522)$— Table of ContentsALKERMES PLC AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)5. FAIR VALUE (Continued) The following table is a rollforward of the fair value of the Company's investments whose fair value was determined using Level 3 inputs atMarch 31, 2013: The Company transfers its financial assets and liabilities measured at fair value on a recurring basis between fair value hierarchies at the end ofeach reporting period. During the year ended March 31, 2013, the Company transferred $87.1 million of its investments in U.S. government agencydebt securities and $3.1 million of its investments in international government agency debt securities from Level 1 to Level 2 as the Company hadlimited visibility into their trading volumes. There were no transfers of any securities from Level 2 to Level 1 during the year ended March 31, 2013.Also, during the year ended March 31, 2013, there were two securities transferred from Level 3 to Level 2 as trading resumed for these securities. A third-party pricing service was used to determine the estimated fair value of the Company's securities. The third-party pricing service developsits estimate of fair value through a proprietary model using variables including reportable trades and last trade date, bids and offers, trading frequency,benchmark yields, credit spreads and other industry and economic events. The Company validates the prices provided by its third-party pricing serviceby reviewing their pricing methods and matrices, obtaining market values from other pricing sources, analyzing pricing data in certain instances andconfirming the activity in the relevant markets. After completing its validation procedures, the Company did not adjust or override any fair valuemeasurements provided by its pricing services at March 31, 2013. The Company's investments in US government and agency debt securities, international government agency debt securities and corporate debtsecurities classified as Level 2 were initially valued at the transaction price and subsequently valued, at the end of each reporting period, utilizing marketobservable data. The market observable data includes reportable trades, benchmark yields, credit spreads, broker/dealer quotes, bids, offers, current spotrates and other industry and economic events. The Company validates the prices developed using the market observable data by obtaining market valuesfrom other pricing sources, analyzing pricing data in certain instances and confirming that the relevant markets are active. In September and December 2011, the Company entered into interest rate cap agreements, and, in September 2011, the Company entered into aninterest rate swap agreement. These agreements are described in greater detail in Note 12, Derivative Instruments. The fair value of the Company'sinterest rate cap and interest rate swap agreements were based on an income approach, which excludes accrued interest, and takes into considerationthen-current interest rates and then-current creditworthiness of the Company or the counterparty, as applicable. The carrying amounts reflected in the consolidated balance sheets for cash and cash equivalents, accounts receivable, other current assets, accountspayable and accrued expenses approximate fair valueF-27(In thousands) Fair Value Balance, April 1, 2012 $10,656 Investments transferred into Level 3 1,579 Investments transferred out of Level 3 (12,247)Total unrealized gains included in comprehensive loss 12 Balance, March 31, 2013 $— Table of ContentsALKERMES PLC AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)5. FAIR VALUE (Continued)due to their short-term nature. The fair value of the remaining financial instruments not currently recognized at fair value on the Company's consolidatedbalance sheets consist of the $300.0 million, seven-year term loan bearing interest at LIBOR plus 2.75% with a LIBOR floor of 0.75% ("Term Loan B-1") and the $75.0 million, four-year term loan bearing interest at LIBOR plus 2.75%, with no LIBOR floor ("Term Loan B-2" and together with TermLoan B-1, the "2013 Term Loans"). The estimated fair value of these term loans, which was based on quoted market price indications (Level 2 in thefair value hierarchy) and may not be representative of actual values that could have been or will be realized in the future at March 31, 2013, was asfollows:6. INVENTORY Inventory consists of the following:F-28(In thousands) CarryingValue EstimatedFair Value Term Loan B-1 $296,029 $298,375 Term Loan B-2 $72,979 $73,308 March 31, (In thousands) 2013 2012 Raw materials $13,506 $12,841 Work in process 13,842 9,569 Finished goods(1) 16,135 16,968 Consigned-out inventory(2) — 381 Inventory $43,483 $39,759 (1)At March 31, 2013 and 2012, the Company had $0.6 million and $1.3 million, respectively, of finished goods inventorylocated at its third party warehouse and shipping service provider. (2)At March 31, 2012, consigned-out inventory related to VIVITROL inventory in the distribution channel for which theCompany had not recognized revenue. As previously disclosed, in August 2012, the Company changed the way in whichrevenue is recognized on VIVITROL product sales, and, consequently, it no longer expects to have consigned-outinventory.Table of ContentsALKERMES PLC AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)7. PROPERTY, PLANT AND EQUIPMENT Property, plant and equipment consist of the following: The Company reclassified $11.5 million of "Furniture, fixtures, and equipment" and $0.7 million of "Land" at March 31, 2012 as "Buildings andimprovements" to revise prior period presentation. Depreciation expense was $31.9 million, $22.5 million and $8.7 million for the years endedMarch 31, 2013, 2012 and 2011, respectively. During the year ended March 31, 2013, the Company performed an impairment analysis on certain of its manufacturing equipment dedicated to theproduction of VIVITROL. This equipment was originally purchased by Cephalon in connection with the VIVITROL collaboration and later acquiredby the Company upon the termination of the VIVITROL collaboration with Cephalon. The Company determined that these assets will not be used in thefuture production of VIVITROL and recorded an impairment charge of $3.3 million to write the assets down to their fair value. Fair value wasdetermined using level 3 inputs including internally established estimates and the selling prices of similar assets. Also, during the years ended March 31,2013 and 2012, the Company wrote off furniture, fixtures and equipment that had a carrying value of less than $0.1 million at the time of dispositionand received proceeds from the sales of furniture, fixtures and equipment of less than $0.1 million. Amounts included as construction in progress in the consolidated balance sheets primarily include capital expenditures at the Company'smanufacturing facility in Ohio. The Company continues to evaluate its manufacturing capacity based on expectations of demand for its products and willcontinue to record such amounts within construction in progress until such time as the underlying assets are placed into service. The Companycontinues to periodically evaluate whether facts and circumstances indicate that the carrying value of its long-lived assets to be held and used may not berecoverable.F-29 March 31, (In thousands) 2013 2012 Land $8,357 $8,891 Building and improvements 141,092 127,583 Furniture, fixture and equipment 197,743 189,262 Leasehold improvements 24,137 45,798 Construction in progress 39,399 44,768 Subtotal 410,728 416,302 Less: accumulated depreciation (122,293) (113,307) Total property, plant and equipment, net $288,435 $302,995 Table of ContentsALKERMES PLC AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)8. GOODWILL AND INTANGIBLE ASSETS Goodwill and intangible assets consists of the following: During the three months ended December 31, 2012, the Company performed its annual goodwill impairment test. The Company worked with athird-party valuation firm and established fair value for the purpose of impairment testing by using an average of the income approach and the marketapproach. The income approach employs a discounted cash flow model that takes into account (i) assumptions that market participants would use intheir estimates of fair value, (ii) current period actual results, and (iii) budgeted results for future periods that have been vetted by senior management.The discounted cash flow model incorporates the same fundamental pricing concepts used to calculate fair value in an acquisition due diligence processand a discount rate that takes into consideration the Company's estimated cost of capital adjusted for the uncertainty inherent in an acquisition. Themarket approach employs market multiples for comparable publicly traded companies in the pharmaceutical and biotechnology industries obtained fromindustry sources, taking into consideration the nature, scope and size of the acquired reporting unit. In the market approach, estimates of fair value areestablished using an average of both revenue and EBITDA multiples, adjusted for the reporting unit's performance relative to peer companies. The Company determined that the fair value of its reporting unit was substantially in excess of its respective carrying value and there was noimpairment in the value of this asset as of October 31, 2012. During the three months ended March 31, 2012, and after finalization of the purchase accounting for the Business Combination, the Companyidentified events and changes in circumstance, such as correspondence from regulatory authorities and further clinical trial results related to the threeproduct candidates acquired as part of the Business Combination, and classified as IPR&D, which indicated that the assets may be impaired. As such,the Company performed an analysis to measure the amount of the impairment loss, if any. The Company performed the valuation of its IPR&D fromthe viewpoint of a market participant through the use of a discounted cash flow model. The model contained certain key assumptions, including the costto bring the pre-clinical products through the clinical trial and regulatory approval process, the gross margin a market participant would expect to earn ifthe products were approved for sale, the cost to sell the approved product and a discount factor based on an industry average weighted average cost ofcapital. Based on the analysis performed, the Company March 31, 2012 March 31, 2013 (In thousands) WeightedAmortizableLife GrossCarryingAmount AccumulatedAmortization NetCarryingAmount GrossCarryingAmount AccumulatedAmortization NetCarryingAmount Goodwill $92,740 $— $92,740 $92,740 $— $92,740 Finite-livedintangibleassets: Collaborationagreements 12 $499,700 $(17,734)$481,966 $499,700 $(50,143)$449,557 NanoCrystaltechnology 13 74,600 (1,839) 72,761 74,600 (5,373) 69,227 OCRtechnology 12 66,300 (3,182) 63,118 66,300 (9,091) 57,209 Trademark — 2,600 (2,600) — — — — Total finite-livedintangibleassets $643,200 $(25,355)$617,845 $640,600 $(64,607)$575,993 Indefinite-livedintangibleassets IPR&D — 45,800 (45,800) — — — — Total $689,000 $(71,155)$617,845 $640,600 $(64,607)$575,993 F-30Table of ContentsALKERMES PLC AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)8. GOODWILL AND INTANGIBLE ASSETS (Continued)determined that the IPR&D was impaired and recorded an impairment charge of $45.8 million within "Impairment of long-lived assets" in theaccompanying statement of operations and comprehensive income (loss). The Company recorded $41.9 million and $25.4 million of amortization expense related to its finite-lived intangible assets during the years endedMarch 31, 2013 and 2012, respectively. Based on the Company's most recent analysis, amortization of intangible assets included within its consolidatedbalance sheet at March 31, 2013, is expected to be approximately $50.0 million, $60.0 million, $65.0 million, $70.0 million and $70.0 million in thefiscal years ending March 31, 2014 through 2018, respectively. Although the Company believes such available information and assumptions arereasonable, given the inherent risks and uncertainties underlying its expectations regarding such future revenues, there is the potential for the Company'sactual results to vary significantly from such expectations. If revenues are projected to change, the related amortization of the intangible asset will changein proportion to the change in revenues.9. ACCOUNTS PAYABLE AND ACCRUED EXPENSES Accounts payable and accrued expenses consist of the following:10. RESTRUCTURING On April 4, 2013, the Company, approved a restructuring plan related to its Athlone, Ireland manufacturing facility consistent with the evolution ofthe Company's product portfolio and designed to improve operational performance for the future. Under the restructuring plan, the Company will terminate manufacturing services for certain older products becoming uneconomic to produce dueto decreasing demand from its customers resulting from generic competition. The Company expects to continue to generate revenues from themanufacturing of these products during fiscal year 2014 and, for certain of these products, into fiscal year 2015. As a result of the termination of these services, it is contemplated that the Company will also implement a corresponding reduction in headcount ofup to 130 employees. In connection with the Plan, the Company recorded restructuring charges consisting of the following within "Restructuring" inF-31 March 31, (In thousands) 2013 2012 Accounts payable $18,282 $18,400 Accrued compensation 30,432 25,023 Accrued interest 970 2,472 Accrued other 27,226 33,259 Total accounts payable and accrued expenses $76,910 $79,154 Table of ContentsALKERMES PLC AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)10. RESTRUCTURING (Continued)the accompanying consolidated statements of operations and comprehensive income (loss), (in thousands): This Plan is expected to result in estimated annual cost savings of between $15.0 million to $20.0 million by fiscal year 2016 and beyond. The totalamount of the restructuring charges is accrued at March 31, 2013. As part of the Plan, the Company also expects to incur non-cash charges resultingfrom the accelerated depreciation of certain manufacturing assets, which are currently estimated to be approximately $10.0 million in fiscal year 2014and $7.0 million in fiscal year 2015.11. LONG-TERM DEBT Long-term debt consists of the following:Term Loans In September 2012, the Company entered into an amendment (the "Refinancing") to the first lien term loan facility (the "First Lien Term Loan")pursuant to which the First Lien Term Loan was amended and restated to, among other things, provide for a new tranche of term loans in an amountequal to $375.0 million, the proceeds of which, together with cash-on hand of approximately $75.0 million, were used to repay in full all monies duepursuant to the second lien term loan facility (the "Second Lien Term Loan" and together with the First Lien Term Loan, the "2012 Term Loans"). Thenew term loan facility includes the 2013 Term Loans and each of the 2013 Term Loans included a LIBOR floor of 1.0%. In February 2013, the Company further amended the 2013 Term Loans (the "Repricing") to secure: (i) a reduction in interest payable under TermLoan B-1 to LIBOR plus 2.75% and a decrease in the LIBOR floor to 0.75%; (ii) a reduction in interest payable under Term Loan B-2 to LIBOR plus2.75% and a decrease in the LIBOR floor to 0%; and (iii) a shortened time period, from one year to six months, during which a refinancing of the 2013Term Loans, as described in the amended and restated credit agreement, would trigger a 1% prepayment premium.F-32Severance $12,100 Outplacement services 200 Total $12,300 (In thousands) March 31,2013 March 31,2012 Term Loan B-1, due September 25, 2019 $296,029 $— Term Loan B-2, due September 25, 2016 72,979 — First Lien Term Loan, due September 16, 2017 — 306,822 Second Lien Term Loan, due September 16, 2018 — 137,638 Total 369,008 444,460 Less: current portion (6,750) (3,100) Long-term debt $362,258 $441,360 Table of ContentsALKERMES PLC AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)11. LONG-TERM DEBT (Continued) Term Loan B-1 was issued with a principal balance of $300.0 million, an original issue discount of $3.0 million and amortizes in equal quarterlyamounts of 0.25% of the original principal amount of the loan, with the balance payable at maturity, which is September 25, 2019. Term Loan B-2 wasissued with a principal balance of $75.0 million, an original issue discount of $0.4 million and amortizes in equal quarterly amounts of 1.25% of theoriginal principal amount of the loan, with the balance payable at maturity, which is September 25, 2016. The 2013 Term Loans are guaranteed bycertain subsidiaries of the Company (the "Guarantors") and is secured by a first priority lien on substantially all of the assets and properties of theCompany and the Guarantors (subject to certain exceptions and limitations). Scheduled maturities with respect to the 2013 Term Loans are as follows (in thousands): Required quarterly principal payments of $0.8 million on Term Loan B-1 and $0.9 million on Term Loan B-2 began on December 31, 2012.Commencing with the completion of the Company's fiscal year ended March 31, 2014, the Company is subject to mandatory prepayments of principal ifcertain excess cash flow thresholds, as defined in the 2013 Term Loans, are met. The Company may make prepayments of principal without premium orpenalty, however, in the event that, prior to September 25, 2013, the Company prepays any of Term Loan B-1 or Term Loan B-2 pursuant to a repricingtransaction or an amendment of the Term Loan Facility that results in a repricing transaction, the Company will be subject to a prepayment premium of1% of the amount of the term loan being repaid or the aggregate amount of the applicable term loan outstanding immediately prior to such amendment. The 2013 Term Loans have an incremental facility capacity in an amount of $140.0 million, plus additional amounts as long as the Company meetscertain conditions, including a specified leverage ratio. The 2013 Term Loans include a number of restrictive covenants that, among other things andsubject to certain exceptions and baskets, impose operating and financial restrictions on the Company and certain of its subsidiaries. The 2013 TermLoans also contain customary affirmative covenants and events of default. The Company was in compliance with its debt covenants at March 31, 2013. The Refinancing was a restructuring of the 2012 Term Loans and involved multiple lenders who were considered members of a loan syndicate. Indetermining whether the Refinancing was to be accounted for as a debt extinguishment or modification, the Company considered whether creditorsremained the same or changed and whether the change in debt terms was substantial. The terms of the 2013 Term Loans were considered substantiallydifferent from the 2012 Term Loans if the present value of the cash flows under the 2013 Term Loans was at least 10% different from the present valueof the remaining cash flows under the 2012 Term Loans (commonly referred to as the "10% Test"). TheF-33Fiscal Year: 2014 $6,750 2015 6,750 2016 6,750 2017 64,875 2018 3,000 Thereafter 283,500 Total $371,625 Table of ContentsALKERMES PLC AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)11. LONG-TERM DEBT (Continued)Company performed a separate 10% Test for each individual creditor participating in the loan syndication. The loans of creditors who did not participatein the 2013 Term Loans were accounted for as a debt extinguishment. The Repricing was a restructuring of the 2013 Term Loans and involved multiple lenders who were considered members of a loan syndicate. TheCompany performed a similar analysis to the analysis described above to determine if the Repricing was to be accounted for as a debt extinguishment ormodification. In addition, since the Debt Repricing occurred within twelve months of the Refinancing, for any lenders who participated in theRefinancing, the Company performed the 10% test using the present value of the remaining cash flows under the 2013 Term Loans. As the 2012 and 2013 Term Loans have a prepayment option exercisable at any time, the Company assumed the prepayment option was exercisedimmediately on the date of the refinancing for purposes of applying the 10% Test. When there was a change in principal balance for individual creditorsin the Refinancing and/or the Repricing, in applying the 10% Test, the Company used the cash flows related to the lowest common principal balance(commonly referred to as the "Net Method"). Under the Net Method, any principal in excess of a creditor's rollover money was treated as a new,separate debt issuance, and any decrease in principal was treated as a partial extinguishment of debt. New costs paid to creditors and third parties in connection with the Refinancing and/or Repricing were allocated to the 2013 Term Loans and thenfurther allocated to each creditor. Once these costs were allocated to the individual creditors, an analysis of each creditor was performed and adetermination made as to whether the refinancing was accounted for as a debt extinguishment or modification under the 10% Test. For debt consideredto be extinguished, the unamortized deferred financing costs and unamortized original issue discount associated with the extinguished debt wereexpensed. For debt considered to be modified, the unamortized deferred financing costs and unamortized original issue discount associated with themodified debt continue to be amortized, new financing costs were expensed and new third-party fees were capitalized. For new creditors in theRefinancing and/or Repricing, new financing costs and original issue discount fees were capitalized and will be amortized over the estimated repaymentperiod of the new debt. The Refinancing and Repricing resulted in a $12.1 million and $7.5 million charge, respectively, in the year ended March 31, 2013, which wasincluded in "Interest expense" in the accompanying consolidated statement of operations and comprehensive income (loss) and was comprised of thefollowing:F-34(In thousands) September 2012Refinancing February 2013Repricing Total Extinguished debt: Unamortized deferred financing costs $4,600 $1,566 $6,166 Unamortized original issue discount 2,657 1,435 4,094 Modified debt: Debt financing costs 1,967 807 2,772 Original issue discount 105 — 105 Prepayment penalty 2,800 3,733 6,533 Total $12,129 $7,541 $19,670 Table of ContentsALKERMES PLC AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)11. LONG-TERM DEBT (Continued) At March 31, 2013, the Company's balance of unamortized deferred financing costs and unamortized original issue discount costs were$3.3 million and $2.6 million, respectively. These costs are being amortized to interest expense over the estimated repayment period of the 2013 TermLoans using the effective interest method. During the years ended March 31, 2013 and 2012, the Company had amortization expense of $5.8 millionand $3.5 million, respectively, related to deferred financing costs and original issue discount.12. DERIVATIVE INSTRUMENTS In December 2011, the Company entered into an interest rate cap agreement with Morgan Stanley Capital Services LLC ("MSCS") at a cost of$0.1 million to mitigate the impact of fluctuations in the three-month LIBOR rate at which the Company's long-term debt bears interest. The interest ratecap agreement expires in December 2013, has a notional value of $160.0 million and is not designated as a hedging instrument. The Company recordedan immaterial amount of loss as "Other income (expense), net" in the accompanying consolidated statements of operations and comprehensive income(loss) due to the decline in value of this contract during the years ended March 31, 2013 and 2012. At March 31, 2013, this contract has an immaterialbalance included within "Other assets" in the accompanying consolidated balance sheets. In September 2011, the Company entered into an interest rate cap agreement with HSBC Bank USA at a cost of less than $0.1 million to mitigatethe impact of fluctuations in the three-month LIBOR rate at which the Company's long-term debt bear interest. The interest rate cap agreement becameeffective on September 16, 2011 and expired in December 2012. The interest rate cap agreement had a notional value of $65.0 million and was notdesignated as a hedging instrument. The Company recorded an immaterial amount of loss within "Other income (expense), net" in the consolidatedstatements of operations and comprehensive income (loss) due to the decline in value of this contract during the years ended March 31, 2013 and 2012. In September 2011, the Company entered into an interest rate swap agreement with MSCS to mitigate the impact of fluctuations in the three-monthLIBOR rate at which the Company's long-term debt bears interest. The interest rate swap agreement became effective in December 2012, expires inDecember 2014 and has a notional value of $65.0 million. This contract was initially designated as a cash flow hedge, however, in connection with theRefinancing, the cash flow hedge was deemed to no longer be effective for accounting purposes and, accordingly, the Company reclassified itsunrealized losses of $0.6 million to "Interest expense" in the accompanying consolidated statement of operations and comprehensive income (loss). Thefollowing table summarizes the beginning and ending accumulated derivative loss for the interest rate swap (in thousands):F-35Unrealized losses included in accumulated other comprehensive income at March 31, 2012 $(522)Unrealized losses incurred during the year ended March 31, 2013 (72)Reclassification of unrealized losses to realized losses during the year ended March 31, 2013 594 Unrealized losses included in accumulated other comprehensive income at March 31, 2013 $— Table of ContentsALKERMES PLC AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)12. DERIVATIVE INSTRUMENTS (Continued) The following table summarizes the fair value and presentation in the consolidated balance sheets for the Company's hedging instruments (inthousands):13. EARNINGS (LOSS) PER SHARE Basic earnings (loss) per ordinary share is calculated based upon net income (loss) available to holders of ordinary shares divided by the weightedaverage number of shares outstanding. For the calculation of diluted earnings (loss) per ordinary share, the Company uses the weighted average numberof ordinary shares outstanding, as adjusted for the effect of potential outstanding shares, including stock options and restricted stock units. The following potential ordinary equivalent shares have not been included in the net income (loss) per ordinary share calculations because theeffect would have been anti-dilutive.F-36 Fair Value (In thousands) Balance Sheet Location March 31, 2013 March 31, 2012 Interest rate swap Liability derivative not designated as a cash flowhedge Other long-term liabilities $(541) — Liability derivative designated as a cash flow hedge Other long-term liabilities $— (522) Year Ended March 31, (In thousands) 2013 2012 2011 Numerator: Net income (loss) $24,983 $(113,678)$(45,540) Denominator: Weighted average number of ordinary shares outstanding 131,713 114,702 95,610 Effect of dilutive securities: Stock options 4,025 — — Restricted stock units 1,362 — — Dilutive ordinary share equivalents 5,387 — — Shares used in calculating diluted earnings (loss) per share 137,100 114,702 95,610 Year Ended March 31, (In thousands) 2013 2012 2011 Stock options 4,497 8,299 13,357 Restricted stock units — 1,205 936 Total 4,497 9,504 14,293 Table of ContentsALKERMES PLC AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)14. SHAREHOLDERS' EQUITYShare Repurchase Programs On September 16, 2011, the board of directors authorized the continuation of the Alkermes, Inc. share repurchase program to repurchase up to$215.0 million of the Company's ordinary shares at the discretion of management from time to time in the open market or through privately negotiatedtransactions. At March 31, 2013, approximately $101.0 million was available to repurchase ordinary shares pursuant to the repurchase program. Allshares repurchased are recorded as treasury stock. The repurchase program has no set expiration date and may be suspended or discontinued at anytime. During the years ended March 31, 2013 and 2012, the Company did not acquire any shares of outstanding ordinary shares under the repurchaseprogram.15. SHARE-BASED COMPENSATIONShare-based Compensation Expense The following table presents share-based compensation expense included in the Company's consolidated statements of operations andcomprehensive income (loss): At March 31, 2013, 2012 and 2011, $0.6 million, $0.4 million and $0.6 million, respectively, of share-based compensation expense wascapitalized and recorded as "Inventory" in the consolidated balance sheets.Share-based Compensation Plans The Company has two compensation plans pursuant to which awards are currently being made; (i) the 2011 Stock Option and Incentive Plan (the"2011 Plan"); (ii) and the 2008 Plan. The Company has five share-based compensation plans pursuant to which outstanding awards have been made,but from which no further awards can or will be made: (i) the 1996 Stock Option Plan for Non-Employee Directors (the "1996 Plan"); (ii) the 1998Equity Incentive Plan (the "1998 Plan"); (iii) the 1999 Stock Option Plan (the "1999 Plan"); (iv) the 2002 Restricted Stock Award Plan (the "2002Plan"); and (v) the 2006 Stock Option Plan for Non-Employee Directors (the "2006 Plan"). The 2011 Plan and the 2008 Plan provides for issuance ofnon-qualified and incentive stock options, restricted stock, restricted stock units, cash-based awards and performance shares to employees, officers anddirectors of, and consultants to, the Company in such amounts and with such terms and conditions as may be determined by the compensationcommittee of the Company's board of directors, subject to provisions of the 2011 Plan and the 2008 Plan. At March 31, 2013, there were 9.8 million shares of ordinary shares available for issuance under the Company's stock plans. The 2011 Planprovides that awards other than stock options will be counted against the total number of shares available under the plan in a 1.8-to-1 ratio and the 2008F-37 Year Ended March 31, (In thousands) 2013 2012 2011 Cost of goods manufactured and sold $4,375 $2,962 $1,725 Research and development 9,078 8,784 6,218 Selling, general and administrative 21,263 17,080 11,889 Total share-based compensation expense $34,716 $28,826 $19,832 Table of ContentsALKERMES PLC AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)15. SHARE-BASED COMPENSATION (Continued)Plan provides that awards other than stock options will be counted against the total number of shares available under the plan in a 2-to-1 ratio.Stock Options A summary of stock option activity is presented in the following table: The weighted average grant date fair value of stock options granted during the years ended March 31, 2013, 2012 and 2011 was $8.11, $8.00 and$5.92, respectively. The aggregate intrinsic value of stock options exercised during the years ended March 31, 2013, 2012 and 2011 was $28.1 million,$11.1 million and $2.0 million, respectively. At March 31, 2013, there were 6.0 million stock options expected to vest with a weighted average exercise price of $15.27 per share, a weightedaverage contractual remaining life of 8.3 years and an aggregate intrinsic value of $50.5 million. At March 31, 2013, the aggregate intrinsic value ofstock options exercisable was $98.8 million with a weighted average remaining contractual term of 4.4 years. The number of stock options expected tovest is determined by applying the pre-vesting forfeiture rate to the total outstanding options. The intrinsic value of a stock option is the amount bywhich the market value of the underlying stock exceeds the exercise price of the stock option. At March 31, 2013, there was $20.3 million of unrecognized compensation cost related to unvested stock options, which is expected to berecognized over a weighted average period of approximately 1.9 years. Cash received from option exercises under the Company's award plans duringthe years ended March 31, 2013 and 2012 was $34.4 million and $20.9 million, respectively. The Company issued new shares upon option exercisesduring the years ended March 31, 2013 and 2012.F-38 Number ofShares Weighted AverageExercise Price Outstanding, April 1, 2012 17,359,760 $13.68 Granted 2,535,500 $16.84 Exercised (3,052,642)$11.26 Forfeited (334,063)$14.98 Expired (57,451)$20.12 Outstanding, March 31, 2013 16,451,104 $14.57 Exercisable, March 31, 2013 10,321,840 $14.13 Table of ContentsALKERMES PLC AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)15. SHARE-BASED COMPENSATION (Continued)Time-Vested Restricted Stock Units A summary of time-vested RSU activity is presented in the following table: The weighted average grant date fair value of time-vested RSUs granted during the years ended March 31, 2013, 2012 and 2011 was $16.55,$17.91 and $11.74, respectively. The total fair value of time-vested RSUs that vested during the years ended March 31, 2013, 2012 and 2011 was$9.9 million, $6.1 million and $4.0 million, respectively. At March 31, 2013, there was $14.0 million of total unrecognized compensation cost related to unvested time-vested RSUs, which will berecognized over a weighted average remaining contractual term of 1.9 years.Performance-Based Restricted Stock Units In May 2009, the board of directors awarded 45,000 RSUs to certain of the Company's executive officers under the 2006 Plan that vested upon theapproval of BYDUREON by the U.S. Food and Drug Administration ("FDA"), provided the approval by the FDA occurred at least one year after thedate of grant. During the year ended March 31, 2010, 20,000 RSUs were forfeited upon the resignation of an executive officer. The grant date fair valueof the award was $8.55 per share, which was the market value of the Company's stock on the date of grant. During the year ended March 31, 2012, theperformance condition was met and the award vested. In May 2008, the board of directors awarded 40,000 RSUs to certain of the Company's executive officers under the 2002 Plan that vest upon theachievement of a market condition specified in the award terms. During the year ended March 31, 2010, 10,000 RSUs were forfeited upon theresignation of an executive officer. The grant date fair value of $9.48 per share was determined through the use of a Monte Carlo simulation model. Thecompensation cost for the award's grant date fair value of $0.4 million was recognized over a derived service period of 1.4 years. During the year endedMarch 31, 2012, the market condition was met and the awards vested.F-39 Number ofShares Weighted AverageGrant Date Fair Value Unvested, April 1, 2012 2,114,176 $13.45 Granted 1,032,530 $16.55 Vested (799,935)$12.41 Forfeited (120,000)$15.70 Unvested, March 31, 2013 2,226,771 $15.14 Table of ContentsALKERMES PLC AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)16. COLLABORATIVE ARRANGEMENTS The Company's business strategy includes forming collaborations to develop and commercialize its products, and to access technological, financial,marketing, manufacturing and other resources. The Company's significant collaborative arrangements are described below:JanssenRISPERDAL CONSTA Under a product development agreement, the Company collaborated with Janssen on the development of RISPERDAL CONSTA. Under thedevelopment agreement, Janssen provided funding to the Company for the development of RISPERDAL CONSTA, and Janssen is responsible forsecuring all necessary regulatory approvals for the product. Under license agreements, the Company granted Janssen and an affiliate of Janssen exclusive worldwide licenses to use and sell RISPERDALCONSTA. Under its license agreements with Janssen, the Company receives royalty payments equal to 2.5% of Janssen's net sales of RISPERDALCONSTA in each country where the license is in effect based on the quarter when the product is sold by Janssen. This royalty may be reduced in anycountry based on lack of patent coverage and significant competition from generic versions of the product. Janssen can terminate the license agreementsupon 30 days' prior written notice to the Company. The licenses granted to Janssen expire on a country-by-country basis upon the later of (i) theexpiration of the last patent claiming the product in such country or (ii) fifteen years after the date of the first commercial sale of the product in suchcountry, provided that in no event will the license granted to Janssen expire later than the twentieth anniversary of the first commercial sale of theproduct in such country, with the exception of certain countries where the fifteen-year limitation shall pertain regardless. After expiration, Janssenretains a non-exclusive, royalty-free license to manufacture, use and sell RISPERDAL CONSTA. The Company exclusively manufacturesRISPERDAL CONSTA for commercial sale. Under its manufacturing and supply agreement with Janssen, the Company records manufacturingrevenues when product is shipped to Janssen, based on 7.5% of Janssen's net unit sales price for RISPERDAL CONSTA for the calendar year. The manufacturing and supply agreement terminates on expiration of the license agreements. In addition, either party may terminate themanufacturing and supply agreement upon a material breach by the other party, which is not resolved within 60 days after receipt of a written noticespecifying the material breach or upon written notice in the event of the other party's insolvency or bankruptcy. Janssen may terminate the agreementupon six months' written notice to the Company. In the event that Janssen terminates the manufacturing and supply agreement without terminating thelicense agreements, the royalty rate payable to the Company on Janssen's net sales of RISPERDAL CONSTA would increase from 2.5% to 5.0%. Under its agreements with Janssen, the Company recognized manufacturing revenues related to RISPERDAL CONSTA of $98.6 million,$129.8 million, and $116.2 million during the years ended March 31, 2013, 2012 and 2011, respectively. Under its agreements with Janssen, theCompany recognized royalty revenues related to RISPERDAL CONSTA of $35.0 million, $38.5 million and $38.1 million during the years endedMarch 31, 2013, 2012 and 2011, respectively.F-40Table of ContentsALKERMES PLC AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)16. COLLABORATIVE ARRANGEMENTS (Continued)INVEGA SUSTENNA/XEPLION Under its license agreement with Janssen Pharmaceutica N.V., the Company granted Janssen a worldwide exclusive license under its NanoCrystaltechnology to develop, commercialize and manufacture INVEGA SUSTENNA/XEPLION and related products. The Company receives certain development milestone payments from Janssen and tiered royalty payments between 5% and 9% of INVEGASUSTENNA net sales in each country where the license is in effect, with the exact royalty percentage determined based on worldwide net sales. Theroyalty payments may be reduced in any country based on lack of patent coverage or patent litigation, or where competing products achieve certainminimum sales thresholds. The licenses granted to Janssen expire on a country-by-country