Alkermes
Annual Report 2017

Plain-text annual report

Table of Contents UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549Form 10‑K(Mark One) ☑☑ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934for the fiscal year ended December 31, 2017OR☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934For the transition period from to Commission file number: 001‑35299ALKERMES 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 executive offices)(Zip code)+353‑1‑772‑8000(Registrant’s telephone number, including area code)Securities registered pursuant to Section 12(b) of the Act:Ordinary shares, $0.01 par valueNasdaq Global Select MarketTitle of each className of each exchange on which registeredSecurities registered pursuant to Section 12(g) of the Act: NoneIndicate by check mark if the registrant is a well‑known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☒ No ☐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 ☐ 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 of 1934during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filingrequirements for the past 90 days. Yes ☒ No ☐Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File requiredto be submitted and posted pursuant to Rule 405 of Regulation S‑T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter periodthat the registrant was required to submit and post such files): Yes ☒ No ☐Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S‑K (§ 229.405 of this chapter) is not contained herein, andwill not be contained, to the best of the registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of thisForm 10‑K or any amendment to this Form 10‑K. ☒Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non‑accelerated filer, a smaller reporting company, or anemerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growthcompany” in Rule 12b‑2 of the Exchange Act. (Check one):Large accelerated filer ☒Accelerated filer ☐Non‑accelerated filer ☐Smaller reporting company ☐ (Do not check if a smaller reportingcompany)Emerging growth company ☐If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any newor revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐ Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b‑2 of the Act). Yes ☐ No ☒The aggregate market value of the registrant’s ordinary shares held by non‑affiliates of the registrant (without admitting that any person whose shares arenot included in such calculation is an affiliate) computed by reference to the price at which the ordinary shares were last sold as of the last business day ofthe registrant’s most recently completed second fiscal quarter was $8,819,125,952.As of February 2, 2018, 156,144,366 ordinary shares were issued and outstanding.DOCUMENTS INCORPORATED BY REFERENCEPortions of the definitive proxy statement for our 2018 Annual General Meeting of Shareholders are incorporated by reference into Part III of this report. Table of ContentsALKERMES PLC AND SUBSIDIARIESANNUAL REPORT ON FORM 10‑KFOR THE YEAR ENDED DECEMBER 31, 2017INDEXPART I Item 1. Business 5Item 1A. Risk Factors 31Item 1B. Unresolved Staff Comments 49Item 2. Properties 49Item 3. Legal Proceedings 49Item 4. Mine Safety Disclosures 49PART II Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases ofEquity Securities 49Item 6. Selected Financial Data 52Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 54Item 7A. Quantitative and Qualitative Disclosures about Market Risk 72Item 8. Financial Statements and Supplementary Data 73Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosures 74Item 9A. Controls and Procedures 74Item 9B. Other Information 75PART III Item 10. Directors, Executive Officers and Corporate Governance 76Item 11. Executive Compensation 76Item 12. Security Ownership of Certain Beneficial Owners and Management and Related StockholderMatters 76Item 13. Certain Relationships and Related Transactions, and Director Independence 76Item 14. Principal Accounting Fees and Services 76PART IV Item 15. Exhibits and Financial Statement Schedules 76Item 16 Form 10-K Summary 84SIGNATURES 85 2 Table of ContentsCAUTIONARY NOTE CONCERNING FORWARD‑LOOKING STATEMENTSThis document contains and incorporates by reference “forward‑looking statements” within the meaning of Section 27A ofthe Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, asamended (the “Exchange Act”). In some cases, these statements can be identified by the use of forward‑looking terminologysuch as “may,” “will,” “could,” “should,” “would,” “expect,” “anticipate,” “continue,” “believe,” “plan,” “estimate,”“intend,” or other similar words. These statements discuss future expectations, and contain projections of results ofoperations 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 (“Annual Report”) include, without limitation, statementsregarding:●our expectations regarding our financial performance, including revenues, expenses, gross margins, liquidity,capital expenditures and income taxes;●our expectations regarding our products, including the development, regulatory (including expectations aboutregulatory filing, regulatory approval and regulatory timelines), therapeutic and commercial scope andpotential 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 competitive landscape, and changes therein, related to our products, includingour development programs, and our industry generally;●our expectations regarding the financial impact of currency exchange rate fluctuations and valuations;●our expectations regarding future amortization of intangible assets;●our expectations regarding our collaborations, licensing arrangements and other significant agreements withthird parties relating to our products, including our development programs;●our expectations regarding the impact of new legislation and related regulations, including the Tax Cuts andJobs Act of 2017, and the adoption of new accounting pronouncements;●our expectations regarding near‑term changes in the nature of our market risk exposures or in management’sobjectives and strategies with respect to managing such exposures;●our ability to comply with restrictive covenants of our indebtedness and our ability to fund our debt serviceobligations;●our expectations regarding future capital requirements and capital expenditures and our ability to finance ouroperations and capital requirements; and●other factors discussed elsewhere in this Annual Report.Actual results might differ materially from those expressed or implied by these forward‑looking statements because theseforward‑looking statements are subject to risks, assumptions and uncertainties. You are cautioned not to place undue relianceon forward‑looking statements, which speak only as of the date of this Annual Report. All subsequent written and oralforward‑looking statements concerning the matters addressed in this Annual Report and attributable to us or any personacting on our behalf are expressly qualified in their entirety by the cautionary statements contained or referred to in thissection. Except as required by applicable law or regulation, we do not undertake any obligation to update publicly or reviseany forward‑looking statements, whether as a result of new information, future events or otherwise. In light of these risks,assumptions and uncertainties, the forward‑looking events discussed in this Annual Report might not occur. For moreinformation regarding the risks and uncertainties of our business, see “Item 1A—Risk Factors” in this Annual Report.This Annual Report includes data that we obtained from industry publications and third-party research, surveys andstudies. Industry publications and third-party research, surveys and studies generally indicate that their information has beenobtained from sources believed to be reliable, although they do not guarantee the accuracy or completeness of suchinformation. This Annual Report also includes data based on our own internal estimates and research. Our internal estimatesand research have not been verified by any independent source, and, while we believe the industry publications and third-party research, surveys and studies are reliable, we have not independently verified such data. Such third-party data and ourinternal estimates and research are necessarily subject to a high degree of uncertainty and risk due to a variety of factors,including those described in “Item 1A—Risk Factors” in this Annual Report. These and other factors could cause results todiffer materially from those expressed in the estimates included in this Annual Report.NOTE REGARDING COMPANY AND PRODUCT REFERENCESUse of the terms such as “us,” “we,” “our,” “Alkermes” or the “Company” in this Annual Report is meant to refer toAlkermes plc and its consolidated subsidiaries. Except as otherwise suggested by the context, (a) references to3 Table of Contents“products” or “our products” in this Annual Report include our marketed products, marketed products using our proprietarytechnologies, our product candidates, product candidates using our proprietary technologies, development products anddevelopment products using our proprietary technologies, (b) references to the “biopharmaceutical industry” in this AnnualReport are intended to include reference to the “biotechnology industry” and/or the “pharmaceutical industry” and (c)references to “licensees” are used interchangeably with references to “partners.”NOTE REGARDING TRADEMARKSWe are the owner of various United States (“U.S.”) federal trademark registrations (“®”) and other trademarks (“TM”),including ALKERMES, ARISTADA, CODAS, IPDAS, LinkeRx, MXDAS, NanoCrystal, SECA™, SODAS,VERELAN and VIVITROL.The following are trademarks of the respective companies listed: ABILIFY and ABILIFY MAINTENA—OtsukaPharmaceutical Co., Ltd. (“Otsuka Pharm. Co.”); AMPYRA, FAMPYRA—Acorda Therapeutics, Inc. (“Acorda”);ANTABUSE—Teva Women’s Health, Inc.; AUBAGIO and LEMTRADA—Sanofi Societe Anonyme France; AVONEX,PLEGRIDY, TECFIDERA, and TYSABRI—Biogen MA Inc. (together with its affiliates, “Biogen”); BETASERON—Bayer Pharma AG; BUNAVAIL—BioDelivery Sciences; BYDUREON and BYETTA—Amylin Pharmaceuticals, LLC(“Amylin”); BYDUREON BCise—AstraZeneca Pharmaceuticals LP;—CAMPRAL—Merck Sante; COPAXONE—TevaPharmaceutical Industries Ltd.; FOCALIN XR, EXTAVIA, GILENYA and RITALIN LA—Novartis AG; INVEGASUSTENNA, RISPERDAL CONSTA INVEGA TRINZA, TREVICTA and XEPLION—Johnson & Johnson (or itsaffiliates); NOVANTRONE and REBIF—Ares Trading S.A.; OCREVUS—Genentech, Inc. (“Genentech”); SUBOXONE, SUBUTEX and SUBLOCADE—Indivior plc; TRICOR—Fournier Industrie et Sante Corporation; VICTOZA—NovoNordisk A/S LLC; ZOHYDRO™—Zogenix, Inc.; ZUBSOLV—Orexo US, Inc.; and TRULICITY, ZYPREXA andZYPREXA RELPREVV—Eli Lilly and Company. Other trademarks, trade names and service marks appearing in thisAnnual Report are the property of their respective owners. Solely for convenience, the trademarks and trade names in thisAnnual Report are referred to without the and ™ symbols, but such references should not be construed as any indicator thattheir respective owners will not assert, to the fullest extent under applicable law, their rights thereto.4 ®®®®®®®®®®®®®®®®®®®®®®TM®®TM®®®®®®®®®®®®®®®®®®®®®®®®®Table of Contents PART I Item 1.BusinessThe following discussion contains forward‑looking statements. Actual results may differ significantly from those expressedor implied in the forward‑looking statements. See “Cautionary Note Concerning Forward‑Looking Statements” on page 3 ofthis Annual Report. Factors that might cause future results to differ materially from those expressed or implied in theforward‑looking statements include, but are not limited to, those discussed in “Item 1A—Risk Factors” and elsewhere in thisAnnual Report.OverviewAlkermes plc is a fully integrated, global biopharmaceutical company that applies its scientific expertise and proprietarytechnologies to research, develop and commercialize, both with partners and on its own, pharmaceutical products that aredesigned to address unmet medical needs of patients in major therapeutic areas. Alkermes has a diversified portfolio ofmarketed drug products and a clinical pipeline of products that address central nervous system (“CNS”) disorders such asschizophrenia, depression, addiction and multiple sclerosis (“MS”). Headquartered in Dublin, Ireland, Alkermes has aresearch and development (“R&D”) center in Waltham, Massachusetts; an R&D and manufacturing facility in Athlone,Ireland; and a manufacturing facility in Wilmington, Ohio.Marketed ProductsThe key marketed products discussed below are expected to generate significant revenues for us. Refer to the “Patents andProprietary Rights” section of this Annual Report for information with respect to the intellectual property protection for thesemarketed products.Summary information regarding our proprietary products: Product Indication(s) Licensee Territory Schizophrenia None Commercialized byAlkermes in theU.S. Alcoholdependence andOpioiddependence None Cilag GmbHInternational(“Cilag”) Commercialized byAlkermes in theU.S. Russia andCommonwealth ofIndependent States(“CIS”) 5 Table of ContentsSummary information regarding products that use our proprietary technologies: Product Indication(s) Licensee Territory RISPERDAL CONSTA Schizophreniaand Bipolar Idisorder JanssenPharmaceutica Inc.(“Janssen, Inc.”)and JanssenPharmaceuticaInternational, adivision of CilagInternational AG(“JanssenInternational”) Worldwide INVEGA SUSTENNA SchizophreniaandSchizoaffectivedisorder JanssenPharmaceutica N.V.(together withJanssen, Inc.,JanssenInternational andtheir affiliates“Janssen”) U.S. XEPLION Schizophrenia Janssen All countriesoutside of the U.S.(“ROW”) INVEGA TRINZASchizophreniaJanssenU.S. TREVICTA Schizophrenia Janssen ROW AMPYRA FAMPYRA Treatment toimprove walkingin patients withMS, asdemonstrated byan increase inwalking speed Acorda Biogen, undersublicense fromAcorda U.S. ROW BYDUREON and BYDUREON BCise Type 2 diabetes AstraZeneca plc(“AstraZeneca”) Worldwide 6 Table of ContentsProprietary ProductsWe develop and commercialize products designed to address the unmet needs of patients suffering from addiction andschizophrenia.ARISTADAARISTADA (aripiprazole lauroxil) is an extended-release intramuscular injectable suspension approved in the U.S. forthe treatment of schizophrenia. ARISTADA is the first of our products to utilize our proprietary LinkeRx technology.ARISTADA is a prodrug; once in the body, ARISTADA is likely converted by enzyme-mediated hydrolysis to N-hydroxymethyl aripiprazole, which is then hydrolyzed to aripiprazole. ARISTADA is the first atypical antipsychotic withonce-monthly, once-every-six-weeks and once-every-two-months dosing options to deliver and maintain therapeuticlevels of medication in the body. ARISTADA has four dosing options (441 mg, 662 mg, 882 mg and 1064 mg) and ispackaged in a ready-to-use, pre-filled product format. ARISTADA 1064 mg, our two-month dosing option, was approvedby the U.S. Food and Drug Administration (the “FDA”) in June 2017. We developed ARISTADA and manufacture andcommercialize it in the U.S.What is schizophrenia?Schizophrenia is a chronic, severe and disabling brain disorder. The disease is marked by positive symptoms(hallucinations and delusions) and negative symptoms (depression, blunted emotions and social withdrawal), as well as bydisorganized thinking. An estimated 2.4 million Americans over the age of 18 have schizophrenia in a given year, withmen 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 aregular basis, which can lead to worsening of symptoms.VIVITROLVIVITROL (naltrexone for extended-release injectable suspension) is a once-monthly, non-narcotic, injectablemedication approved in the U.S., Russia and certain countries of the CIS for the treatment of alcohol dependence and forthe prevention of relapse to opioid dependence, following opioid detoxification. VIVITROL uses our polymer-basedmicrosphere injectable extended-release technology to deliver and maintain therapeutic medication levels in the bodythrough one intramuscular injection every four weeks. We developed and exclusively manufacture VIVITROL. Wecommercialize VIVITROL in the U.S., and Cilag commercializes VIVITROL in Russia and certain countries of the CIS.What are opioid dependence and alcohol dependence?Opioid dependence is a serious and chronic brain disease characterized by compulsive, prolonged self-administration ofopioid substances that are not used for a medical purpose. According to the 2016 U.S. National Survey on Drug Use andHealth, nearly 2 million people aged 18 or older in the U.S. had an opioid use disorder.Alcohol dependence is a serious and chronic brain disease characterized by cravings for alcohol, loss of control overdrinking, withdrawal symptoms and an increased tolerance for alcohol. According to the 2016 U.S. National Survey onDrug Use and Health, an estimated 8 million people aged 12 or older had alcohol dependence. Adherence to medication isparticularly challenging with this patient population.Products Using Our Proprietary TechnologiesWe have granted licenses under our proprietary technologies to enable third parties to develop, commercialize and, insome cases, manufacture products for which we receive royalties and/or manufacturing revenues. Such arrangements includethe following:INVEGA SUSTENNA/XEPLION, INVEGA TRINZA/TREVICTA and RISPERDAL CONSTAINVEGA SUSTENNA/XEPLION (paliperidone palmitate), INVEGA TRINZA (paliperidone palmitate)/TREVICTA(paliperidone palmitate 3-monthly injection) and RISPERDAL CONSTA (risperidone long-acting injection) are long-acting atypical antipsychotics owned and commercialized worldwide by Janssen that incorporate our proprietarytechnologies.7 Table of ContentsINVEGA SUSTENNA is approved in the U.S. for the treatment of schizophrenia and for the treatment of schizoaffectivedisorder as either a monotherapy or adjunctive therapy. Paliperidone palmitate extended-release injectable suspension isapproved in the European Union (“EU”) and other countries outside of the U.S. for the treatment of schizophrenia and ismarketed and sold under the trade name XEPLION. INVEGA SUSTENNA/XEPLION uses our nanoparticle injectableextended-release technology to increase the rate of dissolution and enable the formulation of an aqueous suspension foronce-monthly intramuscular administration. INVEGA SUSTENNA/XEPLION is manufactured by Janssen.In January 2018, Janssen Pharmaceuticals NV and Janssen Pharmaceuticals, Inc. initiated a patent infringement lawsuitin the United States District Court for the District of New Jersey against Teva Pharmaceuticals USA, Inc. (“Teva”), whofiled an ANDA seeking approval to market a generic version of INVEGA SUSTENNA before the expiration of United StatesPatent No. 9,439,906. The Company is not a party to these proceedings. For further discussion of the legal proceedingsrelated to the patents covering INVEGA SUSTENNA, see Note 16, Commitments and Contingencies in the “Notes toCondensed Consolidated Statements” and “Item 3—Legal Proceedings” in this Annual Report and for information aboutrisks relating to the INVEGA SUSTENNA Paragraph IV litigation, see “Part I, Item 1A—Risk Factors” in this AnnualReport and specifically the section entitled “—We or our licensees may face claims against intellectual property rightscovering our products and competition from generic drug manufacturers.”INVEGA TRINZA is an atypical antipsychotic injection for the treatment of schizophrenia used in people who havebeen treated with INVEGA SUSTENNA for at least four months. INVEGA TRINZA is the first schizophrenia treatment to betaken once every three months. TREVICTA is approved in the EU for the maintenance treatment of schizophrenia in adultpatients who are clinically stable on XEPLION. INVEGA TRINZA/TREVICTA uses our proprietary technology and ismanufactured by Janssen.RISPERDAL CONSTA is approved in the U.S. for the treatment of schizophrenia and as both monotherapy andadjunctive therapy to lithium or valproate in the maintenance treatment of bipolar I disorder. RISPERDAL CONSTA isapproved in numerous countries outside of the U.S. for the treatment of schizophrenia and the maintenance treatment ofbipolar I disorder. RISPERDAL CONSTA uses our polymer-based microsphere injectable extended-release technology todeliver and maintain therapeutic medication levels in the body through just one intramuscular injection every two weeks.RISPERDAL CONSTA microspheres are exclusively manufactured by us.Revenues from Janssen accounted for approximately 33%, 36% and 40% of our consolidated revenues for the yearsended December 31, 2017, 2016 and 2015, respectively. See “Collaborative Arrangements” in Part I of this Annual Reportfor information about our relationship with Janssen.What is bipolar I disorder?Bipolar I disorder is a brain disorder that causes unusual shifts in a person’s mood, energy and ability to function. It isoften characterized by debilitating mood swings, from extreme highs (mania) to extreme lows (depression). Bipolar Idisorder is characterized based on the occurrence of at least one manic episode, with or without the occurrence of a majordepressive episode. Bipolar disorder is believed to affect approximately 5.7 million American adults, or about 2.6% of theU.S. population aged 18 and older in a given year. The median age of onset for bipolar disorder is 25 years.What is schizoaffective disorder?Schizoaffective disorder is a condition in which a person experiences a combination of schizophrenia symptoms, such asdelusions, hallucinations or other symptoms characteristic of schizophrenia, and mood disorder symptoms, such as maniaor depression. Schizoaffective disorder is a serious mental illness that affects about one in 100 people.AMPYRA/FAMPYRAAMPYRA (dalfampridine)/FAMPYRA (fampridine) is believed to be the first treatment approved in the U.S. and in over50 countries across Europe, Asia and the Americas to improve walking in adults with MS who have walking disability, asdemonstrated by an increase in walking speed. Extended-release dalfampridine tablets are marketed and sold by Acorda inthe U.S. under the trade name AMPYRA and by Biogen outside the U.S. under the trade name FAMPYRA. In July 2011,the European Medicines Agency (“EMA”) conditionally approved FAMPYRA in the EU, and in May 2017, the EMAgranted FAMPYRA a standard marketing authorization in the EU for the improvement of8 Table of Contentswalking in adults with MS. AMPYRA and FAMPYRA incorporate our oral controlled-release technology. AMPYRA andFAMPYRA are manufactured by us.We and/or Acorda have received notices of ANDA filings for AMPYRA asserting that a generic form of AMPYRA wouldnot infringe AMPYRA’s Orange Book-listed patents and/or those patents are invalid. In response, we and/or Acorda filedlawsuits against certain of the ANDA filers in the U.S. District Court for the District of Delaware (the “Delaware Court”)asserting infringement of U.S. Patent No. 5,540,938 (the “‘938 Patent”) , which we own, and U.S. Patent Nos. 8,007,826;8,354,437; 8,440,703; and 8,663,685, which are owned by Acorda. On March 31, 2017, the Delaware Court upheld the‘938 Patent, which pertains to the formulation of AMPYRA and is set to expire in July 2018, and invalidated U.S. PatentNos. 8,007,826; 8,354,437; 8,440,703; and 8,663,685, which pertain to AMPYRA (the “Delaware Court Decision”). InMay 2017, Acorda filed its appeal of the Delaware Court Decision with the U.S. Court of Appeals for the Federal Circuit(the “Federal Circuit”) with respect to the findings on U.S. Patent Nos. 8,007,826; 8,354,437; 8,440,703; and 8,663,685. InJune 2017, certain of the ANDA filers filed a cross-appeal of the Delaware Court Decision with the Federal Circuit withrespect to the validity of the ‘938 Patent. We and Acorda filed an opening brief in August 2017 and the ANDA filersresponded in October 2017. Each side subsequently filed a response and reply brief in November 2017. A date for oralargument before the Federal Circuit has not yet been set. For further discussion of the legal proceedings related to thepatents covering AMPYRA, see Note 16, Commitments and Contingencies in the “Notes to Condensed ConsolidatedStatements” and “Item 3—Legal Proceedings” in this Annual Report and for information about risks relating to theAMPYRA Paragraph IV litigation, see “Part I, Item 1A—Risk Factors” in this Annual Report and specifically the sectionentitled “—We or our licensees may face claims against intellectual property rights covering our products and competitionfrom generic drug manufacturers.”The legal proceedings in the Delaware Court related to the patents covering AMPYRA do not involve the patentscovering FAMPYRA, and the latest of the patents covering FAMPYRA expires in April 2025 in the EU.What is multiple sclerosis?Multiple sclerosis, or MS, is a chronic, usually progressive, disease in which the immune system attacks and degrades thefunction of nerve fibers in the brain and spinal cord. These nerve fibers consist of long, thin fibers, or axons, surrounded bya myelin sheath, which facilitates the transmission of electrical impulses. In MS, the myelin sheath is damaged by thebody’s own immune system, causing areas of myelin sheath loss, also known as demyelination. This damage, which canoccur at multiple sites in the CNS, blocks or diminishes conduction of electrical impulses. People with MS may sufferimpairments in any number of neurological functions. These impairments vary from individual to individual and over thecourse of time, depending on which parts of the brain and spinal cord are affected, and often include difficulty walking.Individuals vary in the severity of the impairments they suffer on a day‑to‑day basis, with impairments becoming better orworse depending on the activity of the disease on a given day.BYDUREON and BYDUREON BCiseBYDUREON (exenatide extended-release for injectable suspension) is approved in the U.S. and the EU for the treatmentof type 2 diabetes. AstraZeneca is responsible for the development and commercialization of BYDUREON worldwide.BYDUREON, a once-weekly formulation of exenatide, uses our polymer-based microsphere injectable extended-releasetechnology. BYDUREON is manufactured by AstraZeneca. BYDUREON Pen 2 mg, a pre-filled, single-use pen injector thatcontains the same formulation and dose as the original BYDUREON single-dose tray, is available in the U.S., certaincountries in the EU and Japan. In October 2017, AstraZeneca announced FDA approval of BYDUREON BCise, a new formulation of BYDUREON in aonce-weekly, single-dose autoinjector device for adults with type 2 diabetes. AstraZeneca announced the U.S. launch ofBYDUREON BCise in January 2018. A regulatory application for the new autoinjector device has also been accepted bythe EMA.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 healthcomplications, including cardiovascular, kidney and nerve disease. Diabetes is believed to affect nearly 26 million peoplein the U.S. and an estimated 382 million adults worldwide. 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 modestamount) supports patients in their efforts to achieve and sustain glycemic control.9 Table of ContentsKey Development ProgramsOur R&D is focused on leveraging our formulation expertise and proprietary product platforms to develop novel,competitively advantaged medications designed to enhance patient outcomes in major CNS disorders, such as schizophrenia,addiction, depression and MS. As part of our ongoing R&D efforts, we have devoted, and will continue to devote, significantresources to conducting pre-clinical work and clinical studies to advance the development of new pharmaceutical products.The discussion below highlights our current key R&D programs. Drug development involves a high degree of risk andinvestment, and the status, timing and scope of our development programs are subject to change. Important factors that couldadversely affect our drug development efforts are discussed in “Part I, Item 1A—Risk Factors” of this Annual Report. Refer tothe “Patents and Proprietary Rights” section in “Part I, Item 1— Business” of this Annual Report for information with respectto the intellectual property protection for our development candidates. The following graphic summarizes the status of our key development programs:Preclinical Phase 1 Phase 2Phase 3 NDASubmissionAripiprazole LauroxilNanoCrystalDispersionSchizophreniaALKS 5461Major Depressive DisorderALKS 3831SchizophreniaBIIB098 (formerly)ALKS 8700Multiple SclerosisALKS 4230CancerImmunotherapy Aripiprazole Lauroxil NanoCrystal DispersionAripiprazole Lauroxil NanoCrystal Dispersion (“ALNCD”) is a novel, investigational product designed to enableinitiation onto any dose or duration of ARISTADA (aripiprazole lauroxil) extended-release injectable suspension for thetreatment of schizophrenia. ALNCD uses our proprietary NanoCrystal technology and provides an extended-releasearipiprazole lauroxil formulation having a smaller particle size than ARISTADA, thereby enabling faster dissolution andleading to more rapid achievement of therapeutic levels of aripiprazole. We have submitted a new drug application(“NDA”) to the FDA for ALNCD to be used as an initiation dose for ARISTADA for the treatment of schizophrenia. TheFDA has issued a target action date for the ALNCD NDA of June 30, 2018 under the Prescription Drug User Fee Act.ALKS 5461ALKS 5461 is a proprietary, investigational, once-daily, oral medicine that acts as an opioid system modulator andrepresents a novel mechanism of action for the adjunctive treatment of major depressive disorder (“MDD”). ALKS 5461 is afixed-dose combination of buprenorphine, a partial mu-opioid receptor agonist and kappa-opioid receptor10 Table of Contentsantagonist, and samidorphan, a mu-opioid receptor antagonist. In October 2013, the FDA granted Fast Track status forALKS 5461 for the adjunctive treatment of MDD in patients with inadequate response to standard antidepressant therapies. The FORWARD (Focused On Results With A Rethinking of Depression) program for ALKS 5461 includes three corephase 3 efficacy studies (FORWARD-3, FORWARD-4 and FORWARD-5), as well as additional supportive studies toevaluate the long-term safety, dosing, pharmacokinetic profile and human abuse potential of ALKS 5461.In January 2016, we announced the topline results of FORWARD-3 and FORWARD-4. Neither study met the primaryefficacy endpoint, which compared ALKS 5461 to placebo on the change from baseline on the 10-item Montgomery—Åsberg Depression Rating Scale (“MADRS-10”) total scores. FORWARD-4, which tested two dose levels of ALKS 5461 (2mg/2 mg and 0.5 mg/0.5 mg) compared to placebo, showed a clear trend toward efficacy with the 2 mg/2 mg dose of ALKS5461 on the primary endpoint, and post hoc analyses achieved statistical significance for the 2 mg/2 mg dose group on theMADRS-10 endpoint. Based on these analyses, we believe that FORWARD-4 provides supportive evidence of the efficacyof ALKS 5461 for the adjunctive treatment of MDD in patients with an inadequate response to standard antidepressanttherapies. FORWARD-3 tested ALKS 5461 (2 mg/2 mg) compared to placebo. Placebo response was greater than thatobserved in FORWARD-4 and no treatment effect of ALKS 5461 was observed.In October 2016, we announced positive topline results from FORWARD-5, a phase 3, randomized, double-blind,multicenter, placebo-controlled, sequential parallel comparison design study of ALKS 5461 for the adjunctive treatment ofMDD in patients with an inadequate response to standard antidepressant therapies. ALKS 5461 2 mg/2 mg demonstratedstatistically significant reductions in MADRS-10 scores compared to placebo and also met the primary endpoint ofsignificantly reducing depression scores compared to placebo, as measured by the 6-item Montgomery—ÅsbergDepression Rating Scale (“MADRS-6”). The 1 mg/1 mg dose of ALKS 5461 showed improvement in depressive symptomsin the study, but did not separate significantly from placebo. FORWARD-5 was conducted in two sequential stages: Stage1 was 5 weeks in duration, and Stage 2 was 6 weeks. In Stage 1, the average change from baseline depression scores wascalculated for weeks 3 through 5. For Stage 2, the average change from baseline was calculated for weeks 3 through 6. Theresults of Stages 1 and 2 were then averaged. Depression scores were assessed using MADRS-6 and MADRS-10. MADRS-6,a subscale of the MADRS-10 assessment tool for depression, focuses on the core symptoms of depression. The mostcommon adverse events for ALKS 5461 observed in the FORWARD efficacy studies included nausea, constipation anddizziness.In February 2017 and July 2017, based on the results of FORWARD-5, the supportive evidence from FORWARD-4 andthe successful phase 2 study of ALKS 5461 we met with the FDA’s Division of Psychiatric Products at a Type C meetingand a pre-NDA meeting, respectively, to discuss ALKS 5461. In January 2018, we completed submission of our NDA forALKS 5461. The NDA is based on a comprehensive clinical efficacy and safety package with data from more than 30clinical trials and more than 1,500 patients with MDD.ALKS 3831ALKS 3831 is a novel, proprietary, oral investigational medicine designed as a broad-spectrum antipsychotic for thetreatment of schizophrenia. ALKS 3831 is composed of samidorphan in combination with the established antipsychoticdrug olanzapine, which is generally available under the name ZYPREXA. ALKS 3831 is designed to provide the strongantipsychotic efficacy of olanzapine and a differentiated safety profile with favorable weight and metabolic properties.The ENLIGHTEN clinical development program for ALKS 3831 includes two key studies: ENLIGHTEN-1, a studyevaluating the antipsychotic efficacy of ALKS 3831 compared to placebo over four weeks and ENLIGHTEN-2, a studyassessing weight gain with ALKS 3831 compared to olanzapine in patients with schizophrenia over six months. Theprogram also includes supportive studies to evaluate the pharmacokinetic, metabolic and safety profile of ALKS 3831.In June 2017, we announced positive preliminary topline results from ENLIGHTEN-1, a multinational, double-blind,randomized, phase 3 study that evaluated the antipsychotic efficacy, safety and tolerability of ALKS 3831 compared toplacebo in patients experiencing an acute exacerbation of schizophrenia. ALKS 3831 met the prespecified primaryendpoint demonstrating statistically significant reductions from baseline in Positive and Negative Syndrome Scale(“PANSS”) scores compared to placebo. The study also included an olanzapine arm, but was not designed to providecomparative efficacy or safety data between ALKS 3831 and olanzapine. Data from the study11 Table of Contentsshowed that olanzapine achieved similar improvements from baseline PANSS scores as compared to placebo. Results fromENLIGHTEN-2 are expected in the fall of 2018.We recently completed the exploratory phase 1 metabolic study of ALKS 3831, assessing the effects of ALKS 3831 onimportant metabolic parameters compared to olanzapine, and expect to present initial results in the first half of 2018.We expect to use safety and efficacy data from the ENLIGHTEN clinical development program, if successful, to serve asthe basis for an NDA, which we plan to submit to the FDA in the first half of 2019.BIIB098 (formerly ALKS 8700)BIIB098, formerly referred to as ALKS 8700, is a novel, proprietary, oral investigational monomethyl fumarate(“MMF”) prodrug in development for the treatment of relapsing forms of MS. BIIB098 is designed to rapidly andefficiently convert to MMF in the body and to offer differentiated features as compared to the currently marketed dimethylfumarate, TECFIDERA. In March 2017, we initiated an elective, randomized, head-to-head phase 3 study designed tocompare the gastrointestinal tolerability of BIIB098 to TECFIDERA in patients with relapsing-remitting MS.The pivotal clinical program for BIIB098 consists of pharmacokinetic bridging studies comparing BIIB098 andTECFIDERA and a two-year, multicenter, open-label study designed to assess the safety of BIIB098, which we initiated inDecember 2015. During the third quarter of 2017, we completed the clinical registration requirements for BIIB098. Weexpect to complete the required non-clinical studies in 2018 and file a 505(b)(2) NDA in the second half of 2018. For moreinformation about 505(b)(2) NDAs, see “Part 1, Item 1—Business, Regulatory, Hatch-Waxman Act” of this Annual Report.In November 2017, we entered into an exclusive license and collaboration agreement with Biogen relating to BIIB098. For more information about the license and collaboration agreement with Biogen, see “Part 1, Item 1—Business,Collaborative Arrangements” of this Annual Report. We expect to have initial results to share with Biogen in the first halfof 2018 from the head-to-head phase 3 study.ALKS 4230ALKS 4230 is an engineered fusion protein designed to preferentially bind and signal through the intermediate affinityinterleukin-2 (“IL-2”) receptor complex, thereby selectively activating and increasing the number of immunostimulatorytumor-killing immune cells while avoiding the expansion of immunosuppressive cells that interfere with anti-tumorresponse. The selectivity of ALKS 4230 is designed to leverage the proven anti-tumor effects while overcoming limitationsof existing IL-2 therapy, which activates both immunosuppressive and tumor-killing immune cells. Our phase 1 study forALKS 4230 is being conducted in two stages: a dose-escalation stage followed by a dose-expansion stage. The first stageof the study is designed to determine a maximum tolerated dose, and to identify the optimal dose range of ALKS 4230based on measures of immunological-pharmacodynamic effects. Following the identification of the optimal dose range ofALKS 4230 in the first stage of the study, the dose-expansion stage of the study will evaluate ALKS 4230 in patients withselected solid tumor types. Initial data from the first stage of the phase 1 study are expected in 2018.Other ProgramsInduction Protocols for Initiation onto VIVITROL (formerly ALKS 6428)In 2017, we completed two phase 3 clinical trials evaluating the efficacy and safety of an investigational inductionprotocol designed to help healthcare providers transition patients from physical dependence on opioids to initiation withVIVITROL. The investigational regimen, previously referred to as ALKS 6428, consisted of ascending doses of oralnaltrexone administered in conjunction with ancillary medications, including buprenorphine, during a seven-daytreatment period, prior to first VIVITROL injection. In February 2017, we announced results from the first phase 3 study inpatients dependent on heroin or prescription opioids, in which data demonstrated that rates of transition to VIVITROLwere comparable across all treatment groups. The primary endpoint of the study was not met, as patients in all treatmentarms (ascending doses of naltrexone plus tapering doses of buprenorphine, ascending doses of naltrexone plus placebo,and placebo, in each case in conjunction with ancillary medications) performed equally well, with a similar percentage ofpatients in each treatment arm successfully transitioning to initiation with VIVITROL.12 Table of ContentsWe recently completed the second phase 3 study of the investigational induction protocol in patients who wanted totransition from buprenorphine maintenance therapy to initiation with VIVITROL for the treatment of opioid dependence.The Company plans to publish the data from both phase 3 studies in peer-reviewed publications in 2018. Our Research and Development ExpendituresPlease see “Management’s Discussion and Analysis of Financial Condition and Results of Operations” for our R&Dexpenditures for the years ended December 31, 2017, 2016 and 2015.Collaborative ArrangementsWe have entered into several collaborative arrangements to develop and commercialize products and, in connection withsuch arrangements, to access technological, financial, marketing, manufacturing and other resources. Refer to the “Patentsand Proprietary Rights” section in this “Part I, Item 1—Business” of this Annual Report for information with respect to theintellectual property protection for these products.JanssenINVEGA SUSTENNA/XEPLION and INVEGA TRINZA/TREVICTAUnder our license agreement with Janssen Pharmaceutica N.V., we granted Janssen a worldwide exclusive license underour NanoCrystal technology to develop, commercialize and manufacture INVEGA SUSTENNA/XEPLION and INVEGATRINZA/TREVICTA and related products.Under this license agreement, we received milestone payments upon the achievement of certain development goals fromJanssen; there are no further milestones to be earned under this agreement. We receive tiered royalty payments between 5%and 9% of INVEGA SUSTENNA/XEPLION and INVEGA TRINZA/TREVICTA end-market net sales in each country wherethe license is in effect, with the exact royalty percentage determined based on aggregate worldwide net sales. The tieredroyalty payments consist of a patent royalty and a know‑how royalty, both of which are determined on acountry‑by‑country basis. The patent royalty, which equals 1.5% of net sales, is payable in each country until theexpiration of the last of the patents claiming the product in such country. The know‑how royalty is a tiered royalty of3.5%, 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 thelicense agreement. These royalty payments may be reduced in any country based on patent litigation or on competingproducts achieving certain minimum sales thresholds. The license agreement expires upon the later of (i) March 31, 2019or (ii) the expiration of the last of the patents subject to the agreement. 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 havethe right to terminate the agreement upon a material breach of the other party, which is not cured within a certain timeperiod, or upon the other party’s bankruptcy or insolvency.RISPERDAL CONSTAUnder a product development agreement, we collaborated with Janssen on the development of RISPERDAL CONSTA.Under the development agreement, Janssen provided funding to us for the development of RISPERDAL CONSTA, andJanssen is responsible for securing all necessary regulatory approvals for the product.Under two license agreements, we granted Janssen and an affiliate of Janssen exclusive worldwide licenses to use andsell RISPERDAL CONSTA. Under our license agreements with Janssen, we receive royalty payments equal to 2.5% ofJanssen’s end-market net sales of RISPERDAL CONSTA in each country where the license is in effect based on the quarterwhen the product is sold by Janssen. This royalty may be reduced in any country based on lack of patent coverage andsignificant competition from generic versions of the product. Janssen can terminate the license agreements upon 30 days’prior written notice to us. Either party may terminate the license agreements by written notice following a breach whichcontinues for 90 days after the delivery of written notice thereof or upon the other party’s insolvency. The licenses grantedto Janssen expire on a country‑by‑country basis upon the later of (i) the expiration of the last patent claiming the productin such country or (ii) 15 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 the13 Table of Contentstwentieth anniversary of the first commercial sale of the product in each such country, with the exception of Canada,France, Germany, Italy, Japan, Spain and the United Kingdom, in each case, where the fifteen‑year minimum shall pertainregardless. After expiration, Janssen retains a non‑exclusive, royalty‑free license to manufacture, use and sell RISPERDALCONSTA.We exclusively manufacture RISPERDAL CONSTA for commercial sale. Under our manufacturing and supplyagreement with Janssen, we record manufacturing revenues when product is shipped to Janssen, based on a percentage ofJanssen’s net unit sales price for RISPERDAL CONSTA for the applicable calendar year. This percentage is determinedbased on Janssen’s unit demand for such calendar year and varies based on the volume of units shipped, with a minimummanufacturing fee of 7.5%. The manufacturing and supply agreement terminates on expiration of the license agreements.In addition, either party may terminate the manufacturing and supply agreement upon a material breach by the other party,which is not resolved within 60 days after receipt of a written notice specifying the material breach or upon written noticein the event of the other party’s insolvency or bankruptcy. Janssen may terminate the agreement upon six months’ writtennotice to us. In the event that Janssen terminates the manufacturing and supply agreement without terminating the licenseagreements, the royalty rate payable to us on Janssen’s net sales of RISPERDAL CONSTA would increase from 2.5% to5.0%.AcordaUnder an amended and restated license agreement, we granted Acorda an exclusive worldwide license to use and selland, solely in accordance with our supply agreement, to make or have made, AMPYRA/FAMPYRA. We receive certaincommercial and development milestone payments, license revenues and a royalty of approximately 10% based on net salesof AMPYRA/FAMPYRA by Acorda and its sub‑licensee, Biogen. This royalty payment may be reduced in any countrybased on lack of patent coverage, competing products achieving certain minimum sales thresholds, and whether wemanufacture the product.In June 2009, we entered into an amendment of the amended and restated license agreement and the supply agreementwith Acorda and, pursuant to such amendment, consented to the sublicense by Acorda to Biogen of Acorda’s rights to useand sell FAMPYRA in certain territories outside of the U.S. (to the extent that such rights were to be sublicensed to Biogenpursuant to its separate collaboration and license agreement with Acorda). Under this amendment, we agreed to modifycertain terms and conditions of the amended and restated license agreement and the supply agreement with Acorda toreflect the sublicense by Acorda to Biogen.Acorda has the right to terminate the amended and restated license agreement upon 90 days’ written notice. We have theright to terminate the amended and restated license agreement for countries in which Acorda fails to launch a productwithin a specified time after obtaining the necessary regulatory approval or fails to file regulatory approvals within acommercially reasonable time after completion of, and receipt of positive data from, all pre-clinical and clinical studiesrequired for filing a marketing authorization application. Either party has the right to terminate the amended and restatedlicense agreement by written notice following a material breach of the other party, which is not cured within a certain timeperiod, or upon the other party’s entry into bankruptcy or dissolution proceedings. If we terminate Acorda’s license in anycountry, we are entitled to a license from Acorda of its patent rights and know‑how relating to the product as well as therelated data, information and regulatory files, and to market the product in the applicable country, subject to an initialpayment equal to Acorda’s cost of developing such data, information and regulatory files and to ongoing royalty paymentsto Acorda. Subject to the termination of the amended and restated license agreement, licenses granted under the licenseagreement terminate on a country‑by‑country basis on the later of (i) September 26, 2018 or (ii) the expiration of the last toexpire 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/FAMPYRAfor Acorda (and its sub‑licensee, Biogen). Under the terms of the agreement, Acorda may obtain up to 25% of its totalannual requirements of product from a second‑source manufacturer. We receive manufacturing royalties equal to 8% of netselling price for all product manufactured by us and a compensating payment for product manufactured and supplied by athird party. We may terminate the commercial manufacturing supply agreement upon 12 months’ prior written notice toAcorda, and either party may terminate the commercial manufacturing supply agreement following a material and uncuredbreach of the commercial manufacturing supply agreement or amended and restated license agreement or the entry intobankruptcy or dissolution proceedings by the other party. In addition, subject to early termination of the commercialmanufacturing supply agreement noted above,14 Table of Contentsthe commercial manufacturing supply agreement terminates upon the expiry or termination of the amended and restatedlicense agreement.We are entitled to receive the following milestone payments under our amended and restated license agreement withAcorda for each of the third and fourth new indications of the product developed thereunder:●initiation of a phase 3 clinical trial: $1.0 million;●acceptance of an NDA by the FDA: $1.0 million;●approval of the NDA by the FDA: $1.5 million; and●the first commercial sale: $1.5 million.In January 2011, we entered into a development and supplemental agreement to our amended and restated licenseagreement and commercial manufacturing supply agreement with Acorda. Under the terms of this agreement, we grantedAcorda the right, either with us or with a third party, in each case in accordance with certain terms and conditions, todevelop new formulations of dalfampridine or other aminopyridines. Under the terms of the agreement, Acorda has theright to select either a formulation developed by us or by a third party for commercialization. We are entitled todevelopment fees we incur in developing formulations under the development and supplemental agreement and, if Acordaselects and commercializes any such formulation, to milestone payments (for new indications if not previously paid),license revenues and royalties in accordance with our amended and restated license agreement for the product, and eithermanufacturing fees as a percentage of net selling price for product manufactured by us or compensating fees for productmanufactured by third parties. If, under the development and supplemental agreement, Acorda selects a formulation notdeveloped by us, then we will be entitled to various compensation payments and have the first option to manufacture suchthird‑party formulation. The development and supplemental agreement expires upon the expiry or termination of theamended and restated license agreement and may be earlier terminated by either party following an uncured breach of theagreement by the other party.Acorda’s financial obligations under this development and supplemental agreement continue for a minimum of ten yearsfrom the first commercial sale of such new formulation, and may extend for a longer period of time, depending on theintellectual property rights protecting the formulation, regulatory exclusivity and/or the absence of significant marketcompetition. These financial obligations survive termination of the agreement.AstraZenecaIn May 2000, we entered into a development and license agreement with Amylin for the development of exendinproducts falling within the scope of our patents, including the once‑weekly formulation of exenatide marketed asBYDUREON. In August 2012, Bristol‑Myers Squibb Company (“Bristol-Myers”) acquired Amylin. From August 2012through January 2014, Bristol‑Myers and AstraZeneca jointly developed and commercialized Amylin’s exendin products,including BYDUREON, through their diabetes collaboration. In April 2013, Bristol‑Myers completed its assumption of allglobal commercialization responsibility related to the marketing of BYDUREON from Amylin’s former partner, Eli Lilly &Company (“Lilly”). In February 2014, AstraZeneca acquired sole ownership from Bristol-Myers of the intellectual propertyand global rights related to BYDUREON and Amylin’s other exendin products, including Amylin’s rights and obligationsunder our development and license agreement.Pursuant to the development and license agreement, AstraZeneca has an exclusive, worldwide license to ourpolymer‑based microsphere technology for the development and commercialization of injectable extended‑releaseformulations of exendins and other related compounds. We receive funding for research and development and will alsoreceive royalty payments based on future net product sales. Upon the achievement of certain development andcommercialization goals, we received milestone payments consisting of cash and warrants for Amylin common stock; thereare no further milestones to be earned under the agreement. In October 2005 and in July 2006, we amended thedevelopment and license agreement. Under the amended development and license agreement (i) we are responsible forformulation and are principally responsible for non‑clinical development of any products that may be developed pursuantto the agreement and for manufacturing these products, except to the extent manufacturing rights have been transferred toAmylin, and (ii) we transferred certain of our technology related to the manufacture of BYDUREON to Amylin and agreedto the manufacture of BYDUREON by Amylin. Under our amended development and license agreement, AstraZeneca isresponsible for conducting clinical trials, securing regulatory approvals and commercializing exenatide products,including BYDUREON, on a worldwide basis.15 Table of ContentsUntil December 31, 2021, we will receive royalties equal to 8% of net sales from the first 40 million units ofBYDUREON products sold in any particular calendar year and 5.5% of net sales from units sold beyond the first 40 millionunits for that calendar year. Thereafter, during the term of the development and license agreement, we will receive royaltiesequal to 5.5% of net sales of products sold. We were entitled to, and received, milestone payments related to the firstcommercial sale of BYDUREON in the EU and the first commercial sale of BYDUREON in the U.S.The development and license agreement expires on the later of (i) ten years from the first commercial sale of the last ofthe products covered by the development and license agreement, or (ii) the expiration or invalidation of all of our patentslicensed under the agreement. Upon expiration, all licenses become non‑exclusive and royalty‑free. AstraZeneca mayterminate the development and license agreement for any reason upon 180 days’ written notice to us. In addition, eitherparty 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. Alkermes may terminate thedevelopment and license agreement upon AstraZeneca’s insolvency or bankruptcy.BiogenUnder a license and collaboration agreement, we granted Biogen a worldwide, exclusive, sublicensable license todevelop, manufacture and commercialize BIIB098 and other products covered by patents licensed to Biogen under theagreement.Upon entering into this agreement in November 2017, we received an up-front cash payment of $28.0 million. We arealso eligible to receive additional payments upon achievement of milestones, as follows: (i) a $50.0 million optionpayment upon Biogen’s decision to continue the collaboration after having reviewed certain data from our long-termsafety clinical trial and part A of the head-to-head phase 3 gastrointestinal tolerability clinical trial comparing BIIB098 toTECFIDERA and (ii) a $150.0 million payment upon an approval by the FDA on or before December 31, 2021 of a 505(b)(2) NDA (or, in certain circumstances, a 505(b)(1) NDA) for BIIB098. We are also eligible to receive additional paymentsupon achievement of milestones with respect to the first two products, other than BIIB098, covered by patents licensed toBiogen under the agreement.In addition, we will receive a mid-teens percentage royalty on worldwide net sales of BIIB098, subject to, under certaincircumstances, minimum annual payments for the first five years following FDA approval of BIIB098. We will also receiveroyalties on net sales of products, other than BIIB098, covered by patents licensed to Biogen under the agreement, at tieredroyalty rates calculated as percentages of net sales ranging from high-single digits to sub-teen double digits. All royaltiesare payable on a product-by-product and country-by-country basis until the later of (i) the last-to-expire patent rightcovering the applicable product in the applicable country and (ii) a specified period of time from the first commercial saleof the applicable product in the applicable country. Royalties for all products and the minimum annual payments forBIIB098 are subject to customary reductions.Except in certain limited circumstances, until FDA approval of an NDA for BIIB098, we are responsible for thedevelopment of BIIB098 for the treatment of MS. Biogen paid a portion of the BIIB098 development costs we incurred in2017 and, beginning on January 1, 2018, Biogen will be responsible for all BIIB098 development costs we incur, subjectto annual budget limitations. After the date of FDA approval of an NDA for BIIB098 for the treatment of MS, Biogen willbe responsible for all development and commercialization activities, as well as the costs of all such activities, for BIIB098and all other products covered by patents licensed to Biogen under the agreement. We have retained the right tomanufacture clinical supplies and commercial supplies of BIIB098 and all other products covered by patents licensed toBiogen under the agreement, subject to Biogen’s right to manufacture or have manufactured commercial supplies as aback-up manufacturer and subject to good faith agreement by the parties on the terms of such manufacturingarrangements. If BIIB098 discontinuations due to gastrointestinal adverse events in BIIB098’s long-term safety clinical trial exceed acertain pre-defined threshold or BIIB098 demonstrates a greater rate of discontinuations as compared to TECFIDERA inpart A of the head-to-head phase 3 gastrointestinal tolerability clinical trial, then “GI Inferiority” shall exist, and (i) Biogenshall have the right to recapture from us its $50.0 million option payment through certain temporary reductions in royaltyrates, (ii) the minimum annual payments Biogen owes to us shall terminate and (iii) there shall be no reversion of BIIB098to us in the event that Biogen terminates the agreement and does not commercialize BIIB098.16 Table of ContentsUnless earlier terminated, the agreement will remain in effect until the expiry of all royalty obligations. Biogen has theright to terminate the agreement at will, on a product-by-product basis or in its entirety. Either party has the right toterminate the agreement following any governmental prohibition of the transactions effected by the agreement, or inconnection with an insolvency event involving the other party. Upon termination of the agreement by either party, if,prior to such termination (i) BIIB098 did not meet GI Inferiority or (ii) BIIB098 met GI Inferiority but Biogencommercialized BIIB098, then, at our request, the BIIB098 program will revert to us.Proprietary Product PlatformsOur proprietary product platforms, which include technologies owned and exclusively licensed to us, address severalimportant development opportunities. We have used these technologies as platforms to establish drug development, clinicaldevelopment and regulatory expertise.Injectable Extended‑Release Microsphere TechnologyOur injectable extended‑release microsphere technology allows us to encapsulate small‑molecule pharmaceuticals,peptides and proteins in microspheres made of common medical polymers. The technology is designed to enable novelformulations of pharmaceuticals by providing controlled, extended release of drugs over time. Drug release from themicrosphere is controlled by diffusion of the drug through the microsphere and by biodegradation of the polymer. Theseprocesses can be modulated through a number of formulation and fabrication variables, including drug substance andmicrosphere particle sizing and choice of polymers and excipients.LinkeRx TechnologyThe long‑acting LinkeRx technology platform is designed to enable the creation of extended‑release injectable versionsof antipsychotic therapies and may also be useful in other disease areas in which extended duration of action may providetherapeutic benefits. The technology uses proprietary linker‑tail chemistry to create new molecular entities derived fromknown agents.NanoCrystal TechnologyOur NanoCrystal technology is applicable to poorly water‑soluble compounds and involves formulating and stabilizingdrugs into particles that are nanometers in size. A drug in NanoCrystal form can be incorporated into a range of commondosage forms and administration routes, including tablets, capsules, inhalation devices and sterile forms for injection, withthe potential for enhanced oral bioavailability, increased therapeutic effectiveness, reduced/eliminated fed/fastedvariability and sustained duration of intravenous/intramuscular release.Oral Controlled Release TechnologyOur oral controlled release (“OCR”) technologies are used to formulate, develop and manufacture oral dosage forms ofpharmaceutical products that control the release characteristics of standard dosage forms. Our OCR platform includestechnologies for tailored pharmacokinetic profiles including SODAS technology, CODAS technology, IPDAS technologyand the MXDAS drug absorption system, each as described below:●SODAS Technology: SODAS (“Spheroidal Oral Drug Absorption System”) technology involves producinguniform spherical beads of 1 mm to 2 mm in diameter containing drug plus excipients and coated withproduct‑specific modified‑release polymers. Varying the nature and combination of polymers within aselectively permeable membrane enables varying degrees of modified release depending upon the requiredproduct profile.●CODAS Technology: CODAS (“Chronotherapeutic Oral Drug Absorption System”) technology enables thedelayed onset of drug release incorporating the use of specific polymers, resulting in a drug release profile thatmore accurately complements circadian patterns.●IPDAS Technology: IPDAS (“Intestinal Protective Drug Absorption System”) technology conveysgastrointestinal protection by a wide dispersion of drug in a controlled and gradual manner, through the use ofnumerous high‑density controlled‑release beads compressed into a tablet form. Release characteristics aremodified by the application of polymers to the micro matrix and subsequent coatings, which form arate‑limiting semi‑permeable membrane.17 Table of Contents●MXDAS Technology: MXDAS (“Matrix Drug Absorption System”) technology formulates the drug in ahydrophilic matrix and incorporates one or more hydrophilic matrix‑forming polymers into a solid oral dosageform, which controls the release of drug through a process of diffusion and erosion in the gastrointestinal tract.Manufacturing and Product SupplyWe own and occupy an R&D and manufacturing facility in Athlone, Ireland and a manufacturing facility in Wilmington,Ohio. We either purchase active drug product from third parties or receive it from our third‑party licensees to formulateproduct using our technologies. The manufacture of our products for clinical trials and commercial use is subject to CurrentGood Manufacturing Practices (“cGMP”) regulations and other regulations. Our manufacturing and development capabilitiesinclude formulation through process development, scale‑up and full‑scale commercial manufacturing and specializedcapabilities for the development and manufacturing of controlled substances.Although some materials and services for our products are currently available from a single source or a limited number ofqualified sources, we attempt to acquire an adequate inventory of such materials, establish alternative sources and/ornegotiate long‑term supply arrangements. We believe we do not have any significant issues in finding suppliers. However,we cannot be certain that we will continue to be able to obtain long‑term supplies of our manufacturing materials.Our supply chain is growing with an expanding external network of third‑party service providers involved in themanufacture of our products who are subject to inspection by the FDA or comparable agencies in other jurisdictions. Anydelay, interruption or other issues that arise in the acquisition of active pharmaceutical ingredients (“API”), raw materials, orcomponents, or in the manufacture, fill‑finish, packaging, or storage of our marketed or development products, including as aresult of a failure of our facilities or the facilities or operations of third parties to pass any regulatory agency inspection,could significantly impair our ability to sell our products or advance our development efforts, as the case may be. Forinformation about risks relating to the manufacture of our marketed products and product candidates, see “Item 1A—RiskFactors” and specifically those sections entitled “—We rely on third parties to provide services in connection with themanufacture and distribution of our products” and “—We are subject to risks related to the manufacture of our products.”Proprietary Products and Products using our Proprietary TechnologiesWe manufacture microspheres for RISPERDAL CONSTA and VIVITROL, polymer for BYDUREON and BYDUREONBCise, and ARISTADA in our Wilmington, Ohio facility. We are currently operating one RISPERDAL CONSTA line, twoVIVITROL lines and two ARISTADA lines at commercial scale. In 2018, we expect to qualify a dedicated fill line for thecommercial production of VIVITROL diluent. We source our packaging operations for VIVITROL and ARISTADA to athird‑party contractor. Janssen is responsible for packaging operations for RISPERDAL CONSTA and, in Russia andcertain countries of the CIS, VIVITROL. Our Wilmington, Ohio facility has been inspected by U.S., European (includingthe Medicines and Healthcare Products Regulatory Agency), Chinese, Japanese, Brazilian, Turkish and Saudi Arabianregulatory authorities for compliance with required cGMP standards for continued commercial manufacturing.We manufacture AMPYRA/FAMPYRA and other products in our Athlone, Ireland facility. This facility has beeninspected by U.S., Irish, Brazilian, Turkish, Saudi Arabian, Korean, Belarusian and Chinese regulatory authorities forcompliance with required cGMP standards for continued commercial manufacturing. The FDA recently completed a pre-approval inspection and recommended the Athlone, Ireland facility for approval to manufacture commercial supplies ofbulk intermediate NanoCrystal Dispersion of Meloxicam. For more information about our manufacturing facilities, see “Item 2—Properties.”Clinical ProductsWe have established, and are operating, facilities with the capability to produce clinical supplies of injectableextended‑release products as well as solid dosage and biologics products at our Wilmington, Ohio facility andNanoCrystal and OCR technology products at our Athlone, Ireland facility. We have also contracted with third‑partymanufacturers to formulate certain products for clinical use. We require that our contract manufacturers adhere to cGMP inthe manufacture of products for clinical use.18 Table of ContentsResearch & DevelopmentWe devote significant resources to R&D programs. We focus our R&D efforts on developing novel therapeutics in areasof 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” for our R&D expenditures forour years ended December 31, 2017, 2016 and 2015.Permits and Regulatory ApprovalsWe hold various licenses in respect of our manufacturing activities conducted in Wilmington, Ohio and Athlone, Ireland.The primary licenses held in this regard are FDA Registrations of Drug Establishment; and Drug Enforcement Administrationof the U.S. Department of Justice (“DEA”). We also hold a Manufacturers Authorization (No. M1067), an InvestigationalMedicinal Products Manufacturers Authorization (No. IMP074) and Certificates of Good Manufacturing PracticeCompliance of a Manufacturer (Ref. 2014/7828/IMP074 and 2014/7828/M1067) from the Health Products RegulatoryAuthority in Ireland (“HPRA”) in respect of our Athlone, Ireland facility, and a number of Controlled Substance Licensesgranted by the HPRA. Due to certain U.S. state law requirements, we also hold state licenses to cover distribution activitiesthrough certain states and not in respect 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 thathave been developed on behalf of a licensee of such technologies. In such cases, our licensee usually holds the relevantauthorization from the FDA or other national regulator, and we would support this authorization by furnishing a copy of theDrug Master File, or the chemistry, manufacturing and controls data to the relevant regulator to prove adequatemanufacturing data in respect of the product. We would generally update this information annually with the relevantregulator. In other cases where we have developed proprietary products, such as VIVITROL and ARISTADA, we hold theappropriate regulatory documentation ourselves.Marketing, Sales and DistributionWe are responsible for the marketing of VIVITROL and ARISTADA in the U.S. We focus our sales and marketing efforts onspecialist physicians in private practice and in public treatment systems. We believe that we use customary pharmaceuticalcompany practices to market our product and to educate physicians. Our practices include, the education of individualphysicians, nurses, social workers, counselors and other stakeholders involved in the treatment of opioid dependence,advertisements, professional symposia, selling initiatives and other methods. We provide, or contract with third‑partyvendors to provide, customer service and other related programs for our products, such as product‑specific websites,insurance research services and order, delivery and fulfillment services.Our sales force for VIVITROL in the U.S. consists of approximately 100 individuals. VIVITROL is sold to pharmaceuticalwholesalers, pharmacies, specialty distributors and treatment providers. Product sales of VIVITROL during the year endedDecember 31, 2017 to Cardinal Health, McKesson Corporation, AmerisourceBergen Corporation (“AmerisourceBergen”) andCVS Caremark Corporation represented approximately 19%, 18%, 18% and 11%, respectively, of total VIVITROL sales.Our sales force for ARISTADA in the U.S. consists of approximately 220 individuals. ARISTADA is primarily sold topharmaceutical wholesalers. Product sales of ARISTADA during the year ended December 31, 2017 to Cardinal Health,McKesson Corporation and AmerisourceBergen represented approximately 45%, 24% and 20%, respectively, of totalARISTADA sales.ICS AmerisourceBergen, a division of AmerisourceBergen, provides warehousing, shipping and administrative services forVIVITROL and ARISTADA.Under our license agreements with Janssen, AstraZeneca, Acorda and other licensees and sublicensees, they are eachresponsible for the commercialization of any products developed under their respective agreement if and when regulatoryapproval is obtained.19 Table of ContentsCompetitionWe face intense competition in the development, manufacture, marketing and commercialization of our products frommany and varied sources, such as academic institutions, government agencies, research institutions and biopharmaceuticalcompanies, including other companies with similar technologies. Some of these competitors are also our licensees, whocontrol the commercialization of products from which we receive manufacturing and royalty revenues. These competitors areworking to develop and market other systems, products and other methods of preventing or reducing disease, and newsmall‑molecule and other classes of drugs that can be used with or without a drug delivery system.The biopharmaceutical industry is characterized by intensive research, development and commercialization efforts andrapid and significant technological change. Many of our competitors are larger and have significantly greater financial andother resources than we do. We expect our competitors to develop new technologies, products and processes that may bemore effective than those we develop. The development of technologically improved or different products or technologiesmay make our products or product platforms obsolete or noncompetitive before we recover expenses incurred in connectionwith their development or realize any revenues from any marketed product.There are other companies developing extended‑release product platforms. In many cases, there are products on the marketor in development that may be in direct competition with our products. In addition, we know of new chemical entities thatare being developed that, if successful, could compete against our products. These chemical entities are being designed towork differently than our products and may turn out to be safer or to be more effective than our products. Among the manyexperimental therapies being tested around the world, there may be some that we do not now know of that may compete withour proprietary product platforms or products. Our licensees could choose a competing technology to use with their drugsinstead of one of our product platforms and could develop products that compete with our products.With respect to our products, we believe that our ability to successfully compete will depend on, among other things, theexistence of competing or alternative products in the marketplace, including generic competition, and the relative price ofthose products; the efficacy, safety and reliability of our products compared to competing or alternative products; productacceptance by physicians, other health care providers and patients; our ability to comply with applicable laws, regulationsand regulatory requirements with respect to the commercialization of our products, including any changes or increases toregulatory restrictions; protection of our proprietary rights; obtaining reimbursement for our products in approvedindications; our ability to complete clinical development and obtain regulatory approvals for our products, and the timingand scope of regulatory approvals; our ability to provide a reliable supply of commercial quantities of a product to themarket; and our ability to recruit, retain and develop skilled employees.With respect to our proprietary injectable product platform, we are aware that there are other companies developingextended-release delivery systems for pharmaceutical products, including, but not limited to Luye Pharma Group Ltd. (“LuyePharma”), which is developing risperidone formulated as extended release microspheres for intramuscular injection for thetreatment of schizophrenia and/or schizoaffective disorders, and Indivior plc, which is developing a once-monthly injectablerisperidone for the treatment of schizophrenia. In the treatment of schizophrenia, ARISTADA, INVEGASUSTENNA/XEPLION, INVEGA TRINZA/TREVICTA and RISPERDAL CONSTA compete with each other and a number ofother injectable products including ZYPREXA RELPREVV ((olanzapine) For Extended Release Injectable Suspension),which is marketed and sold by Lilly; ABILIFY MAINTENA (aripiprazole for extended release injectable suspension), a once-monthly injectable formulation of ABILIFY (aripiprazole) developed by Otsuka Pharm. Co.; oral compounds currently on themarket; and generic versions of branded oral and injectable products. In the treatment of bipolar disorder, RISPERDALCONSTA competes with antipsychotics such as oral aripiprazole, REXULTI, LATUDA, ABILIFY MAINTENA, risperidone,olanzapine, ziprasidone and clozapine.In the treatment of alcohol dependence, VIVITROL competes with generic acamprosate calcium (also known asCAMPRAL) and generic disulfiram (also known as ANTABUSE) as well as currently marketed drugs, including genericdrugs, also formulated from naltrexone. Other pharmaceutical companies are developing products that have shown somepromise in treating alcohol dependence that, if approved by the FDA, would compete with VIVITROL.In the treatment of opioid dependence, VIVITROL competes with SUBOXONE (buprenorphine HCl/naloxone HCldehydrate sublingual tablets), SUBOXONE (buprenorphine/naloxone) Sublingual Film, SUBUTEX (buprenorphine HClsublingual tablets) and, once launched, will compete with SUBLOCADE (once-monthly buprenorphine extended-release20 Table of Contentsinjection), each of which is, or will be, marketed and sold by Indivior plc, and BUNAVAIL buccal film (buprenorphine andnaloxone) marketed by BioDelivery Sciences, PROBUPHINE (buprenorphine) from Titan Pharmaceuticals, Inc., andZUBSOLV (buprenorphine and naloxone) marketed by Orexo US, Inc. VIVITROL also competes with methadone, oralnaltrexone and generic versions of SUBUTEX and SUBOXONE sublingual tablets. Other pharmaceutical companies aredeveloping products that have shown promise in treating opioid dependence that, if approved by the FDA, would competewith VIVITROL.BYDUREON and BYDUREON BCise compete with established diabetes therapies for market share. Such competitiveproducts include sulfonylureas, metformin, insulins, thiazolidinediones, glinides, dipeptidyl peptidase type IV inhibitors,insulin sensitizers, alpha‑glucosidase inhibitors and sodium‑glucose transporter‑2 inhibitors. BYDUREON and BYDUREONBCise also compete 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 and TRULICITY ((dulaglutide) injection), which is marketedand sold by Lilly. Other pharmaceutical companies are developing products for the treatment of type 2 diabetes that, ifapproved by the FDA, would compete with BYDUREON and BYDUREON BCise.While AMPYRA/FAMPYRA is approved as a treatment to improve walking in patients with MS, there are a number ofFDA‑approved therapies for MS disease management that seek to reduce the frequency and severity of exacerbations or slowthe accumulation of physical disability for people with certain types of MS. These products include AVONEX, TYSABRI,TECFIDERA, and PLEGRIDY from Biogen; OCREVUS from Genentech; BETASERON from Bayer HealthCarePharmaceuticals; COPAXONE from Teva Pharmaceutical Industries Ltd.; REBIF and NOVANTRONE from EMDSerono, Inc.; GILENYA and EXTAVIA from Novartis AG; AUBAGIO and LEMTRADA from Sanofi‑Aventis; and genericproducts.With respect to our NanoCrystal technology, we are aware that other technology approaches similarly address poorlywater‑soluble drugs. These approaches include nanoparticles, cyclodextrins, lipid‑based self‑emulsifying drug deliverysystems, dendrimers and micelles, among others, any of which could limit the potential success and growth prospects ofproducts incorporating our NanoCrystal technology. In addition, there are many competing technologies to our OCRtechnology, some of which are owned by large pharmaceutical companies with drug delivery divisions and other, smallerdrug‑delivery‑specific companies.Patents and Proprietary RightsOur success will be dependent, in part, on our ability to obtain and maintain patent protection for our products, includingthose marketed and sold by our licensees, to maintain trade secret protection and to operate without infringing upon theproprietary rights of others. We have a proprietary portfolio of patent rights and exclusive licenses to patents and patentapplications. In addition, our licensees may own issued patents that cover certain of our products. We have filed numerouspatent applications in the U.S. and in other countries directed to compositions of matter as well as processes of preparationand methods of use, including patent applications relating to each of our delivery technologies. As of December 31, 2017, weowned more than 200 issued U.S. patents. In the future, we plan to file additional patent applications in the U.S. and in othercountries directed to new or improved products and processes, and we intend to vigorously defend our patent positions.ARISTADAWe have several U.S. patents and patent applications, and a number of corresponding foreign counterparts, that coverARISTADA. Our principal U.S. patents and expiration dates are:●U.S. Patent No. 8,431,576, having claims to a class of compounds that includes aripiprazole lauroxil, expiringin 2030; ●U.S. Patent No. 8,796,276, having claims to methods of treating schizophrenia using a class of compounds thatincludes aripiprazole lauroxil, expiring in 2030;●U.S. Patent No. 9,034,867, having claims to pharmaceutical compositions, expiring in 2032;●U.S. Patent No. 9,193,685, having claims to pharmaceutical compositions that confer long-term stability,expiring in 2033;●U.S. Patent No. 9,452,131, having claims to methods of treatment for schizophrenia, expiring in 2035; and●U.S. Patent No. 9,526,726, having claims to kits comprising pharmaceutical compositions of aripiprazolelauroxil and instructions for intramuscular injection, expiring in 2035.21 Table of ContentsIn the U.S., in addition to patent protection, ARISTADA is entitled to regulatory exclusivity until 2020, a benefitafforded to new chemical entities. U.S. Patent Nos. 8,431,576 and 8,796,276 described above also cover ALNCD. There arealso pending patent applications that, if granted, would cover ALNCD.VIVITROL, RISPERDAL CONSTA, BYDUREON and BYDUREON BCiseWe have a significant number of patents and certain pending patent applications covering our microsphere technologythroughout the world, which, to some extent, cover VIVITROL, RISPERDAL CONSTA, BYDUREON and BYDUREONBCise. The latest of our patents covering VIVITROL, RISPERDAL CONSTA, BYDUREON and BYDUREON BCise expirein 2029, 2023, 2025 and 2025 in the U.S., respectively, and 2021, 2021, 2024 and 2024 in the EU, respectively, and weown 16, 4, 11 and 10 unexpired Orange-Book listed U.S. patents covering VIVITROL, RISPERDAL CONSTA,BYDUREON and BYDUREON BCise, respectively.INVEGA SUSTENNA/XEPLION and INVEGA TRINZA/TREVICTAOur NanoCrystal technology patent portfolio contains a number of patents granted throughout the world, including theU.S. and countries outside of the U.S. We also have a number of pending patent applications covering our NanoCrystaltechnology which, to some extent, cover INVEGA SUSTENNA/XEPLION and INVEGA TRINZA/TREVICTA. The latest ofthe patents subject to our license agreement with Janssen covering INVEGA SUSTENNA/XEPLION expire in 2019 in theU.S. and 2022 in the EU, and, in certain countries, in 2030. The latest of the patents covering INVEGATRINZA/TREVICTA expired in 2017 in the U.S. (with regulatory exclusivity in the U.S. until May 2018) and will expirein 2022 in the EU. In addition, the latest of the patents not subject to our license agreement with Janssen covering INVEGASUSTENNA/XEPLION expires in 2031 in the U.S. For a discussion of legal proceedings related to the patents coveringINVEGA SUSTENNA, see Note 16, Commitments and Contingencies in the “Notes to Condensed ConsolidatedStatements” and “Item 3—Legal Proceedings” in this Annual Report.AMPYRA/FAMPYRAOur OCR technology is protected by a patent estate including patents and patent applications filed worldwide. SomeOCR patent families are product-specific (including some which are owned by our licensees), whereas others cover genericdelivery platforms (e.g., different release profiles, taste masking). AMPYRA/FAMPYRA incorporates our OCR technology,and the latest of the patents covering AMPYRA/FAMPYRA expires in 2027 in the U.S. and 2025 in the EU (withregulatory exclusivity in the EU until 2021). For a discussion of legal proceedings related to the patents coveringAMPYRA, see Note 16, Commitments and Contingencies in the “Notes to Condensed Consolidated Statements” and “Item3—Legal Proceedings” in this Annual Report.ALKS 5461 and ALKS 3831We also have worldwide patent protection for our Key Development Programs. We own or have a license to U.S. patentsthat cover a class of compounds that includes the opioid modulators in both ALKS 5461 and ALKS 3831, and grantedmethod of treatment claims that cover ALKS 5461 or ALKS 3831. Our principal U.S. patents and expiration dates for ALKS5461 and ALKS 3831 are:U.S. Patent No. Product Candidate(s) Covered Expiration Date7,956,187 ALKS 5461ALKS 3831 20218,252,929 ALKS 5461ALKS 3831 20217,262,298 ALKS 5461ALKS 3831 20258,680,112 ALKS 5461ALKS 3831 20309,119,848 ALKS 5461ALKS 3831 20319,126,977 ALKS 3831 20319,517,235 ALKS 3831 20318,778,960 ALKS 3831 20328,822,488 ALKS 5461 20329,498,474 ALKS 5461 2032 22 Table of ContentsBIIB098We have U.S. patents and patent applications, and a number of corresponding foreign counterparts, that cover BIIB098.Our U.S. patents and expiration dates for BIIB098 are:●U.S. Patent No. 8,669,281, having claims to a composition of matter that covers BIIB098, expiring in 2033;and ●U.S. Patent No. 9,090,558, having claims to methods of treating MS, expiring in 2033.ALKS 4230We have U.S. patents and patent applications, and a number of corresponding foreign counterparts, that cover ALKS4230. U.S. Patent No. 9,359,415, having claims to ligands that are modified by circular permutation as agonists andantagonists, expiring in 2033, covers ALKS 4230.Protection of Proprietary Rights and Competitive PositionWe have exclusive rights through licensing agreements with third parties to issued U.S. patents, pending patentapplications and corresponding patents or patent applications in countries outside the U.S, subject in certain instances tothe rights of the U.S. government to use the technology covered by such patents and patent applications. Under certainlicensing agreements, we are responsible for patent expenses, and we pay annual license fees and/or minimum annualroyalties. In addition, under these licensing agreements, we are obligated to pay royalties on future sales of products, ifany, covered by the licensed patents.There may be patents issued to third parties that relate to our products. The manufacture, use, offer for sale, sale or importof some of our products might be found to infringe on the claims of these patents. A third 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.There may also be patent applications filed by third parties that relate to some of our products if issued in their presentform. 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 exist or are issued that cover our products, we or our licensees may not be able to manufacture, use, offer forsale, sell or import some of our products without first getting a license from the patent holder. The patent holder may notgrant us a license on reasonable terms, or it may refuse to grant us a license at all. This could delay or prevent us fromdeveloping, manufacturing, selling or importing those of our products 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 ourproprietary technology, inventions and improvements that are important to the development of our business. Because thepatent position of biopharmaceutical companies involves complex legal and factual questions, enforceability of patentscannot be predicted with certainty. The ultimate degree of patent protection that will be afforded to products andprocesses, including ours, in the U.S. and in other important markets, remains uncertain and is dependent upon the scope ofprotection decided upon by the patent offices, courts and lawmakers in these countries. Patents, if issued, may bechallenged, invalidated or circumvented. Thus, any patents that we own or license from others may not provide anyprotection against competitors. Our pending patent applications, those we may file in the future, or those we may licensefrom 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 developsimilar technologies or duplicate any technology that we have developed outside the scope of our patents. The laws ofcertain countries do not protect our intellectual property rights to the same extent as do the laws of the U.S.We also rely on trade secrets, know‑how and technology, which are not protected by patents, to maintain ourcompetitive position. We try to protect this information by entering into confidentiality agreements with parties that haveaccess to it, such as our corporate partners, collaborators, licensees, employees and consultants. Any of these parties maybreach the agreements and disclose our confidential information or our competitors might learn of the information in someother 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 financial condition. For more information, see “Item 1A—Risk Factors.”23 Table of ContentsOur trademarks, including VIVITROL and ARISTADA, are important to us and are generally covered by trademarkapplications or registrations in the U.S. Patent and Trademark Office and the patent or trademark offices of other countries.Products using our proprietary technologies also use trademarks that are owned by our licensees, such as the trademarksINVEGA SUSTENNA/XEPLION, INVEGA TRINZA/TREVICTA and RISPERDAL CONSTA, which are registeredtrademarks of Johnson & Johnson; BYDUREON, which is a registered trademark of Amylin; BYDUREON BCise, which isa registered trademark of AstraZeneca Pharmaceuticals LP; and AMPYRA and FAMPYRA, which are registered trademarksof Acorda. Trademark protection varies in accordance with local law, and continues in some countries as long as thetrademark is used and in other countries as long as the trademark is registered. Trademark registrations generally are forfixed but renewable terms.Revenues and Assets by RegionFor the years ended December 31, 2017, 2016 and 2015, our revenue and assets by geographic area are presented below: Year Ended December 31, (In thousands) 2017 2016 2015 Revenue by region: U.S. $700,090 $557,312 $448,639 Ireland 9,706 4,407 3,902 Rest of world 193,578 183,975 175,794 Assets by region: Current assets: U.S. $402,481 $382,168 $360,154 Ireland 403,167 407,761 394,281 Rest of world 3,196 749 527 Long-term assets: U.S.: Other $360,641 $236,175 $294,158 Ireland: Intangible assets $256,168 $318,227 $379,186 Goodwill 92,873 92,873 92,873 Other 278,701 288,470 334,565 RegulatoryRegulation of Pharmaceutical ProductsUnited StatesOur current and contemplated activities, and the products and processes that result from such activities, are subjectto substantial government regulation. Before new pharmaceutical products may be sold in the U.S., pre‑clinical studiesand clinical trials of the products must be conducted and the results submitted to the FDA for approval. Clinical trialprograms must determine an appropriate dose and regimen, establish substantial evidence of effectiveness and definethe conditions for safe use. This is a high‑risk process that requires stepwise clinical studies in which the product mustsuccessfully meet pre‑specified endpoints.Pre‑Clinical Testing: Before beginning testing of any compounds with potential therapeutic value in human subjectsin the U.S., stringent government requirements for pre‑clinical data must be satisfied. Pre‑clinical testing includes bothin vitro, or in an artificial environment outside of a living organism, and in vivo, or within a living organism,laboratory evaluation and characterization of the safety and efficacy of a drug and its formulation.Investigational New Drug Exemption: Pre‑clinical testing results obtained from in vivo studies in several animalspecies, as well as from in vitro studies, are submitted to the FDA, as part of an IND, and are reviewed by the FDA priorto the commencement of human clinical trials. The pre‑clinical data must provide an adequate basis for evaluatingboth the safety and the scientific rationale for the initial clinical studies in human volunteers.Clinical Trials: Clinical trials involve the administration of the drug to healthy human volunteers or to patients underthe supervision of a qualified investigator pursuant to an FDA‑reviewed protocol. Human clinical trials are typicallyconducted in three sequential phases, although the phases may overlap with one another and, depending upon thenature of the clinical program, a specific phase or phases may be skipped altogether. Clinical trials must24 Table of Contentsbe conducted under protocols that detail the objectives of the study, the parameters to be used to monitor safety, andthe efficacy criteria, if any, to be evaluated. Each protocol must be submitted to the FDA as part of the IND.●Phase 1 clinical trials—test for safety, dose tolerability, absorption, bio‑distribution, metabolism, excretion andclinical pharmacology and, if possible, to gain early evidence regarding efficacy.●Phase 2 clinical trials—involve a relatively small sample of the actual intended patient population and seek toassess the efficacy of the drug for specific targeted indications, to determine dose‑response and the optimal doserange and to gather additional information relating to safety and potential adverse effects.