basis upon the later of (i) March 31, 2019 or (ii) theexpiration of the last of the patents claiming the product in such country. After expiration, Janssen retains a non-exclusive, royalty-free license todevelop, manufacture and commercialize the product. Under its license agreement with Janssen, there are no further development milestones to be earned by the Company related to INVEGASUSTENNA/XEPLION. Janssen may terminate the license agreement in whole or in part upon three months' notice to the Company. The Company and Janssen have theright to terminate the agreement upon the material breach of the other party, which is not cured within a certain time period or upon the other party'sbankruptcy or insolvency. Under its agreements with Janssen, the Company recognized royalty revenues from the sale of INVEGA SUSTENNA/XEPLION of$63.5 million, $18.0 million and none during the years ended March 31, 2013, 2012 and 2011, respectively.Acorda Under an amended and restated license agreement, the Company granted Acorda an exclusive worldwide license to use and sell and, solely inaccordance with its supply agreement, to make or have made AMPYRA/FAMPYRA. Under its license agreement with Acorda, the Company receivescertain commercial and development milestone payments, license revenues and a royalty of approximately 10% based on sales ofAMPYRA/FAMPYRA by Acorda or its sub-licensee, Biogen Idec. This royalty payment may be reduced in any country based on lack of patentcoverage, competing products achieving certain minimum sales thresholds, and whether Alkermes manufactures the product. Acorda has the right to terminate the license agreement upon 90 days' written notice. The Company has the right to terminate the license agreementfor countries in which Acorda fails to launch a product within a specified time after obtaining the necessary regulatory approval or fails to file regulatoryapprovals within a commercially reasonable time after completion and receipt of positive data from all preclinical and clinical studies required for filing amarketing authorization application. If the Company terminates Acorda's license in any country, the Company is entitled to a license from Acorda of itspatent rights and know-how relating to the product as well as the related data, information and regulatory files, and to market the product in theapplicable country, subject to an initial payment equal to Acorda's cost of developing such data, information and regulatory files and to ongoing royaltypayments to Acorda. Subject to the termination of the license agreement, licenses granted under the license agreement terminate on a country-by-countrybasis on the later ofF-41Table of ContentsALKERMES PLC AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)16. COLLABORATIVE ARRANGEMENTS (Continued)(i) September 2018 or (ii) the expiration of the last to expire of our patents or the existence of a threshold level of competition in the marketplace. Under its commercial manufacturing supply agreement with Acorda, the Company manufactures and supplies AMPYRA/FAMPYRA for Acorda(and its sub-licensees). Under the terms of the agreement, Acorda may obtain up to 25% of its total annual requirements of product from a second-source manufacturer. The Company receives royalties equal to 8% of net selling price for all product manufactured by it and a compensating paymentfor product manufactured and supplied by a third party. The Company may terminate the supply agreement upon 12 months' prior written notice toAcorda and either party may terminate the supply agreement following a material and uncured breach of the supply or license agreement or the entry intobankruptcy or dissolution proceedings of the other party. In addition, subject to early termination of the supply agreement noted above, the supplyagreement terminates upon the expiry or termination of the license agreement. The Company is entitled to receive the following milestone payments under its amended and restated license agreement with Acorda for each of thethird and fourth new indications of the product developed thereunder:•Upon the initiation of a phase 3 clinical trial: $1.0 million; •Upon the acceptance of an NDA by the FDA: $1.0 million; •Upon the approval of the NDA by the FDA: $1.5 million; and •Upon the first commercial sale: $1.5 million. In January 2011, the Company entered into a development and supplemental agreement to its amended and restated license agreement and supplyagreement with Acorda. Under the terms of this agreement, the Company granted Acorda the right, either with the Company or with a third party, ineach case in accordance with certain terms and conditions, to develop new formulations of dalfampridine or other aminopyridines. Under the terms ofthe agreement, Acorda has the right to select either a formulation developed by the Company or by a third party for commercialization. The Company is entitled to development fees it incurs in developing formulations under the development and supplemental agreement and, ifAcorda selects and commercializes any such formulation, to milestone payments (for new indications if not previously paid), license revenues androyalties in accordance with its amended and restated license agreement for the product, and either manufacturing fees as a percentage of net selling pricefor product manufactured by the Company or compensating fees for product manufactured by third parties. If, under the development and supplemental agreement, Acorda selects a formulation not developed by the Company, then the Company will beentitled to various compensation payments and has the first option to manufacture such third-party formulation. The development and supplementalagreement expires upon the expiry or termination of the amended and restated license agreement and may be earlier terminated by either party followingan uncured breach of the agreement by the other party. Acorda's financial obligations under this development and supplemental agreement continue for a minimum of ten years from the first commercialsale of such new formulation, and may extend for a longer period of time, depending on the intellectual property rights protecting the formulation,F-42Table of ContentsALKERMES PLC AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)16. COLLABORATIVE ARRANGEMENTS (Continued)regulatory exclusivity and/or the absence of significant market competition. These financial obligations survive termination. During the years ended March 31, 2013, 2012 and 2011, the Company recognized $65.0 million, $25.8 million and none respectively, of revenuefrom its arrangements with Acorda.Bristol-Myers In May 2000, the Company entered into a development and license agreement with Amylin, now a wholly-owned subsidiary of Bristol-Myers, forthe development of exendin products falling within the scope of its patents, which includes the once-weekly formulation of exenatide, BYDUREON.Pursuant to the development and license agreement, Bristol-Myers has an exclusive, worldwide license to the Company's polymer-based microspheretechnology for the development and commercialization of injectable extended-release formulations of exendins and other related compounds. TheCompany receives funding for research and development and will also receive royalty payments based on future product sales. The Company receivedmilestone payments upon the achievement of certain development and commercialization goals, and there are no further milestones to be earned underthe agreements. In October 2005 and in July 2006, the Company amended the development and license agreement. Under the amended agreement, theCompany is responsible for formulation and is principally responsible for non-clinical development of any products that may be developed pursuant tothe agreement and for manufacturing these products for use in early-phase clinical trials. Bristol-Myers is responsible for commercializing exenatide products, including BYDUREON, in the U.S. and for U.S. regulatory matters relatingto BYDUREON. Lilly, Bristol-Myers' former worldwide collaboration partner with respect to exenatide products, continues to have exclusive rights tocommercialize exenatide products outside of the U.S. until December 31, 2013 or such earlier date as agreed by the parties pursuant to the terms of theirtransition agreement, following which Bristol-Myers will have such exclusive rights. Subject to these arrangements with Lilly, Bristol-Myers isresponsible for conducting clinical trials, securing regulatory approvals and marketing any products resulting from the collaboration on a worldwidebasis. In conjunction with the 2005 amendment of the development and license agreement with Bristol-Myers, the Company reached an agreementregarding Bristol-Myers' construction of a manufacturing facility for BYDUREON and certain technology transfer related thereto. The facility andtechnology transfer of the Company's manufacturing processes was completed in 2009. Bristol-Myers is responsible for the manufacture ofBYDUREON and operates the facility. Until December 31 of the tenth full calendar year following the year in which the first commercial sale of BYDUREON occurs, the Company willreceive royalties equal to 8% of net sales from the first 40 million units of BYDUREON sold in any particular year and 5.5% of net sales from unitssold beyond the first 40 million units for that year. Thereafter, during the term of the development and license agreement, the Company will receiveroyalties equal to 5.5% of net sales of products sold. The Company received milestone payments upon the achievement of certain development andcommercialization goals, and there are no further milestones to be earned under the agreements.F-43Table of ContentsALKERMES PLC AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)16. COLLABORATIVE ARRANGEMENTS (Continued) The development and license agreement terminates on the later of (i) 10 years from the first commercial sale of the last of the products covered bythe development and license agreement, or (ii) the expiration or invalidation of all of its patents covering such product. Upon termination, all licensesbecome non-exclusive and royalty-free. Bristol-Myers may terminate the development and license agreement for any reason upon 180 days' writtennotice to the Company. In addition, either party may terminate the development and license agreement upon a material default or breach by the otherparty that is not cured within 60 days after receipt of written notice specifying the default or breach. During the years ended March 31, 2013, 2012 and 2011, the Company recognized $23.8 million, $18.8 million and $2.9 million, respectively, ofrevenue from its arrangements with Bristol-Myers.17. INCOME TAXES The Company's provision (benefit) for income taxes is comprised of the following: The current income tax provision for the year ended March 31, 2013 is primarily due to income earned by the Company during the fiscal year. An$8.9 million benefit has been recorded to additional paid-in capital due to the utilization of NOL carryforwards that were created from the exercise ofemployee stock options. The current income tax provision for the year ended March 31, 2012 is primarily due to a provision of $13.1 million on thetaxable transfer of the BYDUREON intellectual property from the U.S. to Ireland, partially offset by a $4.3 million benefit recorded to additional paid-in capital related to the utilization of certain NOL carryforwards resulting from the exercise of employee stock options. The current income tax benefitfor the year ended March 31, 2011 is primarily related to a tax benefit for bonus depreciation pursuant to the Small Business Jobs Act of 2010. The deferred income tax benefit for the year ended March 31, 2013 is primarily due to the reversals of deferred tax liabilities for intangible assetsfor which the book basis exceeds the tax basis. These intangible assets are being amortized for book purposes over the life of the intangible assets. Thedeferred income tax benefit in Ireland for the year ended March 31, 2012 is primarily due to a benefit from the partial release of the Irish deferred taxliability relating to acquired intellectual property that was established in connection with the Business Combination. The Company also recorded abenefit of $9.9 million due to the partial release of an existing U.S. federal valuation allowance as a consequence of the Business Combination. Thedeferred income tax benefits for the year ended March 31, 2011 is primarily due to the recognition of $0.2 million of income tax expense associatedwith the increase in the value of certain securities that it carried at fair market value.F-44 Year Ended March 31, (In thousands) 2013 2012 2011 Current income tax provision (benefit): U.S. federal $8,152 $7,321 $(756)U.S. state 2,588 6,649 30 Rest of world 1,758 28 — Deferred income tax (benefit) provision: Ireland (1,961) (4,551) — U.S. federal — (10,024) (206)U.S. state (79) (137) (19) Total tax provision (benefit) $10,458 $(714)$(951) Table of ContentsALKERMES PLC AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)17. INCOME TAXES (Continued) No provision for income tax has been provided on undistributed earnings of the Company's foreign subsidiaries because the Company considerssuch earnings to be indefinitely reinvested. Cumulative unremitted earnings of overseas subsidiaries totaled approximately $39.0 million at March 31,2013. In the event of distribution of those earnings in the form of dividends or otherwise, the Company would be subject to income taxes, subject to anadjustment, if any, for foreign tax credits, and foreign withholding taxes payable to certain foreign tax authorities. Determination of the amount ofincome tax liability that would be incurred is not practicable because of the complexities associated with this hypothetical calculation, however,unrecognized foreign tax credit carryforwards may be available to reduce some portion of the tax liability, if any. The distribution of the Company's income (loss) before the provision for income taxes by geographical area consisted of the following: The components of the Company's net deferred tax liabilities are as follows:F-45 Year Ended March 31, (In thousands) 2013 2012 2011 Ireland $(14,722)$(36,711)$— U.S. 23,503 (84,858) (46,491)Rest of world 26,660 7,177 — Income (loss) before provision for income taxes $35,441 $(114,392)$(46,491) March 31, (In thousands) 2013 2012 Deferred tax assets: Irish NOL carryforwards $55,842 $55,176 Tax benefit from the exercise of stock options 8,437 22,089 Share-based compensation 23,468 21,992 Tax credit carryforwards 10,543 12,294 U.S. federal and state NOL carryforwards 496 1,516 Alkermes Europe, Ltd. NOL carryforward — 4,675 Deferred revenue 1,682 1,778 Intangible assets 277 748 Property, plant and equipment 653 — Bonus accrual 7,034 5,849 Other 9,150 9,774 Less: valuation allowance (86,714) (107,128) Total deferred tax assets 30,868 28,763 Deferred tax liabilities: Intangible assets (40,968) (43,606)Property, plant and equipment (19,607) (19,049)Other (2,072) — Total deferred tax liabilities (62,647) (62,655) Net deferred tax liabilities $(31,779)$(33,892) Table of ContentsALKERMES PLC AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)17. INCOME TAXES (Continued) The following table presents the breakdown between current and non-current deferred tax assets (liabilities): In 2013, the Company identified an error in the prior year related to the separate identification and classification of accrued bonus in the netdeferred tax disclosure of $5.8 million. The impact of the accrued bonus was previously disclosed within the U.S. federal and state NOL carryforwardline item in the prior year footnote. The Company believes that the accrued bonus deferred tax asset should have been disclosed as a separate line itemwithin the footnote. There was no impact to the provision for income taxes for any period presented. The error had no effect on the Company'sconsolidated statements of operations and comprehensive income (loss), changes in shareholders' equity or cash flows for any period presented. Theprior period amounts presented in the tax footnote herein have been revised to correct for this immaterial misstatement. As of March 31, 2013, the Company had $438.2 million of Irish NOL carryforwards, $70.4 million of U.S. federal NOL carryforwards and$8.7 million of state NOL carryforwards, which either expire on various dates through 2032 or can be carried forward indefinitely. These losscarryforwards are available to reduce certain future Irish and foreign taxable income, if any. These loss carryforwards are subject to review and possibleadjustment by the appropriate taxing authorities. These loss carryforwards, which may be utilized in any future period, may be subject to limitationsbased upon changes in the ownership of the company's stock. The Company has performed a review of ownership changes in accordance with the U.S.Internal Revenue Code and the Company has determined that it is more likely than not that, as a result of the Business Combination, the Company hasexperienced a change of ownership. As a consequence, the Company's U.S. federal NOL carryforwards and tax credit carryforwards are subject to anannual limitation of $127.0 million. The Company records a deferred tax asset or liability based on the difference between the financial statement and tax basis of assets and liabilities,as measured by enacted tax rates assumed to be in effect when these differences reverse. In evaluating the Company's ability to recover its deferred taxassets, the Company considers all available positive and negative evidence including its past operating results, the existence of cumulative income in themost recent fiscal years, changes in the business in which the Company operates and its forecast of future taxable income. In determining future taxableincome, the Company is responsible for assumptions utilized including the amount of Irish, U.S. and other foreign pre-tax operating income, thereversal of temporary differences and the implementation of feasible and prudent tax planning strategies. These assumptions require significantjudgment about the forecasts of future taxable income and are consistent with the plans and estimates that the Company is using to manage theunderlying businesses. As of March 31, 2013, the Company determined, based on the weight of all available positive and negative evidence, that it ismore likely than not that a significant portion of the deferred tax assets will not be realized and a valuation allowance has been recorded. However, if theCompany demonstrates consistent profitability in theF-46 Year Ended March 31, (In thousands) 2013 2012 Current deferred tax assets $5,824 $656 Current deferred tax liabilities — (36)Non-current deferred tax liabilities (37,603) (34,512) Net deferred tax liabilities $(31,779)$(33,892) Table of ContentsALKERMES PLC AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)17. INCOME TAXES (Continued)future, the evaluation of the recoverability of the deferred tax asset could change and the valuation allowance could be released in part or in whole. The$20.4 million decrease in the valuation allowance from the year ended March 31, 2012 to the year ended March 31, 2013 was primarily due to theutilization of NOLs. The Company has a $31.8 million net deferred tax liability as of March 31, 2013 which is primarily related to book over tax basisdifferences in acquired intellectual property. The tax benefit from stock option exercises included in the table above represents benefits accumulated prior to the adoption of AccountingStandards Codification ("ASC") Topic 718 ("ASC 718") that have not been realized. Subsequent to the adoption of ASC 718 on April 1, 2006, anadditional $34.5 million of tax benefits from stock option exercises, in the form of NOL carryforwards and tax credit carryforwards, have not beenrecognized in the financial statements and will be once they are realized. In total, the Company has approximately $42.9 million related to certain NOLcarryforwards and tax credit carryforwards resulting from the exercise of employee stock options, the tax benefit of which, when recognized, will beaccounted for as a credit to additional paid-in capital rather than a reduction of income tax expense. As part of the Business Combination, Alkermes plc was incorporated and is headquartered in Dublin, Ireland. The statutory tax rate for tradingincome in Ireland is 12.5%. A reconciliation of the Company's statutory tax rate to its effective rate is as follows: A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:F-47 Year Ended March 31, 2013 2012 2011 Statutory rate 12.5% 12.5% 34.0%U.S. state income taxes, net of U.S. federal benefit 4.7% (6.8)% —%R&D credit —% —% 1.4%Share-based compensation 3.3% (0.7)% (2.6)%Non-refundable withholding tax 4.7% —% —%Permanent items (8.2)% —% (0.6)%Change in valuation allowance (28.0)% 47.3% (30.1)%Rate differential 40.5% (51.7)% —% Effective tax rate 29.5% 0.6% 2.1% (In thousands) UnrecognizedTax Benefits Balance, April 1, 2010 $3,373 Additions based on tax positions related to prior periods 1,560 Balance, March 31, 2011 4,933 Additions based on tax positions related to prior periods 1,741 Decreases due to lapse of statute of limitations (68) Balance, March 31, 2012 6,606 Additions based on tax positions related to prior periods 1,065 Decreases due to settlements with tax authorities (413) Balance, March 31, 2013 $7,258 Table of ContentsALKERMES PLC AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)17. INCOME TAXES (Continued) In 2013, the Company identified errors related to uncertain tax positions driven by timing differences that were not identified and disclosed in thetabular rollforward in the prior years. The net impact of the error was $1.5 million to the opening balance at April 1, 2010, $1.5 million during 2011,$3.0 million at March 31, 2011, $1.2 million during 2012 and $4.2 million at March 31, 2012. There was no impact to the net deferred tax assets or theprovision for income taxes for any period presented. The error had no effect on the Company's consolidated balance sheets, statements of operationsand comprehensive income (loss), changes in shareholders' equity or cash flows for any period presented. As a result, the Company believes the impactof this error is immaterial to previously issued financial statements. The prior period amounts presented in the tax footnote herein have been revised tocorrect for this immaterial misstatement. $0.2 million of the unrecognized tax benefits at March 31, 2013, if recognized, would affect the Company's effective tax rate before taking its'valuation allowance into consideration. The Company expects a net reduction in its unrecognized tax benefits in the amount of $7.2 million due to theexpected resolution of certain matters over the next twelve months. The Company has elected to include interest and penalties related to uncertain taxpositions as a component of its provision for taxes. For the year ended March 31, 2013, the Company's accrued interest and penalties related touncertain tax positions were not material. Our major taxing jurisdictions include Ireland and the U.S. (federal and state). These jurisdictions have varying statutes of limitations. In the U.S.,the 2007, 2008, and 2010 through 2013 fiscal years remain subject to examination by the respective tax authorities. In Ireland, fiscal years 2009 to 2013remain subject to examination by the Irish tax authorities. Additionally, because of our Irish and U.S. loss carryforwards, certain tax returns from fiscalyears 1993 onward may also be examined. These years generally remain open for three to four years after the loss carryforwards have been utilized.Fiscal years 2007, 2008 and 2010 for Alkermes, Inc., are currently under examination by the IRS. Fiscal year 2012 for Alkermes, Inc. is currentlyunder examination by the state of Massachusetts. The Company does not believe there are any uncertain tax positions that have not been accounted foras a result of these examinations.18. COMMITMENTS AND CONTINGENCIESLease Commitments The Company leases certain of its offices, research laboratories and manufacturing facilities under operating leases with initial terms of one totwenty years, expiring through the year 2020. Certain of the leases contain provisions for extensions of up to ten years. These lease commitments areprimarily related to the Company's corporate headquarters in Ireland and its corporate offices, R&D andF-48Table of ContentsALKERMES PLC AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)18. COMMITMENTS AND CONTINGENCIES (Continued)manufacturing facilities in Massachusetts. As of March 31, 2013, the total future annual minimum lease payments under the Company's non-cancelableoperating leases are as follows: Rent expense related to operating leases charged to operations was $5.0 million, $4.2 million and $5.4 million for the years ended March 31, 2013,2012 and 2011, respectively. These amounts are net of sublease income of $2.6 million, $9.2 million and $7.3 million earned in the years endedMarch 31, 2013, 2012 and 2011, respectively. In addition to its lease commitments, the Company has open purchase orders totaling $76.0 million atMarch 31, 2013.Litigation From time to time, the Company may be subject to other legal proceedings and claims in the ordinary course of business. For example, theCompany is currently involved in various sets of Paragraph IV litigations in the U.S. and a similar suit in France in respect of certain of its products.The Company is not aware of any such proceedings or claims that it believes will have, individually or in the aggregate, a material adverse effect on itsbusiness, results of operations, cash flows and financial condition.F-49(In thousands) PaymentAmount Fiscal Years: 2014 $3,838 2015 4,068 2016 3,970 2017 3,473 2018 3,650 Thereafter 8,350 27,349 Less: estimated sublease income (1,956) Total future minimum lease payments $25,393 Exhibit 10.21 Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted portions, which are marked with brackets [ ] andan asterisk*, have been separately filed with the Securities and Exchange Commission. Execution Copy ELAN PHARMA INTERNATIONAL LIMITED AND ACORDA THERAPEUTICS, INC. DEVELOPMENT AND SUPPLEMENTAL AGREEMENT TO AMENDED AND RESTATED LICENSE AGREEMENTDATED 26 SEPTEMBER 2003 AS AMENDED AND SUPPLY AGREEMENT DATED 26 SEPTEMBER 2003 Fampridine QD formulation  Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted portions, which are marked with brackets [ ] andan asterisk*, have been separately filed with the Securities and Exchange Commission. 1.Definitions and Interpretation1 2.Effect on Existing Agreements3 3.Development and Project Management (Development Product)4 4.Non-Elan Development Product5 5.Manufacture and Supply of Pre-Commercial Batches6 6.Registration6 7.Additional Financial Provisions7 8.Application of License Agreement8 9.Development Product Supply Agreement9 10.Non-Elan Development Product Supply Option9 11.Term and Termination10 12.Warranties12 13.Confidentiality12 14.Assignment12 15.General13 Schedule 1[*****]17Schedule 2Work Plan Format18Schedule 3Selection Criteria19  Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted portions, which are marked with brackets [ ] andan asterisk*, have been separately filed with the Securities and Exchange Commission. This Development and Supplemental Agreement (“Agreement”) is dated 14 day of January 2011 (the “Effective Date”). PARTIES: (1) ELAN PHARMA INTERNATIONAL LIMITED, with an address at Monksland, Athlone, Co. Westmeath, Ireland (“Elan”) and (2) ACORDA THERAPEUTICS, INC., a Delaware corporation with an office at 15 Skyline Drive, Hawthorne, NY 10532, USA (“Acorda”) BACKGROUND: (A) Elan Corporation, plc and Acorda are parties to (i) an Amended and Restated License Agreement dated 26 September 2003 pursuant to which, interalia, Elan Corporation plc granted certain licenses under its intellectual property in respect of mono- and di- aminopyridines (as amended byAmendment No. 1 defined below, the “License Agreement”) and (ii) a Supply Agreement dated 26 September 2003 pursuant to which ElanCorporation agreed to supply Product to Acorda (as amended by Amendment No. 1 defined below, the “Supply Agreement”). (B) Elan is the successor in interest of Elan Corporation, plc.’s rights and obligations under the above described agreements. (C) By an Amendment No. 1 Agreement to the License Agreement and Supply Agreement and Consent to Sublicense dated 30 June 2009 (“AmendmentNo. 1”), Elan and Acorda made certain amendments to the said agreements. The License Agreement, Supply Agreement, and Amendment No. 1 arereferred to herein as the “License and Supply Agreement.” (D) The Parties wish to pursue the development of one or more new formulations of the Compound and/or Alternate Compounds for existing and/or newindications and the commercialization of one of these additional formulations. The formulations will use Elan technologies upon the terms andconditions of the License and Supply Agreement and the terms and conditions set out below and/or third party technologies upon the terms andconditions set out below and specifically stated as applicable to a formulation developed using third party technologies. The Parties also wish tofurther to provide for certain clarifications in respect of the application of provisions of the license and Supply Agreement to formulations using Elantechnologies. TERMS: The Parties agree as follows: 1. Definitions and Interpretation 1.1 Definitions: In this Agreement the following expressions shall have the following meanings: “Agreement”means this agreement, including its recitals, with the attached Schedules. th Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted portions, which are marked with brackets [ ] andan asterisk*, have been separately filed with the Securities and Exchange Commission. “Compound Know-How andFirst Product Know- How”means the Elan Know-How that is or will be disclosed to Acorda in relation to the Compound or to theFirst Product under the License or Supply Agreement. For clarity and avoidance of doubt this termshall not include any knowledge, information, trade secrets, data or expertise which is generated orcreated by Elan in any Further Development Plan activities. “Compound and First ProductKnow-How License”has the meaning set forth in Clause 4.7. “Development Product”means the Product developed by Acorda and Elan pursuant to this Agreement, the FurtherDevelopment Plan and one or more Work Plans, which Product incorporates the DevelopmentTechnology. “Development Product” does not include the “First Product” but is a “Product” under theLicense Agreement. “Development Product SupplyAgreement”has the meaning set forth in Clause 9. “Development Technology”means the technology which is developed by Elan and/or Acorda pursuant to this Agreement. “First Product”means that specific formulation (twice daily) of the Product that is marketed as of the Effective Date inthe United States under the trademark “Ampyrafl”. “Further Developmentmeans the development plan for the Development Product, Plan” which as of the Effective Date is setout in Schedule 1, as it may be amended by Elan and Acorda from time to time and set out in anyamendment to the Further Development Plan that may be generated in accordance with Clause 3.2 ofthis Agreement. “Non-Elan Developer”means any individual or entity other than Elan (including Acorda). “Non-Elan Developmentmeans a formulation of Compound or an Alternate Product” Compound developed or to be developedby a Non-Elan Developer to meet the Selection Criteria. For clarity, “Non-Elan Development Product”shall not be regarded as a “Product” for the purposes of the License and Supply Agreement or thisAgreement. “Non-Elan DevelopmentProduct Supply Agreement”has the meaning set forth in Clause 10.4.1  Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted portions, which are marked with brackets [ ] andan asterisk*, have been separately filed with the Securities and Exchange Commission. “Non-Elan Party Election”has the same meaning as that set forth in Clause 10.2. “Selection Criteria”means the target criteria for the Development Product and for each Non-Elan Development Product, asspecified to Non-Elan Developers and as may be amended from time to time, which as of the EffectiveDate are set forth in Schedule 3. “Work Plan”means each written plan for development of Product agreed upon by Acorda and Elan, which WorkPlan sets forth the goals of the work, allocates the responsibilities of the parties for conducting thework, timelines, and any other terms and conditions agreed upon between the parties. All Work Plansshall be consecutively numbered and, upon execution by authorized representatives of the parties,shall be incorporated by reference into this Agreement. 1.2 Interpretation: In this Agreement: 1.2.1 capitalised expressions not specifically defined in this Agreement shall have the same meaning as in the License and Supply Agreement, asapplicable; 1.2.2 references to clauses are to clauses of this Agreement unless stated otherwise; and 1.2.3 this Agreement shall otherwise be interpreted in the same manner as the License and Supply Agreement. 2. Effect on Existing Agreements 2.1 Except as expressly provided herein, the parties agree and acknowledge that the development, commercialization and commercial supply of theDevelopment Product shall be governed by the License Agreement, the agreements incorporated by reference in the License Agreement, theDevelopment Product Supply Agreement and in each case any amendments thereto (including but not limited to Amendment No 1). For clarity, theDevelopment Plan does not apply to the Development Product or the Non-Elan Development Product. 2.2 For the purposes of clarity, the License Agreement as amended, the agreements incorporated by reference in the License Agreement, SupplyAgreement and Amendment No. 1 shall continue to govern the development, commercialization and commercial supply of the First Product. Forclarity and avoidance of doubt, the Parties hereby acknowledge that the consent granted by Elan to Acorda in Section 1of the Amendment No. 1 isnot modified by this Agreement. 2.3 At appropriate times during the Term, Elan and Acorda agree that they will discuss in good faith any clarifications as may be required to anyoperational provisions in the License and Supply Agreement to support the development, commercialization and commercial supply of anyDevelopment Product. Any such clarifications shall be set forth in an amendment to this Agreement (or other written, duly executed Elan/Acordaagreements), executed by authorized representatives of Acorda and Elan. The Parties agree that to the extent this Agreement specifically states thatcertain provisions of the License Agreement and the Supply Agreement apply to Non-Elan Development Product, any capitalized terms used withinthe License Agreement and Supply Agreement as so referenced shall have the meaning set forth in the License Agreement or the Supply Agreement, asthe case may be, unless this  Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted portions, which are marked with brackets [ ] andan asterisk*, have been separately filed with the Securities and Exchange Commission. Agreement specifically states otherwise. 3. Development and Project Management (Development Product) 3.1 Without prejudice to Acorda’s rights to cease development of the Development Product at any time, throughout the Term and in accordance with theFurther Development Plan and the applicable Work Plan(s), Elan and Acorda shall use commercially reasonable efforts to develop DevelopmentProduct in accordance with the Further Development Plan(s). For the purpose of clarity, Acorda, in its sole discretion, may choose to ceasedevelopment of the Development Product in the event that Acorda determines that continuing such development is no longer commensurate with theachievement of its own business aims. The decision not to further develop, if made by Acorda, shall not be subject to review by the Committee norshall it be subject to arbitration under Section 12.14 of the License Agreement. 3.2 The Further Development Plan and the applicable Work Plan(s) set forth the agreed respective responsibilities of Elan and Acorda with respect to thedevelopment of the Development Product. Without prejudice to Acorda’s right to cease development at any time during the term of the FurtherDevelopment Plan, Elan and Acorda shall undertake their respective obligations under the Further Development Plan and the applicable WorkPlan(s) on a collaborative basis and using commercially reasonable efforts. Changes may be made to the Further Development Plan by mutual,written agreement of the parties through the Committee referenced in Section 10 of the License Agreement, which written agreement shall be set forth inan amendment to the Further Development Plan and/or Work Plan, as applicable. 3.3 Detailed development work shall be agreed and set out by the parties in one or more Work Plans, which shall be in a form broadly similar to theWork Plan format attached hereto as Schedule 2. Each Work Plan must be mutually agreed by both parties and accepted and signed by a dulyauthorized representative of both parties. Executed Work Plans shall form a part of this Agreement. 3.4 Within two (2) weeks of the Effective Date of this Agreement, the parties will establish a project team (“Project Team”), which shall conveneregularly to keep the parties fully informed as to their progress with its respective tasks and obligations under the Further Development Plan andWork Plan(s). The Project Team shall monitor the progress of such activities. 3.5 Elan and Acorda shall update each other at meetings of the Committee as to the progress of their respective obligations under the Further DevelopmentPlan and the Work Plan(s). 3.6 The parties shall co-operate in good faith through the Project Team and the Committee particularly with respect to unknown problems andcontingencies and shall perform their respective obligations in a commercially reasonable, diligent and workmanlike manner and in accordance withall applicable laws, regulations and guidelines. 3.7 Provided that a party uses reasonable endeavours to meet its obligations under this Agreement, it shall have no liability to the other as a result of anyfailure or delay of the Development Product to achieve any of the goals set out in the Further Development Plan or a Work Plan(s), nor for any failureof a Development Product to obtain NDA Approval or Regulatory Approval. 4. Non-Elan Development Product 4.1 Acorda shall afford Elan a reasonable opportunity to develop a formulation meeting the Selection  Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted portions, which are marked with brackets [ ] andan asterisk*, have been separately filed with the Securities and Exchange Commission. Criteria, and Elan and Acorda shall reasonably cooperate to enable that opportunity. The parties further agree that the entry into this Agreement andthe performance of the Further Development Plan set out in Schedule 1meet this obligation in respect of Elan being afforded a reasonable opportunityand provided with the Selection Criteria for the Development Product, as they exist as of the Effective Date. 4.2 Subject to Clause 4.3, in the event that Acorda selects to commercialize the formulation of a Non-Elan Developer, Acorda shall discuss the reasonsfor its selection with Elan. 4.3 Elan acknowledges and agrees that the final decision on which formulation to develop and commercialize is within Acorda’s sole discretion and thatsuch decision is not subject to review or dispute by Elan through the Committee nor is subject to the arbitration provisions set out in Section 12.14 ofthe License Agreement. Acorda shall promptly disclose any agreed key financial terms of any commercialization agreement with the Non- ElanDeveloper to Elan, which Elan shall maintain as confidential under the confidentiality provisions of Section 12.1of the License Agreement. 