●Phase 3 clinical trials—consist of expanded, large‑scale studies of patients with the target disease or disorder toobtain definitive statistical evidence of the efficacy and safety of the proposed product and dosing regimen.In the U.S., the results of the pre‑clinical and clinical testing of a product are then submitted to the FDA in the formof a Biologics License Application (“BLA”), or an NDA. The NDA or BLA also includes information pertaining to thepreparation of the product, analytical methods, details of the manufacture of finished products and proposed productpackaging and labeling. The submission of an application is not a guarantee that the FDA will find the applicationcomplete and accept it for filing. The FDA may refuse to file the application if it is not considered sufficientlycomplete to permit a review and will inform the applicant of the reason for the refusal. The applicant may thenresubmit the application and include the supplemental information.Once an NDA or BLA is accepted for filing, the FDA has 10 months, under its standard review process, within whichto review the application (for some applications, the review process is longer than 10 months). For drugs that, ifapproved, would represent a significant improvement in the safety or effectiveness of the treatment, diagnosis, orprevention of serious conditions when compared to standard applications, the FDA may assign “priority review”designation and review the application within 6 months. The FDA has additional review pathways to expeditedevelopment and review of new drugs that are intended to treat serious or life‑threatening conditions and demonstratethe potential to address unmet medical needs, including: “Fast Track,” “Breakthrough Therapy,” and “AcceleratedApproval.”For example, in October 2013, the FDA granted Fast Track status for ALKS 5461 for the adjunctive treatment ofMDD in patients with inadequate response to standard antidepressant therapies. Fast Track is a process designed toexpedite the review of such products by providing, among other things, more frequent meetings with the FDA todiscuss the product’s development plan, more frequent written correspondence from the FDA about trial design,eligibility for accelerated approval, and rolling review, which allows submission of individually completed sections ofan NDA or BLA for FDA review before the entire filing is completed. Fast Track status does not ensure that a productwill be developed more quickly or receive FDA approval.As part of its review, the FDA may refer the application to an advisory committee for independent advice onquestions related to the development of the drug and a recommendation as to whether the application should beapproved. The FDA is not bound by the recommendation of an advisory committee; however, historically, it hastypically followed such recommendations. The FDA may determine that a Risk Evaluation and Mitigation Strategy(“REMS”) is necessary to ensure that the benefits of a new product outweigh its risks. If required, a REMS may includevarious elements, such as publication of a medication guide, patient package insert, a communication plan to educatehealth care providers of the drug’s risks, limitations on who may prescribe or dispense the drug, or other measures thatthe FDA deems necessary to assure the safe use of the drug.In reviewing a BLA or NDA, the FDA may grant marketing approval, or issue a complete response letter tocommunicate to the applicant the reasons the application cannot be approved in the current form and provide input onthe changes that must be made before an application can be approved. Even if such additional information and dataare submitted, the FDA may ultimately decide that the BLA or NDA does not satisfy the criteria for approval. Thereceipt of regulatory approval often takes a number of years, involves the expenditure of substantial resources anddepends on a number of factors, including the severity of the disease in question, the availability of alternativetreatments, potential safety signals observed in pre‑clinical or clinical tests, and the risks and benefits demonstrated inclinical trials. It is impossible to predict with any certainty whether and when the FDA will grant marketing approval.Even if a product is approved, the approval may be subject to limitations based on the FDA’s interpretation of thedata. For example, the FDA may require, as a condition of approval,25 Table of Contentsrestricted distribution and use, enhanced labeling, special packaging or labeling, expedited reporting of certainadverse events, pre‑approval of promotional materials or restrictions on direct‑to‑consumer advertising, any of whichcould negatively impact the commercial success of a drug. The FDA may require a sponsor to conduct additionalpost‑marketing studies as a condition of approval to provide data on safety and effectiveness. In addition, prior tocommercialization, controlled substances are subject to review and scheduling by the DEA.The FDA tracks information on side effects and adverse events reported during clinical studies and after marketingapproval. Non‑compliance with safety reporting requirements may result in civil or criminal penalties. Side effects oradverse events that are identified during clinical trials can delay, impede or prevent marketing approval. Based on newsafety information that emerges after approval, the FDA can mandate product labeling changes, impose a REMS or theaddition of elements to an existing REMS, require new post‑marketing studies (including additional clinical trials), orsuspend or withdraw approval of the product.If we seek to make certain types of changes to an approved product, such as adding a new indication, making certainmanufacturing changes, or changing manufacturers or suppliers of certain ingredients or components, the FDA willneed to review and approve such changes in advance. In the case of a new indication, we are required to demonstratewith additional clinical data that the product is safe and effective for the new intended use. Such regulatory reviewscan result in denial or modification of the planned changes, or requirements to conduct additional tests or evaluationsthat can substantially delay or increase the cost of the planned changes.In addition, the FDA regulates all advertising and promotional activities for products under its jurisdiction. Acompany can make only those claims relating to safety and efficacy that are consistent with FDA regulation andguidance. However, physicians may prescribe legally available drugs for uses that are not described in the drug’slabeling. Such off‑label uses are common across certain medical specialties and often reflect a physician’s belief thatthe off‑label use is the best treatment for a particular patient. The FDA does not regulate the behavior of physicians intheir choice of treatments, but the FDA regulations do impose stringent restrictions on manufacturers’ communicationsregarding off‑label uses. Failure to comply with applicable FDA requirements may subject a company to adversepublicity, enforcement action by the FDA and the U.S. Department of Justice, corrective advertising and the full rangeof civil and criminal penalties available to the FDA and the U.S. Department of Justice.Controlled Substances Act: The DEA regulates pharmaceutical products that are controlled substances. Controlledsubstances are those drugs that appear on one of the five schedules promulgated and administered by the DEA underthe Controlled Substances Act (the “CSA”). The CSA governs, among other things, the inventory, distribution,recordkeeping, handling, security and disposal of controlled substances. Pharmaceutical products that act on the CNSare often evaluated for abuse potential; a product that is then classified as controlled substance must undergoscheduling by the DEA, which is a separate process that may delay the commercial launch of a pharmaceutical producteven after FDA approval of the NDA. Companies with a scheduled pharmaceutical product are subject to periodic andongoing inspections by the DEA and similar state drug enforcement authorities to assess ongoing compliance with theDEA’s regulations. Any failure to comply with these regulations could lead to a variety of sanctions, including therevocation, or a denial of renewal, of any DEA registration and injunctions, or civil or criminal penalties.Outside the United StatesCertain of our products are commercialized by our licensees in numerous jurisdictions outside the U.S. Most of thesejurisdictions have product approval and post‑approval regulatory processes that are similar in principle to those in theU.S. In Europe, there are several tracks for marketing approval, depending on the type of product for which approval issought. Under the centralized procedure, a company submits a single application to the EMA. The marketingapplication 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 fulfillsthe 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 adopted by the EC. A marketing application approved bythe EC is valid in all member states.In addition to the centralized procedure, Europe also has: (i) a nationalized procedure, which requires a separateapplication to, and approval determination by, each country; (ii) a decentralized procedure, whereby applicantssubmit identical applications to several countries and receive simultaneous approval; and (iii) a mutual26 Table of Contentsrecognition procedure, where applicants submit an application to one country for review and other countries mayaccept or reject the initial decision. Regardless of the approval process employed, various parties share responsibilitiesfor the monitoring, detection and evaluation of adverse events post‑approval, including national authorities, the EMA,the EC and the marketing authorization holder.Good Manufacturing ProcessesThe FDA, the EMA, the competent authorities of the EU member states and other regulatory agencies regulate andinspect equipment, facilities and processes used in the manufacturing of pharmaceutical and biologic products prior toapproving a product. If, after receiving clearance from regulatory agencies, a company makes a material change inmanufacturing equipment, location or process, additional regulatory review and approval may be required. Companies alsomust adhere to cGMP and product‑specific regulations enforced by the FDA following product approval. The FDA, theEMA and other regulatory agencies also conduct regular, periodic visits to re‑inspect equipment, facilities and processesfollowing the initial approval of a product. If, as a result of these inspections, it is determined that our equipment, facilitiesor processes do not comply with applicable regulations and conditions of product approval, regulatory agencies may seekcivil, criminal or administrative sanctions and/or remedies against us, including the suspension of our manufacturingoperations.Good Clinical PracticesThe FDA, the EMA and other regulatory agencies promulgate regulations and standards, commonly referred to as GoodClinical Practices (“GCP”), for designing, conducting, monitoring, auditing and reporting the results of clinical trials toensure that the data and results are accurate and that the trial participants are adequately protected. The FDA, the EMA andother regulatory agencies enforce GCP through periodic inspections of trial sponsors, principal investigators, trial sites,contract research organizations (“CROs”) and institutional review boards. If our studies fail to comply with applicableGCP, patient safety and well-being could be impacted, the clinical data generated in our clinical trials may be deemedunreliable, and relevant regulatory agencies may require us to perform additional clinical trials before approving ourmarketing applications. Noncompliance can also result in civil or criminal sanctions. We rely on third parties, includingCROs, to carry out many of our clinical trial‑related activities. Failure of such third parties to comply with GCP canlikewise result in rejection of our clinical trial data or other sanctions.Hatch‑Waxman ActUnder the U.S. Drug Price Competition and Patent Term Restoration Act of 1984 (the “Hatch‑Waxman Act”), Congresscreated an abbreviated FDA review process for generic versions of pioneer, or brand‑name, drug products. The law alsoprovides incentives by awarding, in certain circumstances, non‑patent related marketing exclusivities to pioneer drugmanufacturers. Newly approved drug products and changes to the conditions of use of approved products may benefit fromperiods of non‑patent‑related marketing exclusivity in addition to any patent protection the drug product may have. TheHatch‑Waxman Act provides five years of new chemical entity (“NCE”) marketing exclusivity to the first applicant to gainapproval of an NDA for a product that contains an active ingredient, known as the active drug moiety, not found in anyother approved product. The FDA is prohibited from accepting any abbreviated NDA (“ANDA”) for a generic drug or505(b)(2) application referencing the NCE for five years from the date of approval of the NCE, or four years in the case ofan ANDA or 505(b)(2) application containing a patent challenge. A 505(b)(2) application is an NDA wherein the applicantrelies, in part, on data and the FDA’s findings of safety and efficacy from studies not conducted by or for it and for whichthe applicant has not obtained a right of reference. Hatch-Waxman Act exclusivities will not prevent the submission orapproval of a full NDA (e.g., under 505(b)(1)), as opposed to an ANDA or 505(b)(2) application, for any drug, including, forexample, 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 clinicalinvestigations, other than bioavailability studies, essential to the FDA’s approval of new uses of approved products, suchas new indications, dosage forms, strengths, or conditions of use. However, this exclusivity only protects against theapproval of ANDAs and 505(b)(2) applications for the protected use and will not prohibit the FDA from accepting orapproving 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 relatedto the drug for listing in the FDA’s Approved Drugs Product List, commonly referred to as the Orange Book. ANDA and505(b)(2) applicants must then certify regarding each of the patents listed with the FDA for the reference27 Table of Contentsproduct. A certification that a listed patent is invalid or will not be infringed by the marketing of the applicant’s product iscalled a “Paragraph IV certification.” If the ANDA or 505(b)(2) applicant provides such a notification of patent invalidityor noninfringement, then the FDA may accept the ANDA or 505(b)(2) application four years after approval of the NDA foran NCE. If a Paragraph IV certification is filed and the ANDA or 505(b)(2) application has been accepted as a reviewablefiling by the FDA, the ANDA or 505(b)(2) applicant must then, within 20 days, provide notice to the NDA holder andpatent owner stating that the application has been submitted and providing the factual and legal basis for the applicant’sopinion that the patent is invalid or not infringed. The NDA holder or patent owner may file suit against the ANDA or505(b)(2) applicant for patent infringement. If this is done within 45 days of receiving notice of the Paragraph IVcertification, 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’s data exclusivity period, or, if data exclusivity has expired, on thedate that the patent holder is notified. The FDA may approve the proposed product before the expiration of the 30‑monthstay if a court finds the patent invalid or not infringed, or if the court shortens the period because the parties have failed tocooperate in expediting the litigation.Sales and MarketingWe are subject to various U.S. federal and state laws pertaining to healthcare fraud and abuse, including anti‑kickbacklaws 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 aparticular drug. Due to the broad scope of the U.S. statutory provisions, the general absence of guidance in the form ofregulations, and few court decisions addressing industry practices, it is possible that our practices might be challengedunder anti‑kickback or similar laws. False claims laws prohibit anyone from knowingly and willingly presenting, orcausing to be presented, for payment to third‑party payers (including Medicare and Medicaid) claims for reimbursed drugsor services that are false or fraudulent, claims for items or services not provided as claimed or claims for medicallyunnecessary items or services. Activities relating to the sale and marketing of our products may be subject to scrutinyunder these laws. Violations of fraud and abuse laws may be punishable by criminal and/or civil sanctions, including finesand civil monetary penalties, as well as the possibility of exclusion from federal healthcare programs (including Medicareand Medicaid). In addition, federal and state authorities are paying increased attention to enforcement of these laws withinthe pharmaceutical industry and private individuals have been active in alleging violations of the laws and bringing suitson behalf of the government under the federal civil False Claims Act. If we were subject to allegations concerning, or wereconvicted of violating, these laws, our business could be harmed. See “Item 1A—Risk Factors” and specifically thosesections entitled “—If we fail to comply with the extensive legal and regulatory requirements affecting the healthcareindustry, we could face increased costs, penalties and a loss of business,” “—Revenues generated by sales of our productsdepend on the availability of reimbursement from third‑party payers, and a reduction in payment rate or reimbursement oran increase in our financial obligation to governmental payers could result in decreased sales of our products anddecreased revenues” and “—The commercial use of our products may cause unintended side effects or adverse reactions, orincidents of misuse may occur, which could adversely affect our business and share price.”Laws and regulations have been enacted by the federal government and various states to regulate the sales andmarketing practices of pharmaceutical manufacturers. The laws and regulations generally limit financial interactionsbetween manufacturers and healthcare providers and require disclosure to the government and public of such interactions.The laws include federal “sunshine” provisions enacted in 2010 as part of the comprehensive federal healthcare reformlegislation. The sunshine provisions apply to pharmaceutical manufacturers with products reimbursed under certaingovernment programs and require those manufacturers to disclose annually to the federal government (for re‑disclosure tothe public) certain payments made to, or at the request of, or on behalf of, physicians or to teaching hospitals. Certain statelaws also require disclosure of pharmaceutical pricing information and marketing expenditures. Given the ambiguity foundin many of these laws and their implementation, our reporting actions could be subject to the penalty provisions of thepertinent federal and state laws and regulations.Pricing and ReimbursementUnited StatesIn the U.S., sales of our products, including those sold by our licensees, and our ability to generate revenues on suchsales are dependent, in significant part, on the availability and level of reimbursement from third‑party payers such asstate and federal governments, including Medicare and Medicaid, managed care providers and private insurance plans.Third‑party payers are increasingly challenging the prices charged for medical products28 Table of Contentsand examining the medical necessity and cost‑effectiveness of medical products, in addition to their safety andefficacy.Medicaid is a joint federal and state program that is administered by the states for low‑income and disabledbeneficiaries. Under the Medicaid rebate program, we are required to pay a rebate for each unit of product reimbursedby the state Medicaid programs. The amount of the rebate for each product is set by law as the greater of 23.1% ofaverage manufacturer price (“AMP”) or the difference between AMP and the best price available from us to anycommercial or non‑federal governmental customer. The rebate amount must be adjusted upward where the AMP for aproduct’s first full quarter of sales, when adjusted for increases in the Consumer Price Index—Urban, is less than theAMP for the current quarter, with this difference being the amount by which the rebate is adjusted upwards. The rebateamount is required to be recomputed each quarter based on our report of current AMP and best price for each of ourproducts to the Centers for Medicare & Medicaid Services (“CMS”). The terms of our participation in the rebateprogram imposes a requirement for us to report revisions to AMP or best price within a period not to exceed 12quarters from the quarter in which the data was originally due. Any such revisions could have the impact of increasingor decreasing our rebate liability for prior quarters, depending on the direction of the revision. In addition, if we werefound to have knowingly submitted false information to the government, the statute provides for civil monetarypenalties per item of false information in addition to other penalties available to the government. Medicare is a federalprogram that is administered by the federal government that covers individuals age 65 and over as well as those withcertain disabilities. Medicare Part B pays physicians who administer our products under a payment methodologyusing average sales price (“ASP”) information. Manufacturers, including us, are required to provide ASP informationto the CMS on a quarterly basis. This information is used to compute Medicare payment rates, with rates for MedicarePart B drugs outside the hospital outpatient setting and in the hospital outpatient setting consisting of ASP plus aspecified percentage. These rates are adjusted periodically. If a manufacturer is found to have made amisrepresentation in the reporting of ASP, the statute provides for civil monetary penalties for each misrepresentationand 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 notneed to be injected or otherwise administered by a physician) and certain physician-administered drugs reimbursedunder a pharmacy benefit. Medicare Part D also covers the prescription drug benefit for dual eligible beneficiaries.Medicare Part D is administered by private prescription drug plans approved by the U.S. government and each drugplan establishes its own Medicare Part D formulary for prescription drug coverage and pricing, which the drug planmay modify from time‑to‑time. The prescription drug plans negotiate pricing with manufacturers and may conditionformulary placement on the availability of manufacturer discounts. Except for dual eligible Medicare Part Dbeneficiaries who qualify for low income subsidies, manufacturers, including us, are required to provide a fifty percent(50%) discount on our brand name prescription drugs utilized by Medicare Part D beneficiaries when thosebeneficiaries reach the coverage gap in their drug benefits; the Bipartisan Budget Act of 2018, signed into law onFebruary 9, 2018, increased this discount percentage on brand name prescription drugs to seventy percent (70%)starting in 2019.The availability of federal funds to pay for our products under the Medicaid Drug Rebate Program and MedicarePart B requires that we extend discounts to certain purchasers under the Public Health Services (“PHS”)pharmaceutical pricing program. Purchasers eligible for discounts include a variety of community health clinics, otherentities that receive health services grants from PHS, and hospitals that serve a disproportionate share of financiallyneedy patients.We also make our products available for purchase by authorized users of the Federal Supply Schedule (“FSS”) of theGeneral Services Administration pursuant to our FSS contract with the Department of Veterans Affairs. Under theVeterans Health Care Act of 1992 (the “VHC Act”), we are required to offer deeply discounted FSS contract pricing tofour federal agencies: the Department of Veterans Affairs; the Department of Defense; the Coast Guard; and the PHS(including the Indian Health Service), in order 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 Bprogram and the PHS pharmaceutical pricing program is also conditioned upon FSS participation. FSS pricing isnegotiated periodically with the Department of Veterans Affairs. FSS pricing is intended not to exceed the price thatwe charge our most‑favored non‑federal customer for a product. In addition, prices for drugs purchased by theDepartment of Veterans Affairs, Department of Defense (including drugs purchased by military personnel anddependents through the TriCare retail pharmacy program), Coast Guard and PHS are subject to a cap on pricing equalto 76% of the non‑federal average manufacturer price (“non‑FAMP”).29 Table of ContentsAn additional discount applies if non‑FAMP increases more than inflation (measured by the Consumer Price Index—Urban). In addition, if we are found to have knowingly submitted false information to the government, the VHC Actprovides for civil monetary penalties per false item of information in addition to other penalties available to thegovernment.In addition, on January 21, 2016, CMS released the final Medicaid covered outpatient drug regulation, whichbecame effective on April 1, 2016. This regulation implements those changes made by the Patient Protection andAffordable Care Act (the “PPACA”) to the Medicaid drug rebate statute in 2010 and addresses a number of other issueswith respect to the Medicaid program, including, but not limited to, the eligibility and calculation methodologies forAMP and best price, and the expansion of Medicaid rebate liability to include Medicaid managed care organizations.The final Medicaid covered outpatient drug regulation established two calculation methodologies for AMP: one fordrugs generally dispensed through retail community pharmacies (“RCP”) and one for so-called “5i drugs” (inhaled,infused, instilled, implanted or injectable drugs) “not generally dispensed” through RCPs. The regulation furthermade clear that 5i drugs would qualify as “not generally dispensed” and, therefore, able to use the alternative AMPcalculation, if not more than thirty percent (30%) of their sales were to RCPs or to wholesalers for RCPs. The primarydifference between the two AMP calculations is the requirement to exclude from AMP, for those qualifying 5i drugsnot generally dispensed through RCPs, certain payments, rebates and discounts related to sales to non-RCPs; suchexclusion often leads to a lower AMP. The decision of which AMP calculation a product is eligible to use must bemade and applied on a monthly basis based on the percentage of sales of such product to RCPs or to wholesalers forRCPs.The U.S. federal and state governments regularly consider reforming healthcare coverage and lessening healthcarecosts. Such reforms may include price controls, value-based pricing and changes to the coverage and reimbursement ofour products, which may have a significant impact on our business. In addition, emphasis on managed care in the U.S.has increased and we expect will continue to increase the pressure on drug pricing. Private insurers regularly seek tomanage drug cost and utilization by implementing coverage and reimbursement limitations through means including,but not limited to, formularies, increased out‑of‑pocket obligations and various prior authorization requirements. Evenif favorable coverage and reimbursement status is attained for one or more products for which we have receivedregulatory approval, less favorable coverage policies and reimbursement rates may be implemented in the future.Outside the United StatesWithin the EU, products are paid for by a variety of payers, with governments being the primary source of payment.Governments may determine or influence reimbursement of products. Governments may also set prices or otherwiseregulate pricing. Negotiating prices with governmental authorities 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 thosereference prices to set a price). Recent budgetary pressures in many EU countries are causing governments to consideror implement various cost‑containment measures, such as price freezes, increased price cuts and rebates, and expandedgeneric substitution and patient cost‑sharing. If budget pressures continue, governments may implement additionalcost‑containment measures.Other RegulationsForeign Corrupt Practices Act: We are subject to the U.S. Foreign Corrupt Practices Act (the “FCPA”), which prohibitsU.S. corporations and their representatives from paying, offering to pay, promising, authorizing, or making payments ofanything of value to any foreign government official, government staff member, political party, or political candidate in anattempt to obtain or retain business or to otherwise influence a person working in an official capacity. In many countries,the healthcare professionals with whom we regularly interact 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 reflecttheir transactions and to devise and maintain an adequate system of internal accounting controls. Environmental, Health and Safety Laws: Our operations are subject to complex and increasingly stringentenvironmental, health and safety laws and regulations in the countries where we operate and, in particular, where we havemanufacturing facilities, namely the U.S. and Ireland. Environmental and health and safety authorities in the relevantjurisdictions, including the Environmental Protection Agency and the Occupational Safety and Health30 Table of ContentsAdministration in the U.S. and the Environmental Protection Agency and the Health and Safety Authority 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 exposureof persons to hazardous substances, and the general health, safety and welfare of employees and members of the public. Incertain cases, these laws and regulations may impose strict liability for pollution of the environment and contaminationresulting from spills, disposals or other releases of hazardous substances or waste and/or any migration of such hazardoussubstances or waste. Costs, damages and/or fines may result from the presence, investigation and remediation ofcontamination at properties currently or formerly owned, leased or operated by us and/or off‑site locations, includingwhere we have arranged for the disposal of hazardous substances or waste. In addition, we may be subject to third‑partyclaims, including for natural resource damages, personal injury and property damage, in connection with suchcontamination.Other Laws: We are subject to a variety of financial disclosure, securities trading regulations and governmentalregulations as an Irish-incorporated public company in the U.S., including laws relating to the oversight activities of theSecurities and Exchange Commission (“SEC”), the Irish Companies Act 2014, and the regulations of the Nasdaq, on whichour shares are traded. We are also subject to various laws, regulations and recommendations relating to safe workingconditions, laboratory practices, the experimental use of animals, and the purchase, storage, movement, import and exportand use and disposal of hazardous or potentially hazardous substances used in connection with our research work.EmployeesAs of February 2, 2018, we had approximately 2,000 full‑time employees. A significant number of our management andprofessional employees have prior experience with pharmaceutical, biopharmaceutical or medical product companies. Webelieve that we have been successful in attracting skilled and experienced scientific and senior management personnel;however, competition for such personnel is intense. None of our employees is covered by a collective bargaining agreement.We consider our relations with our employees to be good.Available Information and Website DisclosureOur principal executive offices are located at Connaught House, 1 Burlington Road, Dublin 4, Ireland. Our telephonenumber is +353‑1‑772‑8000 and our website address is www.alkermes.com. Information that is contained in and can beaccessed through, our website is not incorporated into, and does not form a part of, this Annual Report. We make availablefree of charge through the Investors section of our website our Annual Reports on Form 10‑K, Quarterly Reports onForm 10‑Q, Current Reports on Form 8‑K and all amendments to those reports as soon as reasonably practicable after suchmaterial is electronically filed with, or furnished to, the SEC. We also make available on our website (i) the charters for thestanding committees of our board of directors, including the Audit and Risk Committee, Compensation Committee, andNominating and Corporate Governance Committee, and (ii) our Code of Business Conduct and Ethics governing ourdirectors, officers and employees. We intend to disclose on our website any amendments to, or waivers from, our Code ofBusiness Conduct and Ethics that are required to be disclosed pursuant to the rules of the SEC. You may read and copymaterials we file with the SEC at the SEC’s Public Reference Room at 100 F Street, N.E., Washington, D.C. 20549. You mayobtain information on the operation of the Public Reference Room by calling the SEC at 1‑800‑SEC‑0330. The SECmaintains an internet site that contains reports, proxy and information statements and other information regarding issuers thatfile electronically with the SEC at www.sec.gov.From time to time, we may use our website to distribute material information. Our financial and other material informationis routinely posted to and accessible on the Investors section of our website, available at www.alkermes.com. Investors areencouraged to review the Investors section of our website because we may post material information on that site that is nototherwise disseminated by us. Information that is contained in and can be accessed through our website is not incorporatedinto, and does not form a part of, this Annual Report. Item 1A. Risk FactorsYou should consider carefully the risks described below in addition to the financial and other information contained inthis Annual Report, including the matters addressed under the caption “Cautionary Note Concerning Forward-LookingStatements.” If any events described by the following risks actually occur, they could materially adversely affect ourbusiness, financial condition, cash flows or results of operations. This could cause the market price of our ordinary sharesto decline.31 Table of ContentsWe rely heavily on our licensees in the commercialization and continued development of products from which we receiverevenue; and if our licensees are not effective, our revenues could be materially adversely affected.Our arrangements with licensees are critical to bringing products using our proprietary technologies and from which wereceive manufacturing and/or royalty revenue to the market and successfully commercializing them. We rely on theselicensees in various respects, including commercializing such products; providing funding for development programs andconducting pre-clinical testing and clinical trials with respect to new formulations or other development activities for suchproducts; and managing the regulatory approval process.The revenues that we receive from manufacturing fees and royalties depend primarily upon the success of our licensees,and particularly Janssen, Acorda, Biogen, and AstraZeneca, in commercializing certain products. Janssen is responsible forthe commercialization of RISPERDAL CONSTA, INVEGA SUSTENNA/XEPLION, and INVEGA TRINZA/TREVICTA, and,in Russia and the CIS, VIVITROL. Acorda and Biogen are responsible for commercializing AMPYRA and FAMPYRA,respectively. AstraZeneca is responsible for commercializing BYDUREON and BYDUREON BCise. We have noinvolvement in the commercialization efforts for such products. Our revenues may fall below our expectations, theexpectations of our licensees or those of investors, which could have a material adverse effect on our results of operations andthe market price of our ordinary shares. Such revenues will depend on numerous factors, many of which are outside ourcontrol. Our licensees may also choose to use their own or other technology to develop an alternative product and withdraw theirsupport of our product, or to compete with our jointly developed product. In addition, ARISTADA competes directly withRISPERDAL CONSTA, INVEGA SUSTENNA/XEPLION and INVEGA TRINZA/TREVICTA, products from which we receivemanufacturing and/or royalty revenue. Disputes may also arise between us and a licensee and may involve the ownership oftechnology developed under a license or other issues arising out of collaborative agreements. Such a dispute could delay therelated program or result in expensive arbitration or litigation, which may not be resolved in our favor.In addition, most of our licensees can terminate their agreements with us without cause, and we cannot guarantee that anyof these relationships will continue. Failure to make or maintain these arrangements or a delay in, or failure of, a licensee’sperformance, or factors that may affect a licensee’s sales, may materially adversely affect our business, financial condition,cash flows and results of operations.We receive substantial revenues from our key products.We depend substantially upon continued sales of INVEGA SUSTENNA/XEPLION, INVEGA TRINZA/TREVICTA andRISPERDAL CONSTA by Janssen, upon continued sales of AMPYRA/FAMPYRA by Acorda and its sublicensee, Biogen,and upon our continued sales of VIVITROL and ARISTADA. Any significant negative developments relating to theseproducts, or to our licensee relationships, could have a material adverse effect on our business, results of operations, cashflows and financial condition.Our revenues may be lower than expected as a result of failure by the marketplace to accept our products or for otherfactors.We cannot be assured that our products will be, or will continue to be, accepted in the U.S. or in any markets outside theU.S. or that sales of our products will not decline or cease in the future. A number of factors may cause revenues from sales ofour products to grow at a slower than expected rate, or even to decrease or cease, including:●the perception of physicians and other members of the healthcare community as to our products’ safety andefficacy relative to that of competing products and the willingness or ability of physicians and other membersof the healthcare community to prescribe or dispense, and patients to use, our products, including those thatmay be scheduled by the DEA (if and when approved);●unfavorable publicity concerning us or our products, similar classes of drugs or the industry generally;●the cost-effectiveness of our products;●patient and physician satisfaction with our products;●the successful manufacture of our 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 payers;32 Table of Contents●the introduction, availability and acceptance of competing treatments, including treatments marketed and soldby our licensees;●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 significantwarnings or restrictions on use;●our continued ability to access third parties to vial, package and/or distribute our products on acceptable terms;●the unfavorable outcome of litigation or proceedings before the U.S. Patent and Trademark Office’s (the“USPTO”) Patent Trial and Appeal Board (the “PTAB”), including so-called “Paragraph IV” litigation, interpartes reviews (“IPR”) and other patent litigation, related to any of our products, including Paragraph IVlitigation relating to INVEGA SUSTENNA and AMPYRA; ●regulatory developments related to the manufacture or continued use of our products, including the issuance ofa REMS by the FDA;●the extent and effectiveness of the sales and marketing and distribution support our products receive, includingfrom our licensees;●our licensees’ decisions as to the timing of product launches, pricing and discounting;●disputes with our licensees relating to the marketing and sale of products from which we receive revenue;●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 ourproducts in the marketplace, our licensees’ orders, the timing of shipments, and our ability to manufacture productssuccessfully, including our yield and our production schedule. The unit costs to manufacture our products may be higherthan anticipated if certain volume levels are not achieved. In addition, we may not be able to supply the products in a timelymanner or at all.We have less experience in the commercialization of long-acting atypical antipsychotics and oral antidepressants than ourcompetitors.In October 2015, we launched ARISTADA into a highly competitive market in which it competes head-to-head withproducts marketed and sold by companies larger than us and with more experience than us in the commercialization of long-acting injectable atypical antipsychotic products for the treatment of schizophrenia.We lack experience commercializing products in markets with multiple branded and generic competitors, includingschizophrenia and depression, and will face competition from companies with more experience and resources than we have. Ifwe are not able to attract and retain qualified personnel to serve in our sales and marketing organization, to maintaineffective distribution networks and reimbursement for our products, or to otherwise effectively and efficiently support ourcommercialization activities, we may not be able to successfully commercialize our products and such events couldmaterially adversely affect our business, financial condition, cash flows and results of operations. The FDA or other regulatory agencies may not approve our products or may delay approval.We must obtain government approvals before marketing or selling our products in the U.S. and in jurisdictions outside theU.S. The FDA, DEA (to the extent a product is a controlled substance), and comparable regulatory agencies in othercountries, impose substantial and rigorous requirements for the development, production and commercial introduction ofdrug products. These include pre-clinical, laboratory and clinical testing procedures, sampling activities, clinical trials andother costly and time-consuming procedures. Satisfaction of the requirements of the FDA and of other regulatory agenciestypically takes a significant number of years and can vary substantially based upon the type, complexity and novelty of theproduct.In addition, regulation is not static, and regulatory agencies, including the FDA, evolve in their staff, interpretations andpractices and may impose more stringent requirements than currently in effect, which may adversely affect our planned drugdevelopment and/or our commercialization efforts. The approval procedure and the time required to obtain approval alsovaries among countries. Regulatory agencies may have varying interpretations of the same data, and approval by oneregulatory agency does not ensure approval by regulatory agencies in other jurisdictions. In addition, the FDA or regulatoryagencies outside the U.S. may choose not to communicate with or update us during clinical testing33 Table of Contentsand regulatory review periods. The ultimate decision by the FDA or other regulatory agencies regarding drug approval maynot be consistent with prior communications.This product approval process can last many years, be very costly and still be unsuccessful. Regulatory approval by theFDA or regulatory agencies outside the U.S. can be delayed, limited or not granted at all for many reasons, including:●a product may not demonstrate safety and efficacy for each target indication in accordance with the FDA’s orregulatory agencies’ standards;●data from pre-clinical testing and clinical trials may be interpreted by the FDA or other regulatory agencies indifferent ways than we or our licensees interpret it;●the FDA or other regulatory agencies may not agree with our or our licensees’ regulatory approval strategies,components of our or our licensees’ filings, such as clinical trial designs, conduct and methodologies, or thesufficiency of our or our licensees’ submitted data;●the FDA or other regulatory agencies might not approve our or our licensees’ manufacturing processes orfacilities;●the FDA or other regulatory agencies may not approve accelerated development timelines for our products;●the failure of our clinical investigational sites and the records kept at such sites, including the clinical trial data,to be in compliance with the FDA’s GCP, or EU legislation governing GCP, including the failure to pass FDA,EMA or EU member state inspections of clinical trials;●the FDA or other regulatory agencies may change their approval policies or adopt new regulations; and●adverse medical events during the trials could lead to requirements that trials be repeated or extended, or that aprogram be terminated or placed on clinical hold, even if other studies or trials relating to the program aresuccessful. Failure to obtain regulatory approval for products will prevent their commercialization. Any delay in obtaining regulatoryapproval for products could adversely affect our ability to successfully commercialize such products. In addition, share priceshave declined significantly in certain instances where companies have failed to obtain FDA approval of a product or wherethe timing of FDA approval is delayed. If the FDA’s or any other regulatory agency’s response to any application forapproval is delayed or not favorable for any of our products, our share price could decline significantly and could materiallyadversely affect our business, financial condition, cash flows and results of operations.Clinical trials for our products are expensive, may take several years to complete, and their outcome is uncertain.Before obtaining regulatory approvals for the commercial sale of any products, we or our licensees must demonstrate,through pre-clinical testing and clinical trials, that our products are safe and effective for use in humans. Conducting clinicaltrials is a lengthy, time-consuming and expensive process. We have incurred, and we will continue to incur, substantialexpense for pre-clinical testing and clinical trials.Our pre-clinical and clinical development efforts may not be successfully completed. Completion of clinical trials maytake several years or more. The length of time can vary substantially with the type, complexity, novelty and intended use ofthe product. The commencement and rate of completion of clinical trials may be delayed by many factors, including:●the potential delay by a partner in beginning a clinical trial;●the failure of third-party CROs 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 inability to recruit clinical trial participants at the expected rate;●the inability to follow patients adequately after treatment;●unforeseen safety issues;●the inability to manufacture or obtain sufficient quantities of materials used for clinical trials; and●unforeseen governmental or regulatory issues or concerns, including those of the FDA, DEA and otherregulatory agencies.In addition, we are currently conducting and enrolling patients in clinical studies in a number of countries where ourexperience is more limited. For example, phase 3 efficacy studies of ALKS 3831 are being conducted in many countriesaround the world, including in Europe and Israel. We depend on independent clinical investigators, CROs and other third-party service providers and our collaborators in the conduct of clinical trials for our products and in the accurate34 Table of Contentsreporting of results from such clinical trials. We rely heavily on these parties for successful execution of our clinical trials butdo not control many aspects of their activities. For example, while the investigators are not our employees, we are responsiblefor ensuring that each of our clinical trials is conducted in accordance with the general investigational plan and protocols forthe trial. Third parties may not complete activities on schedule or may not conduct our clinical trials in accordance withregulatory requirements or our stated protocols.The outcome of our clinical trials is uncertain. The results from pre-clinical testing and early clinical trials often have notpredicted results of later clinical trials. A number of products have shown promising results in early clinical trials butsubsequently failed to establish sufficient safety and efficacy data in later clinical trials to obtain necessary regulatoryapprovals.If a product fails to demonstrate safety and efficacy in clinical trials, or if third parties fail to conduct clinical trials inaccordance with their obligations, the development, approval and commercialization of our products may be delayed orprevented, and such events could materially adversely affect our business, financial condition, cash flows and results ofoperations.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 fromtime 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, naturaldisasters and many other factors. Problems with manufacturing processes could result in product defects or manufacturingfailures, which could require us to delay shipment of products or recall products previously shipped, or could impair ourability to expand into new markets or supply products in existing markets. We may not be able to resolve any such problemsin a timely fashion, if at all.We rely solely on our manufacturing facility in Wilmington, Ohio for the manufacture of RISPERDAL CONSTA,VIVITROL, ARISTADA, polymer for BYDUREON and BYDUREON BCise and certain of our other development products.We rely on our manufacturing facility in Athlone, Ireland for the manufacture of AMPYRA/FAMPYRA and some of our otherproducts using our NanoCrystal and OCR technologies.Due to regulatory and technical requirements, we have limited ability to shift production among our facilities or tooutsource any part of our manufacturing to third parties. If we cannot produce sufficient commercial quantities of ourproducts to meet demand, there are currently very few, if any, third-party manufacturers capable of manufacturing ourproducts as contract suppliers. We cannot be certain that we could reach agreement on reasonable terms, if at all, with thosemanufacturers. Even if we were to reach agreement, the transition of the manufacturing process to a third party to enablecommercial 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 inthe regulatory approval or market launch of products, or suspension of the sale of our products, manufactured in our facilities,may cause operating losses as we continue to operate these facilities and retain specialized personnel. In addition, anyinterruption in manufacturing could result in delays in meeting contractual obligations and could damage our relationshipswith our licensees, 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, formulationand packaging services, storage and product distribution services, customer service activities and product returns processing.These third parties must comply with federal, state and local regulations applicable to their business, including FDA and, asapplicable, DEA regulations. Although we actively manage these third-party relationships to ensure continuity, quality andcompliance with regulations, some events beyond our control could result in the complete or partial failure of these goodsand services. Any such failure could materially adversely affect our business, financial condition, cash flows and results ofoperations.The manufacture of products and product components, including the procurement of bulk drug product, packaging,storage and distribution of our products, requires successful coordination among us and multiple third-party providers. Forexample, we are responsible for the entire supply chain for both ARISTADA and VIVITROL, up to the sale of final productand including the sourcing of key raw materials and active pharmaceutical agents from third parties. Issues with our third-party providers, including our inability to coordinate these efforts, lack of capacity available at such third-party35 Table of Contentsproviders or any other problems with the operations of these third-party providers, could require us to delay shipment ofsaleable products, recall products previously shipped or could impair our ability to supply products at all. This couldincrease our costs, cause us to lose revenue or market share and damage our reputation and have a material adverse effect onour business, financial condition, cash flows and results of operations.In addition, due to the unique nature of the production of our products, there are several single-source providers of our keyraw materials. We endeavor to qualify and register new vendors and to develop contingency plans so that production is notimpacted by issues associated with single-source providers. Nonetheless, our business could be materially and adverselyaffected 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 theproducts using our technologies are granted to, or retained by, our third-party licensee (for example, in the cases of INVEGASUSTENNA/XEPLION, INVEGA TRINZA/TREVICTA, BYDUREON and BYDUREON BCise) or approved sub-licensee, wehave no control over the manufacturing, supply or distribution of the product. Supply or manufacturing issues encounteredby such licensees or sublicenses could materially and adversely affect sales of products from which we receive revenue, andour business, financial condition, cash flows and results of operations. If we or our third-party providers fail to meet the stringent requirements of governmental regulation in the manufacture ofour products, we could 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 regulations and other applicable foreignstandards in the manufacture of our products. In addition, in the U.S., the DEA and state-level agencies heavily regulate themanufacturing, holding, processing, security, recordkeeping and distribution of substances, including controlled substances.Our products that are scheduled by the DEA as controlled substances make us subject to the DEA’s regulations. We aresubject to unannounced inspections by the FDA, the DEA and comparable state and foreign agencies in other jurisdictions toconfirm compliance with all applicable laws. Any changes of suppliers or modifications of methods of manufacturing requireamending our application to the FDA or other regulatory agencies, and ultimate amendment acceptance by such agencies,prior to release of product to the applicable marketplace. Our inability or the inability of our third-party providers todemonstrate ongoing cGMP or other regulatory compliance could require us to withdraw or recall products and interruptclinical and 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 thirdparties to pass any regulatory agency inspection could significantly impair our ability to develop and commercialize ourproducts. This could increase our costs, cause us to lose revenue or market share and damage our reputation.The FDA and various regulatory agencies outside the U.S. have inspected and approved our commercial manufacturingfacilities. We cannot guarantee that the FDA or any other regulatory agencies will approve any other facility we or our third-party providers may operate or, once approved, that any of these facilities will remain in compliance with cGMP and otherregulations. Any third party we use to manufacture bulk drug product must be licensed by the FDA and, for controlledsubstances, the DEA. Failure by us or our third-party providers to gain or maintain regulatory compliance with the FDA orother regulatory agencies could materially adversely affect our business, financial condition, cash flows and results ofoperations.Revenues generated by sales of our products depend on the availability of reimbursement from third-party payers, and areduction in payment rate or reimbursement or an increase in our financial obligation to governmental payers could resultin decreased sales of our products and decreased revenues.In both U.S. and non-U.S. markets, sales of our products depend, in part, on the availability of reimbursement from third-party payers such as state and federal governments, including Medicare and Medicaid in the U.S. and similar programs inother countries, managed care providers and private insurance plans. Deterioration in the timeliness, certainty and amount ofreimbursement for our products, the existence of barriers to coverage of our products (such as prior authorization, criteria foruse or other requirements), increases in our financial obligation to government payers (including due to changes in our AMPcalculation), limitations by healthcare providers on how much, or under what circumstances, they will prescribe or administerour products or unwillingness by patients to pay any required co-payments, or deductible amounts, could reduce the use of,and revenues generated from, our products and could have a material adverse effect on our business, financial condition, cashflows and results of operations. In addition, when a new product is approved, the availability of government and privatereimbursement for that product is uncertain, as is the amount for which that product will be reimbursed. We cannot predictthe availability or amount of reimbursement for36 Table of Contentsour products.In the U.S., federal and state legislatures, health agencies and third-party payers continue to focus on containing the cost ofhealthcare, including by comparing the effectiveness, benefits and costs of similar treatments. Any adverse findings for ourproducts from such comparisons may reduce the extent of reimbursement for our products. Economic pressure on statebudgets may result in states increasingly seeking to achieve budget savings through mechanisms that limit coverage orpayment for drugs, including but not limited to price control initiatives, discounts and other pricing-related actions. Forexample, in 2017, the State of California enacted as law SB-17, a drug pricing transparency bill that requires, among otherthings, that manufacturers notify the state and health insurers, and justify, any time such manufacturers plan to increase theprice of a medication by sixteen percent (16%) or more over a two-year period. We expect similar state drug pricinginitiatives to be proposed in 2018. In addition, State Medicaid programs are increasingly requesting manufacturers to paysupplemental rebates and requiring prior authorization by the state program for use of any drug. Managed care organizationscontinue to seek price discounts and, in some cases, to impose restrictions on the coverage of particular drugs. Governmentefforts to reduce Medicaid expenses may lead to increased use of managed care organizations by Medicaid programs. Thismay result in managed care organizations influencing prescription decisions for a larger segment of the population and acorresponding constraint on prices and reimbursement for our products.In 2018, we may face uncertainties as a result of likely continued federal and administrative efforts to repeal, substantiallymodify or invalidate some or all of the provisions of the PPACA and potential reforms and changes to governmentnegotiation or regulation of drug pricing. There is no assurance that the PPACA, as currently enacted or as amended in thefuture, or such reforms and changes, will not adversely affect our business and financial results, and we cannot predict howfuture federal or state legislative or administrative changes relating to healthcare reform will affect our business.The government-sponsored healthcare systems in Europe and many other countries are the primary payers for healthcareexpenditures, including payment for drugs and biologics. We expect that countries may take actions to reduce expenditureon drugs and biologics, including mandatory price reductions, patient access restrictions, suspensions of price increases,increased mandatory discounts or rebates, preference for generic products, reduction in the amount of reimbursement andgreater importation of drugs from lower-cost countries. These cost-control measures likely would reduce our revenues. Inaddition, certain countries set prices by reference to the prices in other countries where our products are marketed. Thus, theinability to secure adequate prices in a particular country may not only limit the marketing of products within that country,but may also adversely affect the ability to obtain acceptable prices in other markets.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, technologies and developingtechnologies, including those that are the subject of our licenses;●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 rightsfrom unauthorized use by third parties only to the extent that our proprietary rights are covered by valid and enforceablepatents or are effectively maintained as trade secrets. In this regard, we try to protect our proprietary position by filing patentapplications in the U.S. and elsewhere related to our proprietary product inventions and improvements that are important tothe development of our business and products. Our pending patent applications, together with those we may file in the future,or those we may license to or from third parties, may not result in patents being issued. Even if issued, such patents may notprovide us with sufficient proprietary protection or competitive advantages against competitors with similar technology. Thedevelopment of new technologies or products may take a number of years, and there can be no assurance that any patentswhich may be granted in respect of such technologies or products will not have expired or be due to expire or withstandchallenge 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 ourproprietary technology does not infringe the rights of third parties, we cannot ascertain the existence of all potentially37 Table of Contentsconflicting claims. Therefore, there is a risk that third parties may make claims of infringement against our products ortechnologies. There may be patents issued to third parties that relate to our products. There may also be patent applicationsfiled by third parties that relate to some of our products. If patents exist or are issued that cover our products, we may not beable to manufacture, use, offer for sale, sell or import such products without first getting a license from the patent holder. Thepatent holder may not grant us a license on reasonable terms, or it may refuse to grant us a license at all. This could delay orprevent us from developing, manufacturing, selling or importing those of our products that would require the license. Claimsof intellectual property infringement also might require us to redesign affected products, enter into costly settlement orlicense agreements or pay costly damage awards, or face a temporary or permanent injunction prohibiting us from marketingor selling certain of our products. Even if we have an agreement to indemnify us against such costs, the indemnifying partymay be unable to uphold its contractual obligations. If we cannot or do not license the infringed technology at all, licensethe technology on reasonable terms or substitute similar technology from another source, our business, financial condition,cash flows and results of operations could be materially adversely affected.Because the patent positions of biopharmaceutical companies involve complex legal and factual questions, enforceabilityof patents cannot be predicted with certainty. The ultimate degree of patent protection that will be afforded to products andprocesses, including ours, and those of our licensees, in the U.S. and in other important markets, remains uncertain and isdependent upon the scope of protection decided upon by the patent offices, courts and lawmakers in these countries. 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 tochallenge by potential competitors. The laws of certain countries may not protect our intellectual property rights to the sameextent as do the laws of the U.S., and any patents that we own or license from others may not provide any protection againstcompetitors. Furthermore, others may independently 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 competitiveposition. We try to protect this information by entering into confidentiality agreements with parties that have access to it,such as our licensees, licensors, employees and consultants. Any of these parties may breach the agreements and disclose ourconfidential information, or our competitors might learn of the information in some other way. To the extent that ouremployees, consultants or contractors use intellectual property owned by others in their work for us, disputes may arise as tothe rights in related or resulting know-how and inventions. If any trade secret, know-how or other technology not protectedby a patent were to be disclosed to, or independently developed by, a competitor, such event could materially adverselyaffect our business, financial condition, cash flows and results of operations.Uncertainty over intellectual property in the biopharmaceutical industry has been the source of litigation, which isinherently costly and unpredictable.There is considerable uncertainty within the biopharmaceutical industry about the validity, scope and enforceability ofmany issued patents in the U.S. and elsewhere in the world. We cannot currently determine the ultimate scope and validity ofpatents which may be granted to third parties in the future or which patents might be asserted to be infringed by themanufacture, use or 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 andan increasing number of IPRs and administrative proceedings in the pharmaceutical industry regarding patents and otherintellectual property rights. A patent holder might file an IPR, interference and/or infringement action against us claimingthat certain claims of one or more of our issued patents are invalid or that the manufacture, use, offer for sale, sale or import ofour products infringed one or more of such party’s patents. We may have to expend considerable time, effort and resources todefend such actions. In addition, we may need to enforce our intellectual property rights against third parties who infringeour patents and other intellectual property or challenge our patents, patent applications or trademark applications (see “—Weor our licensees may face claims against our intellectual property rights covering our products and competition from genericdrug manufacturers” for additional information regarding litigation with generic drug manufacturers). We expect thatlitigation may be necessary in some instances to determine the validity and scope of certain of our proprietary rights.Competitors may sue us as a way of delaying the introduction of our products.Litigation and trial proceedings, such as IPRs, concerning patents and other intellectual property rights may be expensive,protracted with no certainty of success, and distracting to management. Ultimately, the outcome of such litigation andproceedings could adversely affect our business and the validity and scope of our patents or other proprietary rights or hinderour ability to manufacture and market our products.38 Table of ContentsWe rely on a limited number of pharmaceutical wholesalers to distribute our product.As is typical in the pharmaceutical industry, we utilize pharmaceutical wholesalers in connection with the distribution ofthe products that we market and sell. A significant amount of our product is sold to end-users through the three largestwholesalers in the U.S. market, Cardinal Health Inc., AmerisourceBergen Corp. and McKesson Corp. If we are unable tomaintain our business relationships with these major pharmaceutical wholesalers on commercially acceptable terms, if thebuying patterns of these wholesalers fluctuate due to seasonality or if wholesaler buying decisions or other factors outside ofour control change, such events could materially adversely affect our business, financial condition, cash flows and results ofoperations.Our business may suffer if we are unable to develop new products.Our long-term viability and growth will depend upon the successful development of new products from our research anddevelopment activities and we expect the development of products for our own account to consume substantial resources.Since we fund the development of our proprietary products, 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 regulatoryapprovals, obtain a final DEA scheduling designation (to the extent our products are controlled substances) or market anyapproved products on a worldwide basis. If we are able to develop commercial products on our own, the risks associated withthese programs may be greater than those associated with our programs with licensees.If our delivery technologies or product development efforts fail to result in the successful development andcommercialization of products, if our licensees decide not to pursue development and/or commercialization of our productsor if our products do not perform as anticipated, such events could materially adversely affect our business, financialcondition, cash flows and results of operations (see “—Our revenues may be lower than expected as a result of failure by themarketplace to accept our products or for other factors” for factors that may affect the market acceptance of our productsapproved for sale).The FDA or other regulatory agencies may impose limitations or post-approval requirements on any product approval.Even if regulatory approval to market a product is granted by the FDA or other regulatory agencies, the approval mayimpose limitations on the indicated use for which the product may be marketed or additional post-approval requirementswith which we would need to comply in order to maintain the approval of such product. Our business could be seriouslyharmed if we do not complete these post-approval requirements and the FDA or other regulatory agencies, as a result, requireus to change the label for our products.Further, if a product for which we obtain regulatory approval is a controlled substance, it will not become commerciallyavailable until after the DEA provides its final schedule designation, which may take longer and may be more restrictive thanwe expect or may change after its initial designation. We currently expect ALKS 5461 and ALKS 3831 to require such DEAfinal schedule designation prior to commercialization. A restrictive designation could adversely affect our ability tocommercialize such products and could materially adversely affect our business, financial condition, cash flows and resultsof operations.In addition, legislative and regulatory proposals have also been made to expand post-approval requirements and restrictsales and promotional activities for pharmaceutical products. We cannot be sure whether additional legislative changes willbe enacted, or whether the FDA regulations, guidance or interpretations will be changed, or what the impact of such changeson the commercialization of our products, if any, may be. Litigation or arbitration against Alkermes, including securities litigation, or citizen petitions filed with the FDA, mayresult in financial losses, harm our reputation, divert management resources, negatively impact the approval of ourproducts, or otherwise negatively impact our business.We may be the subject of certain claims, including those asserting violations of securities and fraud and abuse laws andderivative actions. Following periods of volatility in the market price of a company’s securities, securities class actionlitigation has often been instituted against companies. In November 2017, a purported stockholder of ours filed a putativeclass action against us and certain of our officers on behalf of a putative class of purchasers of our securities during the periodof February 24, 2015 to November 3, 2017. Such action alleges violations of Sections 10(b) and 20(a) of the Exchange Actbased on allegedly false or misleading statements and omissions regarding our marketing practices39 Table of Contentsrelated to VIVITROL, and seeks to recover unspecified damages for alleged inflation in the price of securities, and reasonablecosts and expenses, including attorneys’ fees. For further discussion of this putative class action, see Note 16, Commitmentsand Contingencies in the “Notes to Condensed Consolidated Statements” and “Item 3—Legal Proceedings” in this AnnualReport. This punitive class action and any similar future litigation could result in substantial costs and a diversion ofmanagement’s attention and resources, which could harm our business.In June 2017, we received a subpoena from an Office of the U.S. Attorney for documents related to VIVITROL. We arecooperating with the government. If, as a result of the government’s request, proceedings are initiated and we are found tohave violated one or more applicable laws, we may be subject to significant liability, including without limitation, civilfines, criminal fines and penalties, civil damages and exclusion from federal funded healthcare programs such as Medicareand Medicaid, as well as potential liability under the federal anti-kickback statute and False Claims Act and state FalseClaims Acts, and be required to enter into a corporate integrity or other settlement with the government, any of which couldmaterially affect our reputation, business, financial condition, cash flows and results of operations. Conduct giving rise tosuch liability could also form the basis for private civil litigation by third-party payors or other persons allegedly harmed bysuch conduct. In addition, if some of our existing business practices are challenged as unlawful, we may have to change thosepractices, including changes and impacts on the practices of our sales force, which could also have a material adverse effecton our business, financial condition, cash flows and results of operations.We may not be successful in defending ourselves in litigation or arbitration which may result in large judgments orsettlements against us, any of which could have a negative effect on our business, financial condition, cash flows and resultsof operations. Additionally, lawsuits can be expensive to defend, whether or not they have merit, and the defense of theseactions may divert the attention of our management and other resources that would otherwise be engaged in managing ourbusiness. Our liability insurance coverage may not be sufficient to satisfy, or may not cover, any expenses or liabilities thatmay arise.We may also be the subject of citizen petitions that request that the FDA refuse to approve, delay approval of, or imposeadditional approval requirements for our NDAs. If successful, such petitions can significantly delay, or even prevent, theapproval of the NDA in question. Even if the FDA ultimately denies such a petition, the FDA may substantially delayapproval while it considers and responds to the petition or impose additional approval requirements as a result of suchpetition. These outcomes and others could adversely affect our ability to generate revenues from the commercialization andsale of our products and products using our proprietary technologies, and our share price.If we fail to comply with the extensive legal and regulatory requirements affecting the healthcare industry, we could faceincreased costs, penalties and a loss of business.Our activities, and the activities of our licensees and third-party providers, are subject to comprehensive governmentregulation. Government regulation by various national, state and local agencies, which includes detailed inspection of, andcontrols over, research and laboratory procedures, clinical investigations, product approvals and manufacturing, marketingand promotion, adverse event reporting, sampling, distribution, recordkeeping, storage, and disposal practices, and achievingcompliance with these regulations, substantially increases the time, difficulty and costs incurred in obtaining andmaintaining approvals to market newly developed and existing products. Government regulatory actions can result in delayin the release of products, seizure or recall of products, suspension or revocation of the authority necessary for themanufacture and sale of products, and other civil or criminal sanctions, including fines and penalties. Biopharmaceuticalcompanies also have been the target of government lawsuits and investigations alleging violations of governmentregulation, including claims asserting submission of incorrect pricing information, impermissible off-label promotion ofpharmaceutical products, payments intended to influence the referral of healthcare business, submission of false claims forgovernment reimbursement, antitrust violations and violations related to environmental matters. In addition, we may be thesubject of securities law claims and derivative actions.While we have implemented numerous risk mitigation measures, we cannot guarantee that we, our employees, ourlicensees, our consultants or our contractors are, or will be, in compliance with all applicable U.S. federal and stateregulations and/or laws or all applicable regulations and/or laws outside the U.S. and interpretations of the applicability ofthese laws to marketing practices. If we or our agents fail to comply with any of those regulations or laws, a range of actionscould result, including the termination of clinical trials, the failure to approve a product, restrictions on our products ormanufacturing processes, withdrawal of our products from the market, significant fines, exclusion from governmenthealthcare programs or other sanctions or litigation.40 Table of ContentsChanges in laws affecting the healthcare industry, including new laws, regulations or judicial decisions, or newinterpretations of existing laws, regulations or decisions, related to patent protection and enforcement, healthcareavailability, and product pricing and marketing, could also adversely affect our revenues and our potential to be profitable.The enactment in the U.S. of healthcare reform and the promulgation of regulations, new legislation and legislation oncomparative effectiveness research are examples of previously enacted and possible future changes in laws that couldadversely affect our business. The costs of prescription pharmaceuticals in the United States has also been the subject ofconsiderable discussion in the U.S. and the current administration has stated that it will address such costs through newlegislative and administrative measures. These measures, if adopted, could impact our ability to generate revenues from ourproducts.We face competition in the biopharmaceutical industry.We face intense competition in the development, manufacture, marketing and commercialization of our products frommany and varied sources, such as academic institutions, government agencies, research institutions and biopharmaceuticalcompanies, including other companies with similar technologies, and manufacturers of generic drugs (see “—We or ourlicensees may face claims against our intellectual property rights covering our products and competition from generic drugmanufacturers.” for additional information relating to competition from generic drug manufacturers). Some of thesecompetitors are also our licensees, who control the commercialization of products from which we receive manufacturingand/or royalty revenues. These competitors are working to develop and market other systems, products, and other methods ofpreventing or reducing disease, and new small-molecule and other classes of drugs that can be used with or without a drugdelivery system.The biopharmaceutical industry is characterized by intensive research, development and commercialization efforts andrapid and significant technological change. Many of our competitors are larger and have significantly greater financial andother resources than we do. We expect our competitors to attempt to develop new technologies, products and processes thatmay be more effective than those we develop. The development of technologically improved or different products ortechnologies may make our products or product platforms obsolete or noncompetitive before we recover expenses incurred inconnection with their development or realize any revenues from any product.There are other companies developing extended-release product platforms. In many cases, there are products on themarket or in development that may be in direct competition with our products. In addition, we know of new chemical entitiesthat are being developed that, if successful, could compete against our products. These chemical entities are being designedto work differently than our products and may turn out to be safer or more effective than our products. Among the manyexperimental therapies being tested around the world, there may be some that we do not now know of that may compete withour proprietary product platforms or products. Our licensees could choose a competing technology to use with their drugsinstead of one of our product platforms and could develop products that compete with our products.With respect to our proprietary injectable product platform, we are aware that there are other companies developingextended-release delivery systems for pharmaceutical products, including, but not limited to Luye Pharma, which isdeveloping risperidone formulated as extended release microspheres for intramuscular injection for the treatment ofschizophrenia and/or schizoaffective disorders and Indivior plc, which is developing a once-monthly injectable risperidonefor the treatment of schizophrenia. In the treatment of schizophrenia, ARISTADA, INVEGA SUSTENNA/XEPLION andINVEGA TRINZA/TREVICTA and RISPERDAL CONSTA compete with each other and a number of other injectableproducts including ZYPREXA RELPREVV ((olanzapine) For Extended Release Injectable Suspension), which is marketedand sold by Lilly; ABILIFY MAINTENA, (aripiprazole for extended release injectable suspension), a once-monthlyinjectable formulation of ABILIFY (aripiprazole) developed by Otsuka Pharm. Co.; oral compounds currently on the market;and generic versions of branded oral and injectable products. In the treatment of bipolar disorder, RISPERDAL CONSTAcompetes with antipsychotics such as oral aripiprazole, REXULTI, LATUDA, ABILIFY MAINTENA, risperidone, olanzapine,ziprasidone and clozapine.In the treatment of alcohol dependence, VIVITROL competes with generic acamprosate calcium (also known asCAMPRAL) and generic disulfiram (also known as ANTABUSE) as well as currently marketed drugs, including genericdrugs, also formulated from naltrexone. Other pharmaceutical companies are developing products that have shown somepromise in treating alcohol dependence that, if approved by the FDA, would compete with VIVITROL.In the treatment of opioid dependence, VIVITROL competes with SUBOXONE (buprenorphine HCl/naloxone HCldehydrate sublingual tablets), SUBOXONE (buprenorphine/naloxone) Sublingual Film, SUBUTEX (buprenorphine HCl41 Table of Contentssublingual tablets) and, once launched, will compete with SUBLOCADE (once-monthly buprenorphine extended-releaseinjection), each of which is, or will be, marketed and sold by Indivior plc, and BUNAVAIL buccal film (buprenorphine andnaloxone) marketed by BioDelivery Sciences, PROBUPHINE (buprenorphine) from Titan Pharmaceuticals, Inc. andZUBSOLV (buprenorphine and naloxone) marketed by Orexo US, Inc. It also competes with methadone, oral naltrexone andgeneric versions of SUBUTEX and SUBOXONE sublingual tablets. Other pharmaceutical companies are developing productsthat have shown promise in treating opioid dependence that, if approved by the FDA, would compete with VIVITROL.BYDUREON and BYDUREON BCise compete with established therapies for market share. Such competitive productsinclude sulfonylureas, metformin, insulins, thiazolidinediones, glinides, dipeptidyl peptidase type IV inhibitors, insulinsensitizers, alpha-glucosidase inhibitors and sodium-glucose transporter-2 inhibitors. BYDUREON and BYDUREON BCisealso compete 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 products forthe treatment of type 2 diabetes that, if approved by the FDA, would compete with BYDUREON and BYDUREON BCise.While AMPYRA/FAMPYRA is approved as a treatment to improve walking in patients with MS, there are a number ofFDA-approved therapies for MS disease management that seek to reduce the frequency and severity of exacerbations or slowthe accumulation of physical disability for people with certain types of MS. These products include AVONEX, TYSABRI,TECFIDERA, and PLEGRIDY from Biogen; OCREVUS from Genentech; BETASERON from Bayer HealthCarePharmaceuticals; COPAXONE from Teva Pharmaceutical Industries Ltd.; REBIF and NOVANTRONE from EMD Serono,Inc.; GILENYA and EXTAVIA from Novartis AG; AUBAGIO and LEMTRADA from Sanofi-Aventis, and generic products,including potential generic versions of AMPYRA.With respect to our NanoCrystal technology, we are aware that other technology approaches similarly address poorlywater-soluble drugs. These approaches include nanoparticles, cyclodextrins, lipid-based self-emulsifying drug deliverysystems, dendrimers and micelles, among others, any of which could limit the potential success and growth prospects ofproducts incorporating our NanoCrystal technology. In addition, there are many competing technologies to our OCRtechnology, some of which are owned by large pharmaceutical companies with drug delivery divisions and other, smallerdrug delivery-specific companies.If we are unable to compete successfully in the biopharmaceutical industry, our business, financial condition, cash flowsand results of operations could be materially adversely affected.We or our licensees may face claims against intellectual property rights covering our products and competition fromgeneric drug manufacturers.In the U.S., generic manufacturers of innovator drug products may file ANDAs and, in connection with such filings, certifythat their products do not infringe the innovator’s patents and/or that the innovator’s patents are invalid. This often results inlitigation between the innovator and the ANDA applicant. This type of litigation is commonly known in the U.S. as“Paragraph IV” litigation.We have received notices of ANDA filings for AMPYRA asserting that a generic form of AMPYRA would not infringeAMPYRA’s Orange-Book listed patents and/or those patents are invalid. We are currently engaged in Paragraph IV litigationdisputing such claims. This litigation may be costly and time consuming. For a discussion of legal proceedings related to thepatents covering AMPYRA, see Note 16, Commitments and Contingencies in the “Notes to Condensed ConsolidatedStatements” and “Item 3—Legal Proceedings” in this Annual Report.Similarly, Janssen Pharmaceuticals NV and Janssen Pharmaceuticals, Inc. initiated a patent infringement lawsuit againstTeva, who filed an ANDA seeking approval to market a generic version of INVEGA SUSTENNA. For a discussion of the legalproceedings related to the patents covering INVEGA SUSTENNA, see Note 16, Commitments and Contingencies in the“Notes to Condensed Consolidated Statements” and “Item 3—Legal Proceedings” in this Annual Report.Although we intend to vigorously enforce our intellectual property rights, and we expect our licensees will do the same,there can be no assurance that we or our licensees will prevail in our defense of our patent rights. Our and our licensees’existing patents could be invalidated, found unenforceable or found not to cover generic forms of our or our licensees’products. If an ANDA filer were to receive FDA approval to sell a generic version of our products and/or42 Table of Contentsprevail in any patent litigation, our products would become subject to increased competition and our business, financialcondition, cash flows and results of operations could be materially adversely affected.The commercial use of our products may cause unintended side effects or adverse reactions, or incidents of misuse mayoccur, which could adversely affect our business and share price.We cannot predict whether the commercial use of our products will produce undesirable or unintended side effects thathave not been evident in the use of, or in clinical trials conducted for, such products to date. The administration of drugs inhumans carries the inherent risk of product liability claims whether or not the drugs are actually the cause of an injury. Ourproducts may cause, or may appear to have caused, injury or dangerous drug interactions, and we may not learn about orunderstand those effects until the products have been administered to patients for a prolonged period of time. Additionally,incidents of product misuse may occur.These events, among others, could result in product recalls, product liability actions or withdrawals or additionalregulatory controls (including additional regulatory scrutiny, REMS programs, and requirements for additionallabeling). Our product liability insurance coverage may not be sufficient to satisfy any liabilities that may arise. As ourdevelopment activities progress and we continue to have commercial sales, this product liability insurance coverage may beinadequate, we may be unable to obtain adequate coverage at an acceptable cost or at all, or our insurer may disclaimcoverage as to a future claim. This could prevent or limit our commercialization of our products. In addition, the reporting ofadverse safety events involving our products and public rumors about such events could cause our product sales or shareprice to decline or experience periods of volatility. These types of events could have a material adverse effect on ourbusiness, financial condition, cash flows and results of operations.Our business involves environmental, health and safety risks.Our business involves the use of hazardous materials and chemicals and is subject to numerous environmental, health andsafety laws and regulations and to periodic inspections for possible violations of these laws and regulations. Under certain ofthese laws and regulations, we could be liable for any contamination at our current or former properties or third-party wastedisposal 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 withenvironmental, 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 fineand any liability imposed in connection with any contamination for which we may be responsible could materially adverselyaffect our business, financial condition, cash flows and results of operations.We may not become profitable on a sustained basis.At December 31, 2017, our accumulated deficit was $1,044.4 million, which was primarily the result of net losses incurredfrom 1987, the year Alkermes, Inc., was founded, through December 31, 2017, partially offset by net income over certainfiscal periods. There can be no assurance we will achieve sustained profitability.A major component of our revenue is dependent on our licensees’ and our ability to commercialize, and our and ourlicensees’ ability to manufacture economically, our products. Our ability to achieve sustained profitability in the futuredepends, in part, on our or our licensees’, as applicable, ability to:●successfully commercialize VIVITROL and ARISTADA in the U.S. and any other products that may beapproved in the U.S. or in other countries;●obtain and maintain regulatory approval for products both in the U.S. and in other countries;●efficiently manufacture our products;●support the commercialization of products by our licensees;●enter into agreements to develop and commercialize our products;●develop, have manufactured or expand our capacity to manufacture and market our products;●obtain adequate reimbursement coverage for our products from insurance companies, government programs andother third-party payers;●obtain additional research and development funding for our proprietary products; and●achieve certain product development milestones.In addition, the amount we spend will impact our profitability. Our spending will depend, in part, on:43 Table of Contents●the progress of our research and development programs for our products, including clinical trials;●the time and expense that will be required to pursue FDA and/or other regulatory approvals for our products andwhether such approvals are obtained;●the time that will be required for the DEA to provide its final scheduling designation for our products that arecontrolled substances;●the time and expense required to prosecute, enforce and/or challenge patent and other intellectual propertyrights;●the cost of building, operating and maintaining manufacturing and research facilities;●the cost of third-party manufacturers;●the number of products we pursue, particularly proprietary products;●how competing technological and market developments affect our products;●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 wherecompetition for such employees is intense.We may not achieve all or any of these goals, and thus we cannot provide assurances that we will ever be profitable on asustained basis or achieve significant revenues. Even if we do achieve some or all of these goals, we may not achievesignificant or sustained commercial success.Our level of indebtedness could adversely affect our business and limit our ability to plan for or respond to changes in ourbusiness.Pursuant to an amendment to our credit agreement, dated as of October 12, 2016, we extended our $288.0 million termloan with an interest rate at LIBOR plus 2.75% with a LIBOR floor of 0.75% by two years to September 25, 2021 (“TermLoan B-1”).Our existing indebtedness is secured by a first priority lien on substantially all of the combined company assets andproperties of Alkermes plc and most of its subsidiaries, which serve as guarantors. The agreements governing Term Loan B-1include a number of restrictive covenants that, among other things, and subject to certain exceptions and baskets, imposeoperating and financial restrictions on us. Our level of indebtedness and the terms of these financing arrangements couldadversely 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 the availability of our cash flow for other purposes, including business development efforts,research and development and capital expenditures;●limiting our flexibility in planning for, or reacting to, changes in our business and the industry in which weoperate, thereby placing us at a competitive disadvantage compared to competitors with less debt;●limiting our ability to take advantage of significant business opportunities, such as potential acquisitionopportunities; and●increasing our vulnerability to adverse economic and industry conditions.Our failure to comply with these restrictions or to make these payments could lead to an event of default that could resultin an acceleration of the indebtedness. Our future operating results may not be sufficient to ensure compliance with thesecovenants or to remedy any such default. In the event of an acceleration of this indebtedness, we may not have, or be able toobtain, sufficient funds to make any accelerated payments.We may require additional funds to execute on our business strategy, and such funding may not be available oncommercially favorable terms or at all, and may cause dilution to our existing shareholders.We may require additional funds in the future to execute on our business strategy, and we may seek funds through varioussources, including debt and equity offerings, corporate collaborations, bank borrowings, arrangements relating to assets, saleof royalty streams we receive on our products or other financing methods or structures. The source, timing and availability ofany financings will depend on market conditions, interest rates and other factors. If we issue additional equity securities orsecurities convertible into equity securities to raise funds, our shareholders will suffer dilution of their investment, and it mayadversely affect the market price of our ordinary shares. In addition, as a condition to providing additional funds to us, futureinvestors or lenders may demand, and may be granted, rights44 Table of Contentssuperior to those of existing shareholders. If we issue additional debt securities in the future, our existing debt serviceobligations will increase further. If we are unable to generate sufficient cash to meet these obligations and need to useexisting cash or liquidate investments in order to fund our debt service obligations or to repay our debt, we may be forced todelay or terminate clinical trials or curtail operations. We cannot be certain, however, that additional financing will beavailable from any of these sources when needed or, if available, will be on acceptable terms, if at all, particularly if the creditand financial markets are constrained at the time we require funding. If we fail to obtain additional capital when we need it,we may not be able to execute our business strategy successfully and may have to give up rights to our product platforms,and/or products, or grant licenses on terms that may not be favorable to us. Adverse financial market conditions may exacerbate certain risks affecting our business.As a result of adverse financial market conditions, organizations that reimburse for use of our products, such as governmenthealth administration authorities and private health insurers, may be unable to satisfy such obligations or may delaypayment. In addition, federal and state health authorities may reduce reimbursements (including Medicare and Medicaidreimbursements in the U.S.) or payments, and private insurers may increase their scrutiny of claims. We are also dependent onthe performance of our licensees, and we sell our products to our licensees through contracts that may not be secured bycollateral or other security. Accordingly, we bear the risk if our licensees are unable to pay amounts due to us thereunder. Dueto volatility in the financial markets, there may be a disruption or delay in the performance of our third-party contractors,suppliers or licensees. If such third parties are unable to pay amounts owed to us or satisfy their commitments to us, or if thereare reductions in the availability or extent of reimbursement available to us, our business, financial condition, cash flows andresults of operations would be adversely affected.Currency exchange rates may affect revenues and expenses.We conduct a large portion of our business in international markets. For example, we derive a majority of our RISPERDALCONSTA revenues and all of our FAMPYRA, XEPLION and TREVICTA revenues from sales in countries other than the U.S.,and these sales are denominated in non-U.S. dollar (“USD”) currencies. We also incur substantial operating costs in Irelandand face exposure to changes in the exchange ratio of the USD and the Euro arising from expenses and payables at our Irishoperations that are settled in Euro. Our efforts to mitigate the impact of fluctuating currency exchange rates may not besuccessful. As a result, currency fluctuations among our reporting currency, USD, and the currencies in which we do businesswill affect our results of operations, often in unpredictable ways. Refer to “Item 7A—Quantitative and QualitativeDisclosures about Market Risk” for additional information relating to our foreign currency exchange rate risk.We may not be able to attract and 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 highly skilled technical, scientific, manufacturing, management, regulatory compliance and selling andmarketing personnel. The loss of key personnel or our inability to hire and retain personnel who have technical, scientific,manufacturing, management, regulatory compliance or commercial backgrounds could materially adversely affect ourresearch 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 businessescomplementary to our business. These transactions could include:●mergers;●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 themarket price of our ordinary shares. Moreover, depending upon the nature of any transaction, we may experience a charge toearnings, which could also materially adversely affect our results of operations and could harm the market price of ourordinary shares.45 Table of ContentsIf we are unable to successfully integrate the companies, businesses or properties that we acquire, such events couldmaterially adversely affect our business, financial condition, cash flows and results of operations. Merger and acquisitiontransactions involve various inherent risks, including:●uncertainties in assessing the value, strengths and potential profitability of, and identifying the extent of allweaknesses, risks, contingent and 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 andwithin the timeframe predicted;●problems that could arise from the integration of the respective businesses, including the application of internalcontrol processes to the acquired business;●difficulties that could be encountered in managing international operations; and●unanticipated changes in business, industry, market or general economic conditions that differ from theassumptions underlying our rationale for pursuing the transaction.Any one or more of these factors could cause us not to realize the benefits anticipated from a transaction. Moreover, anyacquisition opportunities we pursue could materially affect our liquidity and capital resources and may require us to incuradditional indebtedness, seek equity capital or both. Future acquisitions could also result in our assuming more long-termliabilities relative to the value of the acquired assets than we have assumed in our previous acquisitions.If goodwill or other intangible assets become impaired, we could have to take significant charges against earnings.At December 31, 2017, we have $256.2 million of amortizable intangible assets and $92.9 million of goodwill. Underaccounting principles generally accepted in the U.S. (“GAAP”), we must assess, at least annually and potentially morefrequently, whether the value of goodwill and other indefinite‑lived intangible assets have been impaired. Amortizingintangible assets will be assessed for impairment in the event of an impairment indicator. Any reduction or impairment of thevalue of goodwill or other intangible assets will result in a charge against earnings, which could materially adversely affectour results of operations and shareholders’ equity in future periods.Our effective tax rate may increase.As a global biopharmaceutical company, we are subject to taxation in a number of different jurisdictions. As a result, oureffective tax rate is derived from a combination of applicable tax rates in the various places that we operate. In preparing ourfinancial statements, we estimate the amount of tax that will become payable in each of these places. Our effective tax ratemay fluctuate depending on a number of factors, including, but not limited to, the distribution of our profits or lossesbetween the jurisdictions where we operate and differences in interpretation of tax laws. In addition, the tax laws of anyjurisdiction in which we operate may change in the future, which could impact our effective tax rate. Tax authorities in thejurisdictions in which we operate may audit us. If we are unsuccessful in defending any tax positions adopted in oursubmitted tax returns, we may be required to pay taxes for prior periods, interest, fines or penalties, and may be obligated topay increased taxes in the future, any of which could have a material adverse effect on our business, financial condition, cashflows and results of operations. Our deferred tax assets may not be realized. As of December 31, 2017, we had approximately $98.5 million in net deferred tax assets in the U.S. Included in thisamount is approximately $52.0 million of research and development tax credit carryforwards that can be used to offsetfederal tax in future periods. These carryforwards will expire within the next twenty years, with the earliest expirationoccurring in 2020. It is possible that some or all of the deferred tax assets will not be realized, especially if we incur losses inthe U.S. in the future. Losses may arise from unforeseen operating events (see “—We may not become profitable on asustained basis” for additional information relating to operating losses) or the occurrence of significant excess tax benefitsarising from the exercise of stock options and/or the vesting of restricted stock units. Unless we are able to generatesufficient taxable income in the future, a substantial valuation allowance to reduce the carrying value of our U.S. deferred taxassets may be required, which would materially increase our expenses in the period the allowance is recognized andmaterially adversely affect our business, financial condition and results of operations. 