4.4 Subject to the foregoing and to the other terms and conditions of this Agreement, Acorda shall be entitled, through itself or any sublicensees, to selectand commercialize one Non- Elan Development Product meeting the Selection Criteria. 4.5 Acorda shall afford Elan a reasonable opportunity to develop any other formulations containing Compound or Alternate Compound not covered bythis Agreement. For the avoidance of any doubt, nothing in this Agreement shall be deemed to constitute (i) Elan’s consent to the commercialisation ofany other subsequent Non-Elan Development Product nor any Non-Elan Development Product that meets different selection criteria or (ii) a limitationon Acorda’s existing development rights under Section 12.15 of the License Agreement. 4.6 Where Acorda elects to commercialize a Non-Elan Development Product, Acorda and Elan shall generally coordinate and manage their businessrelationship relating to the commercialization of the Non-Elan Development Product through the Committee that is referred to in Article 10 of theLicense Agreement. The Committee shall also resolve any disputed issues (excluding any issues which may arise over Acorda’s formulation selectionunder Clause 4.3 or ceasing to develop or not developing Development Product under Clause 3.1) that may arise between the Parties per Section 10.3of the License Agreement including submission to arbitration under Article 12.14. Through the Committee, Acorda shall keep Elan reasonablyinformed of those matters relating to the Non-Elan Development Product which reasonably affect Elan’s interests, including the general progress ofdevelopment, objectives for and commercial performance of the Non-Elan Development Product, clinical and regulatory filings, sales performanceand sales forecasts and any actual or threatened litigation or “paragraph IV certifications” pertaining to the Non-Elan Development Product. 4.7 Elan hereby grants to Acorda a non-exclusive, non-transferable (other than to a lawful assignee of the License Agreement) license (the “CompoundKnow-How and First Product Know-How license”) under the Compound Know-How and First Product Know-How to develop, package, use,import, export, make and have made (subject to Clause 10) Non-Elan Development Product in the Territory and, in addition, to promote, distribute,market, offer for sale and sell the one particular Non-Elan Development Product (if any) that Acorda finally selects to commercialize under thisClause 4 in the Territory. The part of Compound Know-How and First Product Know-How License that enables Acorda to promote, distribute,market, offer for sale and sell any finally selected Non-Elan Development Product shall be sub-licensable to Acorda’s existing sublicensee withoutElan consent and to other sublicensees in accordance with the terms as set out in Section 2.3 of the License Agreement  Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted portions, which are marked with brackets [ ] andan asterisk*, have been separately filed with the Securities and Exchange Commission. for Product; provided that in each case such entitiy is responsible for commercializing Non-Elan Development Product. Acorda and any sublicenseeit appoints to commercialize Non-Elan Development Product shall only share Compound Know-How and First Product Know-How with Non-ElanDevelopers other than itself on a strictly need-to know-basis. This Compound Know-How and First Product Know-How License shall commence asof the Effective Date and shall end upon the expiry of Acorda’s obligations to make payments to Elan in respect of the Non-Elan DevelopmentProduct, and subject to such payments being duly made shall be irrevocable during that period. 4.8 For clarity, the foregoing provisions shall not be construed as conferring any right or license to use any intellectual property arising from FurtherDevelopment Plan activities developed solely by Elan or jointly with Elan in connection with the development, manufacture or sale of a Non-ElanDevelopment Product, nor as conferring any liability or obligations on Elan with respect to a Non-Elan Development Product other than as expresslyset out Clause 4.7 and in the Non-Elan Development Product Supply Agreement and/or other agreement(s) entered into relating to the supply of Non-Elan Development Product by Elan entered into pursuant to Clause 10 (if any). 5. Manufacture and Supply of Pre-Commercial Batches of Development Product 5.1 Elan shall use commercially reasonable efforts to manufacture and supply to Acorda such quantity of the Development Product as it mayreasonably require to perform its activities under the Further Development Plan and each applicable Work Plan. 5.2 Per Section 3.4 of the License Agreement, supply of Development Product shall be EXW such facility as may be specified in the applicable WorkPlan or as Elan may nominate and Acorda shall reasonably approve, [*****]. 5.3 Acorda’s requests for Development Product shall clearly specify whether such use is for pre-clinical or clinical supply. Where Acorda requestsDevelopment Product for clinical supply, Elan shall manufacture it in accordance with phase specific cGMPs in addition to applicable laws andregulations. 5.4 Clauses 13.2 to 13.8 inclusive of the Supply Agreement (liability) shall apply mutatis mutandis in respect of the supply of pre-commercial suppliesof Development Product. 6. Registration · 6.1 Acorda shall be responsible, at its own expense, for conducting such pre-clinical and clinical studies as are required to obtain Regulatory Approvalfor the Development Product. Elan shall reasonably cooperate with Acorda in obtaining such approvals at Acorda’s expense. 6.2 Elan will prepare and utilize a DMF (or similar structure for international filings) at Acorda’s expense for the Development Product and Acorda shallhave a right of reference to the extent required by any regulatory jurisdiction until such time, if any, as Acorda terminates all development programsrelated to Non-Elan Development Product. Upon receipt of notice of such termination, Elan will discontinue use of the DMF and promptly providethe relevant CMC information to Acorda in support of Acorda’s regulatory filing(s), at Acorda’s expense and otherwise in accordance with theprovisions of Section 3.8 of the License Agreement.  Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted portions, which are marked with brackets [ ] andan asterisk*, have been separately filed with the Securities and Exchange Commission. 7. Additional Financial Provisions 7.1 Development Fees for Development Product. Acorda shall pay to Elan fees in respect of Elan’s activities under this Agreement at a rate of FTE plus[*****], invoiced and payable monthly. Each invoice shall identify the particular work requested by Acorda and performed by Elan under theWork Plan(s) and Further Development Plan(s), as applicable. Further, the provisions of Sections 5.1.3 (development records) and 5.1.4 (thirdparty development costs) of the License Agreement shall apply mutatis mutandis; provided, however, that in reference to third party developmentcosts Elan shall have the right to charge Acorda for the time spent by Elan employees in administering the work conducted by such third parties at[*****] as well as the third party development costs incurred by Elan. 7.2 Non-Elan Development Product Compensation. Notwithstanding any contrary provision of the License Agreement, in consideration of Elan’sagreement to permit Acorda to commercialize the Non-Elan Development Product on the terms and conditions herein and in consideration of the grantof the Compound Know-How and First Product Know-How License, Acorda shall pay to Elan: 7.2.1 [*]; 7.2.2 [*]; 7.2.3 [*]; and 7.2.4 [*]; in each case as if (a) defined terms [*****] and [*****] referred to the Non-Elan Development Product instead of the Product and as if (b) thereferences in Section 5.3.1of the License Agreement and defined terms used therein to “Product” additionally referred to the Non-Elan DevelopmentProduct. 7.3 Application of Rush Payments Agreement. For the avoidance of doubt, Acorda shall remain responsible to make payments to Elan under the RushPayments Agreement in respect of the Development Product or the Non-Elan Development Product, as applicable, on the basis that “NSP” as usedtherein refers to such products respectively. 7.4 Ancillary. 7.4.1 Section 5.9 of the License Agreement (payments, reports and records) shall apply in respect of the Non-Elan Development Product mutatismutandis. 7.4.2 Payments under Clause 7.2.1 shall be made upon provision of the Statement; 7.4.3 Payments under Clause 7.2.2 shall be made in accordance with the applicable supply agreement entered into pursuant to Clause 10, ifapplicable, and otherwise upon provision of the Statement. 7.4.4 In respect of payments under Clause 7.2.4 [*****], Sections 5.3.2 to 5.3.5 (payment terms) of the license Agreement shall apply mutatismutandis. For clarity and as stated above, the manner and method of payment for Non-Elan Development Product are identical to the equivalent terms set outfor Product payments in the License Agreement.  Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted portions, which are marked with brackets [ ] andan asterisk*, have been separately filed with the Securities and Exchange Commission. 8. Application of License Agreement In relation to clarifying the precise manner in which the license Agreement applies to the Development Product, in addition to specific citations tosections of the license Agreement herein, Elan and Acorda agree as follows: 8.1 Intellectual Property. At appropriate times during the Term and from time to time, Elan and Acorda shall prepare revised schedules of Elan PatentRights and Acorda Patent Rights, reflecting such patents and patent applications as are incorporated and/or used in the Development Product. 8.2 License Provisions. For the purpose of clarification, Elan and Acorda agree that: 8.2.1 the reference in the definition of “Elan Patent Rights” to the infringement by the manufacture, use or sale of the Product is to be read as areference to infringement by the manufacture, use or sale of the First Product or the Development Product; and 8.2.2 the references in the definition of “Elan Patent Rights” and “Elan Know How” to development “in connection with the Project” is to be readas if it additionally referred to development pursuant to this Agreement. 8.3 Regulatory Expressions. The definitions of “NDA”, “NDA Approval”, “Regulatory Approval”, and terms referring to those defined terms shall beconstrued as they relate to the First Product or the Development Product, as applicable. 8.4 Diligence. Subject to Acorda’s formulation selection right under Clause 4.3, Section 2.11 (Diligence) of the License Agreement shall apply in respectof the Non-Elan Development Product mutatis mutandis. In performing its obligations under Section 2.11 of the License Agreement, Acorda shall beentitled to select a commercially reasonable strategy Development Product or Non-Elan Development Product, as the case may be, on the other. 8.5 Royalties. In the event that (a) the Development Product is being commercially sold and (b) Elan is manufacturing one, but not both, of the FirstProduct and the commercially sold Development Product, the Elan Royalty specified in Section 5.6 of the License Agreement shall be calculatedseparately for the First Product and the Development Product. 8.6 Committee. Article 10 (Committee) of the License Agreement shall be read as if it additionally referred to the Further Development Plan and itsbudget as appropriate. For clarity, nothing in this Agreement is intended to expand upon the oversight responsibility of the Committee with respect toProduct as set forth in Article 10 of the License Agreement. 9. Development Product Supply Agreement 9.1 Not less than eighteen (18) months prior to the anticipated date of commercial launch of the Development Product, Elan and Acorda shall negotiatein good faith an amendment to the Supply Agreement or a new substantially similar supply agreement in respect of such Development Product(“Development Product Supply Agreement”), which Development Product Supply Agreement shall contain the financial terms set out in thisAgreement and any other provisions of this Agreement that pertain to the Development Product, together with one or more quality agreements asappropriate. The decision as to whether to amend the existing Supply Agreement or to create a substantially similar supply agreement forDevelopment Product shall be decided by the Committee. Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted portions, which are marked with brackets [ ] andan asterisk*, have been separately filed with the Securities and Exchange Commission. 9.2 The price of the Development Product manufactured by Elan under the applicable Development Product Supply Agreement (or under the applicableamendment to the Supply Agreement) shall [*****]. The foregoing shall be in lieu of the price stated in Clauses 9.3 and 9.4 of the SupplyAgreement. 9.3 Elan shall enable the use of a mutually agreed independent second source for manufacture of the Development Product upon terms substantiallysimilar set out in Clause 7 of the Supply Agreement, as agreed upon by the Committee and as set out in the Development Product Supply Agreement. 9.4 Except as set out in this Clause 9, as may be operationally necessary for the manufacture of a Development Product, or as may otherwise be agreedby Elan and Acorda in the Development Product Supply Agreement, the terms of the Development Product Supply Agreement shall be the same asthose set out in the Supply Agreement. 10. Non-Elan Development Product Supply Option 10.1 In the event that Acorda, chooses to commercialize a Non-Elan Development Product in accordance with Clause 4.4 of this Agreement, Elan shallhave the first option to manufacture or have manufactured by an Affiliate all or a portion of the selected Non-Elan Development Product. 10.2 Within forty-five (45) days of the decision to proceed to commercialization of a Non-Elan Development Product (a “Non-Elan Party Election”),Acorda shall notify Elan in writing, and shall procure that Elan is provided within that period with such information as would information as Elanmay reasonably request for the purpose of determining whether it wishes to undertake such manufacture. To this end, Acorda shall procure that theapplicable Non-Elan Developer is made available and with Acorda in attendance and shall cooperate fully to answer queries which Elan may have inthis regard, subject to the terms of a three-way confidential disclosure agreement to be entered into between Acorda, Elan and the Non-Elan Developer. 10.3 Within ninety (90) days of receipt of all such requested information, Elan shall notify Acorda in writing whether it is willing to and believes that it isable to manufacture such Non-Elan Development Product, and the portion of the Non-Elan Development Product it wishes to manufacture. If Elandoes not so notify Acorda within that period, and to the extent of the portion which Elan is not willing to or does not believe that it will be able tomanufacture, Acorda shall be entitled (but not obliged) to have such Non-Elan Development Product manufactured elsewhere. 10.4 In the event that Elan agrees to and is able to manufacture such Non-Elan Development Product: 10.4.1 Elan and Acorda shall negotiate in good faith the terms and conditions of, and enter into, a supply agreement consistent with this Clause 10and otherwise with (a) non-financial terms similar to those contained in the Supply Agreement, to the extent feasible, and (b) the financialterms set out in Clause 7.2.2 (“Non-Elan Development Product Supply Agreement”); and 10.4.2 Elan shall and Acorda shall procure that the Non-Elan Developer negotiates in good faith a technology transfer agreement and plan for thepurposes of enabling Elan to manufacture the Non-Elan Development Product. Each party shall be responsible for its own costs of all suchactivities and Acorda shall be responsible for any costs or expenses that may be invoiced by the Non-Elan Developer. Acorda shall beresponsible at its own cost for  Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted portions, which are marked with brackets [ ] andan asterisk*, have been separately filed with the Securities and Exchange Commission. obtaining for Elan all intellectual property rights and licenses required to undertake such manufacture. 10.5 Elan shall maintain the right to protect and control any confidential or proprietary data of Elan as set forth in the License Agreement or anyapplicable confidentiality or other agreement which may be entered into by Elan. 11. Term and Termination 11.1 This Agreement shall commence on the Effective Date and shall continue in force until the expiry or termination of the License Agreement, howsoeverarising, unless terminated earlier as set forth herein. In the event that any of the terms or provisions hereof are incurably breached by either Party, thenon-breaching Party may immediately terminate this Agreement by written notice. In the event of any other breach, the non-breaching Party mayterminate this Agreement by the giving of written notice to the breaching Party that this Agreement will terminate on the sixtieth (60th) day from noticeunless cure is sooner effected. If the breaching Party has proposed a course of action to rectify the breach and is acting in good faith to rectify samebut has not cured the breach by the sixtieth (60th) day, the said period shall be extended, at the sole discretion of the non- breaching party, by suchperiod as is reasonably necessary to permit the breach to be rectified. 11.2 For the avoidance of doubt, termination of this Agreement pursuant to Clause 11.3 or 11.1 shall not of itself result in termination of the LicenseAgreement or the Supply Agreement. 11.3 Upon Acorda’s notice to Elan of a Non-Elan Party Election, Elan’s and Acorda’s obligations in respect of those Work Plans concerning theDevelopment Product not selected shall automatically terminate, subject to Clause 11.4 below. 11.4 Upon expiry or termination of this Agreement or upon the termination of obligations in respect of specific Work Plans, Elan shall provide Acordawith a timely estimate of any wind down costs and Acorda shall be responsible for: 11.4.1 payment in full for all work conducted by Elan under this Agreement (and authorized under the Further Development Plan and/or, asapplicable, the specific Work Plans) up to the effective date of termination and the wind down costs of all terminated Work Plan andFurther Development Plan activities; and 11.4.2 all uncancellable out of pocket costs reasonably incurred or committed prior to the effective date of termination by Elan in contemplation ofthe applicable Work Plan(s) and/or terminated Further Development Plan. 11.5 Clause 8 shall remain in force until expiry or termination of the License Agreement and Clause 3.7 shall remain in force indefinitely. 11.6 On a country by country basis, in respect of the Development Product, the following provisions shall continue in force until the latest of thefollowing dates (the “Development Product End Date”): (a) ten (10) years starting from the date of First Commercial Sale of the Development Product in that country;  Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted portions, which are marked with brackets [ ] andan asterisk*, have been separately filed with the Securities and Exchange Commission. (b) the expiry of the last to expire patent or patent application included in the Elan Patent Rights in that country; (c) the date on which no Elan Know-How remains capable of enforcement against third parties; (d) the loss of regulatory exclusivity in respect of the Development Product in that country; and (e) the existence of Competition in that country. the said surviving provisions being: (i) Acorda’s obligations under Sections 5.3, 5.5, 5.6 and 5.9 of the License Agreement; (ii) Acorda’sobligations under the Rush Payments Agreement; (iii) the equivalent provisions in the applicable Development Product Supply Agreements to Clause9.5 of the Supply Agreement, as if that provision referred to any Development Product purchased up to and including the Development Product EndDate otherwise than pursuant to such Development Product Supply Agreement; and (iv) Clauses 4, 7.2 to 7.4 inclusive,10, 13,14 and 15 of thisAgreement. 11.7 On a country by country basis, in respect of the Non-Elan Development Product selected for commercialisation, the provisions referred to belowshall continue in force until the latest of the following dates (the “Non-Elan Product End Date”): (a) ten (10) years starting from the date of First Commercial Sale (as said term is defined in the License Agreement but in reference to Non-ElanDevelopment Product rather the Product) of that Non-Elan Development Product in that country; (b) the expiry of the last to expire patent or patent application covering such Non-Elan Development Product which Acorda or any Affiliate orDesignee owns, licenses or controls; (c) the date on which no knowledge, information, trade secrets, data or expertise covering such Non-Elan Development Product which Acordaor any Affiliate or Designee owns, licenses or controls remains capable of enforcement against third parties; (d) the loss of regulatory exclusivity in respect of such Non-Elan Development Product in that country; and (e) the existence of Competition in that country. the said surviving provisions being Clauses 4, 7.2 to 7.4 inclusive, 10, 13, 14 and 15 of this Agreement. 11.8 Acorda and its Affiliates will not directly or indirectly market as a prescription medicine any other sustained release oral dosage form or transdermalform, containing the Compound or any other mono- or di-aminorpyridine active agent, other than Product (including a Development Product), or theone Non-Elan Development Product (if any) selected for commercialisation, during the period in which Acorda has an obligation to make paymentsto Elan under this Agreement and for one year thereafter. The foregoing shall be in addition to the restrictions contained in Section 2.2 of the LicenseAgreement, but for the purposes of that Section such selected Non-Elan Development Product shall not be considered an “Acorda CompetingProduct”. For the avoidance of doubt this Clause 11.8 shall survive termination of this Agreement.  Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted portions, which are marked with brackets [ ] andan asterisk*, have been separately filed with the Securities and Exchange Commission. 12. Warranties Elan and Acorda each represent and warrant to the other that: 12.1 it has the right to enter into this Agreement and perform its obligations under it; 12.2 there are no agreements between that party and any third party that conflict or may conflict with this Agreement; and 12.3 it does not require any consents from any third party to enter into and/or perform its obligations under this Agreement, including in the case ofAcorda, from its sub-licensee. 13. Confidentiality The provisions of Section 12.1 of the License Agreement shall apply to information disclosed between the parties for the purposes of this Agreement,including the terms of this Agreement, as if set out in full. 14. Assignment 14.1 Either party may assign this Agreement to any person or entity to whom it could properly assign its rights and obligations under the LicenseAgreement.  Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted portions, which are marked with brackets [ ] andan asterisk*, have been separately filed with the Securities and Exchange Commission. 14.2 Except as set out above, neither party may assign this Agreement without the prior written consent of the other party. 15. General 15.1 Limitation of Liability. UNLESS RESULTING FROM A PARTY’S WILLFUL MISCONDUCT OR FROM A PARTY’S BREACH OFCLAUSE 13 OF THIS AGREEMENT (ARTICLE 12.1 OF THE LICENSE AGREEMENT) OR AS MAY BE EXPRESSLY SET FORTH INTHE DEVELOPMENT SUPPLY AGREEMENT OR THE NON-ELAN DEVELOPMENT PRODUCT SUPPLY AGREEMENT, ASAPPLICABLE, NEITHER PARTY SHALL BE LIABLE TO THE OTHER PARTY OR ITS AFFILIATES FOR SPECIAL, INCIDENTAL,CONSEQUENTIAL, EXEMPLARY, PUNITIVE, MULTIPLE OR OTHER INDIRECT DAMAGES, OR FOR LOSS PROFITS, LOSS OFDATA, LOSS OF REVENUE OR LOSS OF USE DAMAGES, ARISING FROM OR RELATING TO THIS AGREEMENT OR THEDEVELOPMENT PRODUCT SUPPLY AGREEMENT OR THE NON-ELAN DEVELOPMENT PRODUCT SUPPLY AGREEMENT,WHETHER BASED UPON WARRANTY, CONTRACT, TORT, NEGLIGENCE, STRICT LIABILITY OR OTHERWISE, REGARDLESS OFANY NOTICE OF SUCH DAMAGES. NOTHING IN THIS CLAUSE 15.1 IS INTENDED TO LIMIT OR RESTRICT THEINDEMNIFICATION RIGHTS OR OBLIGATIONS OF EITHER PARTY UNDER THIS AGREEMENT, THE DEVELOPMENT PRODUCTSUPPLY AGREEMENT OR THE NON-ELAN DEVELOPMENT PRODUCT SUPPLY AGREEMENT. 15.2 Method of Calculation of Payments. The parties acknowledge and agree that the methods for calculating the royalties, fees, supply prices,compensating payments and other payments under this Agreement and under the license Agreement (as interpreted in accordance with this AgreementSupply Agreement, Development Product Supply Agreement (if any) and Non-Elan Development Product Supply Agreement (if any are for theconvenience of the parties, are freely chosen and not coerced. 15.3 Parties Bound: This Agreement shall be binding upon and run for the benefit of the parties, their successors and permitted assigns. 15.4 Relationship of the Parties: In this Agreement, nothing shall be deemed to constitute a partnership between the parties or make either party an agentfor the other, for any purpose whatsoever. 15.5 Entire Agreement: Without prejudice to the license Agreement and Supply Agreement and any other agreements incorporated by reference therein, thisAgreement constitutes the entire agreement and understanding between the parties with respect to its subject matter. Except as expressly provided, thisAgreement supersedes all prior representations, writings, negotiations or understandings with respect to that subject matter. The parties acknowledgethat, in entering into this Agreement, they have not relied on, and shall have no right or remedy in respect of, any statement, representation,assurance or warranty (whether made negligently or innocently) other than as expressly set forth in this Agreement. Nothing in this clause shall limitor exclude any liability for fraud. 15.6 Severability: If any provision in this Agreement is deemed to be, or becomes invalid, illegal, void  Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted portions, which are marked with brackets [ ] andan asterisk*, have been separately filed with the Securities and Exchange Commission. or unenforceable under applicable laws, such provision will be deemed amended to conform to applicable laws so as to be valid and enforceable, or ifit cannot be so amended without materially altering the intention of the parties, it will be deleted, but the validity, legality and enforceability of theremaining provisions of this Agreement shall not be impaired or affected in any way 15.7 Further Assurance: Each party shall do and execute, or arrange for the doing and executing of, each necessary act, document and thing reasonablywithin its power to implement this Agreement. 15.8 Counterparts: This Agreement may be executed in any number of counterparts, each of which when so executed shall be deemed to be an originaland all of which when taken together shall constitute this Agreement. 15.9 Waivers: A failure to exercise or delay in exercising a right or remedy provided by this Agreement or by law does not constitute a waiver of the rightor remedy or a waiver of other rights or remedies. No single or partial exercise of a right or remedy provided by this Agreement or by law preventsfurther exercise of the right or remedy or the exercise of another right or remedy. 15.10 Variations. No modification, amendment, or waiver of any provision of this Agreement shall be valid unless in writing and signed by a dulyauthorised officer or representative of each of the parties hereto. 15.11 Notices: 15.11.1 Elan and Acorda hereby acknowledge that pursuant to Section 12.12.1 of the license Agreement, the following addresses, fax numbers and contactnames shall apply in lieu or those originally stated therein: (a) in the case of Elan (which constitutes notice): Address: Elan Pharma International limitedMonkslandAthlone, Co. Westmeath, Ireland Fax: +(353) 9064 95402 Marked for the attention of: Vice President and General Counsel with a copy (receipt of which shall not constitute notice) to: Address: Elan Pharma International limitedTreasury BuildingGrand Canal Street LowerDublin 2, Ireland Fax: +(353) 1709 4700 Marked for the attention of: Vice President, Commercial Management (b) in the case of Acorda (which constitutes notice): Address: Acorda Therapeutics, Inc.15 Skyline DriveHawthorne, New York 10532  Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted portions, which are marked with brackets [ ] andan asterisk*, have been separately filed with the Securities and Exchange Commission. Fax: (914) 347-4560 Marked for the attention of: Ron Cohen, President and Chief Executive Officer with a copy (receipt of which shall not constitute notice) tothe attention of: General Counsel, at the same address 15.11.2 Subject to those changes, Section 12.12 of the License Agreement shall apply to any notice required under this Agreement as if set out in full. 15.12 Governing Law and Arbitration: This Agreement is construed under and ruled by the laws of the State of New York, excluding its conflict of lawsrules. For the purpose of this Agreement, the Parties submit to the jurisdiction of the United States District Court for the State of New York. Section 12.14 of the License Agreement (arbitration) is hereby incorporated as if it were set out at length herein and is applicable to Non-ElanDevelopment Product as provided herein, and reading references in that Clause to Article 10 of the License Agreement (Committee) as interpreted inaccordance with this Agreement. *** Signatures begin on next page  Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted portions, which are marked with brackets [ ] andan asterisk*, have been separately filed with the Securities and Exchange Commission. EXECUTED by the parties on the date appearing at the top of page 1. SIGNED /s/ William F. DanielDuly authorised for and on behalf ofELAN PHARMA INTERNATIONAL LIMITED SIGNED /s/ Ron CohenDuly authorised for and on behalf ofACORDA THERAPEUTICS, INC.  Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted portions, which are marked with brackets [ ] andan asterisk*, have been separately filed with the Securities and Exchange Commission. SCHEDULE 1 [*****] [*****]  Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted portions, which are marked with brackets [ ] andan asterisk*, have been separately filed with the Securities and Exchange Commission. SCHEDULE 2WORK PLAN FORMAT Compound: (INSERT DETAILS) Scope of Work: (INSERT DETAILS) Elan Activities: (INSERT DETAILS) Acorda Activities: (INSERT DETAILS) Estimated Fee: (INSERT DETAILS) The Estimated Fee for the Elan services contemplated by this WorkPlan is U.S. dollars (US $0000.00), including all out-of-pocket expenses (“Total Estimated Fee”). With respect to any potential cost overruns, the Parties agree that such overruns shall not exceed [*] of the TotalEstimated Fee. Acorda shall not be required to pay and Elan shall have the right to discontinue it services if the cost of performing the services under thisworkplan exceeds [*****] of the Estimated Fee. Elan shall resume unperformed services if an amendment to this work plan or a new work plan to completethe services is agreed and executed by Acorda and Elan. Acorda shall reimburse Elan as set out in this Work Plan for labour at Elan’s FTE plus [*****] and actual out-of-pocket expenses incurred by Elanin conducting work under this Work Plan. Elan shall invoice Acorda for such costs no more than once per month. Elan shall provide a reasonably detailed invoice to identify the workperformed and costs incurred under the invoice. Invoices shall be paid by Acorda within thirty (30) days of invoicing and Elan shall, without prejudice toother remedies, be entitled to stop work if payment is not made within this time period. Estimated Timelines: (INSERT DETAILS) Elan estimates that the Elan activities detailed in this Work Plan will be completed approximately weeks/months after this Work Planhas been executed. Should a conflict arise between the terms and conditions of this Work Plan and the terms and conditions of the Development and SupplementalAgreement, Elan and Acorda agree that the terms and conditions of the Development and Supplemental Agreement shall prevail. Agreed and Accepted by: Duly authorised for and on behalf ofDuly authorised for and on behalf ofElan Pharma International Ltd.Acorda Therapeutics, Inc. By:By: Name:Name:Title:Title:Date:Date:  Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted portions, which are marked with brackets [ ] andan asterisk*, have been separately filed with the Securities and Exchange Commission. SCHEDULE 3SELECTION CRITERIA Criteria for Evaluation:· Specific criteria are to be developed based on [*****].· The new formulation must be assessed [*****].· Timing: [*****]· Cost: [*****] End of Schedule 3 Exhibit 10.22 Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted portions, which are marked with brackets [ ] andan asterisk*, have been separately filed with the Securities and Exchange Commission. EXECUTION COPY Date: 26, September 2003 ELAN CORPORATION, PLC. AND ACORDA THERAPEUTICS, INC. SUPPLY AGREEMENT Fampridine SR  Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted portions, which are marked with brackets [ ] andan asterisk*, have been separately filed with the Securities and Exchange Commission. INDEX CLAUSE 1PRELIMINARY CLAUSE 2EXCLUSIVE SUPPLY CLAUSE 3REGULATORY MATTERS CLAUSE 4FORECASTS AND ORDERS CLAUSE 5SUPPLY OF THE PRODUCT CLAUSE 6DISPUTES AS TO SPECIFICATION CLAUSE 7SECOND SOURCE CLAUSE 8ADVERSE EVENTS AND PRODUCT RECALL CLAUSE 9FINANCIAL PROVISIONS CLAUSE 10PAYMENTS, REPORTS AND AUDITS CLAUSE 11DURATION AND TERMINATION CLAUSE 12CONSEQUENCES OF TERMINATION CLAUSE 13REPRESENTATIONS AND WARRANTIES; INDEMNIFICATION CLAUSE 14MISCELLANEOUS PROVISIONS SCHEDULE 1MANUFACTURING COST  Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted portions, which are marked with brackets [ ] andan asterisk*, have been separately filed with the Securities and Exchange Commission. THIS SUPPLY AGREEMENT is made the September 2003 BETWEEN: (1) Elan Corporation, plc., a public limited company incorporated under the laws of Ireland, and having its registered office at Lincoln House,Lincoln Place, Dublin 2, Ireland (“ Elan “); and (2) Acorda Therapeutics, Inc., a corporation organized under the laws of the State of Delaware and having its principal office at 15 Skyline Drive,Hawthorne, New York 10532, United States of America (“ Acorda “). RECITALS: (A) Elan and Acorda have entered into a Licence Agreement concerning the Product (as each of those terms are defined below). (B) Elan is prepared to manufacture and supply the Product to Acorda for onward commercial supply. (C) Elan and Acorda are desirous of entering into this Agreement to give effect to the arrangements described at Recitals (A) and (B). NOW IT IS HEREBY AGREED AS FOLLOWS: CLAUSE 1 PRELIMINARY 1.1. Definitions: “Act” shall mean the United States Federal Food Drug and Cosmetic Act of 1934, and the rules and regulations promulgated thereunder, or anysuccessor act, as the same shall be in effect from time to time. “Affiliate” shall mean any corporation or entity controlling, controlled or under common control with Elan or Acorda, as the case may be. For thepurposes of this Agreement, “control” shall mean the direct or indirect ownership of more than 50% of the issued voting shares or other voting rights ofthe subject entity to elect directors, or if not meeting the preceding criteria, any entity owned or controlled by or owning or controlling at the maximumcontrol or ownership right permitted in the country where such entity exists. “Agreement” shall mean this supply agreement (which expression shall be deemed to include the Recitals and Schedules hereto). 