46 Table of ContentsThe business combination of Alkermes, Inc. and the drug technology business (“EDT”) of Elan Corporation, plc may limitour ability to use our tax attributes to offset taxable income, if any, generated from such business combination.On September 16, 2011, the businesses of Alkermes, Inc. and EDT were combined under Alkermes plc (this combination isreferred to as the “Business Combination”). For U.S. federal income tax purposes, a corporation is generally considered taxresident in the place of its incorporation. Because we are incorporated in Ireland, we should be deemed an Irish corporationunder these general rules. However, Section 7874 of the Internal Revenue Code of 1986, as amended (the “Code”) generallyprovides that a corporation organized outside the U.S. that acquires substantially all of the assets of a corporation organizedin 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 of the acquired U.S. corporation own at least 80% (of either the voting power or the value) of the stock of theacquiring foreign corporation after the acquisition by reason of holding stock in the domestic corporation, and the“expanded affiliated group” (as defined in Section 7874) that includes the acquiring corporation does not have substantialbusiness 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 ofa corporation organized in the U.S., the taxable income of the U.S. corporation during the period beginning on the date thefirst assets are acquired as part of the acquisition, through the date which is ten years after the last date assets are acquired aspart of the acquisition, shall be no less than the income or gain recognized by reason of the transfer during such period or byreason of a license of property by the expatriated entity after such acquisition to a foreign affiliate during such period, whichis referred to as the “inversion gain,” if shareholders of the acquired U.S. corporation own at least 60% (of either the votingpower or the value) of the stock of the acquiring foreign corporation after the acquisition by reason of holding stock in thedomestic corporation, and the “expanded affiliated group” of the acquiring corporation does not have substantial businessactivities in the country in which it is organized. If this rule was to apply to the Business Combination, among other things,Alkermes, Inc. would have been restricted in its ability to use the approximately $274.0 million of U.S. federal net operatingloss (“NOL”) carryforwards and $38.0 million of U.S. state NOL carryforwards that it had as of March 31, 2011. We do notbelieve that either of these limitations should apply as a result of the Business Combination. However, the U.S. InternalRevenue Service (the “IRS”) could assert a contrary position, in which case we could become involved in tax controversywith the IRS regarding possible additional U.S. tax liability. If we were to be unsuccessful in resolving any such taxcontroversy in our favor, we could be liable for significantly greater U.S. federal and state income tax than we anticipatebeing liable for through the Business Combination, which would place further demands on our cash needs.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. Iffaced with a proxy contest, we may not be able to respond successfully to the contest, which would be disruptive to ourbusiness. Even if we are successful, our business could be adversely affected by a proxy contest involving us because:●responding to proxy contests and other actions by activist shareholders can be costly and time-consuming,disrupting operations and diverting 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 orin-licensing opportunities, and may make it more difficult to attract and retain qualified personnel and businesspartners; and●if individuals are elected to our board of directors with a specific agenda, it may adversely affect our ability toeffectively implement our strategic plan in a timely manner and create additional value for our shareholders.These actions could cause the market price of our ordinary shares to experience periods of volatility.If any of our licensees undergoes a change in control or in management, this may adversely affect revenues from ourproducts.Any change of control, or change in management, of our licensees may result in a reprioritization of our product withinsuch licensee’s portfolio, or such licensee may fail to maintain the financial or other resources necessary to continue thedevelopment and/or commercialization of such product.47 Table of ContentsIf any of our licensees undergoes a change of control and the acquirer either is unable to perform such licensee’sobligations under its agreements with us or has a product that competes with ours that such acquirer does not divest, it couldmaterially adversely affect our business, financial condition, cash flows and results of operations.Security breaches and other disruptions could compromise our information and expose us to liability, which would causeour business and reputation to suffer.In the ordinary course of our business, we collect and store sensitive data, including intellectual property, our proprietarybusiness information and that of our suppliers and partners, as well as personally identifiable information of patients, clinicaltrial participants and employees. Similarly, our partners and third-party providers possess certain of our sensitive data. Thesecure maintenance of this information is critical to our operations and business strategy. Despite our security measures, ourinformation technology and infrastructure may be vulnerable to attacks by hackers or breached due to employee error,malfeasance or other disruptions. Certain types of information technology or infrastructure attacks or breaches may goundetected for a prolonged period of time. Any such breach could compromise our networks and the information stored therecould be accessed, publicly disclosed, lost or stolen. Any such access, disclosure or other loss of information, including ourdata being breached at our partners or third-party providers, could result in legal claims or proceedings and liability underlaws that protect the privacy of personal information, disrupt our operations, and damage our reputation which couldadversely affect our business.We may be subject to numerous and varying privacy and security laws, and our failure to comply could result in penaltiesand reputational damage.We are subject to laws and regulations covering data privacy and the protection of personal information, including healthinformation. The legislative and regulatory landscape for privacy and data protection continues to evolve, and there has beenan increasing focus on privacy and data protection issues which may affect our business. In the U.S., numerous federal andstate laws and regulations, including state security breach notification laws, state health information privacy laws, andfederal and state consumer protection laws, govern the collection, use, disclosure, and protection of personal information.Each of these laws is subject to varying interpretations by courts and government agencies, creating complex complianceissues for us. If we fail to comply with applicable laws and regulations we could be subject to penalties or sanctions,including criminal penalties if we knowingly obtain or disclose individually identifiable health information from a coveredentity in a manner that is not authorized or permitted by the Health Insurance Portability and Accountability Act of 1996, asamended by the Health Information Technology for Economic and Clinical Health Act, or HIPAA.Numerous other countries have, or are developing, laws governing the collection, use and transmission of personalinformation as well. The EC and other jurisdictions have adopted data protection laws and regulations, which imposesignificant compliance obligations. For example, the EC adopted the EU Data Protection Directive, as implemented intonational laws by the EU member states, which imposes strict obligations and restrictions on the ability to collect, analyze,and transfer personal data, including health data from clinical trials and adverse event reporting. Data protection authoritiesfrom different EU member states have interpreted the privacy laws differently, which adds to the complexity of processingpersonal data in the EU, and guidance on implementation and compliance practices are often updated or otherwiserevised. In 2016, the EU formally adopted the General Data Protection Regulation, or GDPR, which will apply in all EUmember states effective May 25, 2018 and will replace the current EU Data Protection Directive effective on that date. TheGDPR introduces new data protection requirements in the EU and substantial fines for breaches of the data protection rules.The GDPR will increase our responsibility and liability in relation to personal data that we process and we may be required toput in place additional mechanisms to ensure compliance with the new EU data protection rules. Any failure to comply withthe rules arising from the EU Data Protection Directive, the GDPR, and related national laws of EU member states, could leadto government enforcement actions and significant penalties against us, and could adversely affect our business, financialcondition, cash flows and results of operations.If we identify a material weakness in our internal control over financial reporting, our ability to meet our reportingobligations and the trading price of our ordinary shares could be negatively affected.A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such thatthere is a reasonable possibility that a material misstatement of our financial statements will not be prevented or detected ona timely basis. Accordingly, a material weakness increases the risk that the financial information we report contains materialerrors.48 Table of ContentsWe regularly review and update our internal controls, disclosure controls and procedures, and corporate governancepolicies. In addition, we are required under the Sarbanes-Oxley Act of 2002 to report annually on our internal control overfinancial reporting. Any system of internal controls, however well designed and operated, is based in part on certainassumptions and can provide only reasonable, not absolute, assurances that the objectives of the system are met. If we, or ourindependent registered public accounting firm, determine that our internal controls over financial reporting are not effective,or we discover areas that need improvement in the future, these shortcomings could have an adverse effect on our businessand financial results, and the price of our ordinary shares could be negatively affected.If we cannot conclude that we have effective internal control over our financial reporting, or if our independent registeredpublic accounting firm is unable to provide an unqualified opinion regarding the effectiveness of our internal control overfinancial reporting, investors could lose confidence in the reliability of our financial statements, which could lead to adecline in the trading price of our ordinary shares. Failure to comply with reporting requirements could also subject us tosanctions and/or investigations by the SEC, the Nasdaq or other regulatory authorities. Item 1B. Unresolved Staff CommentsNone. Item 2. PropertiesWe lease approximately 14,600 square feet of corporate office space in Dublin, Ireland, which houses our corporateheadquarters. This lease expires in 2022. We lease two properties in Waltham, Massachusetts. One facility has approximately175,000 square feet of space and houses corporate offices, administrative areas and laboratories. This lease expires in 2021and includes a tenant option to extend the term for up to two five-year periods. We entered into a second lease in Waltham,Massachusetts on January 31, 2017 for approximately 67,400 square feet of office space. This lease expires in 2020 andincludes a tenant option to extend the term for up to two one-year periods. We lease approximately 3,800 square feet ofcorporate office and administrative space in Washington, DC. On December 1, 2017 we amended the lease to provide for arelocation of the premises to certain space containing approximately 7,000 square feet. We gain access to this premises inSeptember 2018. This amended lease expires in 2029 and includes a tenant option to extend the term for an additional five-year period. We own a R&D and manufacturing facility in Athlone, Ireland (approximately 400,000 square feet) and a manufacturingfacility in Wilmington, Ohio (approximately 314,800 square feet).We believe that our current and planned facilities are suitable and adequate for our current and near‑term pre-clinical,clinical and commercial requirements. Item 3. Legal ProceedingsFor information regarding legal proceedings, refer to Note 16, Commitments and Contingencies in the “Notes toCondensed Consolidated Statements” in this Annual Report, which is incorporated into this Part I, Item 3 by reference. Item 4. Mine Safety DisclosuresNot Applicable. PART II Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity SecuritiesMarket and shareholder informationOur ordinary shares are traded on the Nasdaq under the symbol “ALKS.” Set forth below for the indicated periods are thehigh and low closing sales prices for our ordinary shares.49 Table of Contents Year Ended Year Ended December 31, 2017 December 31, 2016 High Low High Low 1st Quarter $61.16 $52.26 $75.27 $29.05 2nd Quarter 61.66 55.90 47.00 35.67 3rd Quarter 60.45 49.16 51.78 43.77 4th Quarter 55.39 47.69 59.50 42.30 There were 130 shareholders of record for our ordinary shares on February 2, 2018. In addition, the last reported sale priceof our ordinary shares as reported on the Nasdaq on February 2, 2018 was $63.42.DividendsNo dividends have been paid on our ordinary shares to date, and we do not expect to pay cash dividends thereon in theforeseeable future. We anticipate that we will retain all earnings, if any, to support our operations and our proprietary drugdevelopment programs. Any future determination as to the payment of dividends will be at the sole discretion of our board ofdirectors and will depend on our financial condition, results of operations, capital requirements and other factors our board ofdirectors deems relevant.Repurchase of equity securitiesOn September 16, 2011, our board of directors authorized the continuation of the Alkermes, Inc. program to repurchase upto $215.0 million of our ordinary shares at the discretion of management from time to time in the open market or throughprivately negotiated transactions. We did not purchase any shares under this program during the year ended December 31,2017. As of December 31, 2017, we had purchased a total of 8,866,342 shares at a cost of $114.0 million. Term Loan B-1includes restrictive covenants that impose certain limitations on our ability to repurchase our ordinary shares.During the three months ended December 31, 2017, we acquired 304 Alkermes ordinary shares, at an average price of$51.48 per share related to the vesting of employee equity awards to satisfy withholding tax obligations. During the threemonths ended December 31, 2017, we acquired 365 Alkermes ordinary shares, at an average price of $54.58 per share,tendered by employees as payment of the exercise price of stock options granted under our equity compensation plans.Irish taxes applicable to U.S. holdersThe following is a general summary of the main Irish tax considerations applicable to the purchase, ownership anddisposition of our ordinary shares by U.S. holders. It is based on existing Irish law and practices in effect on January 2, 2018,and on discussions and correspondence with the Irish Revenue Commissioners. Legislative, administrative or judicialchanges may modify the tax consequences described below.The statements do not constitute tax advice and are intended only as a general guide. Furthermore, this information appliesonly to ordinary shares held as capital assets and does not apply to all categories of shareholders, such as dealers in securities,trustees, insurance companies, collective investment schemes and shareholders who acquire, or who are deemed to acquire,their ordinary shares by virtue of an office or employment. This summary is not exhaustive and shareholders should consulttheir own tax advisers as to the tax consequences in Ireland, or other relevant jurisdictions where we operate, including theacquisition, ownership and disposition of ordinary shares.Withholding tax on dividendsWhile we have no current plans to pay dividends, dividends on our ordinary shares would generally be subject to Irishdividend withholding tax (“DWT”) at the standard rate of income tax, which is currently 20%, unless an exemptionapplies. Dividends on our ordinary shares that are owned by residents of the U.S. and held beneficially through theDepositary Trust Company (“DTC”) will not be subject to DWT provided that the address of the beneficial owner of theordinary 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 besubject to DWT provided that the shareholder has completed the appropriate Irish DWT form and this form remains valid.Such shareholders must provide the appropriate Irish DWT form to our transfer agent at least seven business days before therecord date for the first dividend payment to which they are entitled.50 Table of ContentsIf any shareholder who is resident in the U.S. receives a dividend subject to DWT, he or she should generally be able tomake an application for a refund from the Irish Revenue Commissioners on the prescribed form.Income tax on dividendsIrish income tax, if any, may arise in respect of dividends paid by us. However, a shareholder who is neither resident norordinarily resident in Ireland and who is entitled to an exemption from DWT, generally has no liability for Irish income taxor to the universal social charge on a dividend from us unless he or she holds his or her ordinary shares through a branch oragency in Ireland which carries out a trade on his or her behalf.Irish tax on capital gainsA shareholder who is neither resident nor ordinarily resident in Ireland and does not hold our ordinary shares inconnection with a trade or business carried on by such shareholder in Ireland through a branch or agency should not bewithin the charge to Irish tax on capital gains on a disposal of our ordinary shares.Capital acquisitions taxIrish capital acquisitions tax (“CAT”) is comprised principally of gift tax and inheritance tax. CAT could apply to a giftor inheritance of our ordinary shares irrespective of the place of residence, ordinary residence or domicile of the parties.This is because our ordinary shares are regarded as property 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 between the donor and the recipient, and (ii) the aggregation of the values of previous gifts andinheritances received by the recipient from persons within the same category of relationship for CAT purposes. Gifts andinheritances passing between spouses are exempt from CAT. Our shareholders should consult their own tax advisers as towhether CAT is creditable or deductible in computing any domestic tax liabilities.Stamp dutyIrish stamp duty, if any, may become payable in respect of ordinary share transfers. However, a transfer of our ordinaryshares from a seller who holds shares through DTC to a buyer who holds the acquired shares through DTC should not besubject to Irish stamp duty. A transfer of our ordinary shares (i) by a seller who holds ordinary shares outside of DTC to anybuyer, or (ii) by a seller who holds the ordinary shares through DTC to a buyer who holds the acquired ordinary sharesoutside of DTC, may be subject to Irish stamp duty, which is currently at the rate of 1% of the price paid or the marketvalue of the ordinary shares acquired, if greater. The person accountable for payment of stamp duty is the buyer or, in thecase of a transfer by way 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 riseto Irish stamp duty provided that the shareholder would be the beneficial owner of the related book‑entry interest in thoseordinary shares recorded in the systems of DTC, and in exactly the same proportions, as a result of the transfer and at thetime of the transfer into DTC there is no sale of those book‑entry interests to a third party being contemplated by theshareholder. Similarly, a shareholder who holds ordinary shares through DTC may transfer those ordinary shares out ofDTC without giving rise to Irish stamp duty provided that the shareholder would be the beneficial owner of the ordinaryshares, and in exactly the same proportions, as a result of the transfer, and at the time of the transfer out of DTC there is nosale of those ordinary shares to a third party being contemplated by the shareholder. In order for the share registrar to besatisfied as to the application of this Irish stamp duty treatment where relevant, the shareholder must confirm to us that theshareholder would be the beneficial owner of the related book‑entry interest in those ordinary shares recorded in thesystems of DTC, and in exactly the same proportions or vice‑versa, as a result of the transfer and there is no agreement forthe sale of the related book‑entry interest or the ordinary shares or an interest in the ordinary shares, as the case may be, bythe shareholder to a third party being contemplated.51 Table of ContentsStock performance graphThe information contained in the performance graph below shall not be deemed to be “soliciting material” or to be “filed”with the SEC, and such information shall not be incorporated by reference into any future filing under the Securities Act orthe Exchange Act, except to the extent that we specifically incorporate it by reference into such filing.The following graph compares the cumulative total shareholder return on our ordinary shares from March 31, 2013 throughDecember 31, 2017 with the cumulative returns of the Nasdaq Composite Total Return Index and the Nasdaq BiotechnologyIndex. The comparison assumes $100 was invested on March 31, 2013 in our ordinary shares and in each of the foregoingindices and further assumes reinvestment of any dividends. We did not declare or pay any dividends on our ordinary sharesduring the comparison period.Please note that our stock performance graph previously compared the cumulative total shareholder returns on our ordinaryshares with the cumulative total returns of the Nasdaq Biotechnology Index and the Nasdaq Stock Market (U.S. and Foreign)Index. However, December 31, 2013 was the last day that the Nasdaq Stock Market (U.S. and Foreign) Index data was madeavailable to us by our third-party index provider. As a result of this change, for time periods following December 31, 2013,our performance graph uses information from the Nasdaq Composite Total Return Index in lieu of the Nasdaq Stock Market(U.S. and Foreign) Index. The Nasdaq Biotechnology Index was not affected by this change.Comparison of Cumulative totalReturnsAlkermes plcNasdaq Composite Total ReturnsNasdaq Biotechnology IndexNasdaq Stock Market (U.S. andForeign) Index Year Ended Nine Months Ended March 31, December 31, Year Ended December 31, 2013 2013 2014 2015 2016 2017 Alkermes 100 172 247 335 235 231 Nasdaq Composite Total Return 100 129 148 158 173 224 Nasdaq Biotechnology Index 100 142 190 212 166 201 Nasdaq Stock Market (U.S. and Foreign) Index 100 132 — — — — Item 6. Selected Financial DataThe selected historical financial data set forth below at December 31, 2017 and 2016 and for the years ended December 31,2017, 2016 and 2015 are derived from our audited consolidated financial statements, which are included elsewhere in thisAnnual Report. The selected historical financial data set forth below at December 31, 2015 and for the52 Table of Contentsyear ended and at December 31, 2014 and the nine months ended December 31, 2013 are derived from audited consolidatedfinancial statements, which are not included in this Annual Report.On May 21, 2013, our Audit and Risk Committee, with such authority delegated to it by our board of directors, approved achange to our fiscal year-end from March 31 to December 31. We have elected not to recast prior period amounts to conformto the change in our fiscal year.The following selected consolidated financial data should be read in conjunction with our consolidated financialstatements, the related notes and “Management’s Discussion and Analysis of Financial Condition and Results of Operations”included in Item 7 of Part II of this Annual Report. The historical results are not necessarily indicative of the results to beexpected for any future period. Nine Months Ended Year Ended December 31, December 31, 2017 2016 2015 2014 2013 (In thousands, except per share data) Consolidated Statements of Operations Data: REVENUES: Manufacturing and royalty revenues $505,308 $487,247 $475,288 $516,876 $371,039 Product sales, net 362,834 256,146 149,028 94,160 57,215 License revenues 28,000 — — — — Research and development revenue 7,232 2,301 4,019 7,753 4,657 Total revenues 903,374 745,694 628,335 618,789 432,911 EXPENSES: Cost of goods manufactured and sold 154,748 132,122 138,989 175,832 134,306 Research and development 412,889 387,148 344,404 272,043 128,125 Selling, general and administrative 421,578 374,130 311,558 199,905 116,558 Amortization of acquired intangible assets 62,059 60,959 57,685 58,153 38,428 Total expenses 1,051,274 954,359 852,636 705,933 417,417 OPERATING (LOSS) INCOME (147,900) (208,665) (224,301) (87,144) 15,494 OTHER INCOME (EXPENSE), NET 4,626 (5,722) 296 73,115 (10,097) (LOSS) INCOME BEFORE INCOME TAXES (143,274) (214,387) (224,005) (14,029) 5,397 PROVISION (BENEFIT) FOR INCOME TAXES 14,671 (5,943) 3,158 16,032 (12,252) NET (LOSS) INCOME $(157,945) $(208,444) $(227,163) $(30,061) $17,649 (LOSS) EARNINGS PER ORDINARY SHARE: BASIC $(1.03) $(1.38) $(1.52) $(0.21) $0.13 DILUTED $(1.03) $(1.38) $(1.52) $(0.21) $0.12 WEIGHTED AVERAGE NUMBER OFORDINARY SHARES OUTSTANDING: BASIC 153,415 151,484 149,206 145,274 135,960 DILUTED 153,415 151,484 149,206 145,274 144,961 Consolidated Balance Sheet Data: Cash, cash equivalents and investments $590,716 $619,165 $798,849 $801,646 $449,995 Total assets 1,797,227 1,726,423 1,855,744 1,919,058 1,574,848 Long-term debt 281,436 283,666 349,944 355,756 361,553 Shareholders’ equity 1,202,808 1,209,481 1,314,275 1,396,837 1,065,186 (1)2015 includes a $9.6 million gain on the Gainesville Transaction (as described and defined in Note 2, Summary ofSignificant Accounting Policies, in the accompanying “Notes to Consolidated Financial Statements” section of thisAnnual Report). 2014 includes a gain on the sale of property, plant and equipment of $41.9 million, a gain on thesale of an investment in Civitas Therapeutics, Inc. of $29.6 million and a gain on the sale of an investment inAcceleron Pharma Inc. of $15.3 million. (2)In 2015, the Company retrospectively adopted the Financial Accounting Standards Board (“FASB”)’s guidance,simplifying the presentation of debt issuance costs. As a result, deferred financing costs of $2.2 million and $2.7million that were classified within “Other long-term assets” at December 31, 2014 and December 31, 2013,respectively, were reclassified to “Long-term debt” to conform to the then-current period presentation.53 (1)(2)(2)Table of Contents Item 7. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe following should be read in conjunction with our consolidated financial statements and related notes beginning onpage F‑1 of this Annual Report. The following discussion contains forward‑looking statements. Actual results may differsignificantly from those projected in the forward‑looking statements. See “Cautionary Note Concerning Forward‑LookingStatements” on page 3 of this Annual Report. Factors that might cause future results to differ materially from those projectedin the forward‑looking statements also include, but are not limited to, those discussed in “Item 1A—Risk Factors” andelsewhere in this Annual Report.OverviewWe earn revenue on net sales of VIVITROL and ARISTADA, which are proprietary products that we manufacture, marketand sell in the U.S., and manufacturing and/or royalty revenues on net sales of products commercialized by our licensees. Ourkey marketed products are expected to generate significant revenues for us in the near‑ and medium‑term and we believe aresingular or competitively advantaged products in their classes. These key marketed products consist of VIVITROL;ARISTADA; INVEGA SUSTENNA/XEPLION, INVEGA TRINZA/TREVICTA and RISPERDAL CONSTA;AMPYRA/FAMPYRA; and BYDUREON. Revenues from these key products accounted for 91% of our total revenues during2017, as compared to 92% and 88% during 2016 and 2015, respectively.Under a license and collaboration agreement, we granted Biogen a worldwide, exclusive, sublicensable license to develop,manufacture and commercialize BIIB098 and other products covered by patents licensed to Biogen under the agreement.Upon entering into this agreement in November 2017, we received an up-front cash payment of $28.0 million. We are alsoeligible to receive additional payments upon achievement of certain milestones and a mid-teens percentage royalty onworldwide net sales of BIIB098. Except in certain limited circumstances, until FDA approval of an NDA for BIIB098, we areresponsible for the development of BIIB098 for the treatment of MS. Biogen paid a portion of the BIIB098 developmentcosts we incurred in 2017 and, beginning on January 1, 2018, Biogen will be responsible for all BIIB098 development costswe incur, subject to annual budget limitations. This license and collaboration agreement is discussed in further detail withinthe Critical Accounting Estimates section below.In 2017, we incurred an operating loss of $147.9 million, down from an operating loss of $208.7 million in 2016.Revenues increased by $157.7 million, which was primarily due to a $106.7 million increase in net sales of VIVITROL andARISTADA. This was partially offset by a $96.9 million increase in operating expenses, which was primarily in support ofthe increase in net sales, and continued significant investment in our R&D pipeline and commercial organization. Theseitems are discussed in further detail within the Results of Operations section below.Results of OperationsManufacturing and Royalty RevenuesManufacturing revenues are earned from the sale of products under arrangements with our licensees when product isshipped to them at an agreed upon price. Royalties are generally earned on our licensees’ net sales of products thatincorporate our technologies and are recognized in the period the products are sold by our licensees. The following tablecompares manufacturing and royalty revenues earned in the years ended December 31, 2017, 2016 and 2015: Change Year Ended December 31, Favorable/(Unfavorable)(In millions) 2017 2016 2015 2017–2016 2016–2015Manufacturing and royalty revenues: INVEGA SUSTENNA/XEPLION & INVEGATRINZA/TREVICTA $214.9 $184.2 $149.7 $30.7 $34.5AMPYRA/FAMPYRA 117.0 114.2 104.7 2.8 9.5RISPERDAL CONSTA 84.9 87.2 100.7 (2.3) (13.5)BYDUREON 45.7 45.6 46.1 0.1 (0.5)Other 42.8 56.0 74.1 (13.2) (18.1)Manufacturing and royalty revenues $505.3 $487.2 $475.3 $18.1 $11.9 Under our INVEGA SUSTENNA/XEPLION and INVEGA TRINZA/TREVICTA agreement with Janssen, we earn royaltieson end‑market net sales of INVEGA SUSTENNA/XEPLION and INVEGA TRINZA/TREVICTA 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% oncalendar-year sales exceeding $500 million. The royalty rate resets at the beginning of each calendar‑year54 Table of Contentsto 5%. Under our RISPERDAL CONSTA supply and license agreements with Janssen, we earn manufacturing revenues of7.5% of Janssen’s unit net sales price of RISPERDAL CONSTA and royalty revenues of 2.5% of end‑market net sales.The increase in INVEGA SUSTENNA/XEPLION and INVEGA TRINZA/TREVICTA royalty revenues in each period wasdue to an increase in Janssen’s end‑market net sales of INVEGA SUSTENNA/XEPLION and INVEGA TRINZA/TREVICTA.Janssen’s end‑market net sales of INVEGA SUSTENNA/XEPLION and INVEGA TRINZA/TREVICTA were $2.6 billion,$2.2 billion and $1.8 billion, during the years ended December 31, 2017, 2016 and 2015, respectively.The decrease in RISPERDAL CONSTA revenue in each period was primarily due to a decline in Janssen’s end-marketnet sales of RISPERDAL CONSTA. Janssen’s end‑market net sales of RISPERDAL CONSTA were $805.0 million, $893.0million and $970.0 million, during the years ended December 31, 2017, 2016 and 2015, respectively. The decline inJanssen’s end-market net sales led to a decrease in our royalty revenues of 10% in 2017, as compared to 2016 and 8% in2016, as compared to 2015. The manufacturing revenue we earned on shipments of RISPERDAL CONSTA to Janssen in2017 was consistent with the amount we earned in 2016. While the number of units shipped to Janssen increased by 6% in2017, this was offset by a lower average net selling price on the units shipped to Janssen as Janssen receives a lower salesprice for units sold outside the U.S. The number of units shipped for resale in the U.S. decreased by 17% and the number ofunits shipped for resale in the rest of the world increased by 11%. Manufacturing revenues declined by 15% in 2016, ascompared to 2015, which was primarily due to a 13% decrease in the number of units shipped to Janssen. RISPERDALCONSTA is covered by a patent until 2021 in the EU and 2023 in the U.S.We expect revenues from our long‑acting, atypical antipsychotic franchise to continue to grow as INVEGASUSTENNA/XEPLION grows and INVEGA TRINZA/TREVICTA is launched around the world. A number of companies,including us, are working to develop products to treat schizophrenia and/or bipolar disorder that may compete withINVEGA SUSTENNA/XEPLION, INVEGA TRINZA/TREVICTA and RISPERDAL CONSTA. Increased competition maylead to reduced unit sales of INVEGA SUSTENNA/XEPLION, INVEGA TRINZA/TREVICTA and RISPERDAL CONSTA,as well as increasing pricing pressure. The latest of the patents subject to our license agreement with Janssen coveringINVEGA SUSTENNA/XEPLION expire in 2019 in the U.S. and 2022 in the EU, and, in certain countries, in 2030. Thelatest of the patents covering INVEGA TRINZA/TREVICTA expired in November 2017 in the U.S. (with regulatoryexclusivity in the U.S. until May 2018) and will expire in 2022 in the EU. In addition, the latest of the patents not subjectto our license agreement with Janssen covering INVEGA SUSTENNA/XEPLION expires in 2031 in the U.S.In January 2018, Janssen Pharmaceuticals NV and Janssen Pharmaceuticals, Inc. initiated a patent infringement lawsuitin the United States District Court for the District of New Jersey against Teva, who filed an ANDA seeking approval tomarket a generic version of INVEGA SUSTENNA before the expiration of United States Patent No. 9,439,906. For furtherdiscussion of the legal proceedings related to the patents covering INVEGA SUSTENNA, see Note 16, Commitments andContingencies in the “Notes to Condensed Consolidated Statements” and “Part I, Item 3—Legal Proceedings” in thisAnnual Report and for information about risks relating to the INVEGA SUSTENNA Paragraph IV litigation, see “Part I,Item 1A—Risk Factors” in this Annual Report, and specifically the section entitled “—We or our licensees may face claimsagainst intellectual property rights covering our products and competition from generic drug manufacturers.” Under our AMPYRA supply and license agreements with Acorda, we earn manufacturing and royalty revenues whenAMPYRA is shipped to Acorda, either by us or a third‑party manufacturer. Under our FAMPYRA supply and licenseagreements, we earn manufacturing revenue when FAMPYRA is shipped to Biogen, and we earn royalties upon end‑marketnet sales of FAMPYRA by Biogen.The increase in AMPYRA/FAMPYRA revenues in 2017, as compared to 2016, was primarily due to a 4% increase inmanufacturing revenue, which was due to an 11% increase in the amount of FAMPYRA shipped to Biogen, partially offsetby an 8% decrease in the amount of AMPYRA shipped to Acorda. The increase in AMPYRA/FAMPYRA revenues in 2016,as compared to 2015, was due to a 10% increase in manufacturing revenue and an 8% increase in royalty revenue. Theincrease in manufacturing revenue was primarily due to a 12% increase in product shipped to Acorda and Biogen. Theincrease in royalty revenue was due to an increase in the end-market net sales of AMPYRA/FAMPYRA as end-market netsales of the products increased by 18% in 2016, as compared to 2015.55 Table of ContentsOn March 31, 2017, the Delaware Court upheld the ‘938 Patent, which pertains to the formulation of AMPYRA and is setto expire in July 2018, and invalidated U.S. Patent Nos. 8,007,826; 8,354,437; 8,440,703; and 8,663,685, which pertain toAMPYRA. If the Federal Circuit upholds the Delaware Court’s findings with respect to U.S. Patent Nos. 8,007,826;8,354,437; 8,440,703; and 8,663,685 and the validity of the ‘938 Patent, we can expect competition from generic forms ofAMPYRA as early as July 2018 when the ‘938 Patent expires. If the Federal Circuit upholds the Delaware Court’s findingswith respect to U.S. Patent Nos. 8,007,826; 8,354,437; 8,440,703; and 8,663,685 and overturns the Delaware Court’supholding of the validity of the ‘938 Patent, competition from generic forms of AMPYRA may occur before the July 2018expiry of the ‘938 Patent. We can expect that competition from generic forms of AMPYRA would impact ourmanufacturing and royalty revenues. We expect our manufacturing and royalty revenues to decline in advance of genericentry in anticipation of reduced demand for AMPYRA. For further discussion of the legal proceedings related to thepatents covering AMPYRA, see Note 16, Commitments and Contingencies in the “Notes to Condensed ConsolidatedStatements” and “Part I, Item 3—Legal Proceedings” in this Annual Report and for information about risks relating to theAMPYRA Paragraph IV litigation, see “Part I, Item 1A—Risk Factors” in this Annual Report, and specifically the sectionentitled “—We or our licensees may face claims against intellectual property rights covering our products and competitionfrom generic drug manufacturers.”.Included in other manufacturing and royalty revenues in 2015 was $18.8 million of revenue associated with certainproducts manufactured at our divested manufacturing facility in Gainesville, GA, including RITALIN LA, FOCALIN XRand VERELAN, which were sold in April 2015.Certain of our manufacturing and royalty revenues are earned in countries outside of the U.S. and are denominated incurrencies in which the product is sold. See “Part II, Item 7A—Quantitative and Qualitative Disclosures about MarketRisk” of this Annual Report for information on currency exchange rate risk related to our revenues.Product Sales, NetOur product sales, net consist of sales of VIVITROL and, following its approval by the FDA in October 2015,ARISTADA in the U.S., primarily to wholesalers, specialty distributors and pharmacies. The following table presents theadjustments deducted from product sales, gross to arrive at product sales, net for sales of VIVITROL and ARISTADA in theU.S. during the years ended December 31, 2017, 2016 and 2015: Year Ended December 31, (In millions) 2017 % of Sales 2016 % of Sales 2015 % of Sales Product sales, gross $657.7 100.0% $444.6 100.0% $227.0 100.0% Adjustments to product sales, gross: Medicaid rebates (147.8) (22.5)% (94.2) (21.2)% (32.2) (14.2)% Product discounts (51.0) (7.8)% (35.1) (7.9)% (13.2) (5.8)% Chargebacks (47.9) (7.3)% (31.5) (7.1)% (17.8) (7.8)% Co-pay assistance (9.5) (1.4)% (8.5) (1.9)% (6.5) (2.9)% Other (38.7) (5.8)% (19.2) (4.3)% (8.3) (3.7)% Total adjustments (294.9) (44.8)% (188.5) (42.4)% (78.0) (34.4)% Product sales, net $362.8 55.2% $256.1 57.6% $149.0 65.6% The increase in product sales, gross in 2017, as compared to 2016, was due to a 33% increase in VIVITROL gross salesand a 129% increase in ARISTADA gross sales. The increase in VIVITROL gross sales was due to a 33% increase in thenumber of units sold as there was no change to the selling price of VIVITROL in 2017. The increase in sales of ARISTADAwas primarily due to a 113% increase in the number of units sold and a 5% price increase, which was effective in April2017. ARISTADA 441 mg, 662 mg and 882 mg launched in the U.S. in October 2015 and ARISTADA 1064 mg, our two-month dosing option, was approved by the FDA and launched in June 2017.The increase in product sales, gross in 2016, as compared to 2015, was due to a 66% increase in the number ofVIVITROL units sold and a 3% increase in the selling price of VIVITROL, as well as having a full year of ARISTADA salesas compared to a partial year in 2015.The increases in Medicaid rebates as a percentage of sales in 2017, as compared to 2016, and in 2016, as compared to2015, were primarily due to increases in the amount of VIVITROL sold under the Medicaid Drug Rebate Program.Our product sales, net for VIVITROL were $269.3 million, $209.0 million and $144.4 million in 2017, 2016 and 2015,respectively. Our product sales, net for ARISTADA were $93.5 million, $47.1 million and $4.6 million in 2017,56 Table of Contents2016 and 2015, respectively. We expect our product sales, net will continue to grow as VIVITROL continues to penetratethe opioid dependence market in the U.S., and as ARISTADA sales continue to increase.A number of companies, including us, are working to develop products to treat addiction, including alcohol and opioiddependence that may compete with, and negatively impact, future sales of VIVITROL. Increased competition andincreased pricing pressure may lead to reduced unit sales of VIVITROL. VIVITROL is covered by a patent that will expirein the U.S. in 2029 and in Europe in 2021; and, as such, we do not anticipate any generic versions of this product in thenear term. A number of companies, including us, currently market and/or are working to develop products to treatschizophrenia that may compete with and negatively impact future sales of ARISTADA. Increased competition andincreased pricing pressure may lead to reduced unit sales of ARISTADA. ARISTADA is covered by a patent that will expirein the U.S. in 2035; and, as such, we do not anticipate any generic versions of this product in the near term.License Revenue Change Year Ended December 31, Favorable/(Unfavorable)(In millions) 2017 2016 2015 2017 - 2016 2016 - 2015License revenue $28.0 $ — $ — $28.0 $ — The increase in license revenue in 2017, as compared to 2016, was due to revenue earned under our license andcollaboration agreement with Biogen for BIIB098, as discussed in further detail within the Critical Accounting Estimatessection below.Research and Development Revenue Change Year Ended December 31, Favorable/(Unfavorable)(In millions) 2017 2016 2015 2017 - 2016 2016 - 2015Research and development revenue $7.2 $2.3 $4.0 $4.9 $(1.7) The increase in R&D revenue in 2017, as compared to 2016, was primarily due to revenue earned under our license andcollaboration agreement with Biogen for BIIB098, as discussed in further detail within the Critical Accounting Estimatessection below.Costs and ExpensesCost of Goods Manufactured and Sold Change Year Ended December 31, Favorable/(Unfavorable) (In millions) 2017 2016 2015 2017 - 2016 2016 - 2015 Cost of goods manufactured and sold $154.7 $132.1 $139.0 $(22.6) $6.9 The increase in cost of goods manufactured and sold in 2017, as compared to 2016, was primarily due to the increase incost of goods sold related to VIVITROL and ARISTADA and the increase in cost of goods manufactured related toRISPERDAL CONSTA. Cost of goods sold for VIVITROL and ARISTADA increased by $9.5 million and $5.2 million,respectively, driven by increases in sales, and cost of goods manufactured for RISPERDAL CONSTA increased by $3.7million, driven by increases in the number of units shipped to Janssen, as previously discussed.The decrease in cost of goods manufactured and sold in 2016, as compared to 2015, was primarily due to the Company’sentry on March 7, 2015 into a definitive agreement with Recro Pharma, Inc. (“Recro”) and Recro Pharma LLC to sell theCompany’s Gainesville, GA manufacturing facility, the related manufacturing and royalty revenue associated with certainproducts manufactured at the facility, and the rights to IV/IM and parenteral forms of Meloxicam (the “GainesvilleTransaction”). During the year ended December 31, 2015, the Gainesville facility had cost of goods manufactured of $10.2million. In addition, cost of goods manufactured at our Athlone facility decreased by $8.2 million, which was primarilydue to a reduction in manufacturing activity due to the restructuring program initiated in April 2013. These decreases werepartially offset by an $11.4 million increase in cost of goods manufactured and sold related to products produced at ourWilmington, Ohio manufacturing facility, which was primarily due to the increase in VIVITROL sales and a full year ofARISTADA sales compared to a partial year in 2015. 