1 Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted portions, which are marked with brackets [ ] andan asterisk*, have been separately filed with the Securities and Exchange Commission. “Batch” shall mean a specific quantity of Product that is produced according to a single manufacturing order during the same cycle of manufacture,which quantity shall be agreed in the Technical Agreement. “cGMP” shall mean current Good Manufacturing Practice as defined in the Act and FDA guidance documents; or as applicable current GoodManufacturing Practice under applicable regulations in the European Union. “EEA” shall mean the countries comprising the European Economic Area, as the same may change from time to time . “Effective Date” shall mean the date of this Agreement. “Elan’s Facility” shall mean Monksland, Athlone, Co. Westmeath, Ireland or such other facility as Elan may use to perform its obligationshereunder and is in compliance with the NDA and other regulatory requirements. “Elan Territory” shall mean any country or countries in which Elan, or any licensee of Elan other than Acorda, is permitted to commercialise theProduct, by virtue of termination of the License Agreement in that country or the grant of a license by Acorda to Elan pursuant to Article 2.11.3 of theLicense Agreement. “EXW” or “Ex Works” shall have the meaning as such term is defined in the ICC Incoterms, 2000, International Rules for the Interpretation of TradeTerms, ICC Publication No. 560. “Force Majeure” shall mean any cause or condition beyond the reasonable control of the party obliged to perform, including acts of God, acts ofgovernment (in particular with respect to the refusal to issue necessary import or export licenses), fire, flood, earthquake, war, riots or embargoes,strikes or other labour difficulties affecting a party, or either party’s inability to obtain supplies of components of the Product howsoever arising. “FTE” means Elan’s full time equivalent charging rate for its appropriate employees or consultants from time to time (based on cost without mark-up)which as of the Amendment Date is [*****] per day. “Governmental Authority” shall mean the FDA and /or all other governmental and regulatory bodies, agencies, departments or entities, whether ornot located in the Territory, which regulate, direct or control commercial and other related activities in or with the Territory. “Launch Stocks” shall mean the quantities of stocks of the Product required by Acorda in relation to the launch of the Product following RegulatoryApproval in a Major Market, as more fully described in Clause 4.7. “Launch Year” shall mean the period commencing on the date of First Commercial Sale and expiring on the last day of the month that is the twelfth(12 ) month following the 2 th Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted portions, which are marked with brackets [ ] andan asterisk*, have been separately filed with the Securities and Exchange Commission. date in which the First Commercial Sale occurs. For example, if the First Commercial Sale occurs on March 15 of any year, the Launch Year shallcommence on March 15 of such year and expire on March 31 of the following year. “Licence Agreement” shall mean that certain Amended and Restated Licence Agreement between Elan and Acorda of even date herewith. “Major Market(s)” shall mean the US, the UK, France, Germany, Italy and Japan. “Manufacturing Cost” shall mean the costs described in Schedule 1 as they relate to the Product, PROVIDED THAT if Elan is manufacturing theProduct for sale in an Elan Territory, in no event shall Manufacturing Cost exceed Elan’s own costs for such manufacture, as calculated based onGAAP. “Maximum Capacity” shall mean Elan’s maximum quarterly manufacturing capacity for the Product from time to time, as agreed in, or determinedpursuant to, the Technical Agreement. “Minimum Elan Requirements” shall mean for any Year, at least seventy five percent (75%) of Acorda’s total requirements of the Product . “Minor Deficiencies” shall mean shortfalls or delays that are not inconsistent with industry accepted standards, which standards applicable to theProduct shall be clarified in the Technical Agreement. “Permitted Elan Assignee” shall mean any entity that purchases all or substantially all of the assets of Elan’s Facility and has entered into a writtenagreement with Elan for the benefit of Acorda whereby (inter alia) it represents to Acorda that it is (i) reasonably experienced in the field ofpharmaceutical manufacturing (including the existing management of Elan’s Facility), (ii) in possession of sufficient financial resources and liquidityto perform the obligations of Elan under this Agreement and (iii) in good standing with the FDA. A Permitted Elan Assignee shall also include any entity that has been formed for the purpose of acquiring Elan’s Facility, and shall, following suchacquisition, be under the management of individuals reasonably experienced in pharmaceutical manufacturing (including the said existingmanagement), in possession of sufficient financial resources and liquidity to perform the obligations of Elan under this Agreement, and none of whichare debarred individuals or entities within the meaning of 21 U.S.C. section 335(a) or (b) and have the capacity of being in good standing with theFDA. “Product” shall mean the oral product developed pursuant to the Project, in final packaged and labelled form for commercial sale or for distribution aspromotional samples and as defined in the approved NDA or NDA Equivalent. “Recall” means a company’s removal or correction of a marketed Product that the FDA or equivalent Governmental Authority considers to be inviolation of law and against 3 Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted portions, which are marked with brackets [ ] andan asterisk*, have been separately filed with the Securities and Exchange Commission. which such agency might reasonably be expected to initiate legal action (e.g., a seizure). A Recall does not include market withdrawal for other reasons,or a stock recovery. “Serious Failure to Supply” shall mean that in a period of a Year, for reasons other than Force Majeure or the default of Acorda, Elan fails on atleast two occasions to supply Acorda’s properly forecasted and ordered requirements of the Product in accordance with the terms of this Agreement,except for Minor Deficiencies, and the cumulative shortfall for such Year attributable to such failure(s) is at least 25% of the aggregate amountproperly forecasted and ordered from Elan for delivery in such Year. “Term” shall mean the term of this Agreement, as set out in Clause 11. “$” and “US$” shall mean United States Dollars. “Year” means each consecutive four Calendar Quarters. 1.2. Further Definitions: In addition, the following definitions have the meanings in the Clauses corresponding thereto, as set forth below: DefinitionClause “Discount”9.4“First Approval”4.1.1“Manufacturer”7.1“Resumption Quarter”7.6.1“Second Source”7.1“Second Source Quantity”7.2.1“Supply Price”9.3.1“Technical Agreement”5.5 1.3. Definitions in Licence Agreement: Except as otherwise defined in this Agreement, all capitalised terms used in this Agreement shall have the same meaning as in the Licence Agreement. 1.4. Interpretation: In this Agreement: 1.4.1 the singular includes the plural and vice versa, the masculine includes the feminine and vice versa and references to natural personsinclude corporate bodies, partnerships and vice versa. 4 Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted portions, which are marked with brackets [ ] andan asterisk*, have been separately filed with the Securities and Exchange Commission. 1.4.2 any reference to a Clause or Schedule, unless otherwise specifically provided, shall be respectively to a Clause or Schedule of thisAgreement. 1.4.3 the headings of this Agreement are for ease of reference only and shall not affect its construction or interpretation. 1.4.4 the expressions “include”, “includes”, “including”, “in particular” and similar expressions shall be construed without limitation. CLAUSE 2 EXCLUSIVE SUPPLY 2.1. Subject to the terms and conditions of this Agreement, during the Term, Acorda shall purchase its Minimum Elan Requirements of the Product inthe Territory from Elan, except as provided in Clause 2.3. 2.2. Subject to the terms and conditions of this Agreement, during the Term, Elan shall not supply the Product to: 2.2.1 any person other than Acorda outside the Elan Territory; or 2.2.2 any person other than Acorda in the Elan Territory who intends, to the actual knowledge of Elan, to sell the Product outside the ElanTerritory — except as requested by Acorda, PROVIDED THAT to extent required by applicable law, Elan shall be permitted to: (a) sell the Product to a person in a country which is both part of the Elan Territory and within the EEA, notwithstanding that suchperson may re-sell the Product in another part of the EEA which is not part of the Elan Territory; and (b) if any country of the EEA is part of the Elan Territory, sell the Product to a person in another country of the EEA which is not part ofthe Elan Territory, provided further that Elan shall not actively solicit any such sales. 2.3. Elan shall not have the obligation to use commercially reasonable efforts to supply the Product where 140% of Manufacturing Cost would exceedthe Supply Price, subject to Clauses 2.4 and 2.5 2.4. In the event that either party is of the opinion that the circumstances in Clause 2.3 apply or may shortly apply, it shall promptly notify the other. In such event the parties shall meet to discuss, inter alia , the manner in which Manufacturing Cost is calculated by Elan and Acorda’scommercialisation plans. 2.5. If after such discussions Elan is of the opinion that if it continues to supply the Product to Acorda, the circumstances in Clause 2.3 will apply,Elan shall promptly formally so notify Acorda. In such event 5 Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted portions, which are marked with brackets [ ] andan asterisk*, have been separately filed with the Securities and Exchange Commission. 2.5.1 Elan shall use commercially reasonable efforts to supply Acorda with Product the subject of binding orders issued prior to Acorda’sreceipt of such notification, provided that such orders relate to Product scheduled for delivery in the period of three (3) months after thedate of the purchase orders, and that such Product shall be invoiced at the applicable price under Clause 9.2 or 9.3; and 2.5.2 After the expiration of the period referred to in Clause 2.5.1, Acorda shall have no further obligation to purchase Product under thisAgreement, provide, however, that Acorda may at its option place further purchase orders for delivery during up to a six (6) monthperiod immediately following the period referred to in Clause 2.5.1, subject always to Clause 4 and Clause 5, provided, further, that(i) any such purchase orders are placed not later than three (3) months from the date of Elan’s notice under this Clause 2.5; and(ii) any such Product ordered shall be invoiced at a price equal to Manufacturing Cost plus [*****]. If following the period referred to in Clause 2.5.2, Acorda wishes to continue to purchase the Product from Elan and Elan is prepared to supply thesame, the Parties shall negotiate in good faith the terms of any such supply and purchase. As from the time of Elan’s notice, Acorda shall be entitled to purchase the Product from the Second Source, but without prejudice to binding purchaseorders already placed with Elan and subject to the foregoing paragraph. CLAUSE 3 REGULATORY MATTERS 3.1. Elan shall be responsible, at Elan’s expense, for filing for and maintaining all license and permits pertinent to Elan’s Facility, as distinct from theRegulatory Approvals specific to the Product, without prejudice to Elan’s responsibilities under the Licence Agreement in respect of preparation anddelivery to Acorda for incorporation into the NDA or any NDA Equivalent, of the CMC Section. 3.2. Upon Elan’s prior written notice, Acorda shall permit Elan or any Affiliate to have access to the NDA and any NDA Equivalent and RegulatoryApprovals and to take photocopies of same, as required by Elan to fulfil reporting requirements or as otherwise may reasonably be required byElan in connection with this Agreement. 3.3. Inspections or Inquiries by Governmental Authorities. With respect to Product supplied by it, Elan shall be responsible for all process andequipment validation and quality control tests and procedures required by any Governmental Authority and shall take all steps necessary to passinspection by any Governmental Authorities in the Major Markets, but without prejudice to Article 6.3 of the License Agreement. Elan shall: 3.3.1 notify Acorda as soon as possible, but in any event within the time period to be set forth in the Technical Agreement, of any notificationreceived by Elan from a Governmental Authority to conduct an inspection of its manufacturing or other 6 Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted portions, which are marked with brackets [ ] andan asterisk*, have been separately filed with the Securities and Exchange Commission. facilities used in the development, manufacturing, packaging, storage or handling of the Product; 3.3.2 without delay make available to Acorda a copy of any inspection report received by Elan resulting from any inspection of any of suchfacilities by such Governmental Authority to the extent such report relates to Product, the formulation, manufacture, testing, storageand delivery of the Product or any premises used by Elan in performing Elan’s obligations under this Agreement; 3.3.3 provide Acorda with a written copy of any proposed response(s) thereto at least three Business Days prior to submitting such responseto any Governmental Authority as well as a copy of the response actually submitted. Representatives of Acorda or its Designee shall have the right to be present during the inspection and/or during the close-out session with theinspectors. Any Form 483 observations or warning letter related to the Product shall be provided promptly to Acorda, which shall have the right toreview and discuss the proposed written response to such 483 observations or warning letter, and a copy of the response actually submitted shall bepromptly provided to Acorda. Copies of all other correspondence with any Governmental Authority relating to that any party’s activities under thisAgreement will be provided to the other party within forty-eight (48) hours. 3.4. Inspection by Acorda / Governmental Authority. Elan shall make (i) any licenses and permits relating to Elan’s Facility; and (ii) that portionof Elan’s facility where the Product is manufactured, packaged, tested or stored, including all record and reference samples, available forinspection: 3.4.1 by Acorda’s duly qualified employee or Designee or, with the consent of Elan, by Acorda’s agent or contractor; or 3.4.2 by the relevant Governmental Authority. An inspection under Clause 3.4.1 shall be limited to determining whether there is compliance with cGMP and other requirements of applicable law,including production or quality issues relating to the Product. Any consent required under this Clause 3.4 shall not be unreasonably withheld ordelayed. 3.5. Preservation Samples/Retained Samples. Pursuant to all applicable laws, rules and regulations and to the Specifications, Elan shall assignand apply lot numbers and shall take from each lot of (i) the API used to manufacture Product pursuant to this Agreement; (ii) inactive ingredientsused in the manufacture of Product pursuant to this Agreement; and (iii) the Product shipped to Acorda or its designee pursuant to this Agreement,preservation samples/retained samples. Elan shall retain and store the particular lot of API, other ingredients or Product, as applicable, inaccordance with FDA and other applicable regulations, which currently provide for a period expiring no earlier than two years after the expiration ofthe shelf life of the particular lot of Product shipped to Acorda or its Designee pursuant to this Agreement. Preservation samples/retained 7 Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted portions, which are marked with brackets [ ] andan asterisk*, have been separately filed with the Securities and Exchange Commission. samples, as referred to herein, do not include samples retained for purposes of stability testing. 3.6. Elan shall at its option be entitled to change the manufacturing process or site for manufacture of the Product, provided that (a) Elan providesAcorda with all required information in form and substance necessary to file any related amendments or supplements to the NDA or any NDAEquivalent or, if applicable, Elan files with applicable regulatory authorities any required amendments or supplements to any DMF; (b) no suchchange shall take effect until all requisite regulatory approvals have been obtained, and (c) Elan shall be responsible for the costs associated withsuch change. Acorda shall reasonably co-operate with Elan in obtaining any such changes requested. CLAUSE 4 FORECASTS AND ORDERS 4.1. Forecasts. Acorda shall provide Elan with bona fide written forecasts of its estimated Minimum Elan Requirements of the Product as follows: 4.1.1 within eighteen (18) months prior to the anticipated date of first Regulatory Approval in any Major Market (“ First Approval “),Acorda shall provide Elan with an eighteen (18) month forecast, broken down on a quarterly basis, for the period beginning with theanticipated date of First Commercial Sale in such Major Market (which date shall be specified in the forecast); 4.1.2 thereafter, every three months until First Approval, Acorda shall provide Elan with an updated forecast on a quarterly basis; 4.1.3 within thirty (30) days of First Approval, and thereafter each calendar month not later than the 23 of the month, a rolling 18 monthforecast, broken down on a month-by-month and country-by-country basis, for the period commencing at the beginning of thefollowing month; and 4.1.4 not later than 1 August in each year, a five (5) year forecast, broken down on an annual basis. Except as otherwise provided herein, all forecasts made hereunder shall be made to assist Elan in planning its production and Acorda in planningmarketing and sales, shall not be binding purchase orders, and shall be without prejudice to Acorda’s subsequent firm orders for the Product inaccordance with the terms of this agreement. Each forecast provided by Acorda shall supercede any previous forecast and may be expressed in areasonable range. After receiving Acorda’s forecasts, Elan shall notify Acorda within five (5) days if Elan becomes aware that it will be unable tosupply Acorda’s forecasted requirements of Product and, in such event, the provisions of Clause 4.6 shall be applicable. 4.2. Purchase Requirements. Subject to the agreement between the Parties relating to Launch Stocks under Clause 4.7, Acorda shall be bound toorder one hundred percent 8 Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted portions, which are marked with brackets [ ] andan asterisk*, have been separately filed with the Securities and Exchange Commission. (100%) of the forecasted quantities of the Product for each month of the first three (3) months of the most recent rolling forecast referred to inClause 4.1.3, but otherwise forecasts shall not be binding. 4.3. Forecasts and orders shall not increase or decrease by more than 25% in the aggregate amount of Product required in a calendar quarter comparedto the previous calendar quarter, except for Launch Stocks or unless otherwise agreed by Elan. However, Elan shall use reasonable efforts to fulfilAcorda’s requirements in excess of duly forecasted and ordered amounts. 4.4. Forecasts and orders shall not exceed the Maximum Capacity during the applicable quarterly period. 4.5. Firm Orders. Acorda or its Designee shall provide Elan with purchase orders on the standard purchase order forms of Acorda or its Designee(without prejudice to Clause 5.4) of its Elan Minimum Requirements at least ninety (90) days before it requires each delivery of Product (subject toClause 4.7 with respect to Launch Stocks), specifying the required delivery date in each purchase order and specifying the quantity of Productrequested for commercial use and the quantity of Product for promotional and sample use. 4.6. Shortages. Elan agrees that it will use commercially reasonable efforts to prevent an interruption of supply to Acorda and shall immediatelynotify Acorda of any problems or unusual production situations which may adversely affect production or quality of Product or its Specificationsor its timely delivery to Acorda or its designee. If, at any time during the term of this Agreement, Elan becomes aware that it will not be able tosatisfy Acorda’s forecasts or ordered requirements for Product, then Elan shall: (i) give Acorda prompt notice thereof, (ii) take all commerciallyreasonable steps to enable Acorda to procure adequate quantities of Product from the Second Source in accordance with the applicable provisions ofClause 7 and (iii) if such inability is partial, Elan shall fulfill firm orders with such quantities of Product as are available. and shall continue touse its commercially reasonable efforts to fulfill orders on a timely basis. 4.7. Launch Stocks. Within six months prior to an anticipated Regulatory Approval in a Major Market, the parties shall discuss and agree upon themanufacture and purchase of specific quantities of Launch Stocks for launch of the Product in the applicable Major Market.rd 4.7.1 Launch Stocks shall be ordered not later than 20 Business Days from receipt by Acorda of an approval letter, from the FDA orequivalent Governmental Authority in respect of the NDA or an NDA Equivalent in another Major Market. 4.7.2 Acorda may use the validation batches of the Product as Launch Stocks, subject to compliance with applicable laws, the LicenceAgreement and other provisions of this Agreement, provided that in such event, any amounts previously paid by 9 Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted portions, which are marked with brackets [ ] andan asterisk*, have been separately filed with the Securities and Exchange Commission. Acorda to Elan for such validation batches shall be credited against the applicable price for Launch Stocks under Clause 9.1. CLAUSE 5 SUPPLY OF THE PRODUCT 5.1. Save as otherwise provided in this Agreement, Elan shall use commercially reasonable efforts to produce and supply to Acorda its entire ElanMinimum Requirements of the Product as set forth in and in response to firm purchase orders, within ninety (90) days of the purchase order, orone hundred and fifty (150) days for Launch Stocks or samples (subject to any required extension due to the lead times of specific components ofsamples). 5.2. Elan shall have no obligation to supply Product: 5.2.1 For any period, in excess of Acorda’s properly forecast requirements for such period (but Elan will nevertheless use its commerciallyreasonable efforts to fulfil Acorda’s requirements in excess of such amounts, having regard to its manufacturing capacity); 5.2.2 for less than a minimum order of one Batch, or such other minimum quantity as may be agreed in the Technical Agreement; 5.2.3 in partial Batches; 5.2.4 where Clause 2.3 applies; or 5.2.5 pursuant to an order which does not conform in all material respects to the provisions of Clause 4 and this Clause 5; provided that ifElan does supply pursuant to such an order in its absolute discretion, that fulfilment shall not affect Elan’s right to refuse to fulfil anysubsequent order which does not comply in all material respects with those provisions. 5.3. The Product supplied by Elan to Acorda shall: 5.3.1 be delivered in finished packaged form in the dosages and configurations as set forth in the Specifications and agreed by the partiesand included in the NDA and any NDA Equivalent; 5.3.2 be shipped EXW Elan’s Facility; 5.3.3 be delivered with a certificate of analysis and certificate of release in respect of the Product, in a form reasonably acceptable to Acorda(and Acorda shall be entitled to rely upon such certificate of analysis without the necessity of performing additional testing), inaccordance with the terms of the Technical Agreement, cGMPs and the NDA or any NDA Equivalent; and 10 Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted portions, which are marked with brackets [ ] andan asterisk*, have been separately filed with the Securities and Exchange Commission. 5.3.4 have a shelf life to be determined in the Technical Agreement. 5.4. The terms of this Agreement are hereby incorporated by reference into each order of Product submitted by Acorda and accepted by Elan. In theevent of any conflict between an order or other written instructions and this Agreement, the terms of this Agreement shall prevail. 5.5. Not less than eighteen (18) months before the anticipated First Approval, or such later date as may be determined by the Committee, the partiesshall negotiate in good faith to conclude a detailed technical agreement (the “ Technical Agreement “) regulating the parties’ respective obligationsfrom a technical and quality perspective for the supply of the Product by Elan to Acorda, subject in all cases to compliance with cGMPs, therequirements and commitments of the NDA and any NDA Equivalent and any other applicable laws or regulations governing manufacture andsupply of Product. Such agreement will include commercially reasonable terms as to: 5.5.1 the precise procedures regulating the alleged failure of any shipment of the Product to conform to the Specifications as a result of analleged latent defect and the procedures to be adopted for the return and replacement of such Product; 5.5.2 the inspection and testing for compliance with specifications of API to be conducted by Elan prior to incorporation into Product, thetesting and quality analysis of Product to be conducted by Elan prior to shipment of the Product and the format of the certificate ofanalysis and certificate of release to be furnished by Elan to Acorda as well as any quality analysis to be conducted by Acorda or itsDesignee; 5.5.3 the batch manufacturing records and other documentation to be prepared and maintained by Elan and delivered with each shipment toAcorda to show compliance with cGMP as well as other applicable United States of America and foreign laws and regulations; 5.5.4 the agreed shelf life of the Product as of the date of shipment; 5.5.5 the quantity of Product constituting a Batch and minimum Batch size of each shipment of the Product; 5.5.6 the manner in which Elan may provide Acorda with assistance in relation to field alerts, recalls, complaints and adverse events; 5.5.7 the notification of change by both parties; 5.5.8 the responsibility to collate and write annual product review and annual reports; 5.5.9 technical agreements with any subcontracted parties; 5.5.10 the stability commitments in NDA or amendments thereto; 11 Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted portions, which are marked with brackets [ ] andan asterisk*, have been separately filed with the Securities and Exchange Commission. 5.5.11 active drug substance, excipient and component supplier agreements, including audits/inspections of related manufacturing facilities; 5.5.12 procedures for determining and monitoring the marginal unit variable element of Manufacturing Cost for purposes of Clause 9.5.1; 5.5.13 such other matters relating to the manufacturing and supply of Product, including any amendments to any of the terms of thisAgreement, any matters that this Agreement refers to be included in the Technical Agreement or any other matters that the Parties maymutually agree to or as may be required by the NDA or any NDA Equivalent. CLAUSE 6 DISPUTES AS TO SPECIFICATION 6.1. All claims for failure of any delivery of the Product to conform to the Specifications must be made by Acorda in writing within sixty (60) days following delivery of Product to Acorda or its Designee except in the case of latent defects. Acorda shall promptly upon Elan’s request providereasonable details of the alleged non-conformance and supporting evidence, and shall upon request permit Elan to re-test the Product. If Elan doesnot agree with Acorda’s determination of non-conformance, then Elan shall provide Acorda with a written notice of such disagreement withintwenty (20) days of receipt of the non-conformance notice (adjusted for any delay in providing appropriate details or permitting re-testing),responding to Acorda’s claim. The Parties shall use commercially reasonable efforts to resolve such disagreement within ten (10) Business Days ofAcorda’s receipt of Elan’s notice of disagreement. 6.2. Claims for latent defects, not discovered during the routine testing protocol (to be agreed in the Technical Agreement) shall be made in accordancewith the Technical Agreement in writing within thirty (30) days of discovery. Failure to make timely claims in the manner to be prescribed in theTechnical Agreement shall constitute acceptance of the delivery. 6.3. In the event that the Product supplied by Elan is not in compliance with the Specifications, or is otherwise adulterated, misbranded or defective,Elan shall, in addition to any other applicable remedies: 6.3.1 be responsible, at the sole cost and expense of Elan, for re-analysis, sampling, processing, return, disposal or destruction, includingcertification of destruction, of such non-conforming Product; and 6.3.2 at its cost, replace the nonconforming Product with Product meeting the Specifications as soon as reasonably practicable. 6.4. In the event that the nonconformity was due to a fault of Acorda, then, according to Elan’s orders, the Product shall either be destroyed byAcorda, or returned to Elan for 12 Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted portions, which are marked with brackets [ ] andan asterisk*, have been separately filed with the Securities and Exchange Commission. destruction by Elan, at Acorda’s expense. In such an event Acorda will not be entitled to any credit as to the non-conforming Product. 6.5. In the event of an unresolved dispute as to: 6.5.1 conformity of the Product with Specifications; or 6.5.2 whether defects in the Product are attributable to the negligent acts or omissions of Elan, the parties shall within 30 days after expiration of the ten (10) Business Day period referred to in Clause 6.1 appoint an independent laboratory toundertake the relevant testing and its findings shall be conclusive and binding upon the parties. All costs relating to this process shall be borne solely by the party whose testing was in error. If the parties are unable to agree as to the independent laboratory to be used, the matter shall be referred to arbitration in accordance with Article 12.14of the License Agreement. CLAUSE 7 SECOND SOURCE 7.1. Process Transfer to Second Source: Acorda shall be entitled to qualify the facility of Patheon Inc. at 2100 Syntex Court, Mississauga, Ontario as a second source of the Product (“ Second Source“), subject to Patheon, Inc. (the “ Manufacturer “) undertaking to Elan to protect the confidentiality of Elan’s manufacturing processes related to Product andnot use them for any other purpose, in terms reasonably satisfactory to Elan provided that Elan hereby acknowledges that the Manufacturer is in the processof being qualified as a Second Source Manufacturer. At Acorda’s request, Elan shall use commercially reasonable efforts to assist in qualifying the Second Source as an alternative site of manufacture of theProduct. Pursuant to this obligation, Elan shall: 7.1.1 provide Acorda or the Manufacturer (at Acorda’s request) with any information necessary to manufacture the Product; 7.1.2 provide to Acorda or the Manufacturer (at Acorda’s request) the documentation constituting the required material support, moreparticularly practical performance advice, shop practice, specifications as to materials to be used and control methods; 7.1.3 assist Acorda and/or the Manufacturer (at Acorda’s request) with the working up and use of the technology and with the training ofManufacturer’s personnel to 13 Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted portions, which are marked with brackets [ ] andan asterisk*, have been separately filed with the Securities and Exchange Commission. the extent which may reasonably be necessary in relation to the manufacture of the Product by the Manufacturer. In this regard, Elan willreceive the Acorda’s and/or Manufacturer’s scientific staff, as applicable, in its premises for certain periods, the term of which will be agreedby the parties; and 7.1.4 comply with the other obligations and responsibilities of Elan relating to technology transfer to Patheon, as set forth in the TechnologyTransfer Responsibilities Schedule. Acorda shall comply with its obligations and responsibilities relating to technology transfer to Patheon, as set forth in the Technology Transfer ResponsibilitiesSchedule. 7.2. Supply of Product from Second Source: Acorda may purchase the following quantities of Product from the Second Source and, accordingly, if so purchased, Acorda shall have no obligation topurchase such quantities from Elan and Elan shall have no obligation to supply such quantities to Acorda: 7.2.1 In any Year, up to twenty five percent (25%) of Acorda’s total requirements of Product for such Year, subject to Clauses 7.3.2 and 9.5(the “ Second Source Quantity “); 7.2.2 quantities of the Product which Elan is not obligated to, and declines to, supply pursuant to Clause 2.3; 7.2.3 quantities of Product in addition to the Second Source Quantity required to make up any portion of a valid purchase order which iseither (i) not delivered by Elan by its due date for delivery (regardless of the cause of late or short delivery), except for MinorDeficiencies, or (ii) by reason of Force Majeure, to the extent not capable of being delivered by its due date for delivery, for so long asthe Force Majeure continues; 7.2.4 where there is a Serious Failure To Supply, its entire requirements of the Product, subject to Clause 7.6. 7.3. Notification of Supply from Second Source; Equitable Purchase of Samples: 7.3.1 If Acorda purchases Product from the Second Source, the amount of the same, together with the quantity so purchased as samples,shall be notified to Elan in the applicable Statement. 7.3.2 Acorda shall purchase from the Second Source at least the same proportion of samples of the Product to commercial supply ofProduct as the proportion of samples to commercial supply purchased by Acorda from Elan. 14 Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted portions, which are marked with brackets [ ] andan asterisk*, have been separately filed with the Securities and Exchange Commission. 7.4. No Supply Restrictions On Second Source: Acorda shall not place or attempt to place any restriction on supply from the Second Source to Elan or its licensees for sale in the Elan Territory, except to theextent of the restrictions on supply by Elan under Clause 2.2. In particular, Acorda shall not place or attempt to place any restriction on supplies from theSecond Source to Elan for sale in the Elan Territory or its licensees after the end of the Term. 7.5. Responsibility for Second Source: Assuming compliance by Elan with Clause 7.1, Acorda shall be solely responsible for: 7.5.1 all process and equipment validation in the Second Source required by applicable law or regulations and shall take all stepsreasonably necessary to pass inspection by the Governmental Authority; 7.5.2 Product supplied to Acorda or its Designees by the Second Source. 7.6. Resumption of Elan Supply: 7.6.1 In the event that Product is being purchased from a Second Source as a result of Serious Failure To Supply, at such time as Elan hasremedied the situation that caused it and is once again able to fulfil its obligations to supply Product pursuant to the terms andconditions of this Agreement, Elan shall so notify Acorda. Commencing on the first calendar quarter beginning after the date of suchnotice (the “ Resumption Quarter “), Acorda shall resume purchasing and Elan shall resume its obligations to supply the MinimumElan Quantities from Elan, subject to the provisions of Clause 7.6.2. 7.6.2 Acorda shall be entitled to: 7.6.2.1 honor its binding purchase commitments from the Second Source, incurred reasonably and consistently with its practiceof ordering from Elan and for delivery within three (3) months of the date of such commitments, prior to the notice referredto in Clause 7.6.1; and 7.6.2.2 subsequent to the commencement of the Resumption Quarter, in addition to the Second Source Quantity, purchase fromthe Second Source up to twenty five percent (25%) of Minimum Elan Requirements, to the exclusion of Elan, for twoconsecutive calendar quarters in order to be satisfied of Elan’s ability to fulfil its obligations in respect of the supply ofProduct pursuant to the terms and conditions of this Agreement. 7.6.3 The Technical Agreement shall contain terms applicable to the resumption of supply where the cessation is by reason of Force Majeure,which shall be not less favourable to Elan than the provisions of Clauses 7.6.1 and 7.6.2 applicable to resumption following SeriousFailure to Supply. 15 Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted portions, which are marked with brackets [ ] andan asterisk*, have been separately filed with the Securities and Exchange Commission. 7.7. No Termination Right: Absent Elan’s failure to use commercially reasonable efforts to supply Product in accordance with the terms of this Agreement, Acorda shall have no right toterminate this Agreement by reason of failure to supply, except as otherwise expressly provided herein. 7.8. Have Made License: The Parties acknowledge and confirm that: (a) to the extent that Acorda is permitted hereunder to purchase the Product from Patheon; and (b) following termination of this Agreement, and until termination of the License Agreement — Acorda is regarded for the purposes of Article 2.1 of the License Agreement as being permitted to have the Product made by Patheon at the Second Source(subject always to the terms and conditions of this Agreement) and that the license grant under such Article 2.1 to make and have made Product extendsaccordingly. CLAUSE 8 ADVERSE EVENTS AND PRODUCT RECALL 8.1. Each party shall give the other prompt notice, which shall be promptly confirmed in writing, of any occurrence that involves: 8.1.1 any material complaint about the safety or effectiveness of a Product, including a claim for death or injury following administration ofsuch Product (that is plausibly related to the administration of such Product); and 8.1.2 any other matter arising out of this Agreement that must be reported to a Governmental Authority. In the case of Acorda reporting to Elan matters described in Clause 8.1.2, reporting quarterly, or in such other timescale as may be agreed in theTechnical Agreement, shall be considered “prompt”. For the avoidance of doubt, Acorda shall have overall responsibility for adverse event reporting and medical complaints. 8.2. If a party: 8.2.1 is notified by a Governmental Authority that a Recall of a Product is required, requested or otherwise advisable as being probablyneeded; or 8.2.2 establishes a need to Recall a Product for non-conformities with the Specifications — 16 Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted portions, which are marked with brackets [ ] andan asterisk*, have been separately filed with the Securities and Exchange Commission. it shall promptly give to the other party written notice of the same with full details. 8.3. Unless otherwise agreed, after consultation with Elan, Acorda shall take the lead role in any Recall, market withdrawal, stock recovery or anyother corrective action related to Product in a commercially reasonable manner and Elan shall afford all reasonable assistance. A final report shallbe completed by Acorda and delivered promptly to Elan. 8.4. If the Recall, market withdrawal, stock recovery or other corrective action relating to a Product arises from Elan’s negligent acts or omissions inmanufacturing the Product, or failure of the Product to conform to Specifications, the costs, including the cost of replacement quantities ofProducts, of such Recall, market withdrawal, stock recovery or other corrective action relating to a Product shall be borne by Elan provided thatAcorda could not have discovered the said act(s) or omission(s) prior to the sale of the Product by exercising reasonable diligence. In all othercircumstances, such costs shall be borne by Acorda. For purposes of this Agreement, such costs shall include the expenses of notification anddestruction or return of the Recalled Product and all other documented out-of-pocket costs incurred in connection with such Recall, marketwithdrawal, stock recovery or other corrective action relating to a Product, but shall not include lost profits or opportunity costs of either Party. In the event that Elan should bear the costs of any recall hereunder, Elan shall be entitled but not obliged to take over and perform the recall of theProduct and Acorda shall provide Elan at no cost with all such reasonable assistance as may be required by Elan. CLAUSE 9 FINANCIAL PROVISIONS 9.1. Price of Launch Stocks: Elan shall invoice Acorda for Launch Stocks at a price equivalent to Manufacturing Cost plus [*****], subject to reconciliation pursuant to Clause 9.3.3. 9.2. Price of Samples: The price to be charged to Acorda for Product intended for distribution as free-of-charge promotional samples in its marketing and promotion of the Productshall be equivalent to Manufacturing Cost plus [*****] which price shall apply to Product supplied EXW Elan’s Facility to Acorda. For the avoidance ofdoubt, the Parties confirm that if Acorda requires the samples to be supplied in sample packaging, Manufacturing Cost shall include all costs referable tosuch packaging. 9.3. Price of Product (General): 9.3.1 Except for Product referred to in Clauses 9.1 and 9.2, the price of the Product manufactured by Elan to be charged to Acorda underthis Agreement shall be equivalent to eight per cent (8%) of the NSP as determined by the provisions of Clause 9.3.3 (the “ SupplyPrice “), less the Discount to the extent applicable, and 17 Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted portions, which are marked with brackets [ ] andan asterisk*, have been separately filed with the Securities and Exchange Commission. subject to Clause 2.5. The foregoing price shall apply to Product supplied EXW Elan’s Facility packaged and labelled in final market formand consistent with the NDA. 9.3.2 For the avoidance of doubt the Parties agree that if for whatever reason the Product supplied by Elan to Acorda which meets theSpecifications and the applicable law and regulatory requirements is not sold by Acorda, payment to Elan for such Product shallnonetheless be effected and the price of the Product shall be determined by reference to the NSP calculated pursuant to the provisions ofClause 9.3.3. 9.3.3 Upon supply, Elan shall render an invoice in respect of the quantities of Product delivered to Acorda for a sum calculated by referenceto eight per cent (8%) of then-applicable Notional NSP. The Parties shall adjust their account as of the end of each calendar quarterduring such calendar year by Acorda paying to Elan, or by Elan crediting Acorda (as the case may be), the difference between the sumpaid pursuant to the previous sentence and the actual Supply Price calculated each calendar quarter pursuant by reference to actualNSP in such quarter, within the period specified in Clause 9.6. 9.4. Discount: Where Acorda purchases from Elan for delivery in any Year more than [*****] tablets of the Product, Acorda shall be entitled to a discount (the “ Discount “)in respect of the excess equal to [*****] of Elan’s Manufacturing Cost for such excess tablets. The Discount is without prejudice to Clause 2.3. 9.5. Compensating Payment: 9.5.1 In respect of all Product purchased from the Second Source pursuant to Clause 7.2.1 and 7.6.2.2, Acorda shall make a compensatingpayment to Elan calculated per unit as X — Y, where “X” is the unit price that would have applied if the Product were purchased fromElan, under Clause 9.2 or 9.3 as applicable; and “Y” is the marginal unit variable element of Elan’s Manufacturing Cost applicable tosuch Product. 9.5.2 Such compensating payment shall be made in respect of a particular quarter at the time of provision of the Statement, based on thethen Notional NSP and estimated Manufacturing Cost. The Parties shall adjust their account as of the end of each calendar year byAcorda paying to Elan, or by Elan crediting Acorda (as the case may be), the difference between the sum paid pursuant to Clause9.5.1 and the actual payment calculated on the basis of actual applicable NSP and actual Manufacturing Cost calculated at the end ofthe calendar year, or such other period as may be specified in the Technical Agreementwithin sixty (60) days after the end of thecalendar year. 18 Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted portions, which are marked with brackets [ ] andan asterisk*, have been separately filed with the Securities and Exchange Commission. 9.6. Time For Payment: For the first two years following First Commercial Sale of the Product in any country of the Territory, payment for the Product supplied to Acorda shall beeffected in $ within sixty (60) days of the date of the relevant invoice issued on supply by Elan pursuant to Clause 9.3.3. Thereafter, payment shall beeffected by Acorda in $ within thirty (30) days of the date of the relevant invoice issued on supply by Elan pursuant to Clause 9.3.3. The adjusting payments referred to in Clause 9.3.3 shall be made on provision of the relevant Statement. For the avoidance of doubt, in respect of Product ordered for a particular country prior to Regulatory Approval in that country, Acorda shall be responsible forthe price of such Product as from its readiness for delivery, notwithstanding that applicable law or regulations may prevent such Product from being suppliedbefore Regulatory Approval. 9.7. Process Transfer Costs: Except as otherwise set forth in this Agreement, in respect of the establishment, qualification and operation of the Second Source, Acorda shall be solelyresponsible for: 9.7.1 Acorda’s own costs and expenses; 9.7.2 all third party costs and expenses, including out of pocket expenses incurred by Elan, for products or services previously approvedby the Committee; and 9.7.3 work conducted by Elan, its Affiliates, and their employees and consultants, under the Technology Transfer Responsibilitiesschedule, or as may otherwise be agreed to by the Parties, at the rate of FTE plus 45%. 9.8. VAT: All prices for the Product and other amounts in this Agreement are exclusive of any applicable value added or any other sales tax, for which Acorda will beadditionally liable, if payable, subject to Clause 10. CLAUSE 10 PAYMENTS, REPORTS AND AUDITS Article 5.9 of the Licence Agreement is hereby incorporated by reference herein as if restated in its entirety herein. CLAUSE 11 DURATION AND TERMINATION 11.1. This Agreement shall be deemed to have come into force on the Effective Date and will expire upon expiry or termination of the Licence Agreement,howsoever arising. 19 Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted portions, which are marked with brackets [ ] andan asterisk*, have been separately filed with the Securities and Exchange Commission. 11.2. In addition to the rights of termination provided for elsewhere in this Agreement, either party will be entitled forthwith to terminate this Agreementby written notice to the other party if: 11.2.1 that other party commits any breach of any of the provisions of this Agreement or the Licence Agreement, and in the case of a breachcapable of cure, fails to cure the same within 60 days after receipt of a written notice giving full particulars of the breach and requiringit to be remedied; provided, that if the breaching party has proposed a course of action to cure the breach and is acting in good faith tocure same but has not cured the breach by the 60th day, such period shall be extended by such period as is reasonably necessary topermit the breach to be cured, provided that such period shall not be extended by more than 90 days, unless otherwise agreed in writingby the parties; 11.2.2 that other party goes into liquidation (except for the purposes of amalgamation or reconstruction and in such manner that the companyresulting therefrom effectively agrees to be bound by or assume the obligations imposed on that other party under this Agreement); 11.2.3 an encumbrancer takes possession or a receiver is appointed over any of the property or assets of that other party; 11.2.4 any proceedings are filed or commenced by that other party under bankruptcy, insolvency or debtor relief laws or anything analogousto any of the foregoing under the laws of any jurisdiction occurs in relation to that other party. 11.3. For the purposes of Clause 11.2, a breach will be considered capable of cure if the party in breach can comply with the provision in question inall respects other than as to the time of performance (provided that time of performance is not of the essence). 11.4. Elan may terminate this Agreement by giving twelve (12) months’ written notice to do so to Acorda. CLAUSE 12 CONSEQUENCES OF TERMINATION 12.1. Upon exercise of those rights of termination specified in Clause 11 or elsewhere in this Agreement, this Agreement shall, subject to the provisionsof the Agreement which survive the termination of the Agreement and Clause 12.2 automatically terminate forthwith and be of no further legal forceor effect, provided, however, that if the Agreement is terminated by Elan under Clause 11.4 such termination shall not be effective until theexpiration of such twelve (12) month period 12.2. Upon termination of this Agreement by either party, the following shall be the consequences: 20 Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted portions, which are marked with brackets [ ] andan asterisk*, have been separately filed with the Securities and Exchange Commission. 12.2.1 any sums that were due from Acorda to Elan under the provisions of Clause 9 or otherwise prior to the exercise of the right to terminatethis Agreement as set forth herein shall be paid in full forthwith provided , that Elan has delivered Product in accordance with theSpecifications and cGMP; and Elan shall not be liable to repay to Acorda any amount of money paid or payable by Acorda to Elan upto the date of the termination of this Agreement; 12.2.2 all confidentiality provisions set out herein shall remain in full force and effect for a period of 7 years from the date of termination ofthis Agreement; 12.2.3 all representations and warranties shall insofar are appropriate remain in full force and effect; 12.2.4 the rights of inspection and audit shall continue in force for the period referred to in the relevant provisions of this Agreement; and 12.2.5 if Elan terminates the Agreement under Clause 11.4, Acorda shall be entitled to purchase all of Acorda’s requirements of Product fromthe Second Source as from termination becoming effective. CLAUSE 13 REPRESENTATIONS AND WARRANTIES; INDEMNIFICATION 13.1. The following clauses of the License Agreement are hereby incorporated by reference herein as if stated herein in their entirety, except that forpurposes of this Agreement, all references in such clauses to “the Agreement” or “this Agreement” shall be deemed to mean this Supply Agreement:Articles 8.2, 8.3, 8.4, 8.5, and 8.7. 13.2. Elan represents and warrants that the Product supplied to Acorda by Elan under this Agreement shall be free of any lien, security, interest or otherencumbrance on title, conform to the Specifications and all applicable laws and regulations and requirements of the FDA and other GovernmentalAuthorities including, without limitation, the cGMP regulations which apply to the manufacture, storage, packaging and supply of the Product. Elan represents and warrants that the Product supplied to Acorda under this Agreement shall be free of defects in material and workmanship, shallnot be adulterated or mis-branded as defined by the Act (or applicable foreign law) and shall not be a product which would violate any section ofsuch Act if introduced in interstate commerce and shall be fit for use as a pharmaceutical product. Acorda agrees not to assert its right to rescindthis Agreement in the event of a breach of the representations of Elan contained in this Clause 13.2. 13.3. Elan shall indemnify, defend and hold harmless Acorda and its officers, directors, employees and agents from all actions, losses, claims,demands, damages, costs and liabilities (including reasonable attorneys’ fees) due to Third Party claims to which Acorda is or may becomesubject insofar as they arise out of or are alleged or claimed to arise out of (i) any breach by Elan of any of its obligations under this Agreement, (ii)any breach of a representation or warranty of Elan made in this Agreement, (iii) any failure of 21 Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted portions, which are marked with brackets [ ] andan asterisk*, have been separately filed with the Securities and Exchange Commission. the Product provided under this Agreement to meet the Specifications, or (iv) the manufacture or shipment of the Product provided under thisAgreement by Elan, except in each case to the extent due to the negligence or wilful misconduct of Acorda. 13.4. Acorda shall indemnify, defend and hold harmless Elan and its officers, directors, employees and agents from all actions, losses, claims,demands, damages, costs and liabilities (including reasonable attorneys’ fees) due to Third Party claims to which Elan is or may become subjectinsofar as they arise out of or are alleged or claimed to arise out of (i) any breach by Acorda of any of its obligations under this Agreement, (ii) anybreach of any representation or warranty of Acorda made in this Agreement, (iii) damages for personal injury (including death) and/or for costs ofmedical treatment, caused by or attributed to the Product, or (iv) the acts or omissions of any sub-licensee appointed pursuant to the LicenceAgreement, except in each case to the extent due to the negligence or wilful misconduct of Elan or to the relative extent that Elan is obliged toindemnify Acorda pursuant to Clause 13.3. 13.5. The party seeking an indemnity shall: 13.5.1 fully and promptly notify the other party of any claim or proceedings, or threatened claim or proceedings; 13.5.2 permit the indemnifying party to take full control of such claim or proceedings, with counsel of the indemnifying party’s choice,provided that the indemnifying party shall reasonably and regularly consult with the indemnified party in relation to the progress andstatus of such claim or proceedings; 13.5.3 co-operate in the investigation and defence of such claim or proceedings; and 13.5.4 take all reasonable steps to mitigate any loss or liability in respect of any such claim or proceedings. The indemnifying party may settle a Claim on terms which provide only for monetary relief and do not include any admission of liability. Save asaforesaid, neither the indemnifying party nor the party to be indemnified shall acknowledge the validity of, compromise or otherwise settle any Claimor proceedings without the prior written consent of the other, which shall not be unreasonably withheld. 13.6. TO THE FULLEST EXTENT PERMITTED BY LAW, APART FROM THE FOREGOING REPRESENTATIONS, WARRANTIES,COVENANTS AND INDEMNITIES, AND THOSE SET FORTH IN THE LICENSE AGREEMENT ELAN MAKES NO ADDITIONALREPRESENTATIONS OR WARRANTIES AND HEREBY DISCLAIMS ALL WARRANTIES, REPRESENTATIONS, AND LIABILITIES,WHETHER EXPRESS OR IMPLIED, ARISING FROM CONTRACT OR TORT (EXCEPT FRAUD), IMPOSED BY STATUTE OROTHERWISE, RELATING TO THE PRODUCTS AND/OR ANY PATENTS OR TECHNOLOGY USED OR INCLUDED IN THEPRODUCTS, INCLUDING ANY WARRANTIES AS 22 Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted portions, which are marked with brackets [ ] andan asterisk*, have been separately filed with the Securities and Exchange Commission. TO MERCHANTABILITY, FITNESS FOR PURPOSE, CORRESPONDENCE WITH DESCRIPTION, OR NON-INFRINGEMENT. 13.7. NOTWITHSTANDING ANYTHING TO THE CONTRARY IN THIS AGREEMENT, ELAN AND ACORDA SHALL NOT BE LIABLETO THE OTHER BY REASON OF ANY REPRESENTATION OR WARRANTY, CONDITION OR OTHER TERM OR ANY DUTY OFCOMMON LAW, OR UNDER THE EXPRESS TERMS OF THIS AGREEMENT, FOR ANY CONSEQUENTIAL, SPECIAL ORINCIDENTAL OR PUNITIVE LOSS OR DAMAGE (WHETHER FOR LOSS OF CURRENT OR FUTURE PROFITS, LOSS OFENTERPRISE VALUE OR OTHERWISE) AND WHETHER OCCASIONED BY THE NEGLIGENCE OF THE RESPECTIVE PARTIES,THEIR EMPLOYEES OR AGENTS OR OTHERWISE. 13.8. Elan and Acorda shall each maintain comprehensive general liability insurance, insuring against all liability, including product liability, personalinjury, physical injury and property damage in respective amounts deemed reasonable in the industry for companies of their respective size andengaged in their respective activities under this Agreement for the duration of this Agreement and for a period of 5 years thereafter. Each party shall provide the other party with a certificate from the insurance company verifying the above and shall notify the other party in writing atleast 30 days prior to the expiration or termination of such coverage. CLAUSE 14 MISCELLANEOUS PROVISIONS 14.1. Secrecy and Confidentiality. Article 12.1 of the License Agreement is hereby incorporated by reference herein as if stated herein in its entirety. 14.2. Licence to Elan: Acorda hereby grants to Elan and Elan hereby accepts for the Term a non-exclusive royalty-free license to use such Acorda Patent Rights and Acorda Know-How as are necessary or useful for the purpose of manufacturing the Product. Such rights shall be sub-licensable by Elan to its Affiliates and sub-contractors, for the sole purpose of manufacturing the Product in accordance with this Agreement. 14.3. Assignment: 14.3.1 Subject to the provisions of this Clause 14.3, each party be entitled without the consent of the other: 14.3.1.1 to subcontract or delegate the whole or any part of its duties hereunder to its Affiliate(s) (but shall remain responsible for itsobligations under this Agreement); and/or 23 Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted portions, which are marked with brackets [ ] andan asterisk*, have been separately filed with the Securities and Exchange Commission. 14.3.1.2 to assign this Agreement to its Affiliate, provided that such assignment has no material adverse tax implications for theother Party or Parties hereto, and provided further that the assigning Party shall remain liable and responsible with suchassignee to the other Party for the performance of any obligations, representations or warranties delegated, contracted,assigned or otherwise transferred to any such assignee. 14.3.2 In the event that Elan agrees to sell all or substantially all of the assets of Elan’s Facility, Elan shall so notify Acorda. In such event,Elan may (a) terminate this Agreement by ninety (90) days’ written notice to Acorda; or (b) assign all (but not, subject to the followingsentences, a portion) of its rights and obligations under this Agreement to a Permitted Elan Assignee, provided that such transfer orassignment has no adverse tax implications for Acorda. 14.3.3 Each Party may assign all (but not a portion) of its rights and obligations under this Agreement to an entity that acquires all orsubstantially all of its business or assets to which this Agreement pertains, whether by merger, reorganisation, acquisition, sale orotherwise, provided, that in the case of an assignment by Elan, the assignee is a Permitted Elan Assignee. 14.3.4 Except as provided for in this Clause 14.3, this Agreement may not be assigned by a party without the prior written consent of the otherParty, which shall not be unreasonably withheld or delayed. 14.3.5 Any permitted assignee of a Party under this Clause 14.3 shall assume all related obligations of its assignor under this Agreement. 14.4. Parties bound: This Agreement shall be binding upon and enure for the benefit of parties hereto, their successors and permitted assigns. 14.5. Severability: If any provision in this Agreement is deemed to be, or becomes invalid, illegal, void or unenforceable under applicable laws: 14.5.1 such provision will be deemed amended to conform to applicable laws so as to be valid and enforceable; or 14.5.2 if it cannot be so amended without materially altering the intention of the parties, it will be deleted the validity, legality andenforceability of the remaining provisions of this Agreement shall not be impaired or affected in any way. 24 Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted portions, which are marked with brackets [ ] andan asterisk*, have been separately filed with the Securities and Exchange Commission. 14.6. Force Majeure: 14.6.1 Neither party to this Agreement shall be liable for delay or failure in the performance of any of its obligations hereunder if such delay orfailure results from Force Majeure. 14.6.2 If Force Majeure prevents or delays the performance by a party of any obligation under this Agreement, then the party claiming ForceMajeure shall promptly notify the other party thereof in writing. The parties shall thereafter as soon as practicable discuss how best tocontinue their operations in accordance with this Agreement and shall thereafter continue such discussions on a regular basis whileForce Majeure continues. 14.6.3 Where a party claims Force Majeure, the other party’s obligations under this Agreement shall be suspended for the period while ForceMajeure continues, but only to the extent reasonably required by the Force Majeure. 14.6.4 The party claiming Force Majeure shall use all reasonable efforts to avoid, minimise or remove the cause of such non-performance andto mitigate its effects and shall continue performance with due dispatch whenever such causes are removed. 14.6.5 Where Force Majeure continues for a period of six (6) months the other party shall have the right to terminate this Agreement, providedthat it has complied with its obligations under this Clause 14.6. 14.7. Relationship of the parties: 14.7.1 Nothing contained in this Agreement is intended or is to be construed to constitute any of the parties hereto as partners or members of ajoint venture or any party as an employee of another party. 14.7.2 No party hereto shall have any express or implied right or authority to assume or create any obligations on behalf of or in the name ofany other party or to bind another party to any contract, agreement or undertaking with any third party. 14.8. Amendments: No amendment, modification or addition hereto shall be effective or binding on any party hereto unless set forth in writing and executed by a duly authorisedrepresentative of all parties hereto. 14.9. Waiver: No waiver of any right under this Agreement shall be deemed effective unless contained in a written document signed by the party charged with such waiver,and no waiver of any breach or failure to perform shall be deemed to be a waiver of any future breach or failure to perform or of any other right arising underthis Agreement. 25 Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted portions, which are marked with brackets [ ] andan asterisk*, have been separately filed with the Securities and Exchange Commission. 14.10. Entire Agreement: 14.10.1 Each of the parties hereto hereby acknowledges that in entering into this Agreement it has not relied on any representation or warrantyexcept as expressly set forth herein or in the License Agreement or in any other document referred to herein. 14.10.2 This Agreement and the Licence Agreement, together with the exhibits and schedules hereto and thereto, together set forth all of theagreements and understandings between the parties with respect to the subject matter hereof, and supersede and terminate all prioragreements and understandings between the parties with respect to the subject matter hereof, including the SCI Agreement and the MSAgreement. 14.10.3 Nothing in this Clause 14.10 shall exclude any liability which any party would otherwise have to the other party or any right whicheither of them may have to rescind this Agreement for fraud. 14.11. Governing law and jurisdiction: 14.11.1 This Agreement shall be governed by and construed in accordance with the laws of the State of New York, excluding its conflict oflaws rules. 14.11.2 Article 12.14 of the License Agreement is hereby incorporated by reference herein as if stated herein in its entirety. 14.12. Notices: 14.12.1 Any notice to be given under this Agreement shall be sent in writing in English by registered or recorded delivery post, reputableovernight courier or fax to: Elan at c/o Elan Pharma Ltd.MonkslandAthloneCo. WestmeathIrelandAttention:General ManagerFax:+353 906 492427 Acorda at 15 Skyline DriveHawthorne, New York 10532United States of AmericaAttention:PresidentFax:914.347.4560 26 Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted portions, which are marked with brackets [ ] andan asterisk*, have been separately filed with the Securities and Exchange Commission. or to such other address(es) and fax numbers as may from time to time be notified by either party to the other hereunder. 14.12.2 Any notice sent by mail shall be deemed to have been delivered within 7 working days after despatch or delivery to the relevant courierand any notice sent by fax shall be deemed to have been delivered upon confirmation of receipt. Notice of change of address shall beeffective upon receipt. 14.13. Further assurances: At the request of any of the parties, the other party or parties shall (and shall use reasonable efforts to procure that any other necessary third parties shall)execute and do all such documents, acts and things as may reasonably be required subsequent to the signing of this Agreement for assuring to or vesting in therequesting party the full benefit of the terms hereof. 14.14. Counterparts: This Agreement may be executed in any number of counterparts, each of which when so executed shall be deemed to be an original and all of which whentaken together shall constitute this Agreement. 14.15. Set-off: Each of the parties will be entitled but not obliged to set-off against any amount of money payable to it by the other party hereunder, any amount of moneypayable by it to the other party hereunder. IN WITNESS WHEREOF the parties have executed this Agreement on the day and date appearing at the top of page 1. 27 Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted portions, which are marked with brackets [ ] andan asterisk*, have been separately filed with the Securities and Exchange Commission. SCHEDULE 1 MANUFACTURING COST “Manufacturing Cost” shall mean fully absorbed cost of manufacture (including packaging) which shall be determined on the basis of the following elements: (a) Direct material, labour and overhead cost; and (b) Such indirect labour, factory, laboratory and other overhead costs properly allocable. Overhead allocations shall include, but not be limited to,expenses of plant maintenance and engineering, plant management, receiving and warehousing, disposal and treatment of waste, building occupancy,quality control, costs of services provided to manufacturing and insurance provided to manufacturing. Such allocations shall be in a manner consistent with GAAP from time to time and in a manner consistent with expenses and overhead allocated to otherproducts manufactured by Elan or its Affiliates. Where some part(s) of the manufacture or packaging is/are conducted by unaffiliated third party(ies), Manufacturing Cost shall be the amount paid to suchthird party(ies) plus any of the aforementioned costs incurred by Elan or its Affiliates in completing the manufacture, packaging or delivery of the Product. 28 Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted portions, which are marked with brackets [ ] andan asterisk*, have been separately filed with the Securities and Exchange Commission. SIGNEDMonksland Holdings BV By:/s/ Pieter BosseBy:/s/ Klaas van Blanken for and on behalf ofELAN CORPORATION, PLC. Name:Monksland Holdings BVTitle:Proxyholder SIGNED By:/s/ Ron Cohen for and on behalf ofACORDA THERAPEUTICS, INC. Name:Ron CohenTitle:President & Chief Executive Officer 29Exhibit 10.23 Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted portions, which are marked with brackets [ ] andan asterisk*, have been separately filed with the Securities and Exchange Commission. LICENSE AGREEMENT by and among ELAN PHARMACEUTICAL RESEARCH CORP.,d/b/aNANOSYSTEMS and ELAN PHARMA INTERNATIONAL LIMITED and JANSSEN PHARMACEUTICA N.V. March 31, 1999 This document is the confidential information of both parties hereto.It should be distributed on a need-to-know basis and kept in secure area.  Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted portions, which are marked with brackets [ ] andan asterisk*, have been separately filed with the Securities and Exchange Commission. TABLE OF CONTENTS Page ARTICLE 1 - Definitions1ARTICLE 2 - LICENSE GRANT7ARTICLE 3 - DEVELOPMENT ACTIVITIES9ARTICLE 4 - CLINICAL AND REGULATORY ACTIVITIES10ARTICLE 5 - PAYMENTS12ARTICLE 6 - ROYALTIES13ARTICLE 7 - ROYALTY PAYMENTS, REPORTS AND RECORDS14ARTICLE 8 - COMMERCIALIZATION16ARTICLE 9 - MANUFACTURING AND SUPPLY17ARTICLE 10 - RIGHTS IN TECHNOLOGY, INVENTIONS AND PATENTS17ARTICLE 11 - INFRINGEMENT19ARTICLE 12 - CONFIDENTIALITY23ARTICLE 13 - TERM26ARTICLE 14 - TERMINATION BY JANSSEN27ARTICLE 15 - TERMINATION FOR CAUSE27ARTICLE 16 - RIGHTS AND OBLIGATIONS UPON TERMINATION27ARTICLE 17 - REPRESENTATIONS AND WARRANTIES28ARTICLE 18 - INDEMNIFICATION30ARTICLE 19 - CHOICE OF LAW32ARTICLE 20 - FORCE MAJEURE32ARTICLE 21 - DISPUTE RESOLUTION32ARTICLE 22 - NOTICES35ARTICLE 23 - WAIVER36ARTICLE 24 - ENTIRE AGREEMENT36ARTICLE 25 - ASSIGNMENT36ARTICLE 26 - TITLES38ARTICLE 27 - PUBLICITY38ARTICLE 28 - UNENFORCEABLE PROVISIONS38ARTICLE 29 - CONSTRUCTION38ARTICLE 30 - EXECUTION39ARTICLE 31 - NON-SOLICITATION39 Exhibit ANANO PATENTSExhibit BSELECTION PATENTSForm 1STATEMENT  Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted portions, which are marked with brackets [ ] andan asterisk*, have been separately filed with the Securities and Exchange Commission. This License Agreement is made as of this 31st day of March, 1999 (the “Effective Date”) by and among Elan Pharmaceutical Research Corp., a corporationorganized and existing under the laws of the State of Georgia and doing business as NanoSystems (“EPRC”), and Elan Pharma International Limited, acorporation organized and existing under the laws of Ireland (“EPIL”) (EPRC and EPIL collectively referred to herein as “NANO”), and JanssenPharmaceutica N.V., a corporation organized and existing under the laws of Belgium (“JANSSEN”). WITNESSETH THAT: WHEREAS, NANO possesses, among other things, certain proprietary information in connection with a technology for the formulation of crystalline drugsubstances into pharmaceutically acceptable dosage forms; and WHEREAS, NANO owns or controls patents and patent applications, as well as know-how with respect to its technology and has the right to grant certainrights and licenses thereunder as set forth herein; and WHEREAS, JANSSEN possesses proprietary information, as well as patents and patent applications in relation to a proprietary compound developed by it;and WHEREAS, NANO and JANSSEN wish to engage in a development and license agreement with a view towards developing certain crystalline forms of aproprietary JANSSEN compound utilizing NANO’s proprietary technology; and WHEREAS, NANO is willing to grant such rights and licenses to JANSSEN under the terms and conditions hereinafter set forth; NOW, THEREFORE, in consideration of the mutual promises, covenants and agreements hereinafter set forth, the parties to this Agreement mutually agree asfollows: ARTICLE 1 - DEFINITIONS For purposes of this Agreement, the following capitalized terms in this Agreement shall have the following meanings, unless the context clearly requiresotherwise: 1.1 “Affiliate” shall mean, with respect to any party hereto, any corporation, company, partnership, joint venture or any other entity which directly orindirectly controls, is controlled by, or is under common control with such party. For purposes of this definition, “control” shall mean direct orindirect ownership of fifty percent (50%) or more of the stock or shares entitled to vote for the election of directors. For the purposes of thisAgreement, EPRC and EPIL shall not be considered Affiliates of JANSSEN and JANSSEN shall not be considered an Affiliate of EPRC or EPIL. 1 Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted portions, which are marked with brackets [ ] andan asterisk*, have been separately filed with the Securities and Exchange Commission. 1.2 “Agreement” shall mean this License Agreement. 1.3 “Analogue” shall mean a structural analogue of Compound falling under the claims of any Janssen Patent, which is developed and commercializedunder this Agreement as a substitute for, and for the same indications as, 9 O-H risperidone palmitate (R 92670) or any salt or derivative thereof. 1.4 “Compound” shall mean (i) the active ingredient 9 O-H risperidone palmitate (R 92670), or any salt or derivative thereof, falling under the claims ofany Janssen Patent, or (ii) in the event that JANSSEN ceases development of R 92670 prior to commercialization, an Analogue selected byJANSSEN, or (iii) in the event that JANSSEN ceases development of an Analogue prior to commercialization, another Analogue selected byJANSSEN. 1.5 “Competition” shall mean a situation in which one or more Persons in a country are marketing a product containing Compound that competes withthe Product and such Persons’ sales of such product for a calendar quarter are at least fifteen percent (15%) of the total sales of all Products in suchcountry, as measured by comparing equivalent units of products sold. Sales of a competing product in a country during any calendar quarter shallbe conclusively deemed to be at least fifteen percent (15%) of the total sales of Products in such country if IMS America or IMS International makessuch a determination based on its conduct of a market share study in such country during such quarter. Once a determination is made thatCompetition exists for the Product in any country, such determination shall be made again each calendar quarter for so long as the Product ismarketed in that country. 1.6 “Control, Controlled” shall mean the legal authority or right of a party hereto to grant a license or sublicense of intellectual property rights to anotherparty hereto, or to otherwise disclose proprietary or trade secret information to such other party, without breaching the terms of any agreement with aThird Party, infringing upon the intellectual property rights of a Third Party, or misappropriating the proprietary or trade secret information of aThird Party. Information that is generally known or available to the public shall not be deemed Controlled by a party hereto. 1.7 “Development Candidate” shall mean a Sterile, injectable pharmaceutical formulation of the Compound selected by JANSSEN for furtherdevelopment under the terms of this Agreement. 1.8 “Development Plan” shall mean the plan directed towards the development of a Development Candidate as more fully set forth in Article 3. 2 Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted portions, which are marked with brackets [ ] andan asterisk*, have been separately filed with the Securities and Exchange Commission. 1.9 “Development Program” shall mean the program of activities specified in the Development Plan for a Development Candidate as further detailed inArticle 3. 1.10 “Development Team” shall mean a team comprised of representatives of NANO and JANSSEN monitoring the Development Program. 1.11 “Dollars” shall mean United States dollars. 1.12 “Elan-Independent” shall mean incorporating, embodying or derived from patent rights, know-how or technology owned, licensed or developed byElan Corporation, plc or any of its Affiliates (i) prior to the date on which Elan Corporation, plc acquired NanoSystems, LLC, or (ii) thereafter butwholly independent of any patent rights, know-how or technology obtained by Elan Corporation, plc or any of its Affiliates as a result of suchacquisition. 1.13 “EU” shall mean the member states of the European Union. 1.14 “FDA” shall mean the United States Food and Drug Administration and, when appropriate herein, shall also mean any corresponding regulatoryagency in any other country in the Territory. 1.15 “Feasibility Agreement” shall mean the Feasibility Collaboration Agreement between JANSSEN and NanoSystems, LLC dated August 29, 1996. 1.16 “First Commercial Sale” shall mean the first sale of the Product by JANSSEN, its Affiliates or Licensees, or any of their distributors in anycountry following receipt of all regulatory approvals, including those relating to pricing and reimbursement, necessary to commence commercial salesof the Product in such country. Reasonably limited sales made prior to the receipt of all approvals necessary to commence commercial sales, such asso-called “named patient sales”, “compassionate use” sales and the like, shall not be deemed First Commercial Sales. 1.17 “Highly Confidential Information” shall mean specific processing conditions and/or parameters included in NanoCrystal Technology (excludingspecific processing conditions and/or parameters specifically described in any NANO Patent) that are reasonably necessary for specializedJANSSEN or NANO employees to become skilled in the art of making nanoparticles, including, but not limited to, information concerning (i)work-up and composition of starting materials, size reduction, harvesting and sizing of nanoparticles; (ii) stabilization of nanoparticles; and (iii)specific downstream processing to make nanoparticle formulations. “Highly Confidential Information” shall not include information that is aimed atproviding JANSSEN or NANO employees with a general understanding of the methods, processes and equipment used to manufacture or 3 Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted portions, which are marked with brackets [ ] andan asterisk*, have been separately filed with the Securities and Exchange Commission. formulate nanoparticles, but that is not intended to enable JANSSEN or NANO employees to become skilled in the art of making or formulatingnanoparticles. In addition, “Highly Confidential Information” shall include only information that is (A) disclosed to JANSSEN in written or othertangible form clearly labeled as “Highly Confidential” at the time of disclosure, or (B) initially disclosed to JANSSEN in non-tangible form andidentified as “Highly Confidential” at the time of such disclosure and, within thirty (30) days following the initial disclosure, summarized anddesignated as “Highly Confidential” in written or other tangible form delivered to JANSSEN. 1.18 “Improvement” shall mean any enhancement of or improvement to NanoCrystal Technology developed, invented or acquired by, or coming underthe Control of, any party hereto (i) as a consequence of activities conducted or information disclosed under this Agreement or the FeasibilityAgreement, or (ii) during the period between the Effective Date and the filing of the IRF for the Product; provided, however, that “Improvements”shall not include any enhancements of or improvements to NanoCrystal Technology that (A) are made by Janssen and are useful solely with respectto Compound or Product; (B) concern a commercial scale manufacturing process developed by JANSSEN for Product, but do not utilize and are notderived from NanoCrystal Technology; or (C) are Elan-Independent inventions, discoveries or findings. 1.19 “IND” shall mean (i) an Investigational New Drug Application filed by JANSSEN, its Affiliates or Licensees pursuant to the requirements of theFDA, as more fully defined in 21 C.F.R. § 312.3, as well as (ii) equivalent submissions with similar requirements to the appropriate healthauthorities in other countries in the Territory as herein defined. 1.20 “IRF” shall mean the International Registration File owned by JANSSEN, compiled in such a way as is: (a) necessary to satisfy the requirements of an NDA in the United States; (b) necessary to satisfy the requirements of the Notice to Applicants for marketing authorization for Proprietary Medicinal Productsfor use in the EU; and (c) satisfactory to be submitted as such to the national health authorities in any country or to be used as a basis for a nationalapplication for marketing authorization for the Product in the specific format required by such national health authorities. 