57 Table of ContentsResearch and Development ExpensesFor each of our R&D programs, we incur both external and internal expenses. External R&D expenses include clinicaland non‑clinical activities performed by CROs, consulting fees, laboratory services, purchases of drug product materialsand third‑party manufacturing development costs. Internal R&D expenses include employee‑related expenses, occupancycosts, depreciation and general overhead. We track external R&D expenses for each of our development programs;however, internal R&D expenses are not tracked by individual program as they benefit multiple programs or ourtechnologies in general.The following table sets forth our external R&D expenses for the years ended December 31, 2017, 2016 and 2015relating to our individual Key Development Programs and all other development programs, and our internal R&D expensesby the nature of such expenses: Change Year Ended December 31, Favorable/(Unfavorable)(In millions) 2017 2016 2015 2017 - 2016 2016 - 2015External R&D Expenses: Key development programs: ALKS 3831 $91.9 $71.0 $26.1 $(20.9) $(44.9)BIIB098 47.4 26.9 17.9 (20.5) (9.0)ALKS 5461 42.2 46.2 108.4 4.0 62.2ARISTADA and ARISTADA line extensions 13.7 36.3 38.1 22.6 1.8ALKS 6428 10.6 16.3 7.0 5.7 (9.3)ALKS 4230 7.0 4.8 4.6 (2.2) (0.2)Other external R&D expenses 27.8 42.4 14.9 14.6 (27.5)Total external R&D expenses 240.6 243.9 217.0 3.3 (26.9)Internal R&D expenses: Employee-related 132.2 110.1 97.5 (22.1) (12.6)Occupancy 9.6 9.0 8.1 (0.6) (0.9)Depreciation 10.5 7.9 6.2 (2.6) (1.7)Other 20.0 16.2 15.6 (3.8) (0.6)Total internal R&D expenses 172.3 143.2 127.4 (29.1) (15.8)Research and development expenses $412.9 $387.1 $344.4 $(25.8) $(42.7) These amounts are not necessarily predictive of future R&D expenses. In an effort to allocate our spending mosteffectively, we continually evaluate the products under development, based on the performance of such products inpre‑clinical and/or clinical trials, our expectations regarding the likelihood of their regulatory approval and our view oftheir commercial viability, among other factors.The increase in expenses related to ALKS 3831 in 2017, as compared to 2016, was primarily due to the timing of activitywithin the ENLIGHTEN-1 and ENLIGHTEN-2 pivotal trials, which were initiated in December 2015 and February 2016,respectively and activity for a supportive study in the ENLIGHTEN clinical development program for ALKS 3831, whichwas initiated in June 2017. The increase in expenses related to BIIB098 in 2017, as compared to 2016, was primarily dueto further progression of the two-year, multicenter, open-label phase 3 study designed to assess the safety of BIIB098,which was initiated in December 2015 and is actively enrolling. We also initiated a phase 3 gastrointestinal tolerabilitystudy for BIIB098 in March 2017. The decrease in expenses related to ALKS 5461 in 2017, as compared to 2016, wasprimarily due to the completion of the three core phase 3 studies related to the program. We announced topline results ofthe FORWARD-3 and FORWARD-4 studies in January 2016 and topline results from FORWARD-5 were announced inOctober 2016. In January 2018, we completed our submission of an NDA to the FDA seeking marketing approval of ALKS5461 for the adjunctive treatment of MDD. The decrease in expenses related to ARISTADA and ARISTADA lineextensions in 2017, as compared to 2016, was primarily due to the timing of the phase 1 clinical study of extended dosingintervals of aripiprazole lauroxil in patients with schizophrenia. ARISTADA 1064 mg, our two-month dosing option, wasapproved by the FDA in June 2017 and we submitted an NDA to the FDA for ALNCD in October 2017, which wasaccepted by the FDA in November 2017. The decrease in expenses related to ALKS 6428 in 2017, as compared to 2016,was primarily due to the completion of a phase 3 clinical study initiated in September 2015 evaluating the safety,tolerability and efficacy of ALKS 6428 in patients with opioid dependence. Topline results were announced in February2017. The increase in expenses related to ALKS 4230 in 2017, as compared to 2016, was primarily related to the timing ofthe phase 1 study which was initiated in May 2016. Initial data from the first stage of the phase 1 study is expected in2018.58 Table of ContentsThe increase in expenses related to ALKS 3831 in 2016, as compared to 2015, was primarily due to the timing of theENLIGHTEN-1 and ENLIGHTEN-2 pivotal trials. The decrease in expenses related to ARISTADA and ARISTADA lineextensions in 2016, as compared to 2015, was primarily due to the timing of the phase 1 clinical study of extended dosingintervals of aripiprazole lauroxil in patients with schizophrenia. ARISTADA was approved by the FDA in October 2015.Also, in December 2014, we initiated a phase 1 clinical study of extended dosing intervals of ARISTADA in patients withschizophrenia. The increase in expenses related to ALKS 6428 was primarily due to the initiation of the phase 3 studyevaluating the safety, tolerability and efficacy of ALKS 6428 in patients with opioid dependence in September 2015. Theincrease in expenses related to BIIB098 in 2016, as compared to 2015, was primarily due to the timing of study activity.We initiated the two-year, multicenter, open-label phase 3 study designed to assess the safety of BIIB098 in December2015, following the completion of a phase 1 study of BIIB098 initiated in 2014.The decrease in other external R&D expenses in 2017, as compared to 2016, and the increase in 2016, as compared to2015, were primarily due to a $10.0 million non-refundable, upfront payment we paid as partial consideration of a grant tous of rights and licenses pursuant to a collaboration and license option agreement with Reset Therapeutics, Inc. Theremainder of the changes are due to activity related to our early-stage, pre-clinical development activity.For additional detail on the status of our key development programs, refer to “Key Development Programs” within “PartI, Item 1—Business” in this Annual Report.The increase in employee-related expenses in both periods presented was primarily due to an increase in headcount. OurR&D-related headcount increased by 9% in 2017, as compared to 2016, and 20% in 2016, as compared to 2015.Selling, General and Administrative Expenses Change Year Ended December 31, Favorable/(Unfavorable)(In millions) 2017 2016 2015 2017 - 2016 2016 - 2015Selling, general and administrative expense $421.6 $374.1 $311.6 $(47.5) $(62.5) The increase in selling, general and administrative (“SG&A”) expense in both periods presented was primarily due toincreases in marketing and professional services fees and employee-related expenses. Marketing and professional servicesfees increased by $31.1 million and $27.1 million, respectively, and were primarily due to additional brand investments inboth VIVITROL and ARISTADA, as well as an increase in patient access support services, such as reimbursement andtransition assistance, for both of these products. Employee-related expenses increased by $13.4 million and $28.9 million,respectively, and were primarily due to an increase in our SG&A-related headcount of 17% in 2017 and 15% in 2016.Amortization of Acquired Intangible Assets Change Year Ended December 31, Favorable/(Unfavorable)(In millions) 2017 2016 2015 2017 - 2016 2016 - 2015Amortization of acquired intangible assets $62.1 $61.0 $57.7 $(1.1) $(3.3) Our amortizable intangible assets consist of technology and collaborative arrangements acquired as part of theacquisition of EDT in September 2011, which are being amortized over 12 to 13 years. We amortize our amortizableintangible assets using the economic use method, which reflects the pattern that the economic benefits of the intangibleassets are consumed as revenue is generated from the underlying patent or contract.Based on our most recent analysis, amortization of intangible assets included within our consolidated balance sheet atDecember 31, 2017 is expected to be approximately $65.0 million, $55.0 million, $50.0 million, $40.0 million and $35.0million in the years ending December 31, 2018 through 2022, respectively.59 Table of ContentsOther Income (Expense), Net Change Year Ended December 31, Favorable/(Unfavorable)(In millions) 2017 2016 2015 2017 - 2016 2016 - 2015Interest income $4.6 $3.8 $3.3 $0.8 $0.5Interest expense (12.0) (14.9) (13.2) 2.9 (1.7)Change in the fair value of contingent consideration 21.6 7.9 (2.3) 13.7 10.2Gain on Gainesville Transaction — — 9.6 — (9.6)Gain on sale of property, plant and equipment — — 2.9 — (2.9)Other (expense) income, net (9.6) (2.5) — (7.1) (2.5)Total other income (expense), net $4.6 $(5.7) $0.3 $10.3 $(6.0) The decrease in interest expense in 2017, as compared to 2016 and the increase in interest expense in 2016, as comparedto 2015, was due to the amendment of Term Loan B-1 in October 2016, pursuant to which, among other things, the duedate of Term Loan B-1 was extended from September 25, 2019 to September 25, 2021 (the “Refinancing”). The interestrate under Term Loan B-1 was unchanged and remains at LIBOR plus 2.75% with a LIBOR floor of 0.75%. We incurred acharge of $2.1 million in connection with the Refinancing, which is included in interest expense. In April 2015, we completed the Gainesville Transaction and received $54.0 million in cash, $2.1 million in warrants toacquire Recro common stock and $57.6 million in contingent consideration tied to low double digit royalties on net salesof the IV/IM and parenteral forms of Meloxicam and any other product with the same active ingredient as MeloxicamIV/IM that is discovered or identified using certain of our intellectual property to which Recro was provided a right of use,through license or transfer, pursuant to the Gainesville Transaction (the “Meloxicam Products”), and up to $120.0 millionin milestone payments upon the achievement of certain regulatory and sales milestones related to the Meloxicam Products.We determined the fair value of the contingent consideration through three valuation approaches, which are described ingreater detail in Critical Accounting Estimates, Contingent Consideration, later in “Item 7—Management’s Discussionand Analysis of Financial Condition and Results of Operations” of this Annual Report. At each reporting date, we updateour assessment of the fair value of this contingent consideration and reflect any changes to the fair value within theconsolidated statements of operations and comprehensive loss, and will continue to do so until the milestones and/orroyalties included in the contingent consideration have been settled.During the years ended December 31, 2017, 2016 and 2015, we determined that the fair value of the contingentconsideration increased by $21.6 million, $7.9 million and decreased by $2.3 million, respectively. The increases in 2017,as compared to 2016, and in 2016, as compared to 2015, were primarily due to the change in the structure of thedevelopment milestones, which is discussed in greater detail in Critical Accounting Estimates, Contingent Consideration,later in “Item 7—Management’s Discussion and Analysis of Financial Condition and Results of Operations” of this AnnualReport and a shorter time to payment and improved probability of success on the milestones and royalties included in thecontingent consideration.The increase in other (expense) income, net, in 2017, as compared to 2016, was primarily due to an impairment chargerelated to our investment in Reset, which was accounted for under the equity method. In September 2017, we recorded another-than-temporary impairment charge of $10.5 million, which represented our remaining investment in Reset, as webelieve that Reset is unable to generate future earnings that justify the carrying amount of the investment.Provision (Benefit) for Income Taxes Change Year Ended December 31, Favorable/(Unfavorable)(In millions) 2017 2016 2015 2017 - 2016 2016 - 2015Income tax provision (benefit) $14.7 $(5.9) $3.2 $(20.6) $9.1 The income tax provisions in 2017 and 2015 and the income tax benefit in 2016 were primarily due to U.S. federal andstate taxes. The unfavorable change in income taxes in 2017, as compared to 2016, was primarily due to the enactment ofthe Tax Cuts and Jobs Act (the “Act” or “Tax Reform”) and an increase in income earned in the U.S., partially offset by therecognition of excess tax benefits related to share-based compensation. The favorable change in income taxes in 2016, ascompared to 2015, was primarily due to a reduction in income earned in the U.S.60 Table of ContentsNo provision for income tax has been provided on undistributed earnings of our foreign subsidiaries because suchearnings may be repatriated to Ireland without incurring any tax liability. Cumulative unremitted earnings of overseassubsidiaries totaled approximately $160.3 million at December 31, 2017.In March 2016, the FASB issued guidance as part of its simplification initiative that involves several aspects of theaccounting for share-based payment transactions including the requirement that all future excess tax benefits and taxdeficiencies be recognized as income tax expense or benefit in the income statement. On January 1, 2017, we adopted thisstandard on a modified retrospective basis, which resulted in a favorable cumulative-effect adjustment of $61.5 million toaccumulated deficit due to the change in the accounting treatment of excess tax benefits and tax deficiencies.Tax Reform was enacted in December 2017. We are primarily subject to the business-related provisions outlined inSubtitle C to the Act, as well as the international tax provisions for inbound transactions outlined in Subtitle D, Part II, tothe Act. We recorded a $21.5 million discrete tax expense in the quarter ended December 31, 2017 to account for thereduction in the U.S. federal tax rate from 35% to 21%. The Act also removes the exception for performance-basedcompensation in §162(m) of the Internal Revenue Code (“the Code”) on a prospective basis. Performance-basedcompensation provided pursuant to a written binding agreement entered into prior to November 2, 2017 will continue tobe deductible provided no significant modification is made to the agreement on or after that date. Following ourpreliminary assessment, we believe that performance-based compensation, provided prior to November 2, 2017, wasprovided pursuant to written binding agreements and will be deductible. As of December 31, 2017, we have a deferred taxasset of $13.3 million for this item, which is recorded as a provisional amount. If our position is not sustained, then wewould record a deferred tax expense for part or all of this amount. The accounting for this item is incomplete and maychange as our interpretation of the provisions of the Act evolve, additional information becomes available or interpretiveguidance is issued by the U.S. Treasury. The final determination will be completed no later than one year from theenactment of the Act. The benefits from a reduced U.S. federal tax rate are expected to be offset, in part, by unfavorable adjustments to certainpermanent differences such as non-deductible executive compensation under §162(m) of the Code and non-deductiblemeals and entertainment. The impact of the international provisions for inbound transactions are not expected to bematerial to our effective tax rate as we do not expect additional tax expense resulting from the Base Erosion and Anti-Abuse Tax (“BEAT”), which is based on payments made to non-U.S. affiliates. In addition, the new limitations on interestdeductibility are unlikely to materially impact us on the basis of our current financing arrangements. We expect a modestpositive improvement to our effective tax rate as a result of the Act. We continue to expect our effective tax rate tofluctuate in the near-term due to the distribution of our profit and losses between the jurisdictions in which we operate.Under the Act, the repeal of the alternative minimum tax and the immediate expensing of certain capital investments willprovide near-term cash flow benefits, however, the required capitalization of §174 R&D expenses beginning in 2022 willhave an unfavorable cash flow impact. Our position with respect to the valuation allowance held against our deferred taxassets and undistributed foreign earnings does not change as a result of the Act. We will continue to evaluate the futureimpact of the Act and will update our disclosures as additional information and interpretive guidance becomes availableand management’s analysis evolves.At December 31, 2017, we maintained a valuation allowance of $9.4 million against certain U.S. state deferred tax assetsand $163.4 million against certain Irish deferred tax assets as we determined that it is more‑likely‑than‑not that these netdeferred tax assets will not be realized. If we demonstrate consistent profitability in the future, the evaluation of therecoverability of these deferred tax assets may change and the remaining valuation allowance may be released in part or inwhole.As of December 31, 2017, we had $1.2 billion of Irish NOL carryforwards, $5.9 million of U.S. state NOL carryforwards,$57.5 million of federal R&D credits, $10.0 million of alternative minimum tax credits and $11.9 million of U.S. state taxcredits which either expire on various dates through 2037 or can be carried forward indefinitely. These loss and creditcarryforwards are available to reduce certain future Irish and U.S. taxable income and tax and, in the case of the alternativeminimum tax credits, may be refundable. These loss and credit carryforwards are subject to review and possible adjustmentby the appropriate taxing authorities. These loss and credit carryforwards, which may be utilized in a future period, may besubject to limitations based upon changes in the ownership of our ordinary shares.61 Table of ContentsLiquidity and Capital ResourcesOur financial condition is summarized as follows: December 31, 2017 December 31, 2016(In millions) U.S. Ireland Total U.S. Ireland TotalCash and cash equivalents $114.7 76.6 $191.3 $81.2 105.2 $186.4Investments—short-term 127.5 114.7 242.2 184.4 126.5 310.9Investments—long-term 108.9 48.3 157.2 60.1 61.8 121.9Total cash and investments $351.1 $239.6 $590.7 $325.7 $293.5 $619.2Outstanding borrowings—short and long-term $281.4 $ — $281.4 $283.7 $ — $283.7 At December 31, 2017, our investments consisted of the following: Gross Amortized Unrealized Estimated(In millions) Cost Gains Losses Fair ValueInvestments—short-term $242.7 $ — $(0.5) $242.2Investments—long-term available-for-sale 154.3 — (0.8) 153.5Investments—long-term held-to-maturity 3.5 0.2 — 3.7Total $400.5 $0.2 $(1.3) $399.4 Sources and Uses of CashWe generated $19.2 million and used $63.8 million and $40.4 million of cash from operating activities during the yearsended December 31, 2017, 2016 and 2015, respectively. We expect that our existing cash and investments will besufficient to finance our anticipated working capital and other cash requirements, such as capital expenditures andprincipal and interest payments on our long‑term debt, for at least the twelve months following the date from which ourfinancial statements were issued. Subject to market conditions, interest rates and other factors, we may pursue opportunitiesto obtain additional financing in the future, including debt and equity offerings, corporate collaborations, bankborrowings, arrangements relating to assets or other financing methods or structures. In addition, Term Loan B-1 has anincremental facility capacity in an amount of $140.0 million, plus additional amounts as long as we meet certainconditions, including a specified leverage ratio.Our investment objectives are, first, to preserve liquidity and conserve capital and, second, to generate investmentincome. We mitigate credit risk in our cash reserves by maintaining a well‑diversified portfolio that limits the amount ofinvestment exposure as to institution, maturity and investment type. Our available‑for‑sale investments consist primarily ofshort‑ and long‑term U.S. government and agency debt securities and corporate debt securities. We classifyavailable‑for‑sale investments in an unrealized loss position, which do not mature within 12 months, as long‑terminvestments. We have the intent and ability to hold these investments until recovery, which may be at maturity, and it ismore‑likely‑than‑not that we would not be required to sell these securities before recovery of their amortized cost. AtDecember 31, 2017, we performed an analysis of our investments with unrealized losses for impairment and determinedthat they were temporarily impaired.Information about our cash flows, by category, is presented in the accompanying consolidated statements of cash flows.The following table summarizes our cash flows for the years ended December 31, 2017, 2016 and 2015: Year Ended December 31, (In millions) 2017 2016 2015Cash and cash equivalents, beginning of period $186.4 $181.1 $224.1Cash provided by (used in) operating activities 19.2 (63.8) (40.4)Cash (used in) provided by investing activities (18.4) 127.2 (43.5)Cash provided by (used in) financing activities 4.1 (58.1) 40.9Cash and cash equivalents, end of period $191.3 $186.4 $181.1 Operating ActivitiesThe increase in cash provided by operating activities in 2017, as compared to 2016, was primarily due to a 21% increasein the amount of cash collected from our customers and a 46% decrease in the amount of taxes paid during the year,partially offset by a 17% increase in the amount of cash paid to our employees and a 6% increase in the amount of cashpaid to our suppliers. The increase in the amount of cash we collected from our customers is primarily62 Table of Contentsdue to the increase in revenues in 2017, as compared to 2016. The increase in the amount of cash paid to our employees isprimarily due to the increase in our headcount and the increase in the amount of cash paid to our suppliers is due to theincrease in R&D and commercial activity, as previously discussed. The increase in cash used in operating activities in 2016, as compared to 2015, was primarily due to a 26% increase inthe amount of cash paid to our employees and a 21% increase in the amount of cash paid to our suppliers, partially offsetby a 16% increase in the amount of cash we collected from our customers. The increase in the amount of cash paid to ouremployees is primarily due to the increase in our headcount and the increase in the amount of cash paid to our suppliers isdue to the increase in R&D and commercial activity, as previously discussed. Investing ActivitiesThe increase in cash used in investing activities in 2017, as compared to 2016, was primarily due to a 15% increase inproperty, plant and equipment additions and a 2% decrease in net sales of investments. This was partially offset by a $15.0million investment in Reset Therapeutics, Inc., that we made in 2016. The increase in capital spending was primarily dueto the timing of our capital projects, primarily the construction of facilities and equipment at our Wilmington, Ohiolocation for the manufacture of products currently in development and existing proprietary products. Amounts included asconstruction in progress at December 31, 2017 primarily include capital expenditures at our manufacturing facility inWilmington, Ohio. We expect to spend approximately $85.0 million during the year ended December 31, 2018 for capitalexpenditures. We continue to evaluate our manufacturing capacity based on expectations of demand for our products andwill continue to record such amounts within construction in progress until such time as the underlying assets are placedinto service, or we determine we have sufficient existing capacity and the assets are no longer required, at which time wewould recognize an impairment charge. We continue to periodically evaluate whether facts and circumstances indicate thatthe carrying value of these long‑lived assets to be held and used may not be recoverable.Cash provided by our investing activities increased by $170.7 million in 2016, as compared to 2015, which wasprimarily due to the increase in net sales of investments of $226.8 million, which were primarily used to fund operations in2016. The increase in cash provided by our investing activities was partially offset by the $50.0 million in cash wereceived in 2015 from the Gainesville Transaction, as previously discussed.Financing ActivitiesThe increase in cash provided by financing activities in 2017, as compared to 2016, was primarily due to a $60.9 millionprincipal payment for a term loan which matured in September 2016, which had an original principal balance of $75.0million, bore interest at LIBOR plus 2.75%, with no LIBOR floor. In 2017, our financing activities consisted of $7.1million in cash received from our employees related to stock option exercises and $3.0 million in principal payments wemade under Term Loan B-1.The increase in cash used in financing activities in 2016, as compared to 2015, was primarily due to the $60.9 millionprincipal payment, as previously mentioned. In addition, there was a $12.2 million decrease in cash received fromemployee stock option exercises.BorrowingsAt December 31, 2017, our borrowings consisted of $284.3 million outstanding under Term Loan B-1. Please refer toNote 9, Long‑Term Debt, in the accompanying “Notes to Consolidated Financial Statements” for a discussion of ouroutstanding term loans.63 Table of ContentsContractual ObligationsThe following table summarizes our obligations to make future payments under our current contracts at December 31,2017: Less Than One to Three to More than One Year Three Years Five Years Five YearsContractual Obligations (In thousands) Total (2018) (2019 - 2020) (2021 - 2022) (After 2022)Term Loan B-1—Principal $284,250 $3,000 $6,000 $275,250 $—Term Loan B-1—Interest 46,454 12,571 24,742 9,141 —Operating lease obligations 31,928 9,174 15,496 3,643 3,615Purchase obligations 473,868 473,868 — — —Total contractual cash obligations $836,500 $498,613 $46,238 $288,034 $3,615 As interest on Term Loan B‑1 is based on a one, three or six month LIBOR rate of our choosing, we are using the three-month LIBOR rate, which was 1.69% at December 31, 2017 as this exceeds the LIBOR rate floor under the terms of TermLoan B‑1 and is the frequency in which we make interest payments. This table excludes any liabilities pertaining touncertain tax positions as we cannot make a reliable estimate of the period of cash settlement with the respective taxingauthorities.At December 31, 2017, we had $5.5 million of net liabilities associated with uncertain tax positions. We do not anticipatethat the amount of existing unrecognized tax benefits will significantly increase or decrease within the next 12 months.In September 2006, we entered into a license agreement with the Rensselaer Polytechnic Institute (“RPI”), which grantedus exclusive rights to a family of opioid receptor compounds discovered at RPI. Under the terms of the agreement, RPIgranted us an exclusive worldwide license to certain patents and patent applications relating to its compounds designed tomodulate opioid receptors. We are responsible for the continued research and development of any resulting productcandidates. We are obligated to pay annual fees of up to $0.2 million, and tiered royalty payments of between 1% and 4% ofannual net sales in the event any products developed under the agreement are commercialized. In addition, we are obligatedto make milestone payments in the aggregate of up to $7.0 million upon certain agreed‑upon development events. Allamounts paid 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 whichroyalty, milestone and other payments may be made and accordingly they are not included in the table of contractualobligations.Off‑Balance Sheet ArrangementsAt December 31, 2017, we were not a party to any off‑balance sheet arrangements that have, or are reasonably likely tohave, a current or future effect on our financial condition, results of operations, liquidity, capital expenditures or capitalresources.Critical Accounting EstimatesOur consolidated financial statements are prepared in accordance with GAAP. In connection with the preparation of ourfinancial statements, we are required to make assumptions and estimates about future events, and apply judgments onhistorical experience, current trends and other factors that management believes to be relevant at the time our consolidatedfinancial statements are prepared. On a regular basis, we review the accounting policies, assumptions, estimates andjudgments to ensure that our financial statements are presented fairly and in accordance with GAAP. However, because futureevents and their effects cannot be determined with certainty, actual results could differ from our assumptions and estimates,and such differences could be material.Our significant accounting policies are discussed in Note 2, Summary of Significant Accounting Policies, of the “Notes toConsolidated Financial Statements.” We believe that the following accounting estimates are the most critical to aid in fullyunderstanding and evaluating our reported financial results, and they require our most difficult, subjective or complexjudgments, resulting from the need to make estimates about the effects of matters that are inherently uncertain.64 Table of ContentsWe have reviewed these critical accounting estimates and related disclosures with the Audit and Risk Committee of ourboard of directors.Manufacturing and Royalty RevenueOur manufacturing and royalty revenues are earned under the terms of collaboration agreements with pharmaceuticalcompanies, the most significant of which include Janssen for INVEGA SUSTENNA/XEPLION and INVEGATRINZA/TREVICTA, as well as RISPERDAL CONSTA, Acorda for AMPYRA/FAMPYRA and AstraZeneca forBYDUREON. Manufacturing revenues are recognized when persuasive evidence of an arrangement exists, delivery hasoccurred and title to the product and associated risk of loss has passed to the customer, the sales price is fixed ordeterminable and collectability is reasonably assured.The sales price for certain of our manufacturing revenues is based on the end‑market sales price earned by our licensees.As the end‑market sale occurs after we have shipped our product and the risk of loss has passed to our licensees, weestimate the sales price for our products based on information supplied to us by our licensees, our historical transactionexperience and other third‑party data. Differences between the actual manufacturing revenues and estimated manufacturingrevenues are reconciled and adjusted for in the period in which they become known, which is generally within the quarter.The difference between our actual and estimated manufacturing revenues has not been material.Royalty revenues are related to the sale by our licensees of products that incorporate our technologies. Royalties, withthe exception of AMPYRA, are earned under the terms of license agreements in the period the products are sold by ourlicensees, and the royalty earned can be reliably measured and collectability is reasonably assured. Sales information isprovided to us by our licensees and may require estimates to be made. Differences between actual royalty revenues andestimated royalty revenues are reconciled and adjusted for in the period in which they become known, which is generallywithin the quarter. The difference between our actual and estimated royalty revenues has not been material. Royalties onAMPYRA are earned in the period that product is shipped to Acorda. We also earn royalties on shipments to Acorda ofAMPYRA manufactured by third‑party manufacturers.Product Sales, NetWe recognize revenue from product sales of VIVITROL and ARISTADA when persuasive evidence of an arrangementexists, and title to the product and associated risk of loss has passed to the customer, the sales price is fixed or determinableand collectability is reasonably assured. We sell VIVITROL and ARISTADA to pharmaceutical wholesalers, specialtydistributors, pharmacies and treatment providers.Product sales are recorded net of sales reserves and allowances. Sales of many pharmaceutical products in the U.S. aresubject to increased pricing pressure from managed care groups, institutions, government agencies and other groupsseeking discounts. We and other biopharmaceutical companies selling products in the U.S. market are required to providestatutorily defined rebates and discounts to various U.S. government and state agencies in order to participate in theMedicaid program and other government‑funded programs. The sensitivity of our estimates can vary by program and typeof customer. Estimates associated with Medicaid and other U.S. government allowances may become subject to adjustmentin a subsequent period. We record product sales net of the following significant categories of product sales allowances:●Medicaid Rebates—we record accruals for rebates to states under the Medicaid Drug Rebate Program as areduction of sales when the product is shipped into the distribution channel. We rebate individual states for alleligible units purchased under the Medicaid program based on a rebate per unit calculation, which is based onour AMPs. We estimate expected unit sales and rebates per unit under the Medicaid program and adjust ourrebate estimates based on actual unit sales and rebates per unit. To date, actual Medicaid rebates have notdiffered materially from our estimates;●Chargebacks—chargebacks are discounts that occur when contracted indirect customers purchase directly fromwholesalers and specialty distributors. Contracted customers generally purchase the product at its contractedprice. The wholesaler or specialty distributor, in turn, then generally charges back to us the difference betweenthe wholesale acquisition cost and the contracted price paid to the wholesaler or specialty distributor by thecustomer. The allowance for chargebacks is based on actual and expected utilization of these programs.Chargebacks could exceed historical experience and our estimates of future65 Table of Contentsparticipation in these programs. To date, actual chargebacks have not differed materially from our estimates;●Product Discounts—cash consideration, including sales incentives, given by us under agreements with anumber of wholesaler, distributor, pharmacy and treatment provider customers that provide them with adiscount on the purchase price of products. To date, actual product discounts have not differed materially fromour estimates;●Co‑pay Assistance— we have a program whereby a patient can receive monetary assistance each month towardtheir product co-payment, co-insurance or deductible, provided the patient meets certain eligibility criteria.Reserves for such co-pay assistance are recorded upon the product sale. To date, actual co-pay assistance hasnot differed materially from our estimates; and●Product Returns—we record an estimate for product returns at the time our customer takes title to our product.We estimate the liability based on our historical return levels and specifically identified anticipated returns dueto known business conditions and product expiry dates. Once product is returned, it is destroyed. At December31, 2017, our product return reserve was estimated to be approximately 1.5% of each of our VIVITROL andARISTADA gross product sales.Our provisions for sales and allowances reduced gross product sales as follows: Medicaid Product Co-Pay Product (In millions) Rebates Chargebacks Discounts Assistance Returns Other TotalBalance, December 31, 2015 $17.2 $0.6 $2.9 $(0.2) $6.7 $3.4 $30.6Provision: Current year 92.1 31.5 35.3 9.2 7.1 12.1 187.3Prior year 2.1 — (0.2) (0.7) — — 1.2Total 94.2 31.5 35.1 8.5 7.1 12.1 188.5Actual: Current year (48.7) (30.6) (30.6) (8.9) (1.0) (10.8) (130.6)Prior year (18.9) (0.4) (1.8) — 0.7 (0.9) (21.3)Total (67.6) (31.0) (32.4) (8.9) (0.3) (11.7) (151.9)Balance, December 31, 2016 $43.8 $1.1 $5.6 $(0.6) $13.5 $3.8 $67.2Provision: Current year 153.5 47.9 51.2 9.9 7.5 31.9 301.9Prior year (5.7) — (0.2) (0.4) (0.8) 0.1 (7.0)Total 147.8 47.9 51.0 9.5 6.7 32.0 294.9Actual: Current year (66.0) (46.3) (42.0) (9.3) (0.1) (24.1) (187.8)Prior year (35.7) (0.8) (6.0) 0.3 (1.3) (3.1) (46.6)Total (101.7) (47.1) (48.0) (9.0) (1.4) (27.2) (234.4)Balance, December 31, 2017 $89.9 $1.9 $8.6 $(0.1) $18.8 $8.6 $127.7 Multiple Element ArrangementsWhen entering into multiple element arrangements, we identify our deliverables under the arrangement to determine ifthe deliverables are to be separate units of accounting or a single unit of accounting. Deliverables under the arrangementwill be separate units of accounting provided that (i) a delivered item 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, delivery or performance of theundelivered item is considered probable and substantially in the control of the vendor. Arrangement consideration isallocated to the separate units of accounting based on the fair value of each deliverable. The fair value of deliverablesunder the arrangement may be derived using a “best estimate of selling price” if vendor-specific objective evidence andthird-party evidence of the fair value is not available.Whenever we determine that an arrangement should be accounted for as a single unit of accounting, we determine theperiod over which the performance obligations will be performed and revenue will be recognized. Revenue will berecognized using either a proportional performance or straight-line method. We recognize revenue using the proportionalperformance method when the level of effort required to complete our performance obligations under an arrangement canbe reasonably estimated and such performance obligations are provided on a “best-efforts” basis.66 Table of ContentsSignificant management judgment is required in determining the consideration to be earned under an arrangement andthe period over which we are expected to complete our performance obligations under an arrangement. Steering committeeservices that are not inconsequential or perfunctory and that are determined to be performance obligations are combinedwith other research services or performance obligations required under an arrangement, if any, in determining the level ofeffort required in an arrangement and the period over which we expect to complete our aggregate performance obligations.Many of our collaboration agreements entitle us to additional payments upon the achievement of performance-basedmilestones. If the achievement of a milestone is considered probable at the inception of the collaboration, the relatedmilestone payment is included with other collaboration consideration, such as upfront payments and research funding, inour revenue model. Milestones that involve substantial effort on our part and the achievement of which are not consideredprobable at the inception of the collaboration are considered “substantive milestones.”We account for substantive milestones using the milestone method of revenue recognition for R&D arrangements. Underthe milestone method, contingent consideration received from the achievement of a substantive milestone is recognized inits entirety in the period in which the milestone is achieved, which we believe is more consistent with the substance of ourperformance under our various collaboration agreements. A milestone is defined as an event (i) that can only be achievedbased in whole or in part on either an entity's performance or on the occurrence of a specific outcome resulting from theentity's performance; (ii) for which there is substantive uncertainty at the date the arrangement is entered into that the eventwill be achieved; and (iii) that would result in additional payments being due to the entity. A milestone is substantive ifthe consideration earned from the achievement of the milestone is consistent with our performance required to achieve themilestone, or the increase in value to the collaboration resulting from our performance, relates solely to our pastperformance, and is reasonable relative to all of the other deliverables and payments within the arrangement.In November 2017, we granted Biogen, under a license and collaboration agreement, a worldwide, exclusive,sublicensable license to develop, manufacture and commercialize BIIB098 and other products covered by patents licensedto Biogen under the agreement. Upon entering into this agreement in November 2017, we received an up-front cashpayment of $28.0 million. We are also eligible to receive additional payments upon achievement of milestones, as follows:(i) a $50.0 million option payment upon Biogen’s decision to continue the collaboration after having reviewed certaindata from our long-term safety clinical trial and part A of the head-to-head phase 3 gastrointestinal tolerability clinical trialcomparing BIIB098 and TECFIDERA and (ii) a $150.0 million payment upon an approval by the FDA on or beforeDecember 31, 2021 of a 505(b)(2) NDA (or, in certain circumstances, a 505(b)(1) NDA) for BIIB098. We are also eligible toreceive additional payments upon achievement of developmental milestones with respect to the first two products, otherthan BIIB098, covered by patents licensed to Biogen under the agreement. In addition, we will receive a royalty onworldwide net sales of BIIB098, subject to, under certain circumstances, minimum annual payments for the first five yearsfollowing FDA approval of BIIB098, and worldwide net sales of products, other than BIIB098, covered by patents licensedto Biogen under the agreement. Biogen paid a portion of the BIIB098 development costs we incurred in 2017 and,beginning on January 1, 2018, Biogen will be responsible for all BIIB098 development costs we incur, subject to annualbudget limitations. We have retained the right to manufacture clinical supplies and commercial supplies of BIIB098 andall other products covered by patents licensed to Biogen under the agreement, subject to Biogen’s right to manufacture orhave manufactured commercial supplies as a back-up manufacturer and subject to good faith agreement by the parties onthe terms of such manufacturing arrangements.We evaluated the agreement under ASC Subtopic 605-25, Multiple Element Arrangements (“ASC 605-25”). Wedetermined that we had four initial performance obligations: (i) the grant of the license to Biogen, (ii) future developmentservices, (iii) assuming we enter into a supply agreement with Biogen, clinical supply and (iv) participation on a jointsteering committee with Biogen. The participation on the joint service committee was considered to be perfunctory andthus not recognized as a separate unit of accounting. The deliverables, aside from the participation in the joint steeringcommittee which was considered to be perfunctory, were determined to be separate units of accounting as they each havevalue to Biogen on a stand-alone basis.The consideration allocable to the delivered unit or units of accounting is limited to the amount that is not contingentupon the delivery of additional items or meeting other specified performance conditions. Therefore, we will exclude fromthe allocable consideration the milestone payments and royalties, regardless of the probability that such milestone androyalty payments will be made, until the events that give rise to such payments actually occur.67 Table of ContentsWe allocated consideration to each unit of accounting using the relative selling price method based on our best estimateof selling price for the license and other deliverables. We used a discounted cash flow model to estimate the fair value ofthe license in order to determine the best estimate of selling price. To estimate the fair value of the license, we assessed thelikelihood of the FDA’s approval of BIIB098 and estimated the expected future cash flows assuming FDA approval and theintellectual property (“IP”) protecting BIIB098. We then discounted these cash flows using a discount rate of 8.0%, whichwe believe captures a market participant’s view of the risk associated with the expected cash flows. The best estimate ofselling price of the development services and clinical supply were determined through third-party evidence. We believethat a change in the assumptions used to determine the best estimate of selling price for the license most likely would nothave a significant effect on the allocation of consideration transferred.At the date the license was delivered to Biogen, the revenue recognized for the license unit of accounting was limited tothe lesser of the amount otherwise allocable using the relative selling price method or the non-contingent amount. Duringthe three months ended December 31, 2017, we recognized license revenue of $28.0 million based on the non-contingentamount, which was the upfront payment. Any consideration received subsequent to the delivery of the license will beallocated to the remaining units of accounting and recognized when the general revenue recognition criteria are met.We determined that the future milestones we are entitled to receive are substantive milestones. We are entitled to receivean option payment of $50.0 million upon Biogen’s decision to continue the collaboration after having reviewed certaindata from our long-term safety clinical trial and part A of the head-to-head phase 3 gastrointestinal tolerability clinical trialcomparing BIIB098 and TECFIDERA and a $150.0 million payment upon approval by the FDA on or before December 31,2021 of a 505(b)(2) NDA (or, in certain circumstances, a 505(b)(1) NDA) for BIIB098. Given the challenges inherent indeveloping and obtaining approval for pharmaceutical and biologic products, there was substantial uncertainty as towhether these milestones would be achieved at the time the license and collaboration agreement was entered into.InvestmentsWe hold investments in U.S. government and agency obligations, debt securities issued by foreign agencies and backedby foreign governments and corporate debt securities. In accordance with the accounting standard for fair valuemeasurements, we have classified our financial assets as Level 1, 2 or 3 within the fair value hierarchy. Fair valuesdetermined by Level 1 inputs utilize quoted prices in active markets for identical assets that we have the ability to access.Fair values determined by Level 2 inputs utilize data points that are observable such as quoted prices, interest rates andyield curves. Fair values determined by Level 3 inputs utilize unobservable data points for the asset.Substantially all of our investments are classified as “available‑for‑sale” and are recorded at their estimated fair value.The valuation of our available‑for‑sale securities for purposes of determining the amount of gains and losses is based onthe specific identification method. Our held‑to‑maturity investments are restricted investments held as collateral undercertain letters of credit related to our lease arrangements and are recorded at amortized cost.The earnings on our investment portfolio may be adversely affected by changes in interest rates, credit ratings, collateralvalue, the overall strength of credit markets and other factors that may result in other‑than‑temporary declines in the valueof the securities. On a quarterly basis, we review the fair market 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 an analysis to assess whether we intend tosell or whether we would more‑likely‑than‑not be required to sell the security before the expected recovery of theamortized cost basis. Where we intend to sell a security, or may be required to do so, the security’s decline in fair value isdeemed to be other‑than‑temporary, and the full amount of the unrealized loss is recorded within earnings as an impairmentloss. Regardless of our intent to sell a security, we perform additional analysis on all securities with unrealized losses toevaluate losses associated with the creditworthiness of the security. Credit losses are identified where we do not expect toreceive 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, weconsider the fair market value of the security, the duration of the security’s decline and the financial condition of theissuer. We then consider our intent and ability to hold the equity security for a period of time sufficient to recover ourcarrying value. Where we have determined that we lack the intent and ability to hold an equity security to its68 Table of Contentsexpected recovery, the security’s decline in fair value is deemed to be other‑than‑temporary and is recorded withinearnings as an impairment loss.Share‑Based CompensationOur share‑based compensation plans provide for compensation in the form of incentive stock options, non‑qualifiedstock options and restricted stock units. See Note 2, Summary of Significant Accounting Policies, and Note 13,Share‑Based Compensation, in our “Notes to Consolidated Financial Statements” for a complete discussion of ourshare‑based compensation plans.The fair value of restricted stock units is equal to the closing price of our shares on the date of grant. The fair value ofstock option awards is determined through the use of a Black‑Scholes option‑pricing model. The Black‑Scholes modelrequires us to estimate certain subjective assumptions. These assumptions include the expected option term, which takesinto account both the contractual term of the option and the effect of our employees’ and non-employee directors’expected exercise and post‑vesting termination behavior, expected volatility of our ordinary shares over the option’sexpected term, which is developed using both the historical volatility of our ordinary shares and implied volatility fromour publicly traded options, the risk‑free interest rate over the option’s expected term and an expected annual dividendyield. Due to the differing exercise and post‑vesting termination behaviors of our employees and non‑employee directors,we establish separate Black‑Scholes input assumptions for three distinct employee populations: our senior management;our non‑employee directors; and all other employees. For the years ended December 31, 2017, 2016 and 2015, the rangesin weighted‑average assumptions were as follows: Year Ended December 31, 2017 2016 2015Expected option term 5 - 8 years 5 - 7 years 5 - 7 yearsExpected stock volatility 43 % - 47 % 39 % - 53 % 38 % - 46 %Risk-free interest rate 1.69 % - 2.38 % 0.95 % - 2.14 % 1.29 % - 2.02 %Expected annual dividend yield — — — In addition to the above, we apply judgment in developing estimates of award forfeitures. For the year ended December31, 2017, we used an estimated forfeiture rate of zero for our non‑employee directors, 2.25% for members of seniormanagement and 6.0% for all other employees.For all of the assumptions used in valuing stock options and estimating award forfeitures, our historical experience isgenerally the starting point for developing our assumptions, which may be modified to reflect information available at thetime of grant that would indicate that the future is reasonably expected to differ from the past.Amortization and Impairment of Long‑Lived AssetsLong‑lived assets, other than goodwill which is separately tested for impairment, are evaluated for impairment wheneverevents or changes in circumstances indicate the carrying value of an asset may not be recoverable. When evaluatinglong‑lived assets for potential impairment, we first compare the carrying value of the asset to the asset’s estimated futurecash flows (undiscounted and without interest charges). If the estimated future cash flows are less than the carrying value ofthe asset, we calculate an impairment loss. The impairment loss calculation compares the carrying value of the asset to theasset’s estimated fair value, which may be based on estimated future cash flows (discounted and with interest charges). Werecognize an impairment loss if the amount of the asset’s carrying value exceeds the asset’s estimated fair value. If werecognize an impairment loss, the adjusted carrying amount of the asset becomes its new cost basis. For a depreciablelong‑lived asset, the new cost basis will be depreciated over the remaining useful life of that asset.When reviewing long‑lived assets for impairment, we group long‑lived assets with other assets and liabilities at thelowest level for which identifiable cash flows are largely independent of the cash flows of other assets and liabilities. Ourimpairment loss calculations contain uncertainties because they require management to make assumptions and to applyjudgment to estimate future cash flows and asset fair values, including forecasting useful lives of the assets and selectingthe 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 theBusiness Combination. These intangible assets are being amortized as revenue is generated from these products, which werefer to as the economic benefit amortization model. This amortization methodology involves calculating a69 Table of Contentsratio of actual current period sales to total anticipated sales for the life of the product and applying this ratio to the carryingamount of the intangible asset.