4 Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted portions, which are marked with brackets [ ] andan asterisk*, have been separately filed with the Securities and Exchange Commission. 1.21 “Janssen Patent” shall mean all patents (including all additions, divisions, continuations, continuations-in-part, substitutions, extensions, patentterm extensions and renewals thereof) and patent applications (including patents issued thereon) that are or become owned or Controlled byJANSSEN. For the purpose hereof, “Janssen Patents” shall also include JANSSEN’s interests, if any, in Selection Patents. 1.22 “Licensee” shall mean any person, corporation, unincorporated body, or other entity that is not an Affiliate of JANSSEN and to whom JANSSENgrants a sublicense of the rights granted to JANSSEN pursuant to Article 2. 1.23 “Major Markets” shall mean the United States, Japan, the United Kingdom, France and Germany. 1.24 “Nano Know-How” shall mean all information and materials, including, without limitation, processes, techniques, formulas, data, methods,equipment designs, know-how, show-how and trade secrets, patentable or otherwise, tangible or intangible, that are owned or Controlled by NANOas of the Effective Date and that relate to the preparation, purification, characterization, stabilization, processing, formulation or delivery of smallparticles of pharmaceutical compounds prepared using a wet milling process; provided, however, that “Nano Know-How” shall not include anyElan-Independent information or materials. 1.25 “Nano Patents” shall mean all patents (including all additions, divisions, continuations, continuations-in-part, substitutions, extensions, patentterm extensions and renewals thereof) and patent applications (including patents issued thereon) that are owned or Controlled by NANO as of theEffective Date or that claim or cover any Improvement; provided, however, that “Nano Patents” shall not include any Elan-Independent patents orpatent applications. A worldwide list of the current Nano Patents (including pending patent applications) is attached hereto as Exhibit A. This listwill be updated by NANO upon the reasonable request of JANSSEN. 1.26 “NanoCrystal Technology” shall mean the Nano Patents, the Nano Know-How and Improvements. 1.27 “NDA” shall mean (i) a New Drug Application and all supplements filed pursuant to the requirements of the FDA, including all documents, dataand other information concerning the Product which are necessary for or included in FDA approval to market a Product as more fully defined in 21.C.F.R. § 314.50 et seq., or (ii) any other similar application for marketing authorization filed with the appropriate regulatory authorities in any othercountry of the Territory. 5 Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted portions, which are marked with brackets [ ] andan asterisk*, have been separately filed with the Securities and Exchange Commission. 1.28 “Net Sales” shall mean, commencing with the First Commercial Sale of the Product in each country in the Territory, the aggregate of the grossinvoiced sales price for such Product sold or commercially disposed of for value by JANSSEN, its Affiliates or the Licensees, or any of theirdistributors, to Third Parties, after deduction of the following amounts: (a) all normal and customary trade and quantity discounts, allowances and rebates, including government rebates actually taken orallowed except that such discounts granted in consideration of a Third Party s agreement to purchase other products shall not be deducted; (b) credits or allowances given or made for rejection, recall or return of previously sold Product to the extent actually taken orallowed; (c) any tax or government charges, including any tax such as a value added or similar tax or government charge other than an incometax levied on the sale, transportation or delivery of the Product and borne by the seller thereof; and (d) any charges for freight and insurance that are documented as billed to the final customer. 1.29 “Phase I” shall mean (i) that portion of the FDA submission and approval process which provides for the first introduction into humans of theProduct with the purposes of determining human toxicity, metabolism, absorption, elimination and other pharmacological actions, as more fullydefined in 21 C.F.R. § 312.21(a), as well as (ii) equivalent submissions with similar requirements in other countries in the Territory. 1.30 “Phase II” shall mean (i) that portion of the FDA submission and approval process which provides for the initial trials of the Product on a limitednumber of patients for the purposes of determining dose and evaluating safety and efficacy in the proposed therapeutic indication as more fullydefined in 21 C.F.R. § 312.21(b), as well as (ii) equivalent submissions with similar requirements in other countries in the Territory. 1.31 “Phase III” shall mean (i) that portion of the FDA submission and approval process which provides for the continued trials of Product on sufficientnumbers of patients to generate safety, efficacy and pharmacoeconomic data to support regulatory approval in the proposed therapeutic indication asmore fully defined in 21 C.F.R. § 312.21(c), as well as (ii) equivalent submissions with similar requirements in other countries in the Territory. 6 Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted portions, which are marked with brackets [ ] andan asterisk*, have been separately filed with the Securities and Exchange Commission. 1.32 “Product” shall mean a Sterile, injectable pharmaceutical product containing Compound that (i) utilizes or is prepared using Nano Know-How orany Improvement , and/or (ii) is covered by a Selection Patent and/or (iii) would infringe any of the Nano Patents but for the licenses grantedhereunder. 1.33 “Selection Patents” shall mean all patents (including all additions, divisions, continuations, continuations-in-part, substitutions, extensions, patentterm extensions and renewals thereof) and patent applications (including patents issued thereon) that (i) claim findings or inventions made orconceived by JANSSEN or NANO (or any of their Affiliates) as a consequence of activities conducted or information disclosed under thisAgreement or the Feasibility Agreement; and (ii) are directed to methods of preparing, purifying, characterizing, stabilizing, processing, formulatingor delivering small particles of Compound or Product. A worldwide list of the current Selection Patents (including pending patent applications) isattached hereto as Exhibit B. This list will be updated by JANSSEN at the reasonable request of NANO. 1.34 “Sterile” shall mean meeting the criteria of sterility as defined in the current United States Pharmacopeia. 1.35 “Territory” shall mean all countries of the world. 1.36 “Third Party” shall mean any person, corporation, unincorporated body, or other entity other than JANSSEN, NANO and their respectiveAffiliates and/or Licensees. 1.37 “Valid Claim” shall mean a claim in a patent that has not lapsed or become abandoned and that has not been declared invalid by an unreversed or anunappealable decision of a court of competent jurisdiction. ARTICLE 2 - LICENSE GRANT 2.1 NANO grants to JANSSEN a worldwide, exclusive license under the NanoCrystal Technology for the sole purpose of developing, havingdeveloped, making, having made, using, marketing, selling, having sold and distributing Product in the Territory, subject to the terms andconditions set forth in this Agreement, including the provisions of Article 9. 2.2 The rights and licenses granted hereunder shall be sublicensable by JANSSEN to Licensees in any country in the Territory, subject to the terms andconditions set forth in this Agreement, including the provisions of Article 9; provided, however, that no Licensee shall be permitted to sublicense anylicense granted to such sublicensee. 7 Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted portions, which are marked with brackets [ ] andan asterisk*, have been separately filed with the Securities and Exchange Commission. 2.3 JANSSEN may develop, make and/or sell Product through its Affiliates in any country in the Territory or grant sublicenses to its Affiliates in anycountry of the Territory, subject to the terms and conditions set forth in this Agreement, including the provisions of Article 9. 2.4 At the request of JANSSEN, NANO will extend the rights and licenses granted herein to an Affiliate of JANSSEN on a direct basis in any countryof the Territory, subject to the terms and conditions set forth in this Agreement, including the provisions of Article 9. 2.5 Notwithstanding the granting of a sublicense to a Licensee or an Affiliate, or a direct license to an Affiliate, JANSSEN shall remain directlyresponsible to NANO for all obligations of JANSSEN, its Affiliates and Licensees. 2.6 Nothing herein shall preclude JANSSEN and/or its Affiliates from utilizing distributors to promote and distribute the Product in any country of theTerritory. 2.7 In the event the JANSSEN would consider developing an oral formulation of the Product, the Parties will in good faith discuss the possibility andthe terms and conditions under which NANO would grant JANSSEN a license under the NanoCrystal Technology to develop, make and sell suchoral formulation and/or whether NANO would manufacture such oral formulation for JANSSEN. 2.8 Notwithstanding anything else herein to the contrary, in the event that JANSSEN’s development, manufacture, use, marketing, sale or distributionof Product in the Territory would infringe any patent that would be a Nano Patent but for the fact that it is an Elan-Independent patent (an “ElanPatent”), NANO hereby grants to JANSSEN, to the extent NANO is legally able to do so, a non-exclusive, royalty-free license under such ElanPatent for the sole purpose of developing, having developed, making, having made, using, marketing, selling, having sold and distributing suchProduct in the Territory, which license shall be subject to the provisions of Article 9. The provisions of Article 11 shall not apply to any ElanPatents licensed hereunder, and NANO shall have no obligation to transfer or disclose to JANSSEN any processes, techniques, formulas, data,methods, equipment designs, know-how, show-how or trade secrets associated with any Elan Patents licensed hereunder. Notwithstanding theabove, in the event NANO is legally not able to grant such a non-exclusive, royalty free license under any Elan Patent and is for similar reasons notable to grant a commitment not to sue under such Elan Patent in relation to the development, manufacture, use, marketing, sale or distribution ofProduct, then JANSSEN shall be entitled to deduct all costs incurred or payments made (including royalty payments) in relation to any allegedinfringement of such Elan Patent or settlement or other final disposition thereof, in accordance with the provisions of Section 11.1 8 Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted portions, which are marked with brackets [ ] andan asterisk*, have been separately filed with the Securities and Exchange Commission. ARTICLE 3 - DEVELOPMENT ACTIVITIES 3.1 The selection and development of Development Candidate(s) that are suitable for development into a Product for commercialization and approval ofthe development and final commercial formulation and specifications for the Product will be the sole responsibility of JANSSEN and JANSSENwill bear all costs and expenses related thereto. At any stage in the Development Program, it will be JANSSEN’s sole decision to evaluate whether theresults generated warrant the continuation of the Development Program with respect to a Development Candidate. 3.2 NANO will disclose to JANSSEN within a reasonable period of time the Nano Know-How and any Improvements that NANO believes arenecessary or useful in connection with the Development Program, based on the information, requests and reports provided to it by JANSSEN duringthe term of this Agreement. JANSSEN will disclose to NANO within a reasonable period of time any Improvements developed or invented duringthe term of this Agreement by JANSSEN or its Affiliates. 3.3 From the Effective Date hereof, JANSSEN will proceed with the development of the Development Candidate selected by JANSSEN, suchdevelopment already having been initiated under the terms of the Feasibility Agreement. 3.4 The activities to be undertaken in the course of the Development Program will be monitored by the Development Team. The Development Team shallreview and monitor the progress made during the Development Program and will discuss important milestone events. The Development Team will bechaired by JANSSEN. 3.5 Prior to NANO commencing supporting activities in relation to the Development Program, JANSSEN and NANO will agree on the specificactivities to be undertaken by NANO, including timelines and related budget and such timelines and budget will be attached to the DevelopmentPlan. JANSSEN acknowledges that in the event it requests additional support activities from NANO that are not contemplated under this Agreementor in the Development Plan, NANO may not be in a position to readily provide such support in view of other commitments NANO may have toThird Parties. In such event, JANSSEN and NANO will in good faith discuss how and within what timeframe such additional support activitiesmay be performed by NANO. In performing such support activities in relation to the Development Program, NANO will use reasonable efforts tocomply with its commitments, including the commitment to dedicate sufficient staff with adequate skills to such Development Program, as set forthin the 9 Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted portions, which are marked with brackets [ ] andan asterisk*, have been separately filed with the Securities and Exchange Commission. Development Plan and as agreed upon prior to the start of the Development Program. 3.6 If NANO’s development efforts include the use of a Third Party, NANO will, prior to appointing such Third Party, discuss with JANSSEN theactivities to be undertaken by such Third Party and the terms and conditions thereof. NANO will not proceed with such Third Party without theprior written approval of JANSSEN, which approval shall not be unreasonably withheld. 3.7 NANO will provide JANSSEN with regular written reports on the progress of the support activities to be undertaken by it under the DevelopmentProgram(s) and will create detailed descriptions of any methodologies, development formulations or processes directed to Development Candidates inorder to enable JANSSEN to prepare and file any regulatory filings in relation to the Product. 3.8 JANSSEN will provide NANO on a quarterly basis with written reports on the progress of activities undertaken by it relating to the DevelopmentProgram. JANSSEN agrees to use reasonable efforts, consistent with its normal business practices and in line with the efforts it devotes to projectsof similar sales and technical potential, to carry out the development activities directed to a Development Candidate with the aim of developing theProduct that can be commercialized. ARTICLE 4 - CLINICAL AND REGULATORY ACTIVITIES 4.1 JANSSEN will be responsible for planning and conducting, at its own cost and expense, Phase I, Phase II and Phase III clinical trials in connectionwith a Development Candidate. The protocols of any Phase I, Phase II or Phase III clinical trial directed to the Development Candidate will be solelydetermined by JANSSEN. JANSSEN shall keep NANO apprised on a quarterly basis of the progress of any such trials and any results thereof. Itwill be JANSSEN’s sole decision to evaluate whether the results of any clinical trial warrant the continuance of the Development Program withrespect to a given Development Candidate. 4.2 JANSSEN shall be responsible, at its own cost and expense, for the preparation and filing of any IND or any other regulatory approvals necessaryto start clinical trials with respect to a Development Candidate, and for compliance of such trials with the FDA’s IND and related requirements. NANO shall give JANSSEN such support as may be reasonably requested by JANSSEN in relation thereto, provided such requests are restrictedto the activities undertaken by NANO in accordance with the provisions of Section 3.5, or relate to requests raised by any regulatory 10 Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted portions, which are marked with brackets [ ] andan asterisk*, have been separately filed with the Securities and Exchange Commission. authorities in relation to the NanoCrystal Technology in general, as more fully described in Sections 4.7 and 4.8. 4.3 JANSSEN shall be responsible for and shall have exclusive authority for compiling the IRF, including the indications pursued therein, and for filingand obtaining NDA’s in any country in the Territory where JANSSEN decides to commercialize the Product. 4.4 Upon compilation of the IRF for the Product, JANSSEN shall use reasonable efforts consistent with its normal business practices and its overallbusiness strategy to apply for the necessary regulatory approvals in the Major Markets with respect to the Product, including regulatory approvalspertaining to pricing and reimbursement. JANSSEN will inform NANO promptly upon the filing of any application for regulatory approval, andany subsequent approval, in any Major Market and will furthermore keep NANO apprised on a quarterly basis of the filings and approvals outsidethe Major Markets. 4.5 All regulatory data pertaining to the Product and relating to any regulatory filing and/or approval, license or permit granted by a regulatory authorityin connection with the Product will be owned by JANSSEN; provided, however, that all Drug Master Files and other submissions filed by NANOwith respect to NanoCrystal Technology shall be owned by NANO. 4.6 NANO will provide JANSSEN with reasonable regulatory support related to NanoCrystal Technology in connection with the regulatory approvalsto be filed by JANSSEN and the compilation of the IRF of the Product. Amongst other things , NANO will (i) prepare all necessary supportingdocumentation related to NANO’s activities under the Development Plan requested by JANSSEN, such as certificates or other administrativedocuments required for reference in any regulatory filing, and (ii) issue a letter of authorization to the FDA permitting the FDA to reference NANO’srelevant drug master files in reviewing applications for regulatory approval of Product. NANO will further assist JANSSEN with the preparation ofsupporting data related to the NanoCrystal Technology to allow JANSSEN to apply for and pursue the regulatory approvals in any country whereJANSSEN decides to register Product. JANSSEN will keep NANO informed in connection with questions raised by regulatory authoritiesspecifically related to the NanoCrystal Technology and NANO will assist JANSSEN whenever such regulatory questions or issues arise during thereview process in any country. JANSSEN may reasonably request NANO to participate in critical meetings scheduled with the health authorities inrelation to requests raised by such authorities with respect to the NanoCrystal Technology. 4.7 During the term of this Agreement NANO will promptly inform JANSSEN of any information or finding (including questions or remarks raised byregulatory 11 Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted portions, which are marked with brackets [ ] andan asterisk*, have been separately filed with the Securities and Exchange Commission. authorities) in relation to the NanoCrystal Technology that NANO believes or has reason to believe may have a regulatory bearing on the furthermaking or commercialization of the Product in accordance with the regulatory approvals in any country in the Territory. In addition, NANO willprovide JANSSEN with reasonable assistance whenever questions specifically related to the NanoCrystal Technology are raised by regulatoryauthorities during the review process in any country in the Territory, which assistance shall include participation in critical meetings scheduled withhealth authorities in any such country. 4.8 Each party shall promptly inform the other of any actions, questions or remarks raised by regulatory authorities in relation to the NanoCrystalTechnology, or the use thereof with respect to the Product. In addition, JANSSEN will report and cause its Affiliates and Licensees to report toNANO, and NANO will report and cause its Affiliates to report to JANSSEN, all information concerning any known or suspected side effect,injury, toxicity, sensitivity reaction, customer complaint, alleged defect or other adverse experience (including the severity thereof) associated withexposure to or use of Compound or Product that is alleged, believed or suspected to be attributable to the application of NanoCrystal technology toCompound or Product. JANSSEN shall be responsible for reporting adverse experiences with respect to Product to the FDA in conformity withapplicable laws and regulations. Each party shall promptly inform the other of any threatened or pending actions by the FDA or any other regulatoryauthority concerning Product or NanoCrystal Technology. 4.9 Any regulatory support provided by NANO under this Article 4 shall be provided free of charge; provided, however, that JANSSEN shallreimburse NANO for (i) all out-of-pocket expenses NANO or its Affiliates incur in relation to any activities requested by JANSSEN, and (ii) anyextraordinary activities requested by JANSSEN, including, without limitation, attending any meetings with regulatory authorities concerning theProduct. ARTICLE 5 - PAYMENTS 5.1 In consideration of the rights and licenses granted to JANSSEN under Article 2 of this Agreement, JANSSEN shall pay to NANO the followingamounts: (a) the non-refundable sum of [*] due and payable upon the Effective Date of this Agreement; (b) in connection with Development Candidates and Product the following sums: 12 Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted portions, which are marked with brackets [ ] andan asterisk*, have been separately filed with the Securities and Exchange Commission. (i) the sum of [*] payable within thirty (30) days of the date a Development Candidate is first administered to six(6) human subjects; (ii) the sum of [*] payable within thirty (30) days of the date the first IND for a Development Candidate is filed; (iii) the sum of [*] payable within thirty (30) days of JANSSEN’s commencement of the first Phase III clinicaltrial of a Development Candidate; (iv) the sum of [*] payable within thirty (30) days of the date the first NDA for the Product is submitted in aMajor Market; and (v) the sum of [*] payable within thirty (30) days following the date the first NDA for the Product is approved ina Major Market. 5.2 The milestone payments due under Section 5.1(b) shall only be paid once by JANSSEN. NANO will send valid VAT invoices to JANSSEN inrelation to all milestone payments payable under this Agreement. ARTICLE 6 - ROYALTIES 6.1 In consideration of the rights and licenses granted under the NanoCrystal Technology, JANSSEN shall pay a royalty of one and one-half percent (11/2%) on the Net Sales of Products in all countries of Territory where Nano Patents or Selection Patents containing Valid Claims are filed or subsist(hereinafter “Patent Royalty”). 6.2 In further consideration of the rights and licenses under the NanoCrystal Technology, JANSSEN shall pay on its annual Net Sales in Territory aroyalty in accordance with the following brackets (hereinafter “Know How Royalty”): (a) three and one-half percent (3 1/2%) on aggregate Net Sales below 250,000,000 Dollars; (b) five and one-half percent (5 1/2%) on aggregate Net Sales between 250,000,000 Dollars and 500,000,000 Dollars; and (c) seven and one-half percent (7 1/2%) on aggregate Net Sales above 500,000,000 Dollars. 13 Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted portions, which are marked with brackets [ ] andan asterisk*, have been separately filed with the Securities and Exchange Commission. 6.3 With respect to each country in the Territory, JANSSEN shall pay the Patent Royalties until expiration of the last to expire of the Nano Patents andthe Selection Patents that are applicable in such country; provided, however, that any Nano Patent or Selection Patent consisting of a patentapplication pending for more than five (5) years after the Effective Date shall no longer be considered a Nano Patent or a Selection Patent, asapplicable, until such time as the patent on such application issues. 6.4 With respect to each country in the Territory, JANSSEN shall pay the Know-How Royalties until the later of (i) fifteen (15) years following the FirstCommercial Sale in such country, or (ii) twenty (20) years following the Effective Date. The sales in any country where the Know-How Royalties areno longer due in accordance with the above provisions shall not be used in the computation of the aggregate Net Sales in accordance with Section 6.2. 6.5 If in a country a Third Party (other than a Person acting on behalf of or through a license from JANSSEN or any of its Affiliates) is selling aproduct in such a manner sufficient to achieve Competition, the Know-How Royalties for sales of the Product with respect to which Competitionexists shall be reduced by fifty percent (50%) in such country (i.e., only fifty percent (50%) of the sales of such Product in such country shall beconsidered in calculating the aggregate Net Sales in accordance with Section 6.2), until such time as there is a discontinuance of Competition. Notwithstanding the foregoing, no such reduction of the Know-How Royalties shall apply in the event such Competition has caused any party heretoto take action under Section 11.2 against such Third Party; provided, however, that the reduction of the Know-How Royalties set forth inSection 11.2(g) shall be applied if Competition is caused by an infringement of Product and such infringement is not overcome within one hundredtwenty (120) days following NANO’s receipt of JANSSEN’s written notice evidencing a prima facie case of infringement. ARTICLE 7 - ROYALTY PAYMENTS, REPORTS AND RECORDS 7.1 JANSSEN shall keep and shall cause its Affiliates and Licensees to keep, and to maintain for at least two years, true and accurate records of salesof Product and Net Sales and the royalties payable to NANO under Article 6 hereof and shall deliver to NANO a written statement thereof on orbefore the sixtieth (60th) day following the end of each calendar quarter (or any part thereof in the first or last calendar quarter of this Agreement) forsuch calendar quarter. Said written statements shall set forth on a country-by-country basis, a calculation of the Net Sales from gross revenues forthe Product during that calendar quarter, the applicable percentage royalty rates, and a computation of the royalties due to 14 Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted portions, which are marked with brackets [ ] andan asterisk*, have been separately filed with the Securities and Exchange Commission. NANO (the “Royalty Statement”). Upon NANO’s receipt of each Royalty Statement from JANSSEN, NANO will send valid VAT invoices toJANSSEN confirming the royalties due and payable by JANSSEN under this Agreement. 7.2 All royalty payments to be made by JANSSEN to NANO shall be converted into Dollars at the average rate of exchange for the calendar quarter forwhich royalty payments are being remitted according to JANSSEN’s normal procedures, as consistently applied by JANSSEN for its otherproducts (which procedures shall be subject to NANO’s review and approval, such approval not to be unreasonably withheld), and shall be madeby wire transfer to a designated NANO account on or before the sixtieth (60th) day following the end of each JANSSEN accounting quarter. In theevent that royalties are payable with respect to Net Sales in a country whose currency cannot be freely converted to Dollars, such currency shall beconverted in accordance with the normal procedures consistently applied by JANSSEN (which procedures shall be subject to NANO’s review andapproval, such approval not to be unreasonably withheld). 7.3 Any income or other taxes which JANSSEN is required by law to pay or withhold on behalf of NANO with respect to royalties and any othermonies payable to NANO under this Agreement shall be deducted from the amount of such royalties and monies due. JANSSEN shall furnishNANO with proof of such payments. Any such tax required to be paid or withheld shall be an expense of and borne solely by NANO. JANSSENshall promptly provide NANO with a certificate or other documentary evidence to enable NANO to support a claim for a refund or a foreign taxcredit with respect to any such tax so withheld or deducted by JANSSEN. The parties hereto will reasonably cooperate in completing and filingdocuments required under the provisions of any applicable tax treaty or under any other applicable law, in order to enable JANSSEN to make suchpayments to NANO without any deduction or withholding. 7.4 NANO shall have the right to nominate an independent certified public accountant acceptable to and approved by JANSSEN who shall haveaccess, on reasonable notice, to JANSSEN and its Affiliates’ or Licensees’ records during reasonable business hours for the purpose of verifying theroyalties payable as provided in this Agreement for the two preceding years. This right may not be exercised more than once in any calendar year,and once a calendar year is audited it may not be reaudited, and said accountant shall disclose to NANO only information relating solely to theaccuracy of the Royalty Statements provided to NANO and the royalty payments made to NANO under this Agreement. 7.5 Any adjustment required as a result of an audit conducted under Section 7.4 shall be made within twenty-five (25) days after the date on which theaccountant conducting the audit issues a written report to NANO and JANSSEN containing the results of the audit. Any underpayment byJANSSEN shall bear interest from 15 Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted portions, which are marked with brackets [ ] andan asterisk*, have been separately filed with the Securities and Exchange Commission. the date that such amount should have been paid to NANO as royalties to the date that the underpayment is actually paid to NANO by JANSSEN. The interest rate shall be the prime interest rate published in the Wall Street Journal at the close of business on the day prior to the date theunderpayment is made, plus two percent (2%). In addition, if any underpayment by JANSSEN is greater than five percent (5%) of the amountpreviously paid to NANO for the relevant period, the costs and expenses of the audit shall be paid for by JANSSEN. 7.6 All payments due hereunder shall be made to the designated bank account of EPIL in accordance with such timely written instructions as NANOshall from time to time provide. 7.7 Each payment due from JANSSEN to NANO under this Agreement shall bear interest from the due date of such payment at the prime ratepublished in the Wall Street Journal on the due date for such payment plus two percent (2%), provided JANSSEN does not make such paymentwithin thirty (30) days following the due date for such payment. ARTICLE 8 - COMMERCIALIZATION 8.1 All business decisions, including, but not limited to, decisions concerning pricing, reimbursement, package design, sales and promotional activitiesfor the Product, and the decision to launch or continue to market the Product in particular countries in the Territory, shall be within the solediscretion of JANSSEN. Notwithstanding the foregoing sentence, JANSSEN agrees to make a First Commercial Sale of the Product in each of theMajor Markets within nine (9) months after obtaining the necessary regulatory approvals, including approvals concerning acceptable pricing andreimbursement, if applicable, in such Major Market. Said nine (9) month period will be extended, but not by more than six (6) months, uponJANSSEN’s reasonable request for sound business reasons, including, but not limited to, the launch by JANSSEN, its Affiliates or Licensees ofother products that do not directly compete with the Product in the Major Markets, or the intended simultaneous launch of the Product in severalcountries. 8.2 JANSSEN will promptly inform NANO of the First Commercial Sale of the Product in each of the Major Markets and will provide NANO withcalendar quarterly updates on the First Commercial Sales of the Product in other countries. 8.3 All trademarks utilized by JANSSEN or its Affiliates or Licensees on Product under this Agreement shall be chosen and owned by JANSSEN or itsAffiliates or Licensees. Upon termination of this Agreement under Article 14 or Article 15, all rights to said trademarks shall remain withJANSSEN or its Affiliates or Licensees. Notwithstanding the foregoing, JANSSEN shall not use the terms 16 Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted portions, which are marked with brackets [ ] andan asterisk*, have been separately filed with the Securities and Exchange Commission. “nano”, “nanosystem” or “nanocrystal”, or any terms derived therefrom, in any trademark used by JANSSEN for any purpose without the priorwritten approval of NANO. ARTICLE 9 - MANUFACTURING AND SUPPLY 9.1 JANSSEN shall have the right to make or have made Products, but the latter subject to the provisions herein concerning JANSSEN’s obligationswith respect to Highly Confidential Information. In order to enable JANSSEN to so manufacture or have manufactured Products, NANO will, uponJANSSEN’s reasonable request and subject to the terms and conditions herein, provide JANSSEN with all NanoCrystal Technology reasonablynecessary in order to enable JANSSEN to commercially manufacture Product in accordance with the specifications for manufacture set forth in theIRF and as communicated by JANSSEN to NANO. 9.2 JANSSEN shall not sublicense or disclose any Highly Confidential Information to any party, including without limitation its Affiliates andLicensees, without the prior written consent of NANO, such consent not to be unreasonably withheld. Notwithstanding the foregoing, JANSSENmay, without such prior written consent, sublicense and disclose Highly Confidential Information (subject to the limitations set forth in Article 12) toa maximum of two of its Affiliates for the sole purpose of enabling such Affiliates to manufacture Product in accordance with the terms andconditions set forth herein. 9.3 In the event that, pursuant to the terms and conditions of this Agreement, JANSSEN or one of its Affiliates seeks to manufacture Product hereunder,NANO shall supply the polymeric grinding media, if any, required for such manufacture, in accordance with reasonable commercial terms to benegotiated in good faith between the parties. 9.4 JANSSEN hereby agrees to manufacture Product, and to cause all of its Affiliates permitted hereunder to manufacture Product, in conformity withall applicable laws, regulations and regulatory filings and in accordance with generally accepted standards and practices for such activities in thepharmaceutical industry. ARTICLE 10 - RIGHTS IN TECHNOLOGY, INVENTIONS AND PATENTS 10.1 NANO agrees to use its good faith efforts to continue, at its sole cost and expense, the prosecution and maintenance of the Nano Patents listed inExhibit A. Prosecution of pending patent applications, shall mean through final patent office appeal and any opposition proceedings or the like,including but not limited to, re- 17 Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted portions, which are marked with brackets [ ] andan asterisk*, have been separately filed with the Securities and Exchange Commission. issue applications and re-examination proceedings in the United States and any foreign counterparts thereto. Upon either party’s request, but notmore frequently than once per year, the parties shall in good faith review the patents and patent applications set forth in Exhibit A. If both partiesagree, the prosecution of any patent applications and/or maintenance of any patents may be abandoned. 10.2 Whenever any findings or inventions made or discovered during the course of the Development Program, or as a consequence of activities conductedunder this Agreement or the Feasibility Agreement, are deemed patentable, both Parties will promptly inform each other thereof and ownership andfiling of any patent applications related thereto will be done in accordance with the following principles: (a) NANO shall own and shall have the right to apply for and maintain patents at its own cost with respect to findings or inventionsthat are Improvements but that are not useful with respect to Compound and/or Product, irrespective whether such inventions or findingswere made or discovered solely or jointly by employees of NANO and/or JANSSEN. (b) JANSSEN shall own and shall have the right to apply for and maintain patents at its own cost with respect to findings orinventions that are useful solely with respect to Compound and/or Product, irrespective whether such inventions or findings were made ordiscovered solely or jointly by employees of JANSSEN and/or NANO. Each such patent shall be a Janssen Patent or a Selection Patent asthe case may be. (c) With respect to any finding or invention not covered by (a) or (b) above, irrespective whether such inventions or findings weremade or discovered solely or jointly by employees of JANSSEN and/or NANO, the parties shall in good faith evaluate the possibility ofsimultaneously applying for separate patent applications and of separately maintaining any patents issuing thereon. Should the partiesagree that separate patent applications are feasible and appropriate, (i) the claims of any such patent applications filed by JANSSEN shallbe limited to Compound or Product, and any patents issuing thereon shall be deemed Janssen Patents or Selection Patents as the case maybe; and (ii) the claims of any such patent applications filed by NANO shall specifically exclude Compound or Product. (d) In the event either party is of the reasonable opinion that the filing of separate applications is not feasible or appropriate,(i) NANO shall own and have the right to apply for and maintain patents with respect to findings or inventions that are Improvements(which shall be included within NanoCrystal Technology and covered by the license grant to 18 Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted portions, which are marked with brackets [ ] andan asterisk*, have been separately filed with the Securities and Exchange Commission. JANSSEN under Article 2); and (ii) JANSSEN shall own and have the right to apply for and maintain patents with respect to otherfindings and inventions, and the patents on such other findings and inventions shall be deemed Janssen Patents and/or Selection Patents asthe case may be. 10.3 Each of JANSSEN and NANO shall provide prompt notice to the other of all findings and inventions covered under Section 10.2, and shall consultand cooperate with the other in good faith with respect to the filing of patent applications for findings and inventions covered under Section 10.2 andthe maintenance of patents issued thereon including, without limitation, by executing and obtaining from employees and other Persons allassignments and other documents reasonably required in connection therewith. In addition, prior to filing any simultaneous patent applicationsunder Section 10.2(c), each of JANSSEN and NANO shall provide the other with reasonable opportunity to comment on the proposed text of suchapplications and shall give due consideration to any comments received from the other concerning such applications; provided, however, thatJANSSEN and its Affiliates shall not include any Highly Confidential Information in any patent applications they file hereunder without the priorwritten consent of NANO. 10.4 The parties agree to cooperate in order to avoid loss of any rights which may otherwise be available to the parties under the U.S. Drug PriceCompetition and Patent Term Restoration Act of 1984, the Supplementary Certificate of Protection of the Member States of the European Communityand other similar measures in any other country in the Territory. Without limiting the foregoing, each of JANSSEN and NANO agrees to providethe other with reasonable information and assistance in order to permit the timely filing of an application for patent term extension within the sixty(60) day period following NDA approval to market Product in the United States. Upon similar approvals by the health authorities in a country of theEuropean Community or in other countries in the Territory, each party shall provide the other with reasonable information and assistance in order topermit the timely filing of a Supplementary Certificate of Protection of the Member States of the European Community and related filings. ARTICLE 11 - INFRINGEMENT 11.1 If, as a result of the use of the NanoCrystal Technology in the manufacture, use or sale of the Product in any country of the Territory, JANSSENand/or its Affiliate or Licensee is sued for patent infringement or threatened with such a lawsuit or other action by a Third Party, JANSSEN andNANO shall meet to analyze the infringement claim and the avoidance of same. If it is necessary in the judgment of JANSSEN to obtain a licensefrom such Third Party with respect to such Product, and JANSSEN obtains an written opinion from outside counsel 19 Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted portions, which are marked with brackets [ ] andan asterisk*, have been separately filed with the Securities and Exchange Commission. concurring with JANSSEN’s judgment that such a license is necessary, JANSSEN, with NANO’s reasonable assistance, may negotiate for such alicense and in such negotiations shall make every effort to minimize any license fees and/or royalties payable to such Third Party. (a) If the settlement or other resolution of a lawsuit or threatened lawsuit or other action requires any payments for pre-settlement or pre-litigation resolution damages to a Third Party, including but not limited to royalty payments for past sales of an allegedly infringingProduct in a country, then JANSSEN, its Affiliates and Licensees on the one hand and NANO on the other hand shall [*]. (b) For any required royalty payments on post-settlement or post-litigation sales of the allegedly infringing Product in a country, JANSSENand/or its Affiliates or Licensees, but not NANO, shall [*]. (c) The [*] due and payable to NANO under this Section 11.1 shall only apply to the extent that the infringement is due to the use ofNanoCrystal Technology in such Product and is not the result of (i) a modification of the nanoparticle formulation or nanoparticlemanufacturing process of such Product, or (ii) refusal by JANSSEN to modify the Product to avoid infringement, unless JANSSENshows that its manufacturing and regulatory costs to so avoid infringement would be commercially unreasonable. In the event that inconnection with (ii) above, the parties fail to agree on whether such costs are commercially unreasonable, such matter shall be resolved inaccordance with the provisions of Article 20. (d) In the event that JANSSEN manufactures Product using a manufacturing process that does not utilize the NanoCrystal Technology andsuch manufacturing process is alleged by a Third Party to infringe certain patented technology of such Third Party, and JANSSENdemonstrates to NANO’s reasonable satisfaction that JANSSEN is required to obtain a royalty-bearing license from a Third Party to usesuch Third Party’s patented technology to manufacture Product, [*]. 11.2 In the event that in any country in the Territory in which JANSSEN, its Affiliates or Licensees are marketing the Product, there is an infringementof a Nano Patent by a Third Party’s product, JANSSEN or its Affiliates shall notify NANO in writing to that effect, including with said writtennotice evidence establishing a prima facie case of infringement by such Third Party. In the event of a potential multicountry infringement by thesame Third Party with the same infringing product, the parties will promptly discuss the possible strategies to deal with such infringement on aglobal basis prior to deciding on a course of action in a single 20 Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted portions, which are marked with brackets [ ] andan asterisk*, have been separately filed with the Securities and Exchange Commission. country, taking into consideration the conditions set forth hereinafter as well as the potential scope of the infringement and the countries involved. (a) NANO shall have the right at its sole discretion to take action to stop such infringement, including without limitation conducting patentinfringement proceedings or starting settlement discussions. NANO shall bear all the costs and expenses of any suit brought by it. JANSSEN and/or its Affiliate or Licensee will cooperate with NANO in any such suit and shall have the right to consult with NANO andbe represented by its own counsel at its own expense. NANO’s failure to take action under this Article shall not be considered a breach ofthis Agreement and JANSSEN’s sole remedy shall be to bring suit itself, subject to the terms and conditions of this Section 11.2. (b) If, within forty (40) days after NANO’s receipt of JANSSEN’s written notice evidencing a prima facie case of infringement, NANO hasnot overcome the case of infringement, obtained a discontinuance of such infringement, brought suit against the Third Party infringer, ortaken steps to initiate such a suit, JANSSEN shall have the right, in its sole discretion, but not the obligation to bring such suit against theinfringer, subject to the conditions set forth below, at its own expense and in its own name, if legally permissible. If necessary and legallypermissible, NANO will permit the suit to be brought in its name. JANSSEN shall bear all the costs and expenses of any suit brought byit. NANO will cooperate with JANSSEN in any such suit and shall have the right to consult with JANSSEN and be represented by itsown counsel at its own expense. (c) JANSSEN’s right to bring suit in a country in accordance with the above provisions in connection with Nano Patents is subject to [*]. Ifthe parties disagree on whether the above conditions are satisfied in any specific case of infringement, the matter will be submitted fordecision to an independent patent counsel selected in common agreement by JANSSEN and NANO, and the parties agree to abide by thedecision of such patent counsel with respect to such conditions. (d) Notwithstanding the opinion of an independent patent counsel that the conditions in (c) above are satisfied, NANO shall have the right towithhold its consent to JANSSEN bringing suit against the Third Party infringer. [*] (e) [*] (f) Any damages, costs, awards, settlement amounts or other sums received by the party bringing suit arising out of any proceedings forinfringement 21 Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted portions, which are marked with brackets [ ] andan asterisk*, have been separately filed with the Securities and Exchange Commission. of the Nano Patents shall be retained by such party. Notwithstanding the foregoing, whenever the party bringing suit is JANSSEN, thedamages, costs, awards, settlement amounts and other sums shall be divided as follows: (i) JANSSEN shall be entitled to its out of pocket expenses actually incurred by JANSSEN or its designatedAffiliate in respect of the proceedings for infringement of the Nano Patents insofar as such expenses have not already beendeducted from the royalties payable to NANO pursuant to (e) above; (ii) NANO shall be entitled to a sum equal to any royalties withheld pursuant to (e) above; and (iii) JANSSEN and NANO shall equally share the remainder. (g) If, within one hundred twenty (120) days after NANO’s receipt of JANSSEN’s written notice [*], the infringement has not been overcomeby either JANSSEN or NANO, and a Third Party’s (other than a Person acting on behalf of or through a license from JANSSEN or anyof its Affiliates) sales of the infringing product are or become sufficient to create Competition, then the Patent Royalties and the Know-HowRoyalties for sales of the Product being infringed shall each [*] in the country where the infringement is occurring, irrespective of whetherNANO or JANSSEN taking action against such infringer in accordance with the provisions of this Section 11.2, until such time as thereis a discontinuance of such Competition. The provisions of this subsection (g) shall not apply whenever the royalties due to NANO [*] inaccordance with the conditions set forth in (d) above and the provisions of (d) shall apply to such reduction. 11.3 In the event of any infringement of a Janssen Patent by a Third Party, JANSSEN shall have the right at its sole discretion to take action to stop suchinfringement, including without limitation conducting patent infringement proceedings or starting settlement discussions. JANSSEN shall bear allthe costs and expenses in connection with any such proceedings and discussions. 11.4 As of the Effective Date of this Agreement NANO declares that, according to the best of its current knowledge and belief, the application of the NanoPatents and Nano Know-How to the Compound does not infringe the patent rights of any Third Party in any country in the Territory. 22 Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted portions, which are marked with brackets [ ] andan asterisk*, have been separately filed with the Securities and Exchange Commission. ARTICLE 12 - CONFIDENTIALITY 12.1 During the performance of this Agreement, either party will disclose to the other party information which the disclosing party considers to beconfidential. This information may include, without limitation, any data, information, know-how and materials which in the case of JANSSENrelates to Compound and/or Product and which in the case of NANO relates to NanoCrystal Technology, including information which is discoveredby or brought to the attention of any party hereto during or as a result of, directly or indirectly, the performance of the Agreement (“Information”). 12.2 For purposes of this Agreement, each party hereto is a “Submitter” as to Information or Highly Confidential Information disclosed or provided by itunder this Agreement and each is a “Recipient” as to Information or Highly Confidential Information disclosed or provided to it under this Agreement. 12.3 The confidentiality obligations contained herein shall not apply to any portion of the Information or Highly Confidential Information which: (a) is or becomes public or available to the general public otherwise than through the act or default of Recipient or any AuthorizedParty (as defined below); (b) is obtained by Recipient from a Third Party who is lawfully in possession of such Information and is not subject to an obligationof confidentiality or non-use owed to Submitter; (c) is previously known to Recipient prior to disclosure to Recipient by Submitter, as evidenced by the written records of Recipient; (d) is independently developed, discovered or arrived at by Recipient without use of the Information, as evidenced by written recordsof Recipient; or (e) is disclosed by Recipient pursuant to a requirement of law, including without limitation to governmental regulatory agencies, andis thereafter publicly disclosed or made available to the public by operation of law, provided that Recipient has complied with theprovisions set forth in Section 12.9. The Recipient shall have the burden of proof as to the existence of any of the conditions under (a) through (e) above. In addition, independentdevelopment, discovery or arrival at data, information, know-how or materials under (d) above must be established by clear and convincingevidence . 23 Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted portions, which are marked with brackets [ ] andan asterisk*, have been separately filed with the Securities and Exchange Commission. 12.4 Recipient shall employ at least the same degree of care to keep all Information confidential as it employs with respect to its own information of likeimportance; and shall, in any event, take all steps reasonably necessary to maintain and preserve the confidentiality of all Information. 12.5 Information will only be submitted to Recipient’s employees or employees of Recipient’s Affiliates and Licensees on a need to know basis. Withoutthe prior written consent of the Submitter, Recipient shall not disclose any Information to any Third Party, Affiliate or Licensee, except to those whoneed to know such Information to achieve the purpose of this Agreement. Each such Third Party, Affiliate and Licensee, being referred to herein asan “Authorized Party,” and Recipient, including, without limitation, its representatives, agents and employees, shall use the Information only inaccordance with the terms and conditions of this Agreement. 12.6 Recipient warrants that each Authorized Party or employee to whom any Information is revealed shall (i) previously have been informed of theconfidential nature of the Information and (ii) will prior to any disclosure have agreed to be bound by terms and conditions of (A) a written secrecyagreement with Recipient to protect Recipient’s information whenever it concerns an employee, or (B) a written confidentiality agreement withRecipient containing terms and conditions substantially equivalent to those in this Article 12 applicable to Recipient whenever it concerns anAuthorized Party. Recipient shall ensure that the Information is not used or disclosed by such Authorized Party or employee except for the purposesof developing and manufacturing Product in accordance with this Agreement, and shall be responsible for any breach of this Agreement by suchAuthorized Party or employee. 12.7 All Information shall remain the property of Submitter. Upon termination of this Agreement and upon the written request of Submitter (i) all tangibleInformation (including without limitation all copies thereof and all unused samples), except for Information consisting of analyses, studies and otherdocuments prepared by or for the benefit of Recipient, shall be promptly returned to Submitter, and (ii) all portions of such analyses, studies andother documents prepared by or for the benefit of Recipient (including all copies thereof) which are within the definition of Information shall bedestroyed; provided that Recipient may retain one copy of Information in a secure location for purposes of identifying its obligations under thisAgreement and for no other purposes. 12.8 The obligations of Recipient as to confidentiality and non-use set forth in this Agreement, including, without limitation, the provisions ofSection 12.4, shall survive the expiration or termination of this Agreement and shall continue for five 24 Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted portions, which are marked with brackets [ ] andan asterisk*, have been separately filed with the Securities and Exchange Commission. (5) years thereafter, but in no event shall such confidentiality obligations terminate earlier than December 31, 2015. 12.9 If Recipient becomes legally required to disclose any Information, Recipient shall give Submitter prompt notice of such fact so that Submitter mayseek to obtain a protective order or other appropriate remedy concerning any such disclosure and/or waive compliance with the non-disclosureprovisions of this Agreement. Recipient shall fully cooperate with Submitter in connection with Submitter’s efforts to obtain any such order or otherremedy. If any such order or other remedy does not fully preclude disclosure, or if Submitter waives compliance with the non-disclosure provisionsof this Agreement, Recipient shall make such disclosure only to the extent that such disclosure is legally required. Any Information required to beprovided to regulatory authorities or other governmental agencies in connection with a regulatory filing in accordance with the terms of this Agreementin any country in the Territory shall be permitted and shall be exempt from the provisions of this Section 12.9; provided, however, that Recipientwill use efforts to see to it that such regulatory authorities or other governmental agencies treat such Information as confidential, which efforts shall beno less diligent than those Recipient uses to secure confidential treatment by regulatory authorities or other governmental agencies of Recipient’s own,similarly confidential and/or proprietary data, information, know-how and materials. Notwithstanding anything else contained herein, anydisclosure by JANSSEN of NANO Information to regulatory authorities or governmental agencies will be made in accordance with JANSSEN’snormal business practices as consistently applied to its other pharmaceutical products. 12.10 With respect to data concerning Product, including data contained in Information, NANO shall have the right to use and to disclose to Third Parties,with no financial obligation to JANSSEN, data related to Nano Crystal Technology; provided, however, that in any such disclosure NANO shallnot (i) disclose that such data is derived from Compound or Product, or (ii) identify, directly or indirectly, JANSSEN or the Compound. 12.11 The parties recognize the importance of publishing Information developed in clinical studies undertaken by JANSSEN or on behalf of JANSSENunder the provisions of this Agreement. Therefore, subject to NANO’s prior approval, which approval shall not be unreasonably withheld,JANSSEN shall have the right to publish such studies in furtherance of the purposes of this Agreement: provided however that such studies do notcontain any Highly Confidential Information. 12.12 With respect to Highly Confidential Information, JANSSEN and any Authorized Party to whom JANSSEN discloses Highly ConfidentialInformation, in addition to complying with the obligations set forth herein for Information, shall: 25 Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted portions, which are marked with brackets [ ] andan asterisk*, have been separately filed with the Securities and Exchange Commission. (a) disclose it only to employees on a need to know basis to the extent permitted hereunder; (b) treat it as confidential information and safeguard it against disclosure using strict standards and care as provided for in thisSection 12.12 to protect it from disclosure to those not authorized to receive it hereunder; (c) use it only in developing and manufacturing Products in accordance with the terms of this Agreement; (d) require any employee that will receive it to sign for receipt of a numbered copy of it, acknowledging also such employee’s receiptof the Statement attached hereto as Form 1; (e) not make copies of any documents embodying or containing it without the prior written authorization from NANO unless allcopies thereof are numbered, a record is maintained of the recipient of each said numbered copy, and such records are provided promptly toNANO upon request; (f) retain all documents embodying or containing it under lock, separate from JANSSEN’s other records and information and in thepersonal control of one employee of JANSSEN who shall be approved by NANO; (g) immediately notify NANO in writing in the event of any loss, theft or disclosure thereof; and (h) treat any modifications, advances, extensions, enhancements, or other changes to it made by JANSSEN or any Authorized Partyto whom it is disclosed by JANSSEN as Highly Confidential Information as provided hereunder in the same manner as and in accordancewith the provisions of this Agreement relating to Highly Confidential Information. ARTICLE 13 - TERM This Agreement shall become effective from the Effective Date and unless sooner terminated pursuant to any other provision of this Agreementcontinue in full force until the last to expire of the Nano Patents or Selection Patents, or for twenty (20) years from the Effective Date, whicheverresults in the longer period of time. 26 Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted portions, which are marked with brackets [ ] andan asterisk*, have been separately filed with the Securities and Exchange Commission. ARTICLE 14 - TERMINATION BY JANSSEN Notwithstanding any other provision herein, JANSSEN may terminate this Agreement with respect to the entire Territory or with respect to one ormore of the Major Markets upon three (3) months prior written notice to NANO. ARTICLE 15 - TERMINATION FOR CAUSE 15.1 In the event JANSSEN or NANO or their respective Affiliates and Licensees are in material breach of any of the respective obligations andconditions contained in this Agreement, the other party shall be entitled to give the party in breach notice requiring it to cure such material breach. Ifsuch material breach is not cured within ninety (90) days after receipt of such notice, the notifying party shall be entitled (without prejudice to any ofits other rights conferred on it by this Agreement) to terminate this Agreement by giving notice thereof to the party in breach, which notice shall takeeffect immediately. 15.2 If either party elects not to terminate this Agreement under Section 15.1 in the event of a material breach by the other party hereto, the non-breachingparty may seek a determination of damages for the breach from the breaching party by resorting to the dispute resolution procedures set forth inArticle 22. Upon a determination of such damages under Article 22, the non-breaching party may, to the extent possible, offset such damagesagainst such party’s payment obligations under this Agreement. Nothing herein shall prevent either party hereto from exercising such party’s right toobtain temporary or permanent injunctive relief or other equitable relief restraining the other party from engaging in conduct that would constitute abreach of Article 12 or Article 31. 15.3 In the event that one of the parties hereto becomes bankrupt or insolvent, a receiver or a trustee is appointed for the property or estate of such partyand said receiver or trustee is not removed within sixty (60) days, or the party makes an assignment for the benefit of its creditors, and whether anyof the aforesaid events be the outcome of the voluntary act of that party, or otherwise, the other party shall be entitled to terminate this Agreementforthwith by giving a written notice to the first party. ARTICLE 16 - RIGHTS AND OBLIGATIONS UPON TERMINATION 16.1 Upon the expiration of the term of this Agreement under Article 13, but not upon its earlier termination, JANSSEN’s license rights under Section 2.1shall become fully paid-up and shall thereafter remain royalty-free and irrevocable, but shall be non-exclusive. In addition, the provisions ofArticle 1, Sections 7.4, 7.5, 7.6 and 27 Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted portions, which are marked with brackets [ ] andan asterisk*, have been separately filed with the Securities and Exchange Commission. 7.7, Sections 10.2, 10.3 and 10.4, Article 12 (as indicated in Section 12.8), and Articles 16, 17, 18, 19, 20, 21, 22, 23, 24, 26, 27, 28, 29 and30 shall survive such expiration, and all payment obligations accruing under this Agreement prior to its expiration, including without limitation allpayment obligations accruing under Articles 5 and 6, shall survive such expiration. 16.2 In the event that this Agreement is terminated by JANSSEN in the entire Territory or in all Major Markets in accordance with Article 14, or by eitherparty pursuant to Article 15, the provisions of Article 1, Sections 7.4, 7.5, 7.6 and 7.7, Sections 10.2, 10.3 and 10.4, Article 12 (as indicated inSection 12.8), and Articles 16, 17, 18, 19, 20, 21, 22, 23, 24, , 26, 27, 28, 29, 30 and 31 (as indicated therein) shall survive such termination,and all payment obligations accruing under this Agreement prior to the effective date of termination, including without limitation all paymentobligations accruing under Articles 5 and 6, shall survive such termination. 16.3 Subject to the parties’ obligations under Article 21 and to the limitation of liability in Section 18.4, termination of this Agreement by either partyshall not prejudice the rights of such party under this Agreement to seek damages for any breach of this Agreement by the other party hereto. ARTICLE 17 - REPRESENTATIONS AND WARRANTIES 17.1 NANO represents and warrants to JANSSEN that: (a) The execution, delivery and performance of this Agreement by NANO does not conflict with any agreement, instrument orunderstanding, oral or written, to which it is a party or by which it may be bound, and does not violate any law or regulation of any court,governmental body or administrative or other agency having authority over it; (b) NANO is not currently a party to, and during the term of this Agreement will not enter into, any agreements, oral or written, thatare inconsistent with its obligations under this Agreement; (c) NANO is duly organized and validly existing under the laws of the state of its incorporation and has full legal power andauthority to enter into this Agreement; (d) To the best of NANO’s knowledge, all of the Nano Patents are subsisting and are valid and enforceable; 28 Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted portions, which are marked with brackets [ ] andan asterisk*, have been separately filed with the Securities and Exchange Commission. (e) NANO has not previously assigned, transferred, conveyed or otherwise encumbered its right, title and interest in Nano Patents orNano Know-How as they relate to Compound or Product; (f) NANO is the sole and exclusive owner or licensee of the Nano Patents and the Nano Know-How, all of which, to the best ofNANO’S knowledge, are free and clear of any liens, charges and encumbrances, and, except for NANO’s Affiliates, no other person,corporate or other private entity, or governmental entity or subdivision thereof has, or shall have, any claim of control with respect to theNano Patents and the Nano Know-How as they relate to Compound or Product; and (g) There are no claims, judgments or settlements against or owed by NANO pending or, to the knowledge of NANO, threatened,with respect to the Nano Patents and the Nano Know-How as they relate to Compound or Product. 17.2 JANSSEN represents and warrants to NANO that: (a) The execution, delivery and performance of this Agreement by JANSSEN does not conflict with any agreement, instrument orunderstanding, oral or written, to which it is a party or by which it may be bound, and does not violate any law or regulation of any court,governmental body or administrative or other agency having authority over it; (b) JANSSEN is not currently a party to, and during the term of this Agreement will not enter into, any agreements, oral or written,that are inconsistent with its obligations under this Agreement; (c) JANSSEN is duly organized and validly existing under the laws of the state of its incorporation and has full legal power andauthority to enter into this Agreement; (d) JANSSEN will not bind or purport to bind NANO to any affirmation, representation or warranty provided to any Third Partywith respect to the Compound or Product; and (e) To the best of JANSSEN’s actual knowledge on the Effective Date, there is no reason to believe that the Selection Patent listed onthe attached Exhibit B will not issue or will not be valid. 29 Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted portions, which are marked with brackets [ ] andan asterisk*, have been separately filed with the Securities and Exchange Commission. 17.3 THE LIMITED WARRANTIES CONTAINED IN THIS SECTION 17 ARE THE SOLE WARRANTIES GIVEN BY THE PARTIES AND AREMADE EXPRESSLY IN LIEU OF AND EXCLUDE ANY IMPLIED WARRANTIES OF MERCHANTABILITY, FITNESS FOR APARTICULAR PURPOSE, TITLE, INFRINGEMENT OR OTHERWISE, AND ALL OTHER EXPRESS OR IMPLIED REPRESENTATIONSAND WARRANTIES PROVIDED BY COMMON LAW, STATUTE OR OTHERWISE ARE HEREBY DISCLAIMED BY BOTH PARTIES. ARTICLE 18 - INDEMNIFICATION 18.1 Each party (the “Indemnifying Party”) shall indemnify, defend and hold the other party and its Affiliates, Licensees, employees, officers, directors,agents and consultants (each an “Indemnified Party”) harmless from, against and in respect of any damages, claims, losses, liabilities, charges,actions, suits, proceedings, penalties and reasonable costs and expenses (including without limitation reasonable attorneys’ fees) (collectively, the“Losses”) imposed on, sustained, incurred or suffered by or asserted against any Indemnified Party, to the extent such Losses are incurred in thedefense or settlement of a Third Party lawsuit or in a satisfaction of a Third Party judgment arising out of : (a) any injuries to person and/or damage to property resulting from negligent acts that the Indemnifying Party or its Affiliates,Licensees, employees, officers, directors, agents or consultants, performed or failed to perform in carrying out activities contemplatedunder this Agreement or any Development Program conducted hereunder, including the negligent failure by the Indemnifying Party toprovide the Indemnified Party with any Information known by Indemnifying Party that, if timely received, would have enabled theIndemnified Party to avoid such injuries or damage; and (b) personal injury to the Indemnified Party or damage to the Indemnified Party’s property resulting from negligence or intentionalmisconduct on the part of the Indemnifying Party or its Affiliates, Licensees, employees, officers, directors, agents and consultants incarrying out the activities contemplated by this Agreement; provided, however, that an Indemnified Party shall not be indemnified under this Section 18.1 to the extent that such party’s own negligence orintentional misconduct caused or contributed to the events giving rise to the claim for indemnification. 30 Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted portions, which are marked with brackets [ ] andan asterisk*, have been separately filed with the Securities and Exchange Commission. 18.2 JANSSEN shall indemnify, defend and hold NANO and its Affiliates, and each of their officers, directors, employees, agents and consultants(each a “NANO Indemnitee”) harmless from and against all Losses (other than those that are the subject of Section 18.1 hereof) arising out of orresulting from the use by or administration to any person of any Product sold or otherwise distributed by JANSSEN, its Affiliates or Licensees orany of their distributors, except to the extent such Losses arose or resulted from negligence or intentional misconduct on the part of NANO or itsAffiliates, Licensees, employees, officers, directors, agents or consultants in carrying out the activities contemplated by this Agreement, so long as(i) the NANO Indemnitee allows JANSSEN to participate in or, at JANSSEN’s sole option but without any obligation, to conduct at JANSSEN’sexpense the defense of the claim or action for which indemnification is sought under this Section 18.2, and (ii) the NANO Indemnitee does notcompromise or settle such claim or action without JANSSEN’s prior written consent, which shall not be unreasonably withheld. 18.3 NANO shall indemnify, defend and hold JANSSEN, its Affiliates and Licensees and each of their officers, directors, employees, agents andconsultants (each a “JANSSEN Indemnitee”) harmless from and against all Losses (other than those that are the subject of Section 18.1 hereof)arising out of or resulting from negligence or intentional misconduct on the part of NANO or its Affiliates, Licensees, employees, officers, directors,agents or consultants in carrying out the activities contemplated by this Agreement, so long as (i) the JANSSEN Indemnitee allows NANO toparticipate in or, at NANO’s sole option but without the obligation, to conduct at NANO’s expense the defense of the claim or action for whichindemnification is sought under this Section 18.3, and (ii) the JANSSEN Indemnitee does not compromise or settle such claim or action withoutNANO’s prior written consent, which shall not be unreasonably withheld. 18.4 IN NO EVENT SHALL ANY PARTY, OR SUCH PARTY’S DIRECTORS, OFFICERS, EMPLOYEES, AGENTS OR AFFILIATES, BELIABLE TO THE OTHER PARTY OR PARTIES HERETO FOR ANY CONSEQUENTIAL, INCIDENTAL, INDIRECT, SPECIAL,PUNITIVE OR EXEMPLARY DAMAGES, COSTS OR EXPENSES (INCLUDING, BUT NOT LIMITED TO, LOST PROFITS, LOSTREVENUES AND/OR LOST SAVINGS), WHETHER BASED UPON A CLAIM OR ACTION OF CONTRACT, WARRANTY,NEGLIGENCE, STRICT LIABILITY OR OTHERWISE, ARISING FROM A BREACH OR ALLEGED BREACH OF THIS AGREEMENT,EVEN IF SUCH OTHER PARTY OR PARTIES HAVE BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES. 31 Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted portions, which are marked with brackets [ ] andan asterisk*, have been separately filed with the Securities and Exchange Commission. ARTICLE 19 - CHOICE OF LAW The construction, validity and performance of this Agreement shall be governed in all respects by the laws of the State of New Jersey, without givingeffect to principles of conflict of laws. ARTICLE 20 - FORCE MAJEURE No failure or omission by the parties hereto in the performance of any obligation of this Agreement shall be deemed a breach of this Agreement norcreate any liability if the same shall arise from any cause or causes beyond the control of the parties, including but not limited to the followingwhich, for the purposes of this Agreement, shall be regarded as beyond the control of the party in question; act of God, acts or omissions of anygovernment or any rules, regulations or orders of any governmental authority or any officer, department, agency or instrument thereof; fire, storm,flood, earthquake, accident, acts of the public enemy, war, rebellion, insurrection, riot, invasion, strikes or lockouts. ARTICLE 21 - DISPUTE RESOLUTION 21.1 Any dispute, controversy or claim arising out of or relating to the validity, construction, enforceability or performance of this Agreement, includingdisputes relating to an alleged breach or to termination of this Agreement (hereinafter “Disputes”), but excluding (i) any dispute, controversy or claimarising out of or relating to the validity, enforceability, or infringement of any Janssen Patent or any Nano Patent and (ii) other disputes which areexpressly prohibited herein from being resolved by this mechanism, shall be settled by arbitration in the manner described below: (a) Before either party institutes arbitration proceedings in accordance with Section 21.2 with respect to any Dispute, executiveofficers of both parties shall meet in order to attempt to resolve such Dispute in a mutual acceptable manner. (b) In the event the negotiations do not result in a mutually acceptable resolution within a reasonably short period of time (not toexceed 30 days) or no meeting between the executive officers has occurred within 30 days following the notification of such Dispute, eitherparty shall have the right to institute arbitration proceedings. (c) If a party intends to begin an arbitration procedure to resolve a Dispute, such party shall provide written notice (the “ArbitrationRequest”) to the other party informing the other party of such intention and the issues to be resolved. From the date of the ArbitrationRequest and 32 Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted portions, which are marked with brackets [ ] andan asterisk*, have been separately filed with the Securities and Exchange Commission. until such time as any matter has been finally settled by Arbitration, the time periods provided for in Section 15.1 as to which a party mustcure a breach of this Agreement shall be suspended as to the subject matter of the Dispute. (d) Within fifteen (15) business days after receipt of the Arbitration Request, the other party may, by written notice to the partyinitiating the Arbitration, add additional issues to be resolved. (e) Nothing herein shall prohibit either party hereto from seeking or obtaining temporary injunctive relief pending resolution of anyDispute in accordance with the provisions of this Article 21. In addition, nothing herein shall prohibit (i) a party hereto that is sued by athird party from filing a third party complaint against the other party hereto, or (ii) a party hereto from preserving its rights as a creditor ofthe other party hereto in the event that such other party becomes insolvent, voluntary or involuntary bankruptcy proceedings are institutedby or against such other party, a receiver or custodian is appointed for such other party, such other party makes an assignment for thebenefit of its creditors, substantially all of the assets of such other party are seized or attached, such other party files for reorganization ordissolution, or such other person otherwise generally ceases to pay its debts when they become due. 21.2 The Arbitration shall be conducted in accordance with the Center For Public Resources Rules For Non-Administered Arbitration of BusinessDisputes, the arbitration proceeding shall be conducted in New York, New York. Notwithstanding those rules, the following provisions shall in anyevent apply to any issue submitted for arbitration hereunder. (a) The arbitration shall be conducted by a panel of three neutral arbitrators (“Panel”). One member shall be appointed by each partyand the third member shall be appointed by the two arbitrators appointed by the parties. The parties will select an arbitrator within fifteen(15) business days following the Arbitration request. The two arbitrators selected by the parties will appoint the third member within ten(10) days following their appointment. Notwithstanding the above and in the interest of obtaining a judgment within the shortest possible period in connection with (i) certaintechnical or developmental matters that require referral to independent experts or (ii) Disputes where the aggregate damages sought by theclaimant are stated to be less than [*] and neither party seeks equitable relief, the parties will appoint only one single neutral selected inagreement by both parties and 33 Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted portions, which are marked with brackets [ ] andan asterisk*, have been separately filed with the Securities and Exchange Commission. the provisions hereof shall apply mutatis mutandis to such single arbitrator. (b) The language to be used in the arbitration shall be English. (c) Any arbitrator selected by the parties may be of any nationality, and need not be a lawyer