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‑basedintangible assets from the date of acquisition to the end of their respective useful lives. The factors used to estimate suchfuture revenues included: (i) our and our licensees’ projected future sales of the existing commercial products based onthese intangible assets; (ii) our projected future sales of new products based on these intangible assets which we anticipatewill be launched commercially; (iii) the patent lives of the technologies underlying such existing and new products; and(iv) our expectations regarding the entry of generic and/or other competing products into the markets for such existing andnew products. These factors involve known and unknown risks and uncertainties, many of which are beyond our controland could cause the actual economic benefits of these intangible assets to be materially different from our estimates.Based on our most recent analysis, amortization of intangible assets included within our consolidated balance sheet atDecember 31, 2017, is expected to be approximately $65.0 million, $55.0 million, $50.0 million, $40.0 million and $35.0million in the years ending December 31, 2018 through 2022, respectively. Although we believe such availableinformation and assumptions are reasonable, given the inherent risks and uncertainties underlying our expectationsregarding such future revenues, there is the potential for our actual results to vary significantly from such expectations. Ifrevenues are projected to change, the related amortization of the intangible asset will change in proportion to the changein revenue.If there are any indications that the assumptions underlying our most recent analysis would be different than thoseutilized within our current estimates, our analysis would be updated and may result in a significant change in theanticipated lifetime revenue of the products associated with our amortizable intangible assets. For example, the occurrenceof an adverse event could substantially increase the amount of amortization expense associated with our acquiredintangible assets as compared to previous periods or our current expectations, which may result in a significant negativeimpact on our future results of operations.GoodwillWe evaluate goodwill for impairment for our reporting units annually, as of October 31, and whenever events or changesin circumstances indicate its carrying value may not be recoverable. A reporting unit is an operating segment, as definedby the segment reporting accounting standards, or a component of an operating segment. A component of an operatingsegment is a reporting unit if the component constitutes a business for which discrete financial information is available andis reviewed by management. Two or more components of an operating segment may be aggregated and deemed a singlereporting unit for goodwill impairment testing purposes if the components have similar economic characteristics. As ofDecember 31, 2017, we have one operating segment and two reporting units. Our goodwill, which solely relates to theBusiness Combination, has been assigned to one reporting unit which consists of the former EDT business.We have the option to first assess qualitative factors to determine whether it is necessary to perform a quantitativeimpairment test. If we elect this option and determine, as a result of the qualitative assessment, that it is more likely thannot that the fair value of a reporting unit is less than its carrying amount, the quantitative impairment test is required;otherwise, no further testing is required. Among other relevant events and circumstances that affect the fair value ofreporting units, we consider individual factors, such as microeconomic conditions, changes in the industry and the marketsin which we operate as well as historical and expected future financial performance. Alternatively, we may elect to not firstassess qualitative factors and instead immediately perform the quantitative impairment test. In 2017, we elected to early adopt guidance issued by the FASB in January 2017 that simplifies the test for goodwillimpairment. This guidance removes Step 2 of the goodwill impairment test, which requires a hypothetical purchase priceallocation. Under the amended guidance, a goodwill impairment charge will now be recognized for the amount by whichthe carrying value of a reporting unit exceeds its fair value, not to exceed the carrying amount of goodwill.On October 31, 2017, we elected to first assess qualitative factors to determine whether it was necessary to perform thequantitative impairment test. Based on the weight of all available evidence, we determined that the fair value of thereporting unit more-likely-than-not exceeds its carrying value.70 Table of ContentsContingent ConsiderationWe record contingent consideration we receive at fair value on the acquisition date. We estimate the fair value ofcontingent consideration through valuation models that incorporate probability-adjusted assumptions related to theachievement of milestones and thus likelihood of receiving related payments. We revalue our contingent considerationeach reporting period, with changes in the fair value of contingent consideration recognized within the consolidatedstatements of operations and comprehensive loss. Changes in the fair value of contingent consideration can result fromchanges to one or multiple inputs, including adjustments to the discount rates, changes in the amount or timing of cashflows, changes in the assumed achievement or timing of any development or sales-based milestones and changes in theassumed probability associated with regulatory approval.The period over which we discount contingent consideration is based on the current development stage of the productcandidates, the specific development plan for that product candidate adjusted for the probability of completing thedevelopment step, and the date on which contingent payments would be triggered. In estimating the probability of success,we utilize data regarding similar milestone events from several sources, including industry studies and our own experience.These fair value measurements are based on significant inputs not observable in the market. Significant judgment wasemployed in determining the appropriateness of these assumptions at the acquisition date and for each subsequent period.Accordingly, changes in assumptions described above could have a material impact on the increase or decrease in the fairvalue of contingent consideration recorded in any given period.At December 31, 2017, our contingent consideration relates to consideration received as part of the GainesvilleTransaction. We are eligible to receive low double-digit royalties on net sales of IV/IM and parenteral forms of Meloxicamand any other product with the same active ingredient as Meloxicam IV/IM that is discovered or identified using certain ofour intellectual property to which Recro was provided a right of use, through license or transfer, pursuant to the GainesvilleTransaction (together, the “Meloxicam Product(s)”) and up to $125.0 million in milestone payments upon the achievementof certain regulatory and sales milestones related to the Meloxicam Products.In accordance with the accounting standard for fair value measurements, our contingent consideration has beenclassified as a Level 3 asset as its fair value is based on significant inputs not observable in the market. The fair value of thecontingent consideration was determined as follows:●We are entitled to receive $45.0 million upon regulatory approval of an NDA for the first Meloxicam Product. Thefair value of the regulatory milestone was estimated based on applying the likelihood of achieving the regulatorymilestone and applying a discount rate from the expected time the milestone occurs to the balance sheet date. Weexpect the regulatory milestone event to occur in the second quarter of 2018 and used a discount rate of 3.0%;●We are entitled to receive future royalties on net sales of Meloxicam Products. To estimate the fair value of thefuture royalties, we assessed the likelihood of a Meloxicam Product being approved for sale and estimated theexpected future sales given approval and IP protection. We then discounted these expected payments using adiscount rate of 15.0%, which we believe captures a market participant’s view of the risk associated with theexpected payments; and●We are entitled to receive payments of up to $80.0 million upon achieving certain sales milestones on future sales ofthe Meloxicam Product. The sales milestones were determined through the use of a real options approach, where netsales are simulated in a risk-neutral world. To employ this methodology, we used a risk-adjusted expected growthrate based on our assessments of expected growth in net sales of the approved Meloxicam Product, adjusted by anappropriate factor capturing their respective correlation with the market. A resulting expected (probability-weighted) milestone payment was then discounted at a cost of debt, which ranged from 3.5% to 5.4%.Significant judgment was employed in determining the appropriateness of these assumptions at the acquisition date andfor each subsequent period. Accordingly, changes in assumptions described above could have a material impact on theincrease or decrease in the fair value of contingent consideration we record in any given period.Valuation of Deferred Tax AssetsWe evaluate the need for deferred tax asset valuation allowances based on a more‑likely‑than‑not standard. The abilityto realize deferred tax assets depends on the ability to generate sufficient taxable income within the carryback71 Table of Contentsor carryforward periods provided for in the tax law for each applicable tax jurisdiction. We consider the following possiblesources of taxable income when assessing the realization of deferred tax assets:●future reversals of existing taxable temporary differences;●future taxable income exclusive of reversing temporary differences and carryforwards;●taxable income in prior carryback years; and●tax‑planning strategies.The assessment regarding whether a valuation allowance is required or should be adjusted also considers all availablepositive and negative evidence factors including, but not limited to:●nature, frequency and severity of recent losses;●duration of statutory carryforward periods;●historical experience with tax attributes expiring unused; and●near‑ and medium‑term financial outlook.We utilize a rolling three years of actual and current year anticipated results as the primary measures of cumulative lossesin recent years.The evaluation of deferred tax assets requires judgment in assessing the likely future tax consequences of events thathave been recognized in our financial statements or tax returns and future profitability. Our accounting for deferred taxconsequences represents our best estimate of those future events. Changes in our current estimates, due to unanticipatedevents or otherwise, could have a material effect on our financial condition and results of operations. For informationrelated to risks surrounding our deferred tax assets, see “Item 1A—Risk Factors” and specifically the section entitled “—Our deferred tax assets may not be realized.”Recent Accounting PronouncementsPlease refer to Note 2, Summary of Significant Accounting Policies, “New Accounting Pronouncements” in our “Notes toConsolidated Financial Statements” for a discussion of new accounting standards. Item 7A. Quantitative and Qualitative Disclosures about Market RiskWe hold securities in our investment portfolio that are sensitive to market risks. Our securities with fixed interest rates mayhave their market value adversely impacted by a rise in interest rates, while floating rate securities may produce less incomethan expected if interest rates fall. Due in part to these factors, our future investment income may fall short of expectation dueto a fall in interest rates or we may suffer losses in principal if we are forced to sell securities that decline in market value dueto changes in interest rates. However, because we classify our investments in debt securities as available‑for‑sale, no gains orlosses are recognized due to changes in interest rates unless such securities are sold prior to maturity or declines in fair valueare determined to be other‑than‑temporary. Should interest rates fluctuate by 10%, our interest income would change by animmaterial amount over an annual period. 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 anysingle issue, issuer or type of investment.We do not believe that inflation and changing prices have had a material impact on our results of operations, and asapproximately 50% of our investments at December 31, 2017 are in debt securities issued by the U.S. government or itsagencies, our exposure to liquidity and credit risk is not believed to be significant.At December 31, 2017, our borrowings consisted of $284.3 million outstanding under our Term Loan B-1. Term Loan B‑1bears interest at a LIBOR rate of our choosing (one, three or six months), plus 2.75% with a LIBOR floor of 0.75%. We areusing the three-month LIBOR rate, which was 1.69% at December 31, 2017. A 10% increase in the three‑month LIBOR ratewould have increased the amount of interest we owe under this agreement during the year ended December 31, 2017 byapproximately $0.4 million.72 Table of ContentsCurrency Exchange Rate RiskManufacturing and royalty revenues we receive on certain of our products and services are a percentage of the net salesmade by our licensees, and a portion of these sales are made in countries outside the U.S. and are denominated in currenciesin which the product is sold, which is predominantly the Euro. The manufacturing and royalty payments on these non‑U.S.sales are calculated initially in the currency in which the sale is made and are then converted into USD to determine theamount that our licensees pay us for manufacturing and royalty revenues. Fluctuations in the exchange ratio of the USD andthese non‑U.S. currencies will have the effect of increasing or decreasing our revenues even if there is a constant amount ofsales in non‑U.S. currencies. For example, if the USD weakens against a non‑U.S. currency, then our revenues will increasegiven a constant amount of sales in such non‑U.S. currency. For the year ended December 31, 2017, an average 10%strengthening of the USD relative to the currencies in which these products are sold would have resulted in revenues beingreduced by approximately $26.8 million.We incur significant operating costs in Ireland and face exposure to changes in the exchange ratio of the USD and the Euroarising from expenses and payables at our Irish operations that are settled in Euro. The impact of changes in the exchangeratio of the USD and the Euro on our USD denominated revenues earned in countries other than the U.S. is partially offset bythe opposite impact of changes in the exchange ratio of the USD and the Euro on operating expenses and payables incurredat our Irish operations that are settled in Euro. For the year ended December 31, 2017, an average 10% weakening in the USDrelative to the Euro would have resulted in an increase to our expenses denominated in Euro of approximately $6.9 million. Item 8. Financial Statements and Supplementary DataSelected Quarterly Financial Data (unaudited) First Second Third Fourth (In thousands, except per share data) Quarter Quarter Quarter Quarter TotalYear Ended December 31, 2017 REVENUES: Manufacturing and royalty revenues $114,679 $129,252 $122,677 $138,700 $505,308Product sales, net 76,456 88,756 93,681 103,941 362,834License revenues — — — 28,000 28,000Research and development revenue 643 833 1,027 4,729 7,232Total revenues 191,778 218,841 217,385 275,370 903,374EXPENSES: Cost of goods manufactured and sold 40,412 39,775 36,054 38,507 154,748Research and development 104,835 99,153 104,411 104,490 412,889Selling, general and administrative 102,099 108,950 99,633 110,896 421,578Amortization of acquired intangible assets 15,302 15,472 15,643 15,642 62,059Total expenses 262,648 263,350 255,741 269,535 1,051,274OPERATING (LOSS) INCOME (70,870) (44,509) (38,356) 5,835 (147,900)OTHER INCOME (EXPENSE), NET (1,720) (1,171) 2,566 4,951 4,626(LOSS) EARNINGS BEFORE INCOME TAXES (72,590) (45,680) (35,790) 10,786 (143,274)INCOME TAX PROVISION (BENEFIT) (3,709) (2,681) 486 20,575 14,671NET LOSS $(68,881) $(42,999) $(36,276) $(9,789) $(157,945)LOSS PER SHARE—BASIC AND DILUTED $(0.45) $(0.28) $(0.24) $(0.06) $(1.03) 73 Table of Contents First Second Third Fourth Quarter Quarter Quarter Quarter TotalYear Ended December 31, 2016 REVENUES: Manufacturing and royalty revenues $106,159 $137,034 $110,250 $133,804 $487,247Product sales, net 49,374 57,519 69,802 79,451 256,146Research and development revenue 1,241 612 189 259 2,301Total revenues 156,774 195,165 180,241 213,514 745,694EXPENSES: Cost of goods manufactured and sold 27,711 33,998 35,456 34,957 132,122Research and development 101,072 97,006 99,444 89,626 387,148Selling, general and administrative 89,719 96,121 91,145 97,145 374,130Amortization of acquired intangible assets 15,156 15,157 15,323 15,323 60,959Total expenses 233,658 242,282 241,368 237,051 954,359OPERATING LOSS (76,884) (47,117) (61,127) (23,537) (208,665)OTHER EXPENSE, NET (135) (596) (4,215) (776) (5,722)LOSS BEFORE INCOME TAXES (77,019) (47,713) (65,342) (24,313) (214,387)INCOME TAX (BENEFIT) PROVISION 404 (520) (2,655) (3,172) (5,943)NET LOSS $(77,423) $(47,193) $(62,687) $(21,141) $(208,444)LOSS PER SHARE—BASIC AND DILUTED $(0.51) $(0.31) $(0.41) $(0.14) $(1.38) All financial statements required to be filed hereunder, other than the quarterly financial data required by Item 302 ofRegulation S‑K summarized above, are filed as exhibits hereto, are listed under Item 15(a) (1) and (2), and are incorporatedherein by reference. Item 9. Changes in and Disagreements with Accountants on Accounting and Financial DisclosureNot applicable. Item 9A. Controls and ProceduresDisclosure Controls and Procedures and Internal Control Over Financial ReportingControls and ProceduresOur management has evaluated, with the participation of our principal executive officer and principal financial officer,the effectiveness of our disclosure controls and procedures (as defined in Rules 13a‑15(e) and 15d‑15(e) under theExchange Act), as of December 31, 2017. Based upon that evaluation, our principal executive officer and principalfinancial officer concluded that, as of the end of the period covered by this report, our disclosure controls and procedureswere effective to provide reasonable assurance that (a) the information required to be disclosed by us in the reports that wefile or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified inthe SEC’s rules and forms, and (b) such information is accumulated and communicated to our management, including ourprincipal executive officer and principal financial officer, as appropriate to allow timely decisions regarding requireddisclosure. In designing and evaluating our disclosure controls and procedures, our management recognized that anycontrols and procedures, no matter how well designed and operated, can provide only reasonable assurance of achievingthe desired control objectives, and our management necessarily was required to apply its judgment in evaluating thecost‑benefit relationship of possible controls and procedures.Changes in Internal Control over Financial ReportingThere were no changes in our internal control over financial reporting during the quarter ended December 31, 2017 thathave materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.Management’s Annual Report on Internal Control over Financial ReportingOur management is responsible for establishing and maintaining adequate internal control over our financial reportingas defined in Rules 13a‑15(f) and 15d‑15(f). Internal control over financial reporting is defined in Rules 13a‑15(f) and15d‑15(f) under the Exchange Act as a process designed by, or under the supervision of, the issuer’s principal executiveand principal financial officers, or persons performing similar functions, and effected by the issuer’s board of directors,management and other personnel to provide reasonable assurance regarding the reliability of financial reporting and thepreparation of financial statements for external purposes in accordance with74 Table of ContentsGAAP and includes those policies and procedures that:●pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect our transactions anddispositions of the assets of the issuer;●provide reasonable assurance that transactions are recorded as necessary to permit preparation of financialstatements in accordance with GAAP, and that receipts and expenditures of the issuer are being made only inaccordance with authorizations of management and directors of the issuer; and●provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use ordisposition of the issuer’s assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.Projections of any evaluation of effectiveness for future periods are subject to the risk that controls may becomeinadequate because of changes in conditions, or that the degree of compliance with the policies or procedures maydeteriorate.Our management assessed the effectiveness of our internal control over financial reporting as of December 31, 2017. Inmaking this assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of theTreadway Commission (“COSO”) in its 2013 Internal Control—Integrated Framework.Based on this assessment, our management has concluded that, as of December 31, 2017, our internal control overfinancial reporting was effective.The effectiveness of our internal control over financial reporting as of December 31, 2017 has been audited byPricewaterhouseCoopers LLP, an independent registered public accounting firm, as stated in their report, which is includedin this Annual Report, on page F-1. Item 9B. Other InformationOur policy governing transactions in its securities by our directors, officers and employees permits our officers, directorsand employees to enter into trading plans in accordance with Rule 10b5‑1 under the Exchange Act. During the quarter endedDecember 31, 2017, Mr. Iain M. Brown, an executive officer of ours and Mr. Paul J. Mitchell, a director of ours, entered intotrading plans in accordance with Rule 10b5‑1, and our policy governing transactions in our securities by our directors,officers and employees. We undertake no obligation to update or revise the information provided herein, including forrevision or termination of an established trading plan.75 Table of Contents PART III Item 10. Directors, Executive Officers and Corporate GovernanceThe information required by this item is incorporated herein by reference to the Proxy Statement for our 2018 AnnualGeneral Meeting of Shareholders. Item 11. Executive CompensationThe information required by this item is incorporated herein by reference to the Proxy Statement for our 2018 AnnualGeneral Meeting of Shareholders. Item 12. Security Ownership of Certain Beneficial Owners and ManagementThe information required by this item is incorporated herein by reference to the Proxy Statement for our 2018 AnnualGeneral Meeting of Shareholders. Item 13. Certain Relationships and Related Transactions and Director IndependenceThe information required by this item is incorporated herein by reference to the Proxy Statement for our 2018 AnnualGeneral Meeting of Shareholders. Item 14. Principal Accounting Fees and ServicesThe information required by this item is incorporated herein by reference to the Proxy Statement for our 2018 AnnualGeneral Meeting of Shareholders. PART IV Item 15. Exhibits and Financial Statement Schedules(a)(1) Consolidated Financial Statements—The consolidated financial statements of Alkermes plc, required by thisitem, are submitted in a separate section beginning on page F‑1 of this Annual Report.(2) Financial Statement Schedules—All schedules have been omitted because the absence of conditions underwhich they are required or because the required information is included in the consolidated financial statementsor notes thereto.(3) The exhibits listed in the below Exhibit Index are filed or furnished as part of this Annual Report or areincorporated into this Annual Report by reference. EXHIBIT INDEX Incorporated by reference hereinExhibit No. Description of Exhibit Form Date2.1 * Purchase and Sale Agreement, dated March7, 2015, by and among Alkermes PharmaIreland Limited, Daravita Limited, EagleHoldings USA, Inc., Recro Pharma, Inc., andRecro Pharma LLC. Exhibit 2.1 of theAlkermes plcCurrent Report onForm 8-K/A (FileNo. 001-35299) April 16, 20152.1.1 First Amendment to Purchase and SaleAgreement, dated December 8, 2016 by andamong Alkermes Pharma Ireland Limited,Daravita Limited, Eagle Holdings USA, Inc.,Recro Pharma, Inc., and Recro GainesvilleLLC. Exhibit 2.1.1 to theAlkermes plcAnnual Report onForm 10-K (File No.001-35299) February 17, 20173.1 Memorandum and Articles of Association ofAlkermes plc. Exhibit 3.1 to theAlkermes plcCurrent Report onForm 8-K (File No.001-35299) May 26, 201676 Table of Contents Incorporated by reference hereinExhibit No. Description of Exhibit Form Date10.1 Lease Agreement between Alkermes, Inc.and PDM Unit 850, LLC, dated as of April22, 2009. Exhibit 10.5 to theAlkermes, Inc.Annual Report onForm 10-K (FileNo. 001-14131) May 28, 200910.1.1 First Amendment to Lease Agreementbetween Alkermes, Inc. and PDM Unit 850,LLC, dated as of June 18, 2009. Exhibit 10.2 to theAlkermes, Inc.Quarterly Report onForm 10-Q (FileNo. 001-14131) August 6, 200910.1.2 Second Amendment to Lease Agreementbetween Alkermes, Inc. and PDM Unit 850,LLC, dated as of November 12, 2013. Exhibit 10.74 ofthe Alkermes plcTransition Reporton Form 10-KT(File No. 001-35299) February 27, 201410.1.3 Third Amendment to Lease Agreementbetween Alkermes, Inc. and PDM 850 Unit,LLC, dated as of May 15, 2014. Exhibit 10.2 of theAlkermes plcQuarterly Report onForm 10-Q (File No.001-35299) July 31, 201410.1.4 Fourth Amendment to Lease Agreementbetween Alkermes, Inc. and Gl TC 850Winter Street, LLC, dated as of December30, 2014. Exhibit 10.7 to theAlkermes plcQuarterly Report onForm 10-Q (File No.001-35299) July 30, 201510.2 License Agreement, dated as of February 13,1996, between Medisorb TechnologiesInternational L.P. and JanssenPharmaceutica Inc. (United States) (assignedto Alkermes, Inc. in July 2006). Exhibit 10.2 to theAlkermes plcAnnual Report onForm 10-K (File No.001-35299) February 25, 201610.2.1 * Third Amendment To DevelopmentAgreement, Second Amendment ToManufacturing and Supply Agreement andFirst Amendment To License Agreements byand between Janssen PharmaceuticaInternational Inc. and Alkermes ControlledTherapeutics Inc. II, dated April 1, 2000(assigned to Alkermes, Inc. in July 2006). Exhibit 10.5 to theAlkermes, Inc.Quarterly Report onForm 10-Q (FileNo. 001-14131) February 8, 200510.2.2 * Second Amendment, dated as of August 16,2012, to the License Agreement, dated as ofFebruary 13, 1996, as amended, by andbetween Alkermes, Inc. (“Alkermes”) andJanssen Pharmaceutica, Inc. (“Janssen US”)and the License Agreement, dated as ofFebruary 21, 1996, as amended, by andbetween Alkermes and JPI PharmaceuticaInternational, a division of Cilag GmbHInternational (“JPI”) (Janssen US and JPItogether, “Janssen”), and the FifthAmendment, dated as of August 16, 2012, tothe Manufacturing and Supply Agreement,dated as of August 6, 1997, as amended, byand between Alkermes and Janssen. Exhibit 10.3 of theAlkermes plcQuarterly Report onForm 10-Q (FileNo. 001-35299) November 1, 201210.3 License Agreement, dated as of February 21,1996, between Medisorb TechnologiesInternational L.P. and JanssenPharmaceutica International (worldwideexcept United States) (assigned to Alkermes,Inc. in July 2006). Exhibit 10.3 to theAlkermes plcAnnual Report onForm 10-K (File No.001-35299) February 25, 201677 Table of Contents Incorporated by reference hereinExhibit No. Description of Exhibit Form Date10.4 Manufacturing and Supply Agreement,dated August 6, 1997, by and among JPIPharmaceutica International, JanssenPharmaceutica, Inc. and AlkermesControlled Therapeutics Inc. II (assigned toAlkermes, Inc. in July 2006). Exhibit 10.4 to theAlkermes plcAnnual Report onForm 10-K (File No.001-35299) February 25, 201610.4.1 * Fourth Amendment To DevelopmentAgreement and First Amendment ToManufacturing and Supply Agreement byand between Janssen PharmaceuticaInternational Inc. and Alkermes ControlledTherapeutics Inc. II, dated December 20,2000 (assigned to Alkermes, Inc. in July2006). Exhibit 10.4 to theAlkermes, Inc.Quarterly Report onForm 10-Q (FileNo. 001-14131) February 8, 200510.4.2 Addendum to the Manufacturing andSupply Agreement by and among JPIPharmaceutica International, JanssenPharmaceutica Inc. and Alkermes ControlledTherapeutics Inc. II, dated August 1, 2001. Exhibit 10.4.2 tothe Alkermes plcAnnual Report onForm 10-K (File No.001-35299) February 25, 201610.4.3 Letter Agreement and Exhibits toManufacturing and Supply Agreement,dated February 1, 2002, by and among JPIPharmaceutica International, JanssenPharmaceutica Inc. and Alkermes ControlledTherapeutics Inc. II (assigned to Alkermes,Inc. in July 2006). Exhibit 10.4.3 tothe Alkermes plcAnnual Report onForm 10-K (File No.001-35299) February 25, 201610.4.4 * Amendment to Manufacturing and SupplyAgreement by and between JPIPharmaceutica International, JanssenPharmaceutica Inc. and Alkermes ControlledTherapeutics Inc. II, dated December 22,2003 (assigned to Alkermes, Inc. in July2006). Exhibit 10.6 to theAlkermes plcQuarterly Report onForm 10-Q (File No.011-35299) July 30, 201510.4.5 * Fourth Amendment To Manufacturing andSupply Agreement by and between JPIPharmaceutica International, JanssenPharmaceutica Inc. and Alkermes ControlledTherapeutics Inc. II, dated January 10, 2005(assigned to Alkermes, Inc. in July 2006). Exhibit 10.9 to theAlkermes, Inc.Quarterly Report onForm 10-Q (FileNo. 001-14131) February 8, 200510.5 * Development and License Agreement, datedas of May 15, 2000, by and betweenAlkermes Controlled Therapeutics Inc. IIand Amylin Pharmaceuticals, Inc., asamended on October 24, 2005 and July 17,2006 (assigned, as amended, to Alkermes,Inc. in July 2006). Exhibit 10.28 tothe Alkermes, Inc.Annual Report onForm 10-K (FileNo. 001-14131) May 21, 201010.6 * Agreement by and between JPIPharmaceutica International, JanssenPharmaceutica Inc. and Alkermes ControlledTherapeutics Inc. II, dated December 21,2002 (assigned to Alkermes, Inc. in July2006). Exhibit 10.6 to theAlkermes, Inc.Quarterly Report onForm 10-Q (FileNo. 001-14131) February 8, 200510.6.1 * Amendment to Agreement by and betweenJPI Pharmaceutica International, JanssenPharmaceutica Inc. and Alkermes ControlledTherapeutics Inc. II, dated December 16,2003 (assigned to Alkermes, Inc. in July2006). Exhibit 10.7 to theAlkermes, Inc.Quarterly Report onForm 10-Q (FileNo. 001-14131) February 8, 200510.7 Amended and Restated License Agreement,dated September 26, 2003, by and betweenAcorda Therapeutics, Inc. and ElanCorporation, plc. Exhibit 10.14 ofthe AcordaTherapeutics, Inc.Quarterly Report onForm 10-Q/A (FileNo.000-50513; filmNo. 11821367) July 20, 201178 Table of Contents Incorporated by reference hereinExhibit No. Description of Exhibit Form Date10.7.1 * Supply Agreement, dated September 26,2003, by and between Acorda Therapeutics,Inc. and Elan Corporation, plc. Exhibit 10.22 ofthe Alkermes plcAnnual Report onForm 10-K (FileNo. 001-35299) May 23, 201310.7.2 Amendment No. 1 Agreement, dated June30, 2009, to the Amended and RestatedLicense Agreement dated September 26,2003 and the Supply Agreement datedSeptember 26, 2003, and Consent toSublicense, by and among Elan PharmaInternational Limited (as successor ininterest to Elan Corporation, plc), AcordaTherapeutics, Inc. and Biogen IdecInternational GmbH. Exhibit 10.56 toAcordaTherapeutics, Inc.’sQuarterly Report onForm 10-Q (FileNo.000-50513; filmNo. 09999376) August 10, 200910.7.3 Amendment No. 2, dated March 29, 2012, tothe Amended and Restated LicenseAgreement, dated September 26, 2003, asamended, and the Supply Agreement, datedSeptember 26, 2003, as amended, in eachcase by and between Acorda Therapeutics,Inc. and Alkermes Pharma Ireland Limited(as successor in interest to Elan Corporation,plc). Exhibit 10.46 ofthe AcordaTherapeutics, Inc.Annual Report onForm 10-K (FileNo.000-50513; filmno. 13653677) February 28, 201310.7.4 Amendment No. 3, dated February 14, 2013,to the Amended and Restated LicenseAgreement, dated September 26, 2003, asamended and the Supply Agreement, datedSeptember 26, 2003, as amended, in eachcase by and between Acorda Therapeutics,Inc. and Alkermes Pharma Ireland Limited(as successor in interest to Elan Corporation,plc). Exhibit 10.1 of theAcordaTherapeutics, Inc.Quarterly Report onForm 10-Q (File No.000-50513; filmNo. 13831684) May 10, 201310.7.5* Development and Supplemental Agreementbetween Elan Pharma International Limitedand Acorda Therapeutics, Inc. dated January14, 2011. Exhibit 10.21 ofthe Alkermes plcAnnual Report onForm 10-K (FileNo. 001-35299) May 23, 201310.8 * License Agreement by and among ElanPharmaceutical Research Corp., d/b/aNanosystems and Elan Pharma InternationalLimited and Janssen Pharmaceutica N.V.dated as of March 31, 1999. Exhibit 10.23 ofthe Alkermes plcAnnual Report onForm 10-K (FileNo. 001-35299) May 23, 201310.8.1 First Amendment, dated as of July 31, 2003,to the License Agreement by and amongElan Drug Delivery, Inc. (formerly ElanPharmaceutical Research Corp.) and ElanPharma International Limited and JanssenPharmaceutica NV dated March 31, 1999. Exhibit 10.24 ofthe Alkermes plcAnnual Report onForm 10-K (FileNo. 001-35299) May 23, 201310.8.2 * Agreement Amendment No. 2, dated as ofJuly 31, 2009, to the License Agreement byand among Elan Pharmaceutical ResearchCorp., d/b/a Nanosystems and Elan PharmaInternational Limited and JanssenPharmaceutica N.V. dated as of March 31,1999, as amended by the First Amendment,dated as of July 31, 2003. Exhibit 10.25 ofthe Alkermes plcAnnual Report onForm 10-K (FileNo. 001-35299) May 23, 201310.9 Amendment to First Lien Credit Agreement,dated September 25, 2012, amongAlkermes, Inc., Alkermes plc, the guarantorsparty thereto, the lenders party thereto,Morgan Stanley Senior Funding, Inc. asAdministrative Agent and Collateral Agentand the arrangers and agents party thereto. Exhibit 10.1 of theAlkermes plcCurrent Report onForm 8-K (File No.011-35299) September 25, 201279 Table of Contents Incorporated by reference hereinExhibit No. Description of Exhibit Form Date10.9.1 Amendment No. 2, dated as of February 14,2013, to Amended and Restated CreditAgreement, dated as of September 16, 2011,as amended and restated on September 25,2012, among Alkermes, Inc., Alkermes plc,the guarantors party thereto, the lendersparty thereto, Morgan Stanley SeniorFunding, Inc. as Administrative Agent andCollateral Agent and the arrangers andagents party thereto. Exhibit 10.1 of theAlkermes plcCurrent Report onForm 8-K (File No.011-35299) February 19, 201310.9.2 Amendment No. 3 and Waiver to Amendedand Restated Credit Agreement, dated as ofMay 22, 2013, among Alkermes, Inc.,Alkermes plc, Alkermes Pharma IrelandLimited, Alkermes US Holdings, Inc.,Morgan Stanley Senior Funding, Inc. asAdministrative Agent and Collateral Agentand the lenders party thereto. Exhibit 10.52 ofthe Alkermes plcAnnual Report onForm 10-K (File No.011-35299) May 23, 201310.9.3 Amendment No. 4, dated as of October 12,2016, to Amended and Restated CreditAgreement, dated as of September 16, 2011,as amended and restated on September 25,2012, as further amended by AmendmentNo. 2 on February 14, 2013 and as amendedby Amendment No. 3 and Waiver toAmended and Restated Credit Agreementdated as of May 22, 2013, among Alkermes,Inc., Alkermes plc, the guarantors partythereto, the lenders party thereto andMorgan Stanley Senior Funding, Inc. asAdministrative Agent and Collateral Agent. Exhibit 10.2 of theAlkermes plcQuarterly Report onForm 10-Q (File No.011-35299) November 2, 201610.10 #* License and Collaboration Agreement,dated November 27, 2017, by and betweenAlkermes Pharma Ireland Limited andBiogen Swiss Manufacturing GmbH. 10.11 † Employment agreement, dated as ofDecember 12, 2007, by and betweenRichard F. Pops and Alkermes, Inc. Exhibit 10.1 to theAlkermes, Inc.Quarterly Report onForm 10-Q (FileNo. 001-14131) February 11, 200810.11.1 † Amendment to Employment Agreement,dated as of October 7, 2008, by and betweenAlkermes, Inc. and Richard F. Pops. Exhibit 10.5 to theAlkermes, Inc.Current Report onForm 8-K (FileNo. 001-14131) October 7, 200810.11.2 † Amendment No. 2 to EmploymentAgreement by and between Alkermes, Inc.and Richard F. Pops, dated September 10,2009. Exhibit 10.2 to theAlkermes, Inc.Current Report onForm 8-K (FileNo. 001-14131) September 11, 200910.12 † Form of Employment Agreement, dated asof December 12, 2007, entered into by andbetween Alkermes, Inc. and each of KathrynL. Biberstein, Elliot W. Ehrich, M.D., JamesM. Frates and Michael J. Landine. Exhibit 10.3 to theAlkermes, Inc.Quarterly Report onForm 10-Q (FileNo. 001-14131) February 11, 200810.12.1 † Form of Amendment to EmploymentAgreement entered into by and betweenAlkermes, Inc. and each of Kathryn L.Biberstein, Elliot W. Ehrich, M.D. andJames M. Frates, Michael J. Landine. Exhibit 10.7 to theAlkermes, Inc.Current Report onForm 8-K (FileNo. 001-14131) October 7, 200810.13 † Form of Covenant Not to Compete, ofvarious dates, by and between Alkermes,Inc. and each of Kathryn L. Biberstein andJames M. Frates. Exhibit 10.15 tothe Alkermes, Inc.Annual Report onForm 10-K (FileNo. 001-14131) May 30, 200880 Table of Contents Incorporated by reference hereinExhibit No. Description of Exhibit Form Date10.14 † Form of Covenant Not to Compete, ofvarious dates, by and between Alkermes,Inc. and each of Elliot W. Ehrich, M.D. andMichael J. Landine. Exhibit 10.15(a) tothe Alkermes, Inc.Annual Report onForm 10-K (FileNo. 001-14131) May 30, 200810.15 † Shane Cooke Offer Letter, dated as ofSeptember 15, 2011. Exhibit 10.5 to theAlkermes plcCurrent Report onForm 8-K (File No.011-35299) September 20, 201110.15.1 † Employment Agreement by and betweenAlkermes Pharma Ireland Limited andShane Cooke, dated as of September 16,2011. Exhibit 10.6 to theAlkermes plcCurrent Report onForm 8-K (File No.011-35299) September 20, 201110.16 † Offer Letter between Alkermes, Inc. andMark P. Stejbach, effective as of February15, 2012. Exhibit 10.2 to theAlkermes plcCurrent Report onForm 8-K (File No.011-35299) March 5, 201210.16.1 † Employment Agreement by and betweenAlkermes, Inc. and Mark P. Stejbach, datedas of February 29, 2012. Exhibit 10.1 to theAlkermes plcCurrent Report onForm 8-K (File No.011-35299) March 5, 201210.16.2 † Amendment to Employment Agreement,dated as of July 21, 2015, by and betweenMark P. Stejbach and Alkermes, Inc. Exhibit 10.2 to theAlkermes plcQuarterly Report onForm 10-Q (File No.011-35299) July 30, 201510.17 † Form of Employment Agreement enteredinto by and between Alkermes, Inc. andeach of Iain M. Brown, David J. Gaffin andCraig C. Hopkinson, M.D. Exhibit 10.1 to theAlkermes plcQuarterly Report onForm 10-Q (File No.011-35299) November 2, 201610.17.1#† Offer Letter between Alkermes, Inc. andCraig C. Hopkinson M.D., effective as ofApril 24, 2017. 10.18 † Form of Indemnification Agreement by andbetween Alkermes, Inc. and each of itsdirectors and executive officers. Exhibit 10.1 to theAlkermes, Inc.Current Report onForm 8-K (FileNo. 001-14131) March 25, 201010.19 † Form of Deed of Indemnification forAlkermes plc Officers. Exhibit 10.1 to theAlkermes plcCurrent Report onForm 8-K (File No.011-35299) September 20, 201110.20 † Form of Deed of Indemnification forAlkermes plc Directors/Secretary. Exhibit 10.2 to theAlkermes plcCurrent Report onForm 8-K (File No.011-35299) September 20, 201110.21 † Form of Deed of Indemnification forAlkermes, Inc. and SubsidiariesDirectors/Secretary. Exhibit 10.3 to theAlkermes plcCurrent Report onForm 8-K (File No.011-35299) September 20, 201181 Table of Contents Incorporated by reference hereinExhibit No. Description of Exhibit Form Date10.22 † Alkermes, Inc. Amended and Restated 1999Stock Option Plan. Appendix A to theAlkermes, Inc.Definitive ProxyStatement onForm DEF 14/A(File No. 001-14131) July 27, 200710.22.1 † Form of Incentive Stock Option Certificatepursuant to the 1999 Stock Option Plan, asamended. Exhibit 10.35 tothe Alkermes, Inc.Annual Report onForm 10-K (FileNo. 001-14131) June 14, 200610.22.2 † Form of Non-Qualified Stock OptionCertificate pursuant to the 1999 StockOption Plan, as amended. Exhibit 10.36 tothe Alkermes, Inc.Annual Report onForm 10-K (FileNo. 