or hold any other professional status ormembership but will be selected on the basis of his or her qualifications and expertise with respect to the matter under Dispute. (d) The Panel shall resolve the Dispute on the basis of a written record consisting of an initial and rebuttal submission by each party(together with documentary evidence (including affidavits) supporting the positions taken in such submissions); provided that the Panelshall have the right to require the parties to make or participate in such other written or oral submissions, presentations, or examinations asthe Panel shall deem necessary for the proper resolution of the matter under arbitration, all of which shall be made or submitted directly tothe Panel and shall become part of the record in the proceeding. (e) The specific pleading schedule for each proceeding shall be determined by the parties in consultation with the Panel within fifteen(15) business days following the selection of the arbitrators. (f) Unless the parties otherwise agree at the time a particular issue is submitted for arbitration, the Panel shall be required as acondition to their engagement to agree to render a decision within thirty (30) days of the date on which the record in the proceeding iscompleted, but in no case more than one hundred and twenty (120) days after the date of their engagement. (g) The parties shall use their best efforts to schedule and make their submissions, and to take all other necessary actions inconnection with the proceeding, at a time and in a manner which will permit the Panel to render their decision in accordance with theschedule set forth herein. (h) All communications with the arbitrator(s) during the proceeding shall be made in writing, with a copy thereof deliveredsimultaneously to the other party to the proceeding, or if made orally, made only in the presence of the other party to the proceeding or itsrepresentative. (i) All decisions by the Panel shall be rendered by majority vote. The arbitration award or order shall be rendered in writing andshall be final and binding upon the parties. The arbitrator(s) hereunder (i) shall have no power or authority to grant or award punitivedamages and (ii) shall 34 Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted portions, which are marked with brackets [ ] andan asterisk*, have been separately filed with the Securities and Exchange Commission. establish and enforce appropriate rules to ensure that the arbitration proceedings, including the decisions, are kept confidential and that allconfidential and/or proprietary information of the parties is kept confidential and is used for no purpose other than for such arbitrationproceedings. (j) Judgment on any order or award shall be entered by any court of competent jurisdiction. (k) Each party shall bear its own expenses and attorney’s fees in connection with the arbitration. The fees and expenses of thearbitrator(s) shall be equally shared except that if, in the opinion of the arbitrators, any claim by a party hereto or any defense or objectionthereto by the other party was unreasonable and frivolous, the arbitrators may in their discretion assess as part of the award all or any partof the arbitration expenses of the other party (including reasonable attorney’s fees) and expenses of the arbitrators against the party raisingsuch unreasonable and frivolous claim, defense or objection. ARTICLE 22 - NOTICES Any notice required or permitted to be given under this Agreement shall be mailed by registered or certified air mail, postage prepaid, addressed to theparty to be notified at its address stated below, or at such other address as may hereafter be furnished in writing to the notifying party or by telefax tothe numbers set forth below or to such changed telefax numbers as may thereafter be furnished. If to NANO, EPILand/or EPRC:Elan Pharma International LimitedLincoln House, Lincoln PlaceDublin 2, IrelandAttention: Colin Sainsbury, Esq.Telefax: 353-1-709-4124 With a copy to:NanoSystems3000 Horizon DriveKing of Prussia, PA 19406Attention: PresidentTelefax: 610-313-5180 If to JANSSEN:Janssen Pharmaceutica N.V.Turnhoutseweg 30B-2340 Beerse Belgium 35 Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted portions, which are marked with brackets [ ] andan asterisk*, have been separately filed with the Securities and Exchange Commission. Attention: Managing DirectorTelefax: 32-14-60-2841 Any notice sent under this Article 22 shall be deemed to have been received on the date actually received, or (i) five (5) business days after beingmailed in the case of a notice mailed by registered or certified mail, postage prepaid; and (ii) one (1) business day after being transmitted in the caseof a notice transmitted via telefax. The business days referred to in this Section 23.2 shall be business days of the recipient of the notice. ARTICLE 23 - WAIVER The failure on the part of NANO or JANSSEN to exercise or enforce any rights conferred upon it hereunder (including any right to terminate thisAgreement under Article 15) shall not be deemed to be a waiver of any such rights nor operate to bar the exercise or enforcement thereof at any time ortimes thereafter. The observance of any term of this Agreement may be waived (either generally or in a particular instance and either retroactively orprospectively) by the party entitled to enforce such term, but any such waiver shall be effective only if in a writing signed by the party against whomsuch waiver is to be asserted. ARTICLE 24 - ENTIRE AGREEMENT 24.1 Agreement constitutes the entire agreement between the parties hereto concerning the subject matter hereof and any representation, promise or conditionin connection therewith, not incorporated herein, shall not be binding upon either party. This Agreement, including without limitation the exhibitsattached hereto, are intended to define the full extent of the legally enforceable undertakings of the parties hereto, and no promise or representation,written or oral, which is not set forth explicitly herein is intended by either party to be legally binding. 24.2 This Agreement shall expressly supersede and replace the Feasibility Agreement as the same is related to Compound and, as of the Effective Date, theFeasibility Agreement as it relates to Compound shall be of no further force or effect and shall hereby be replaced in its entirety with the terms andconditions of this Agreement. ARTICLE 25 - ASSIGNMENT 25.1 Subject to the provisions of Section 9.2 in connection with Highly Confidential Information, JANSSEN may assign any or part of its rights underthis Agreement 36 Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted portions, which are marked with brackets [ ] andan asterisk*, have been separately filed with the Securities and Exchange Commission. to any of its Affiliates. Prior to any such assignment becoming effective, such Affiliate will undertake in writing to abide by all terms and conditionsof this Agreement. 25.2 JANSSEN and NANO will discuss any assignment by JANSSEN to an Affiliate prior to its implementation in order to avoid or reduce anyadditional tax liability to NANO resulting solely from different tax law provisions applying after such assignment to an Affiliate. For the purposehereof, an additional tax liability to NANO means that NANO would be subject to a higher net tax on payments made hereunder after taking intoaccount any applicable tax treaty and available tax credits, than NANO was subject to before the proposed assignment. In case no reasonablesolution can be found in order to reduce or eliminate the above referred additional tax liability to NANO and NANO can demonstrate by means ofwritten documentation, certified by an independent external auditor, that NANO cannot take a full credit against such tax liability, then NANO shallbe made whole by JANSSEN or the assignee as the case may be, whenever JANSSEN wants to proceed with such assignment to such Affiliate. Tothe extent that NANO is not a taxable entity, any references to NANO shall, solely for the purposes of this Article, deem to refer to its members. 25.3 JANSSEN and NANO will discuss any assignment by NANO to an Affiliate prior to its implementation in order to avoid or reduce any additionaltax liability to JANSSEN resulting solely from different tax law provisions applying after such assignment to an Affiliate. For the purpose hereof,an additional tax liability to JANSSEN means that JANSSEN would be subject to a higher net tax on payments made hereunder after taking intoaccount any applicable tax treaty and available tax credits, than JANSSEN was subject to before the proposed assignment. In case no reasonablesolution can be found in order to reduce or eliminate the above referred additional tax liability to JANSSEN and JANSSEN can demonstrate bymeans of written documentation, certified by an independent external auditor, that JANSSEN cannot take a full credit against such tax liability, thenJANSSEN shall be made whole by NANO or the assignee as the case may be, whenever NANO wants to proceed with such assignment to suchAffiliate. To the extent that JANSSEN is not a taxable entity, any references to JANSSEN shall, solely for the purposes of this Article, deem to referto its members. 25.4 NANO will be entitled to assign all or a portion of its rights and obligations under this Agreement to an Affiliate or to a Third Party that acquires allor substantially all of NANO’s rights in the NanoCrystal Technology from NANO. Prior to any such assignment becoming effective, such Affiliateor Third Party assignee will undertake in writing to abide by all terms and conditions of this Agreement. 37 Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted portions, which are marked with brackets [ ] andan asterisk*, have been separately filed with the Securities and Exchange Commission. ARTICLE 26 - TITLES It is agreed that the marginal headings appearing at the beginning of the numbered Articles hereof have been inserted for convenience only and do notconstitute any part of this Agreement. ARTICLE 27 - PUBLICITY Neither party shall originate any publicity, news release or public announcements, written or oral, whether to the public or press, stockholders orotherwise, relating to this Agreement, including its existence, the subject matter to which it relates, performance under it or any of its terms, to anyamendment hereto or performances hereunder without the prior written consent of the other party, provided however, that this Article 27 shall not beapplicable where either party hereto is legally required to make public, a summary or details of this Agreement, in any country. If a party believesthat it has a legal requirement to make public the existence of or any details of or any events related in any way to this Agreement, it shall provide acopy of any such announcement to the other party for review and approval at least five (5) days prior to making said announcement. Nothing hereinshall limit the parties’ obligations under Article 12 with respect to Information and Highly Confidential Information. ARTICLE 28 - UNENFORCEABLE PROVISIONS The provisions of this Agreement shall be deemed severable and the invalidity or unenforceability of any provision shall not affect the validity orenforceability of the other provisions hereof. If any provision of this Agreement, or the application thereof to any person or entity or anycircumstance, is invalid or unenforceable, (i) a suitable and equitable provision shall be substituted therefore in order to carry out, so far as may bevalid and enforceable, the intent and purpose of such invalid and unenforceable provision and (ii) the remainder of this Agreement and theapplication of such provision to other persons, entities or circumstances shall not be affected by such invalidity or unenforceability, nor shall suchinvalidity or unenforceability affect such provision, or the application thereof, in any other jurisdiction. ARTICLE 29 - CONSTRUCTION As used in this Agreement, singular includes the plural and plural includes the singular, wherever so required by fact or context. 38 Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted portions, which are marked with brackets [ ] andan asterisk*, have been separately filed with the Securities and Exchange Commission. ARTICLE 30 - EXECUTION This Agreement shall be executed in two (2) counterparts, each of which shall for all purposes be deemed an original. ARTICLE 31 - NON-SOLICITATION From the Effective Date until two (2) years following the First Commercial Sale in any of the Major Markets, JANSSEN shall not, directly orindirectly, induce, encourage, or solicit any technical personnel employed by EPRC to (i) leave such employment or (ii) accept any other position oremployment, nor shall JANSSEN assist any other entity to induce, encourage, or solicit any technical personnel employed by EPRC to (i) leave suchemployment or (ii) accept any other position or employment. 39 Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted portions, which are marked with brackets [ ] andan asterisk*, have been separately filed with the Securities and Exchange Commission. IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their respective duly authorized officers or representatives as of theday and year first above written. ELAN PHARMACEUTICALRESEARCH CORP., d/b/aNANOSYSTEMS By:/s/ Seamus MulliganName:S. MulliganTitle:President31/3/99 ELAN PHARMA INTERNATIONAL LIMITED By:/s/ Seamus MulliganName:S. MulliganTitle:President31/3/99 JANSSEN PHARMACEUTICA N.V. By:/s/ G. Van ReetName:Managing DirectorTitle: By:/s/ G. VercauterenName:International Vice PresidentBusiness Development 40 Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted portions, which are marked with brackets [ ] andan asterisk*, have been separately filed with the Securities and Exchange Commission. EXHIBIT A: NANO PATENTS [*] 41 Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted portions, which are marked with brackets [ ] andan asterisk*, have been separately filed with the Securities and Exchange Commission. EXHIBIT B: SELECTION PATENTS [*] 42 Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted portions, which are marked with brackets [ ] andan asterisk*, have been separately filed with the Securities and Exchange Commission. FORM 1: STATEMENT The information contained in this document is strictly confidential information and shall be treated accordingly by the receiver. In no event shall any copies bemade or shall the information be disclosed to a third party. Any disclosure to an employee of JANSSEN or of a JANSSEN Affiliate shall be on a strict needto know basis. The receiver shall keep the document under lock in a safe place. The information shall be used only as authorized by JANSSEN in thedevelopment and/or manufacturing of a nanoparticle product. 43Exhibit 10.24 July 31, 2003 Janssen Pharmaceutica N.V.Turnhoutseweg 30B-2340 Beerse BelgiumAttention: Guy Vercauteren RE: First Amendment to the License Agreement by and among Elan Drug Delivery, Inc. (formerly Elan Pharmaceutical Research Corp.) and ElanPharma International Limited and Janssen Pharmaceutica NV dated 31 March 1999 (“the License Agreement”) Dear Sirs We refer to the above identified License Agreement that the parties desire to amend as follows: Defined terms used in this letter shall have the meanings assigned to them in the License Agreement unless such terms are expressly defined in this letter. Allother provisions of the License Agreement not amended herein shall remain unchanged and in full force and effect. The License Agreement is modified as follows: Section 3.2 is amended to add the following sentence to the end of the paragraph: “The obligations of this Section 3.2 are limited to the disclosure of patents and patent applications only and in accordance with the provisions ofArticle 10.” Section 3.8 is amended by deleting the first sentence. New Sections 10.5 and 10.6 are addded: 10.5 Notwithstanding anything to the contrary in this Agreement, the parties have no obligation to disclose to each other any findings orinventions made or discovered during the course of the Development Program or as a consequence of activities conducted under thisAgreement or the Feasibility Agreement unless and until such finding or invention is the subject of a patent application (“PatentApplications”) filed by such party. 10.6 Nothwithstanding anything to the contrary in this Agreement, Janssen hereby grants to NANO a non-exclusive, royalty-free, world-wide,sublicenseable license to Patent Applications filed by Janssen or its Affiliates, except as to Compound, Analogue, and Product. The licenserights granted to NANO under this Article 10.6 only include Valid Claims that cover NanoCrystal Technology and specifically excludeValid Claims  that do not cover NanoCrystal Technology. For the purposes of this Article 10.6 only, Valid Claims shall also include patent applications. Please indicate your understanding and approval by executing this letter in duplicate at the place indicated below and returning one signed duplicate to us. Sincerely,/s/ Nancy NeillNancy NeillTreasurerElan Drug Delivery, Inc. Agreed for and on behalf of Janssen Pharmaceutica NV /s/ Guy VercauterenGuy Vercauteren Janssen Pharmaceutica NV Agreed for and on behalf of Elan Drug Delivery, Inc. By:/s/ Nancy NeillName:Nancy NeillTitle:Treasurer Agreed for and on behalf of Elan Pharma International Limited By:/s/ Debbie BuryjName:Debbie BuryjTitle:Authorized Signatory 2Exhibit 10.25 Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted portions, which are marked with brackets [ ] andan asterisk*, have been separately filed with the Securities and Exchange Commission. “Agreement Amendment No. 2” [17 March, 2011] Janssen Pharmaceutica N.V.Turnhoutseweg 30B-2340 BeerseBelgium Elan Drug Delivery, Inc.3500 Horizon DriveKing of Prussia, PA 19046USA Dear Sirs RE: License Agreement dated March 31, 1999 (the “Agreement”), as amended by letter amendment of July 31, 2003, between Elan DrugDelivery, Inc. (successor in interest in and to Elan Pharmaceutical Research Corp., d/b/a Nanosystems(“EDDI”) and Elan PharmaInternational Limited (“EPIL”) (EDDI and EPIL collectively hereinafter referred to as “Elan”) and Janssen Pharmaceutica N.V. (“Janssen”) Elan and Janssen hereby agree that with effect from July 31, 2009 this Agreement Amendment No. 2 (“Agreement Amendment No. 2 Effective Date”) theAgreement shall be amended as follows: 1. All references in the Agreement to EPRC shall read EDDI. All references to NANO shall read Elan. 2. Article 22 Elan contact details only - shall be deleted and replaced with the following: If to Elan: Elan Pharma International Limited  EPIL Letter to Janssen and EDDI of 23 July 2009Amendment No 2 to license dated 31 March 1999, as amended Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted portions, which are marked with brackets [ ] andan asterisk*, have been separately filed with the Securities and Exchange Commission. Monksland, Athlone, County Westmeath, Ireland Attention:Vice President & Legal CounselTelefax:00 353 90 64 95402 With a copy to:Elan Drug Delivery, Inc.3500 Horizon Drive, King of Prussia, PA 19406,USA Attention:PresidentTelefax:001 610-313-5182 3. Patent Schedules 3.1 Exhibit A: Nano Patents shall be deleted and replaced with Exhibit A: Nano Patents — Updated January, 2011, attached hereto. Exhibit B: Selection Patents shall be deleted and replaced with Exhibit B Selection Patents — Updated January 2011, attached hereto. 4. Defined texts used in this Agreement Amendment No. 2 shall have the meaning assigned to them in the Agreement unless such terms are expresslydefined in this Agreement Amendment No. 2. All other provisions of the Agreement not amended herein shall remain unchanged and in full force andeffect. Yours faithfully, Signed on behalf of:Elan Pharma International Limited /s/ William DanielName:William DanielTitle:DirectorDate:1 April 2011 Agreed and accepted for and on behalf ofElan Drug Delivery, Inc. successor in interest in and to Elan Pharmaceutical Research Corp., d/b/a Nanosystems 2 Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted portions, which are marked with brackets [ ] andan asterisk*, have been separately filed with the Securities and Exchange Commission. /s/ David CzekaiName: David CzekaiTitle: VP and GMDate: 18 Apr 2011 Accepted for and on behalf of:Janssen Pharamceutica N.V. /s/ Ludo LauwersName: Ludo LauwersTitle: Senior Vice President, Site ManagementDate: 17 March 2011 /s/ Dirk CollierMember of the Board 3 Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted portions, which are marked with brackets [ ] andan asterisk*, have been separately filed with the Securities and Exchange Commission. Exhibit A: Nano Patents—Updated January, 2011 [*****] 4 Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted portions, which are marked with brackets [ ] andan asterisk*, have been separately filed with the Securities and Exchange Commission. [Exhibit B: Selection Patents—Updated July 31, 2009] [*****] 5Exhibit 10.52 Execution Version AMENDMENT NO. 3 AND WAIVER TO AMENDED AND RESTATED CREDIT AGREEMENT THIS AMENDMENT NO. 3 AND WAIVER TO AMENDED AND RESTATED CREDIT AGREEMENT (this “Amendment”) dated asof May 22, 2013 is entered into by and among Alkermes, Inc., a corporation organized under the laws of the Commonwealth of Pennsylvania (the“Borrower”), Alkermes plc, a company incorporated under the laws of the Republic of Ireland (“Holdings”), Alkermes Pharma Ireland Limited, a privatelimited company organized under the laws of the Republic of Ireland (“Intermediate Holdco”), Alkermes US Holdings, Inc. (“Holdco”), Morgan Stanley SeniorFunding, Inc., as administrative agent (in such capacity, the “Administrative Agent”) and as collateral agent (in such capacity, the “Collateral Agent”), andthe undersigned lenders. Capitalized terms not otherwise defined in this Amendment have the same meanings as specified in the Credit Agreement (as definedbelow). PRELIMINARY STATEMENTS: (1) The Borrower, Holdings, Intermediate Holdco, Holdco, the Administrative Agent and Collateral Agent, Morgan Stanley SeniorFunding, Inc., Citigroup Global Markets, Inc. and JPMorgan Chase Bank, N.A., as co-syndication agents and the financial institutions from time to timeparty thereto as term lenders (the “Lenders”) entered into that certain Amended and Restated Credit Agreement, initially dated as of September 16, 2011 andamended and restated on September 25, 2012, as further amended as of February 14, 2013 (the “Credit Agreement”); (2) The Borrower, Holdings, the other Loan Parties party thereto have requested that the Lenders and the Administrative Agent agreeto amend the Credit Agreement and grant certain waivers thereunder, and the Lenders and the Administrative Agent have agreed to such amendments andwaivers, as hereinafter set forth; NOW, THEREFORE, in consideration of the premises and for other good and valuable consideration (the receipt and sufficiency of whichare hereby acknowledged), the parties hereto hereby agree as follows: SECTION 1. Amendments and Waivers to Credit Agreement. 1.1. Amendments The Credit Agreement is, effective as of the date hereof and subject to the satisfaction of the conditions precedent set forth in Section 3,hereby amended as follows: (a) The definition of “ECF Percentage” appearing in Section 1.1 of the Credit Agreement is hereby amended by deleting “March 31, 2014”appearing therein and substituting in lieu therefor “December 31, 2013”. (b) The definition of “Excess Cash Flow Payment Period” appearing in Section 1.1 of the Credit Agreement is hereby amended by deleting“March 31, 2014” appearing therein and substituting in lieu therefor “December 31, 2013”.  (c) Section 3.2(c) of the Credit Agreement is hereby amended by deleting “March 31, 2014” appearing therein and substituting in lieutherefor “December 31, 2013”. 1.2. Waiver The Lenders, effective as of the date hereof and subject to the satisfaction of the conditions precedent set forth in Section 3, hereby waiveSection 7.11(a) thereof in order to permit Holdings to change its fiscal year such that it will end on December 31 of each year, commencing with the fiscal yearending on December 31, 2013. SECTION 2. Reference to and Effect on the Loan Documents. (a) On and after the Effective Date, each reference in the Credit Agreement to “this Agreement”, “hereunder”, “hereof” or words of likeimport referring to the Credit Agreement, and each reference in the other Loan Documents to “the Credit Agreement”, “the First-Lien Credit Agreement,” “theAmended and Restated Credit Agreement,” “thereunder”, “thereof” or words of like import referring to the Credit Agreement, shall mean and be a reference tothe Credit Agreement as amended by this Amendment. (b) The Credit Agreement, as specifically amended and waived by this Amendment, and the other Loan Documents are, and shallcontinue to be, in full force and effect, and are hereby in all respects ratified and confirmed. (c) Except as expressly provided herein, the execution, delivery and effectiveness of this Amendment shall not operate as a waiver of anyright, power or remedy of any Lender or the Administrative Agent under the Credit Agreement or any other Loan Document, nor shall it constitute a waiver ofany provision of the Credit Agreement or any Loan Document. SECTION 3. Conditions of Effectiveness. This Amendment shall become effective as of the date (the “Effective Date”) on whicheach of the following conditions shall have been satisfied (or waived): (a) The Administrative Agent shall have received from (i) the Lenders under the Credit Agreement constituting Required Lenders, and(ii) the Administrative Agent, executed counterparts of this Amendment or written evidence reasonably satisfactory to the Administrative Agent that such partyhas executed this Amendment on, or prior to, 5 p.m., New York City time on May 8, 2013 (the “Consent Deadline”). (b) The Administrative Agent shall have received from the Loan Parties party hereto, executed counterparts of this Amendment or writtenevidence reasonably satisfactory to the Administrative Agent that such party has executed this Amendment. (c) As of the Effective Date, no event shall have occurred and be continuing that would constitute a Default or Event of Default under theAgreement. SECTION 4. Costs and Expenses. The Borrower agrees that all reasonable out-of-pocket expenses incurred by the Administrative Agent in connection with the preparation,execution, delivery and administration, 2 modification and amendment of this Amendment and the other instruments and documents to be delivered hereunder or in connection herewith (including,without limitation, the reasonable fees, charges and disbursements of Shearman & Sterling LLP, counsel for the Administrative Agent), are expenses that theBorrower are required to pay or reimburse pursuant to Section 10.5 of the Credit Agreement. SECTION 5. Miscellaneous. (a) Execution in Counterpart. This Amendment may be executed in any number of counterparts and by different parties hereto in separatecounterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute but one and the sameagreement. Delivery of an executed counterpart of a signature page to this Amendment by telecopier or other electronic means shall be effective as delivery of amanually executed counterpart of this Amendment. (b) Binding Effect. This Amendment shall be binding upon and inure to the benefit of the parties hereto and their respective successorsand assigns. (c) Headings. The headings listed herein are for convenience only and do not constitute matters to be construed in interpreting thisAmendment. (d) Waiver & Modification. No provision of this Amendment may be modified, altered or otherwise amended, except by an instrument inwriting executed by each of the parties hereto. (e) GOVERNING LAW. THIS AMENDMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH,THE LAWS OF THE STATE OF NEW YORK. (f) WAIVER OF RIGHT OF TRIAL BY JURY. EACH PARTY TO THIS AMENDMENT HEREBY EXPRESSLY WAIVES ANYRIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION ARISING UNDER THIS AMENDMENT, OR IN ANYWAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES HERETO OR ANY OF THEM WITHRESPECT TO THE CREDIT AGREEMENT AS AMENDED HEREBY, OR THE TRANSACTIONS RELATED THERETO, IN EACH CASEWHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER FOUNDED IN CONTRACT OR TORT OR OTHERWISE; AND EACHPARTY HEREBY AGREES AND CONSENTS THAT ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE DECIDED BYCOURT TRIAL WITHOUT A JURY, AND THAT ANY PARTY TO THIS AGREEMENT MAY FILE AN ORIGINAL COUNTERPART OR A COPY OFTHIS SECTION WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE SIGNATORIES HERETO TO THE WAIVER OFTHEIR RIGHT TO TRIAL BY JURY. 3 IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be executed by their respective authorized officers as of thedate first above written. BORROWER: ALKERMES, INC., as Borrower By:/s/ James M. FratesName: James M. FratesTitle: Senior Vice President, Chief Financial Officer & Treasurer AlkermesMay 2013 Amendment and Waiver  GIVEN under the common seal ofALKERMES PLC, as Holdingsand DELIVERED as a DEED /s/ Shane CookeDirector /s/ Tom RiordanAssistant Secretary AlkermesMay 2013 Amendment and Waiver  ALKERMES US HOLDINGS, INC., as Holdco By:/s/ James M. FratesName: James M. FratesTitle: VP, CFO and Treasurer AlkermesMay 2013 Amendment and Waiver  GIVEN under the common seal ofALKERMES PHARMA IRELAND LIMITED,as Intermediate Holdcoand DELIVERED as a DEED /s/ Richie PaulDirector /s/ Tom RiordanAssistant Secretary AlkermesMay 2013 Amendment and Waiver  MORGAN STANLEY SENIOR FUNDING, INC.,as Administrative Agent, Collateral Agent and a Lender By:/s/ Stephen B. KingName:Stephen B. KingTitle:Vice President AlkermesMay 2013 Amendment and Waiver  [ ],as a Lender By:Name:Title: AlkermesMay 2013 Amendment and Waiver Exhibit 10.63 Stock Option Award Certificate(INCENTIVE STOCK OPTION)ID: XXXXXXXXConnaught House1 Burlington RoadDublin 4, Ireland «FIRST_NAME» «MIDDLE_NAME» «LAST_NAME»Option Number:«NUM»«ADDRESS_LINE_1»Plan: «PLAN_NAME»«ADDRESS_LINE_2»«ADDRESS_LINE_3»«CITY», «STATE» «ZIP_CODE»ID:«ID» Effective «GRANT_DATE», you have been granted an Incentive Stock Option to buy «SHARES_GRANTED» shares of Alkermes plc (the “Company”)common stock at «OPTION_PRICE» per share. The total option price of the shares granted is «TOTAL_OPTION_PRICE». The right to acquire the shares subject to the Incentive Stock Option will become fully vested on the dates shown below. The Incentive Stock Option shallexpire on the earlier to occur of: the 10 anniversary of the date of grant or three months after termination of your service relationship with the Company(unless otherwise provided below). SharesVesting Date«SHARES_PERIOD_1»«SHARES_PERIOD_2»«SHARES_PERIOD_3»«SHARES_PERIOD_4» In the event of the termination of your employment with the Company (but not the termination of a non-employment relationship with the Company) by reasonof death or permanent disability, the Incentive Stock Option shall vest and be exercisable in full on such termination of employment and the period duringwhich the Incentive Stock Option (to the extent that it is exercisable on the date of termination of employment) may be exercised shall be three (3) yearsfollowing the date of termination of employment by reason of death or permanent disability, but not beyond the original term of the Incentive Stock Option. Forthe purpose of the terms of this Incentive Stock Option, you will be deemed to be employed by the Company so long as you remain employed by a companywhich continues to be a subsidiary of the Company. The foregoing Incentive Stock Option has been granted under and is governed by the terms and conditions of this Certificate and the Alkermes plc 2011 StockOption and Incentive Plan. Alkermes plc.Date thExhibit 10.64 2011 Plan — REVISED (4/2013)US employees Stock Option Award Certificate (NON-QUALIFIED STOCK OPTION)ID: XXXXXXXXConnaught House1 Burlington RoadDublin 4, Ireland «FIRST_NAME» «MIDDLE_NAME» «LAST_NAME»Option Number:«NUM»«ADDRESS_LINE_1»Plan: «PLAN_NAME»«ADDRESS_LINE_2»«ADDRESS_LINE_3»«CITY», «STATE» «ZIP_CODE»ID:«ID» Effective «GRANT_DATE», you have been granted a Non-Qualified Stock Option to buy «SHARES_GRANTED» shares of Alkermes plc. (the“Company”) common stock at «OPTION_PRICE» per share. The total option price of the shares granted is «TOTAL_OPTION_PRICE». The right to acquire the shares subject to the Non-Qualified Stock Option will become fully vested on the dates shown below. The Non-Qualified StockOption shall expire on the earlier to occur of: the 10 anniversary of the date of grant or three months after termination of your service relationship with theCompany (unless otherwise provided below). . SharesVest Date«SHARES_PERIOD_1»«SHARES_PERIOD_2»«SHARES_PERIOD_3»«SHARES_PERIOD_4» In the event of the termination of your employment with the Company (but not the termination of a non-employment relationship with the Company) by reasonof death or permanent disability, the Non-Qualified Stock Option shall vest and be exercisable in full on such termination of employment and the periodduring which the Non-Qualified Stock Option (to the extent that it is exercisable on the date of termination of employment) may be exercised shall be three(3) years following the date of termination of employment by reason of death or permanent disability, but not beyond the original term of the Option. For thepurpose of the terms of this Non-Qualified Stock Option, you will be deemed to be employed by the Company so long as you remain employed by a companywhich continues to be a subsidiary of the Company. The foregoing Non-Qualified Stock Option has been granted under and is governed by the terms and conditions of this Certificate and the Alkermes plc 2011Stock Option and Incentive Plan. Alkermes plc.Date thQuickLinks -- Click here to rapidly navigate through this documentEXHIBIT 21.1 SUBSIDIARIES Name JurisdictionAlkermes Ireland Holdings Limited IrelandAlkermes Science Three Limited IrelandAlkermes Pharma Ireland Limited IrelandAlkermes Finance Ireland Limited IrelandAlkermes Science One Limited IrelandAlkermes Finance S.à r.l. LuxembourgAlkermes Finance Ireland (No. 2) Limited IrelandAlkermes U.S. Holdings, Inc. DelawareAlkermes, Inc. PennsylvaniaEagle Holdings USA, Inc. DelawareAlkermes Controlled Therapeutics, Inc. PennsylvaniaAlkermes Europe, Ltd. United KingdomAlkermes Gainesville LLC MassachusettsQuickLinksEXHIBIT 21.1SUBSIDIARIESQuickLinks -- Click here to rapidly navigate through this documentEXHIBIT 23.1 CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM We hereby consent to the incorporation by reference in the Registration Statement on Form S-1 (No. 333-179550), Form S-4 (No. 333-175078)and Form S-8 (Nos. 333-179545 and 333-184621) of Alkermes plc of our report dated May 23, 2013 relating to the financial statements and theeffectiveness of internal control over financial reporting, which appears in this Form 10-K./s/ PRICEWATERHOUSECOOPERS LLPBoston, MassachusettsMay 23, 2013QuickLinksEXHIBIT 23.1CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRMQuickLinks -- Click here to rapidly navigate through this documentEXHIBIT 31.1 CERTIFICATIONS I, Richard F. Pops, certify that:1.I have reviewed this annual report on Form 10-K of Alkermes plc; 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 thestatements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by thisreport; 3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects thefinancial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; 4.The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as definedin 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) and15d-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 oursupervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us byothers 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 oursupervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements forexternal 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 theeffectiveness 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 mostrecent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonablylikely to materially affect, the registrant's internal control over financial reporting; and 5.The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting,to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which arereasonably 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 internalcontrol over financial reporting./s/ RICHARD F. POPSRichard F. PopsChairman and Chief Executive Officer(Principal Executive Officer) May 23, 2013QuickLinksEXHIBIT 31.1CERTIFICATIONSQuickLinks -- Click here to rapidly navigate through this documentEXHIBIT 31.2 CERTIFICATIONS I, James M. Frates, certify that:1.I have reviewed this annual report on Form 10-K of Alkermes plc; 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 thestatements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by thisreport; 3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects thefinancial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; 4.The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as definedin 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) and15d-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 oursupervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us byothers 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 oursupervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements forexternal 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 theeffectiveness 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 mostrecent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonablylikely to materially affect, the registrant's internal control over financial reporting; and 5.The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting,to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which arereasonably 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 internalcontrol over financial reporting./s/ JAMES M. FRATESJames M. FratesSenior Vice President and Chief Financial Officer(Principal Financial and Accounting Officer) May 23, 2013QuickLinksEXHIBIT 31.2CERTIFICATIONSQuickLinks -- Click here to rapidly navigate through this documentEXHIBIT 32.1 CERTIFICATION PURSUANT TO18 U.S.C. SECTION 1350,AS ADOPTED PURSUANT TOSECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 In connection with the Annual Report of Alkermes plc (the "Company") on Form 10-K for the period ended March 31, 2013 as filed with theSecurities and Exchange Commission on the date hereof (the "Report"), we, Richard F. Pops, Chairman and Chief Executive Officer of the Company,and James M. Frates, Senior Vice President and Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adoptedpursuant to Section 906 of the Sarbanes-Oxley Act of 2002, to our knowledge that: (1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and (2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of theCompany./s/ RICHARD F. POPSRichard F. PopsChairman and Chief Executive Officer(Principal Executive Officer) /s/ JAMES M. FRATESJames M. FratesSenior Vice President and Chief Financial Officer(Principal Financial and Accounting Officer) May 23, 2013 QuickLinksEXHIBIT 32.1CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEYACT OF 2002

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