001-14131) June 14, 200610.23† Alkermes plc Amended and Restated 2008Stock Option and Incentive Plan, asamended. Exhibit 10.1 to theAlkermes plcQuarterly Report onForm 10-Q for thequarter endedMarch 31, 2017(File No. 001-35299) April 27, 201710.23.1 † Alkermes plc 2008 Stock Option andIncentive Plan, Stock Option AwardCertificate (Non-Employee Director). Exhibit 10.4 to theAlkermes plcQuarterly Report onForm 10-Q for thequarter endedMarch 31, 2016(File No. 001-35299) April 28, 201610.23.2 † Alkermes plc 2008 Stock Option andIncentive Plan, Restricted Stock Unit AwardCertificate (Time Vesting Only - Irish). Exhibit 10.5 to theAlkermes plcQuarterly Report onForm 10-Q for thequarter endedMarch 31, 2016(File No. 001-35299) April 28, 201610.23.3 † Alkermes plc 2008 Stock Option andIncentive Plan, Restricted Stock Unit AwardCertificate (Time Vesting Only – U.S.). Exhibit 10.6 to theAlkermes plcQuarterly Report onForm 10-Q for thequarter endedMarch 31, 2016(File No. 001-35299) April 28, 201610.23.4 † Alkermes plc 2008 Stock Option andIncentive Plan, Stock Option AwardCertificate (Time Vesting Non-QualifiedOption – Irish). Exhibit 10.7 to theAlkermes plcQuarterly Report onForm 10-Q for thequarter endedMarch 31, 2016(File No. 001-35299) April 28, 201682 Table of Contents Incorporated by reference hereinExhibit No. Description of Exhibit Form Date10.23.5 † Alkermes plc 2008 Stock Option andIncentive Plan, Stock Option AwardCertificate (Time Vesting Non-QualifiedOption – U.S.). Exhibit 10.8 to theAlkermes plcQuarterly Report onForm 10-Q for thequarter endedMarch 31, 2016(File No. 001-35299) April 28, 201610.23.6 † Alkermes plc 2008 Stock Option andIncentive Plan, Stock Option AwardCertificate (Incentive Stock Option – U.S.). Exhibit 10.9 to theAlkermes plcQuarterly Report onForm 10-Q for thequarter endedMarch 31, 2016(File No. 001-35299) April 28, 201610.23.7 † Alkermes, Inc. 2008 Stock Option andIncentive Plan, Restricted Stock Unit AwardCertificate (Performance Vesting Only). Exhibit 10.2 to theAlkermes, Inc.Current Report onForm 8-K (File No.001-14131) May 22, 200910.24 † Alkermes plc 2011 Stock Option andIncentive Plan, as amended. Exhibit 10.1 to theAlkermes plcCurrent Report onForm 8-K (File No.001-35299) May 24, 201710.24.1 † Alkermes plc 2011 Stock Option andIncentive Plan, Stock Option AwardCertificate (Incentive Stock Option – U.S.),as amended. Exhibit 10.26.1 tothe Alkermes plcAnnual Report onForm 10-K (File No.001-35299) February 25, 201610.24.2 † Alkermes plc 2011 Stock Option andIncentive Plan, Stock Option AwardCertificate (Time Vesting Non-QualifiedOption – U.S.), as amended. Exhibit 10.26.2 tothe Alkermes plcAnnual Report onForm 10-K (File No.001-35299) February 25, 201610.24.3 † Alkermes plc 2011 Stock Option andIncentive Plan, Stock Option AwardCertificate (Performance Vesting Non-Qualified Option – U.S.). Exhibit 10.26.3 tothe Alkermes plcAnnual Report onForm 10-K (File No.001-35299) February 25, 201610.24.4 † Alkermes plc 2011 Stock Option andIncentive Plan, Restricted Stock Unit AwardCertificate (Time Vesting Only – U.S.), asamended. Exhibit 10.75 ofthe Alkermes plcTransition Reporton Form 10-KT(File No. 011-35299) February 27, 201410.24.5 † Alkermes plc 2011 Stock Option andIncentive Plan, Restricted Stock Unit AwardCertificate (Performance Vesting Only –U.S.), as amended. Exhibit 10.26.5 tothe Alkermes plcAnnual Report onForm 10-K (File No.001-35299) February 25, 201610.24.6 † Alkermes plc 2011 Stock Option andIncentive Plan, Restricted Stock Unit AwardCertificate (Time Vesting Only - Irish), asamended. Exhibit 10.77 ofthe Alkermes plcTransition Reporton Form 10-KT(File No. 011-35299) February 27, 201410.24.7 † Alkermes plc 2011 Stock Option andIncentive Plan, Restricted Stock Unit AwardCertificate (Performance Vesting Only -Irish). Exhibit 10.26.7 tothe Alkermes plcAnnual Report onForm 10-K (File No.001-35299) February 25, 201683 Table of Contents Incorporated by reference hereinExhibit No. Description of Exhibit Form Date10.24.8 † Alkermes plc 2011 Stock Option andIncentive Plan, Stock Option AwardCertificate (Non-Employee Director). Exhibit 10.3 to theAlkermes plcQuarterly Report onForm 10-Q for thequarter endedMarch 31, 2016(File No. 001-35299) April 28, 2016 10.24.9 † Alkermes plc 2011 Stock Option andIncentive Plan, Stock Option AwardCertificate (Time Vesting Non-QualifiedOption – Irish). Exhibit 10.26.9 tothe Alkermes plcAnnual Report onForm 10-K (File No.001-35299) February 25, 201610.24.10 † Alkermes plc 2011 Stock Option andIncentive Plan, Stock Option AwardCertificate (Performance Vesting Non-Qualified Option – Irish). Exhibit 10.26.10 tothe Alkermes plcAnnual Report onForm 10-K (File No.001-35299) February 25, 201621.1 # List of subsidiaries 23.1 # Consent of PricewaterhouseCoopers LLP, anindependent registered public accountingfirm 24.1 # Power of Attorney (included on thesignature pages hereto) 31.1 # Certification Pursuant to Rule 13a-14(a) orRule 15d-14(a) of the Securities ExchangeAct of 1934 31.2 # Certification Pursuant to Rule 13a-14(a) orRule 15d-14(a) of the Securities ExchangeAct of 1934 32.1 ‡ Certification Pursuant to 18 U.S.C. Section1350, as adopted pursuant to Section 906 ofthe Sarbanes-Oxley Act of 2002 101.INS +# XBRL Instance Document 101.SCH +# XBRL Taxonomy Extension SchemaDocument 101.CAL +# XBRL Taxonomy Extension CalculationLinkbase Document 101.DEF +# XBRL Taxonomy Extension DefinitionLinkbase Document 101.LAB +# XBRL Taxonomy Extension LabelLinkbase Document 101.PRE +# XBRL Taxonomy Extension PresentationLinkbase Document † Indicates a management contract or any compensatory plan, contract or arrangement.+ XBRL (Extensible Business Reporting Language).# Filed herewith.‡ Furnished herewith.* Confidential treatment has been granted or requested for certain portions of this exhibit. Suchportions have been filed separately with the SEC pursuant to a confidential treatment request. Item 16. Form 10-K SummaryNot applicable. 84 Table of Contents SIGNATURESPursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has dulycaused this report to be signed on its behalf by the undersigned, thereunto duly authorized. ALKERMES PLC By:/s/ Richard F. PopsRichard F. PopsChairman and Chief Executive Officer February 16, 2018 POWER OF ATTORNEYPursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the followingpersons on behalf of the Registrant 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 andJames M. Frates, and each of them, his true and lawful attorney‑in‑fact, with full power of substitution, for him in any and allcapacities, to execute and cause to be filed with the Securities and Exchange Commission any and all amendments to thisAnnual Report, with exhibits thereto and other documents in connection therewith, and hereby ratifies and confirms all thatsaid attorney‑in‑fact or his substitute or substitutes may do or cause to be done by virtue hereof.Signature Title Date /s/ Richard F. PopsRichard F. Pops Chairman and Chief Executive Officer (PrincipalExecutive Officer) February 16, 2018 /s/ James M. FratesJames M. Frates Senior Vice President and Chief Financial Officer(Principal Financial Officer) February 16, 2018 /s/ Iain M. BrownIain M. Brown Senior Vice President and Chief Accounting Officer(Principal Accounting Officer) February 16, 2018 /s/ David W. AnsticeDavid W. Anstice Director February 16, 2018 /s/ Floyd E. BloomFloyd E. Bloom Director February 16, 2018 /s/ Robert A. BreyerRobert A. Breyer Director February 16, 2018 /s/ Wendy L. DixonWendy L. Dixon Director February 16, 2018 /s/ Paul J. MitchellPaul J. Mitchell Director February 16, 2018 /s/ Nancy L. SnydermanNancy L. Snyderman Director February 16, 2018 /s/ Nancy J. WysenskiNancy J. Wysenski Director February 16, 2018 85 Table of ContentsReport of Independent Registered Public Accounting FirmTo the Board of Directors and Shareholders of Alkermes plc Opinions on the Financial Statements and Internal Control over Financial Reporting We have audited the accompanying consolidated balance sheets of Alkermes plc and its subsidiaries (the “Company”) as ofDecember 31, 2017 and 2016, and the related consolidated statements of operations and comprehensive loss, of changes inshareholders’ equity and cash flows for each of the three years in the period ended December 31, 2017, including the relatednotes (collectively referred to as the “consolidated financial statements”). We also have audited the Company's internalcontrol over financial reporting as of December 31, 2017, based on criteria established in Internal Control - IntegratedFramework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financialposition of the Company as of December 31, 2017 and 2016, and the results of their operations and their cash flows for eachof the three years in the period ended December 31, 2017 in conformity with accounting principles generally accepted in theUnited States of America. Also in our opinion, the Company maintained, in all material respects, effective internal controlover financial reporting as of December 31, 2017, based on criteria established in Internal Control - Integrated Framework(2013) issued by the COSO. Change in Accounting Principle As discussed in Note 2 to the consolidated financial statements, the Company changed the manner in which it accounts forshare based payments in 2017. Basis for Opinions The Company's management is responsible for these consolidated financial statements, for maintaining effective internalcontrol over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting,included in Management's Annual Report on Internal Control over Financial Reporting appearing under Item 9A. Ourresponsibility is to express opinions on the Company’s consolidated financial statements and on the Company's internalcontrol over financial reporting based on our audits. We are a public accounting firm registered with the Public CompanyAccounting Oversight Board (United States) ("PCAOB") and are required to be independent with respect to the Company inaccordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and ExchangeCommission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and performthe audits to obtain reasonable assurance about whether the consolidated financial statements are free of materialmisstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained inall material respects. Our audits of the consolidated financial statements included performing procedures to assess the risks of materialmisstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respondto those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in theconsolidated financial statements. Our audits also included evaluating the accounting principles used and significantestimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. Ouraudit of internal control over financial reporting included obtaining an understanding of internal control over financialreporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operatingeffectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as weconsidered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions. Definition and Limitations of Internal Control over Financial Reporting A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding thereliability of financial reporting and the preparation of financial statements for external purposes in accordance withF-1 Table of Contentsgenerally accepted accounting principles. A company’s internal control over financial reporting includes those policies andprocedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect thetransactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded asnecessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and thatreceipts and expenditures of the company are being made only in accordance with authorizations of management anddirectors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorizedacquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also,projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequatebecause of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. /s/PricewaterhouseCoopers LLP Boston, MassachusettsFebruary 16, 2018 We have served as the Company’s auditor since 2007. F-2 Table of ContentsALKERMES PLC AND SUBSIDIARIESCONSOLIDATED BALANCE SHEETSDecember 31, 2017 and 2016 December 31, 2017 December 31, 2016 (In thousands, except share and pershare amounts)ASSETS CURRENT ASSETS: Cash and cash equivalents $191,296 $186,378Investments—short-term 242,208 310,856Receivables, net 233,590 191,102Inventory 93,275 62,998Prepaid expenses and other current assets 48,475 39,344Total current assets 808,844 790,678PROPERTY, PLANT AND EQUIPMENT, NET 284,736 264,785INTANGIBLE ASSETS—NET 256,168 318,227INVESTMENTS—LONG-TERM 157,212 121,931GOODWILL 92,873 92,873CONTINGENT CONSIDERATION 84,800 63,200DEFERRED TAX ASSETS 98,560 47,768OTHER ASSETS 14,034 26,961TOTAL ASSETS $1,797,227 $1,726,423LIABILITIES AND SHAREHOLDERS’ EQUITY CURRENT LIABILITIES: Accounts payable and accrued expenses $286,166 $207,055Long-term debt—short-term 3,000 3,000Deferred revenue—short-term 1,956 1,938Total current liabilities 291,122 211,993LONG-TERM DEBT 278,436 280,666OTHER LONG-TERM LIABILITIES 19,204 17,161DEFERRED REVENUE—LONG-TERM 5,657 7,122Total liabilities 594,419 516,942COMMITMENTS AND CONTINGENCIES (Note 16) SHAREHOLDERS’ EQUITY: Preferred shares, par value, $0.01 per share; 50,000,000 shares authorized; zeroissued and outstanding at December 31, 2017 and 2016, respectively — —Ordinary shares, par value, $0.01 per share; 450,000,000 shares authorized;156,057,632 and 154,191,281 shares issued; 154,009,456 and 152,430,514shares outstanding at December 31, 2017 and 2016, respectively 1,557 1,539Treasury shares, at cost (2,048,176 and 1,760,767 shares at December 31, 2017and 2016, respectively) (89,347) (72,639)Additional paid-in capital 2,338,755 2,231,797Accumulated other comprehensive loss (3,792) (3,274)Accumulated deficit (1,044,365) (947,942)Total shareholders’ equity 1,202,808 1,209,481TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY $1,797,227 $1,726,423 The accompanying notes are an integral part of these consolidated financial statements.F-3 Table of ContentsALKERMES PLC AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSSYears Ended December 31, 2017, 2016 and 2015 Year Ended December 31, 2017 2016 2015 (In thousands, except per share amounts) REVENUES: Manufacturing and royalty revenues $505,308 $487,247 $475,288 Product sales, net 362,834 256,146 149,028 License revenue 28,000 — — Research and development revenue 7,232 2,301 4,019 Total revenues 903,374 745,694 628,335 EXPENSES: Cost of goods manufactured and sold (exclusive of amortization of acquiredintangible assets shown below) 154,748 132,122 138,989 Research and development 412,889 387,148 344,404 Selling, general and administrative 421,578 374,130 311,558 Amortization of acquired intangible assets 62,059 60,959 57,685 Total expenses 1,051,274 954,359 852,636 OPERATING LOSS (147,900) (208,665) (224,301) OTHER INCOME (EXPENSE), NET: Interest income 4,649 3,752 3,330 Interest expense (12,008) (14,889) (13,247) Change in the fair value of contingent consideration 21,600 7,900 (2,300) Gain on the Gainesville Transaction — — 9,636 Gain on sale of property, plant and equipment — — 2,862 Other (expense) income, net (9,615) (2,485) 15 Total other income (expense), net 4,626 (5,722) 296 LOSS BEFORE INCOME TAXES (143,274) (214,387) (224,005) INCOME TAX PROVISION (BENEFIT) 14,671 (5,943) 3,158 NET LOSS $(157,945) $(208,444) $(227,163) LOSS PER ORDINARY SHARE: Basic and diluted $(1.03) $(1.38) $(1.52) WEIGHTED AVERAGE NUMBER OF ORDINARY SHARES OUTSTANDING: Basic and diluted 153,415 151,484 149,206 COMPREHENSIVE LOSS: Net loss $(157,945) $(208,444) $(227,163) Holding (loss) gain, net of a tax (benefit) provision of $(295), $237 and$(292), respectively (518) 522 (661) COMPREHENSIVE LOSS $(158,463) $(207,922) $(227,824) The accompanying notes are an integral part of these consolidated financial statements. F-4 Table of ContentsALKERMES PLC AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITYYears Ended December 31, 2017, 2016 and 2015 Accumulated Additional Other Ordinary Shares Paid-In Comprehensive Accumulated Treasury Stock Shares Amount Capital Loss Deficit Shares Amount Total (In thousands, except share data)BALANCE —December 31, 2014 148,545,150 $1,482 $1,942,878 $(3,136) $(512,335) (1,006,631) $(32,052) $1,396,837Issuance of ordinaryshares underemployee stock plans 3,538,308 35 44,934 — — — — 44,969Receipt of Alkermes'shares for thepurchase of stockoptions or to satisfyminimum taxwithholdingobligations related toshare based awards 45,483 1 704 — — (421,321) (26,609) (25,904)Share-basedcompensationexpense — — 97,619 — — — — 97,619Excess tax benefit fromshare-basedcompensation — — 28,576 — — — — 28,576Unrealized loss onmarketable securities,net of tax benefit of$(292) — — — (659) — — — (659)Net loss — — — — (227,163) — — (227,163)BALANCE —December 31, 2015 152,128,941 $1,518 $2,114,711 $(3,795) $(739,498) (1,427,952) $(58,661) $1,314,275Issuance of ordinaryshares underemployee stock plans 2,027,571 20 20,288 — — — — 20,308Receipt of Alkermes'shares for thepurchase of stockoptions or to satisfyminimum taxwithholdingobligations related toshare based awards 34,769 1 510 — — (332,815) (13,978) (13,467)Share-basedcompensationexpense — — 94,458 — — — — 94,458Excess tax benefit fromshare-basedcompensation — — 1,830 — — — — 1,830Unrealized gain onmarketable securities,net of tax provisionof $237 — — — 521 — — — 521Net loss — — — — (208,444) — — (208,444)BALANCE— December 31, 2016 154,191,281 $1,539 $2,231,797 $(3,274) $(947,942) (1,760,767) $(72,639) $1,209,481Issuance of ordinaryshares underemployee stock plans 1,850,084 16 23,501 — — — — 23,517Receipt of Alkermes'shares for thepurchase of stockoptions or to satisfyminimum taxwithholdingobligations related toshare based awards 16,267 2 273 — — (287,409) (16,708) (16,433)Share-basedcompensationexpense — — 83,184 — — — — 83,184Unrealized loss onmarketable securities,net of tax benefit of$(295) — — — (518) — — — (518)Cumulative effectadjustment related tochange in accountingfor excess taxbenefits — — — — 61,522 — — 61,522Net loss — — — — (157,945) — — (157,945)BALANCE— December 31, 2017 156,057,632 $1,557 $2,338,755 $(3,792) $(1,044,365) (2,048,176) $(89,347) $1,202,808The accompanying notes are an integral part of these consolidated financial statements. F-5 Table of ContentsALKERMES PLC AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF CASH FLOWSYears Ended December 31, 2017, 2016 and 2015 Year Ended December 31, 2017 2016 2015 (In thousands)CASH FLOWS FROM OPERATING ACTIVITIES: Net loss $(157,945) $(208,444) $(227,163)Adjustments to reconcile net loss to cash flows from operating activities: Depreciation and amortization 98,523 94,256 85,596Share-based compensation expense 83,917 94,396 97,341Impairment of investment in Reset Therapeutics, Inc. 10,471 — —Deferred income taxes 7,234 (9,689) (37,580)Change in the fair value of contingent consideration (21,600) (7,900) 2,300Excess tax benefit from share-based compensation — (4,229) (28,576)Gain on the Gainesville Transaction — — (9,636)Loss on debt refinancing — 2,075 —Gain on sale of property, plant and equipment — — (3,272)Other non-cash charges 3,471 2,936 (1,351)Changes in assets and liabilities: Receivables (42,489) (35,616) (16,455)Inventory (30,191) (26,381) 3,687Prepaid expenses and other assets (9,506) (15,014) 15,931Accounts payable and accrued expenses 72,658 45,870 76,155Deferred revenue (1,447) (649) (629)Other long-term liabilities 6,094 4,587 3,292Cash flows provided by (used in) operating activities 19,190 (63,802) (40,360)CASH FLOWS FROM INVESTING ACTIVITIES: Additions of property, plant and equipment (51,300) (43,657) (52,877)Proceeds from the sale of equipment 162 194 535Purchases of investments (431,712) (375,099) (508,683)Sales and maturities of investments 464,494 560,805 467,573Investment in Reset Therapeutics, Inc. — (15,000) —Net proceeds from the Gainesville Transaction — — 49,966Cash flows (used in) provided by investing activities (18,356) 127,243 (43,486)CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from the issuance of ordinary shares under share-basedcompensation arrangements 23,517 20,308 44,969Employee taxes paid related to net share settlement of equity awards (16,433) (13,467) (25,904)Principal payments of long-term debt (3,000) (3,429) (6,750)Excess tax benefit from share-based compensation — 4,229 28,576Payment made for debt refinancing — (65,813) —Cash flows provided by (used in) financing activities 4,084 (58,172) 40,891NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 4,918 5,269 (42,955)CASH AND CASH EQUIVALENTS—Beginning of period 186,378 181,109 224,064CASH AND CASH EQUIVALENTS—End of period $191,296 $186,378 $181,109SUPPLEMENTAL CASH FLOW DISCLOSURE: Cash paid for interest $11,143 $12,458 $12,323Cash paid for taxes $2,992 $5,531 $705Non-cash investing and financing activities: Purchased capital expenditures included in accounts payable and accruedexpenses $11,151 $5,766 $6,054Fair value of warrants received as part of the Gainesville Transaction $ — $ — $2,123Fair value of contingent consideration received as part of the GainesvilleTransaction $ — $ — $57,600 The accompanying notes are an integral part of these consolidated financial statements. F-6 Table of ContentsALKERMES PLC AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS1. DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATIONAlkermes plc (the “Company”) is a fully integrated, global biopharmaceutical company that applies its scientificexpertise and proprietary technologies to research, develop and commercialize, both with partners and on its own,pharmaceutical products that are designed to address unmet medical needs of patients in major therapeutic areas. TheCompany has a diversified portfolio of commercial drug products and a clinical pipeline of product candidates that addresscentral nervous system (“CNS”) disorders such as schizophrenia, depression, addiction, and multiple sclerosis. Headquarteredin Dublin, Ireland, the Company has a research and development (“R&D”) center in Waltham, Massachusetts; R&D andmanufacturing facilities in Athlone, Ireland; and a manufacturing facility in Wilmington, Ohio.2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIESPrinciples of ConsolidationThe consolidated financial statements include the accounts of Alkermes plc and its wholly-owned subsidiaries:Alkermes Ireland Holdings Limited; Daravita Pharma Ireland Limited; Daravita Limited; Alkermes Science Four Limited;Alkermes Science Five Limited; Alkermes Science Six Limited; Alkermes Pharma Ireland Limited; Alkermes U.S. Holdings,Inc.; Alkermes, Inc.; Alkermes Controlled Therapeutics, Inc.; Alkermes Europe, Ltd.; Alkermes Finance Ireland Limited;Alkermes Finance Ireland (No. 2) Limited; Alkermes Finance Ireland (No. 3) Limited; and Alkermes Finance S.à r.l.Intercompany accounts and transactions have been eliminated.On March 7, 2015, the Company entered into a definitive agreement to sell its Gainesville, GA manufacturing facility,the related manufacturing and royalty revenue associated with certain products manufactured at the facility, and the rights toIV/IM and parenteral forms of Meloxicam (the “Disposition” or the “Gainesville Transaction”) to Recro Pharma, Inc.(“Recro”) and Recro Pharma LLC (together with Recro, the “Purchasers”). The consolidated financial statements include theaccounts of Alkermes Gainesville LLC, which represent the entities sold, for the period from January 1, 2015 through April10, 2015.Use of EstimatesThe preparation of the Company’s consolidated financial statements in accordance with accounting principles generallyaccepted in the United States (“U.S.”) (“GAAP”) requires management to make estimates, judgments and assumptions thatmay affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets andliabilities. On an on‑going basis, the Company evaluates its estimates and judgments and methodologies, including thoserelated to revenue recognition and related allowances, its collaborative relationships, clinical trial expenses, the valuation ofinventory, impairment and amortization of intangibles and long‑lived assets, share‑based compensation, income taxesincluding the valuation allowance for deferred tax assets, valuation of investments, contingent consideration and litigation.The Company bases its estimates on historical experience and on various other assumptions that are believed to bereasonable, the results of which form the basis for making judgments about the carrying values of assets and liabilities.Actual results may differ from these estimates under different assumptions or conditions.Cash and Cash EquivalentsThe Company values its cash and cash equivalents at cost plus accrued interest, which the Company believesapproximates their market value. The Company considers only those investments which are highly liquid, readilyconvertible into cash and so near their maturity, generally three months from the date of purchase, that they presentinsignificant risk of change in value because of interest rate changes to be cash equivalents.Receivables, netThe Company’s allowance for doubtful accounts was $0.2 million and $0.1 million at December 31, 2017 and 2016,respectively.F-7 Table of ContentsALKERMES PLC AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)InvestmentsThe Company has investments in various types of securities, consisting primarily of U.S. government and agencyobligations, corporate debt securities and debt securities issued by foreign agencies and backed by foreign governments. TheCompany generally holds its interest bearing investments with major financial institutions and in accordance withdocumented investment policies. The Company limits the amount of credit exposure to any one financial institution orcorporate issuer. At December 31, 2017, substantially all these investments were classified as available for sale and wererecorded at fair value.Holding gains and losses on available-for-sale investments are considered “unrealized” and are reported within“Accumulated other comprehensive loss,” a component of shareholders’ equity. The Company uses the specificidentification method for reclassifying unrealized gains and losses into earnings when investments are sold. The Companyconducts periodic reviews to identify and evaluate each investment that has an unrealized loss, in accordance with themeaning of other-than-temporary impairment and its application to certain investments, as required by GAAP. An unrealizedloss exists when the current fair value of an individual security is less than its amortized cost basis. Unrealized losses onavailable-for-sale securities that are determined to be temporary, and not related to credit loss, are recorded in “Accumulatedother comprehensive loss.”For 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 its amortized cost basis. If theCompany intends 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 ofthe Company’s intent to sell a security, the Company performs additional analysis on all securities with unrealized losses toevaluate losses associated with the creditworthiness of the security. Credit losses are identified where the Company does notexpect to receive cash flows sufficient to recover the amortized cost basis of a security.The Company's held-to-maturity investments are restricted investments held as collateral under letters of credit related tocertain of the Company's agreements and are included in “Investments—long-term,” in the accompanying consolidatedbalance sheets.Fair Value of Financial InstrumentsThe Company’s financial assets and liabilities are recorded at fair value and are classified as Level 1, 2 or 3 within thefair value hierarchy, as described in the accounting standards for fair value measurement. The Company’s financial assets andliabilities consist of cash equivalents, investments, contingent consideration and warrants to purchase the common stock of apublicly traded company are classified within the fair value hierarchy as follows:●Level 1–these valuations are based on a market approach using quoted prices in active markets for identical assets.Valuations of these products do not require a significant degree of judgment. Assets utilizing Level 1 inputs atDecember 31, 2017 included U.S. treasury securities and a fixed term deposit account;●Level 2–these valuations are based on a market approach using quoted prices obtained from brokers or dealers forsimilar securities or for securities for which the Company has limited visibility into their trading volumes.Valuations of these financial instruments do not require a significant degree of judgment. Assets and liabilitiesutilizing Level 2 inputs at December 31, 2017 included U.S. government agency debt securities, debt securitiesissued by foreign agencies and backed by foreign governments and investments in corporate debt securities that aretrading in the credit markets; and●Level 3–these valuations are based on an income approach using certain inputs that are unobservable and aresignificant to the overall fair value measurement. Valuations of these products require a significant degree ofjudgment. At December 31, 2017, assets utilizing Level 3 inputs included contingent consideration and warrants topurchase the common stock of Recro.The carrying amounts reflected in the consolidated balance sheets for cash and cash equivalents, accounts receivable,other current assets, accounts payable and accrued expenses approximate fair value due to their short‑term nature.F-8 Table of ContentsALKERMES PLC AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)InventoryInventory is stated at the lower of cost and net realizable value. Cost is determined using the first-in, first-out method.Included in inventory are raw materials used in production of pre-clinical and clinical products, which have alternative futureuse and are charged to R&D expense when consumed. The cost elements included within inventory include three primarycategories for commercial products: cost of raw materials; direct labor; and overhead. Overhead is based on the normalcapacity of the Company’s production facilities and does not include costs from abnormally low production or idle capacity,which are expensed directly to the consolidated statement of operations.Property, Plant and EquipmentProperty, plant and equipment are recorded at cost, subject to review for impairment whenever events or changes incircumstances indicate that the carrying amount of the assets may not be recoverable. Expenditures for repairs andmaintenance are charged to expense as incurred and major renewals and improvements are capitalized. Depreciation iscalculated using the straight‑line method over the following estimated useful lives of the assets:Asset group TermBuildings and improvements 15 - 40 yearsFurniture, fixtures and equipment 3 - 10 yearsLeasehold improvements Shorter of useful life or lease term Business Acquisitions and DivestituresThe Company's consolidated financial statements include the operations of an acquired business after the completion ofthe acquisition. The Company accounts for acquired businesses using the acquisition method of accounting. The acquisitionmethod of accounting for acquired businesses requires, among other things, that assets acquired and liabilities assumed berecognized at their estimated fair values as of the acquisition date, and that the fair value of acquired in-process research anddevelopment be recorded on the balance sheet. Also, transaction costs are expensed as incurred. Any excess of the purchaseprice over the assigned values of the net assets acquired is recorded as goodwill. Contingent consideration, if any, is includedwithin the acquisition cost and is recognized at its fair value on the acquisition date. A liability resulting from contingentconsideration is re-measured to fair value at each reporting date until the contingency is resolved. Changes in the fair valueof the contingent consideration are recognized in earnings.The Company’s consolidated financial statements include gains and losses from divested businesses. The Companyaccounts for the deconsolidation of a subsidiary, or derecognition of a group of assets, by recognizing a gain or loss in netincome attributable to the Company, measured as the difference between the fair value of any consideration received and thecarrying amount of the former subsidiary’s assets and liabilities, or the carrying amount of the group of assets. Ifconsideration received for the divested business includes contingent consideration, the Company elects, for the componentsof the contingent consideration that are not derivative instruments, such as future regulatory milestones, sales milestones androyalties, to include them in the contingent consideration portion of the arrangement at fair value. The Company has electedthe fair value option for the subsequent accounting of the contingent consideration. The Company will continue to revaluethe contingent consideration at each reporting date until each milestone and/or royalty has been achieved or ceased, withany changes in the fair value of the contingent consideration recognized in earnings.Contingent ConsiderationThe Company records contingent consideration it receives at fair value on the acquisition date. The Company estimatesthe fair value of contingent consideration through valuation models that incorporate probability-adjusted assumptionsrelated to the achievement of milestones and thus likelihood of receiving related payments. The Company revalues itscontingent consideration each reporting period, with changes in the fair value of contingent consideration recognized withinthe consolidated statements of operations and comprehensive loss. Changes in the fair value of contingent consideration canresult from changes to one or multiple inputs, including adjustments to discount rates, changes in the amount or timing ofcash flows, changes in the assumed achievement or timing of any development or sales-based milestones and changes in theassumed probability associated with regulatory approval.The period over which the Company discounts its contingent consideration is based on the current development stage ofthe product candidate, the specific development plan for that product candidate, adjusted for the probability of completingthe development steps, and when contingent payments would be triggered. In estimating the probability ofF-9 Table of ContentsALKERMES PLC AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)success, the Company utilizes data regarding similar milestone events from several sources, including industry studies andthe Company’s own experience. These fair value measurements are based on significant inputs not observable in the market.Significant judgment was employed in determining the appropriateness of these assumptions at the acquisition date and foreach subsequent period. Accordingly, changes in assumptions described above could have a material impact on the increaseor decrease in the fair value of contingent consideration recorded in any given period.Goodwill and Intangible AssetsGoodwill represents the excess cost of the Company's investment in the net assets of acquired companies over the fairvalue of the underlying identifiable net assets at the date of acquisition. The Company’s goodwill consists solely of goodwillcreated as a result of the Company’s acquisition of Elan Drug Technologies (“EDT”) from Elan Corporation, plc (the“Business Combination”) in September 2011 and has been assigned to one reporting unit. A reporting unit is an operatingsegment or one level below an operating segment or a component to which goodwill is assigned when initially recorded.Goodwill is not amortized but is reviewed for impairment on an annual basis, as of October 31, and whenever events orchanges in circumstances indicate that the carrying value of the goodwill might not be recoverable. The Company has theoption to first assess qualitative factors to determine whether it is necessary to perform the quantitative impairment test. If theCompany elects this option and believes, as a result of the qualitative assessment, that it is more-likely-than-not that the fairvalue of its reporting unit is less than its carrying amount, the quantitative impairment test is required; otherwise, no furthertesting is required. Alternatively, the Company may elect to not first assess qualitative factors and immediately perform thequantitative impairment test. In the quantitative impairment test, the Company compares the fair value of its reporting unit toits carrying value. If the carrying value of the net assets assigned to the reporting unit exceeds the fair value of its reportingunit, then the Company would record an impairment loss equal to the difference.The Company's finite-lived intangible assets, consisting of core developed technology and collaboration agreementsacquired as part of the acquisition of EDT, were recorded at fair value at the time of their acquisition and are stated within theCompany’s consolidated balance sheets net of accumulated amortization and impairments. The finite-lived intangible assetsare amortized over their estimated useful lives using the economic use method, which reflects the pattern that the economicbenefits of the intangible assets are consumed as revenue is generated from the underlying patent or contract. The useful livesof the Company's intangible assets are primarily based on the legal or contractual life of the underlying patent or contract,which does not include additional years for the potential extension or renewal of the contract or patent.Impairment of Long‑Lived AssetsThe Company reviews long‑lived assets to be held and used for impairment whenever events or changes incircumstances indicate that the carrying amount of the assets may not be recoverable. Conditions that would necessitate animpairment assessment include a significant decline in the observable market value of an asset, a significant change in theextent or manner in which an asset is used, or a significant adverse change that would indicate that the carrying amount of anasset or group of assets is not recoverable. Determination of recoverability is based on an estimate of undiscounted futurecash flows resulting from the use of the asset and its eventual disposition. In the event that such cash flows are not expectedto 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.Revenue RecognitionCollaborative ArrangementsThe Company has entered into collaboration agreements with pharmaceutical companies including JanssenPharmaceutica Inc. (“Janssen, Inc.”), Janssen Pharmaceutica International, a division of Cilag International AG (“JanssenInternational”), and Janssen Pharmaceutica N.V. (together with Janssen, Inc., Janssen International and their affiliates“Janssen”) for INVEGA SUSTENNA/XEPLION and INVEGA TRINZA/TREVICTA as well as RISPERDAL CONSTA,Acorda Therapeutics, Inc. (“Acorda”) for AMPYRA/FAMPYRA and AstraZeneca plc (“AstraZeneca”) for BYDUREON.Substantially all of the products developed under the Company’s collaborative arrangements are currently being marketed asapproved products. The Company receives payments for manufacturing services and/or royalties on net product sales.F-10 ®®®®®®®®Table of ContentsALKERMES PLC AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) Multiple Element ArrangementsWhen entering into multiple element arrangements, the Company identifies its deliverables under the arrangement todetermine if the deliverables are to be separate units of accounting or a single unit of accounting. Deliverables under thearrangement will be separate units of accounting provided that (i) a delivered item has value to the customer on a stand-alonebasis; and (ii) if the arrangement includes a general right of return relative to the delivered item, delivery or performance ofthe undelivered item is considered probable and substantially in the control of the vendor. Arrangement consideration isallocated to the separate units of accounting based on the fair value of each deliverable. The fair value of deliverables underthe arrangement may be derived using a “best estimate of selling price” if vendor specific objective evidence and third-partyevidence is not available.Whenever the Company determines that an arrangement should be accounted for as a single unit of accounting, theCompany determines the period over which the performance obligations will be performed and revenue will be recognized.Revenue will be recognized using either a proportional performance or straight-line method. The Company recognizesrevenue using the proportional performance method when the level of effort required to complete its performance obligationsunder an arrangement can be reasonably estimated and such performance obligations are provided on a “best-efforts” basis.Significant management judgment is required in determining the consideration to be earned under an arrangement andthe period over which the Company is expected to complete its performance obligations under an arrangement. Steeringcommittee services that are not inconsequential or perfunctory and that are determined to be performance obligations arecombined with other research services or performance obligations required under an arrangement, if any, in determining thelevel of effort required in an arrangement and the period over which the Company expects to complete its aggregateperformance obligations.Many of the Company's collaboration agreements entitle it to additional payments upon the achievement ofperformance-based milestones. If the achievement of a milestone is considered probable at the inception of the collaboration,the related milestone payment is included with other collaboration consideration, such as upfront payments and researchfunding, in the Company's revenue model. Milestones that involve substantial effort on the Company's part and theachievement of which are not considered probable at the inception of the collaboration are considered “substantivemilestones.”The Company accounts for substantive milestones using the milestone method of revenue recognition for R&Darrangements. Under the milestone method, contingent consideration received from the achievement of a substantivemilestone is recognized in its entirety in the period in which the milestone is achieved, which the Company believes is moreconsistent with the substance of its performance under its various collaboration agreements. A milestone is defined as anevent (i) that can only be achieved based in whole or in part on either the entity's performance or on the occurrence of aspecific outcome resulting from the entity's performance; (ii) for which there is substantive uncertainty at the date thearrangement is entered into that the event will be achieved; and (iii) that would result in additional payments being due tothe entity. A milestone is substantive if the consideration earned from the achievement of the milestone is consistent with theCompany's performance required to achieve the milestone, or the increase in value to the collaboration resulting from theCompany's performance, relates solely to the Company's past performance, and is reasonable relative to all of the otherdeliverables and payments within the arrangement.In November 2017, the Company granted Biogen, under a license and collaboration agreement, a worldwide, exclusive,sublicensable license to develop, manufacture and commercialize BIIB098 and other products covered by patents licensed toBiogen under the agreement. Upon entering into this agreement in November 2017, the Company received an up-front cashpayment of $28.0 million. The Company is also eligible to receive additional payments upon achievement of milestones, asfollows: (i) a $50.0 million option payment upon Biogen’s decision to continue the collaboration after having reviewedcertain data from the Company’s long-term safety clinical trial and part A of the head-to-head phase 3 gastrointestinaltolerability clinical trial comparing BIIB098 and TECFIDERA and (ii) a $150.0 million payment upon an approval by theFDA on or before December 31, 2021 of a 505(b)(2) NDA (or, in certain circumstances, a 505(b)(1) NDA) for BIIB098. TheCompany is also eligible to receive additional payments upon achievement of developmental milestones with respect to thefirst two products, other than BIIB098, covered by patents licensed to Biogen under the agreement. In addition, the Companywill receive a royalty on worldwide net sales of BIIB098, subject to, under certain circumstances, minimum annual paymentsfor the first five years following FDA approval of BIIB098, and worldwide net sales of products, other than BIIB098, coveredby patents licensed to BiogenF-11 Table of ContentsALKERMES PLC AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)under the agreement. Biogen paid a portion of the BIIB098 development costs the Company incurred in 2017 and,beginning on January 1, 2018, Biogen will be responsible for all BIIB098 development costs the Company incurs, subject toannual budget limitations. The Company has retained the right to manufacture clinical supplies and commercial supplies ofBIIB098 and all other products covered by patents licensed to Biogen under the agreement, subject to Biogen’s right tomanufacture or have manufactured commercial supplies as a back-up manufacturer and subject to good faith agreement bythe parties on the terms of such manufacturing arrangements.The Company evaluated the agreement under ASC Subtopic 605-25, Multiple Element Arrangements (“ASC 605-25”).The Company determined that it had four initial performance obligations: (i) the grant of the license to Biogen, (ii) futuredevelopment services, (iii) assuming the Company enters into a supply agreement with Biogen, clinical supply and (iv)participation on a joint steering committee with Biogen. The participation on the joint service committee was considered tobe perfunctory and thus not recognized as a separate unit of accounting. The deliverables, aside from the participation in thejoint steering committee which was considered to be perfunctory, were determined to be separate units of accounting as theyeach have value to Biogen on a stand-alone basis.The consideration allocable to the delivered unit or units of accounting is limited to the amount that is not contingentupon the delivery of additional items or meeting other specified performance conditions. Therefore, the Company willexclude from the allocable consideration the milestone payments and royalties, regardless of the probability that suchmilestone and royalty payments will be made, until the events that give rise to such payments actually occur.The Company allocated consideration to each unit of accounting using the relative selling price method based on itsbest estimate of selling price for the license and other deliverables. The Company used a discounted cash flow model toestimate the fair value of the license in order to determine the best estimate of selling price. To estimate the fair value of thelicense, the Company assessed the likelihood of the FDA’s approval of BIIB098 and estimated the expected future cash flowsassuming FDA approval and the intellectual property (“IP”) protecting BIIB098. The Company then discounted these cashflows using a discount rate of 8.0%, which it believes captures a market participant’s view of the risk associated with theexpected cash flows. The best estimate of selling price of the development services and clinical supply were determinedthrough third-party evidence. The Company believes that a change in the assumptions used to determine its best estimate ofselling price for the license most likely would not have a significant effect on the allocation of consideration transferred.At the date the license was delivered to Biogen, the revenue recognized for the license unit of accounting was limited tothe lesser of the amount otherwise allocable using the relative selling price method or the non-contingent amount. Duringthe three months ended December 31, 2017, the Company recognized license revenue of $28.0 million based on the non-contingent amount, which was the upfront payment. Any consideration received subsequent to the delivery of the licensewill be allocated to the remaining units of accounting and recognized when the general revenue recognition criteria are met.The Company determined that the future milestones it is entitled to receive are substantive milestones. The Company isentitled to receive an option payment of $50.0 million upon Biogen’s decision to continue the collaboration after havingreviewed certain data from our long-term safety clinical trial and part A of the head-to-head phase 3 gastrointestinaltolerability clinical trial comparing BIIB098 and TECFIDERA and a $150.0 million payment upon approval by the FDA onor before December 31, 2021 of a 505(b)(2) NDA (or, in certain circumstances, a 505(b)(1) NDA) for BIIB098. Given thechallenges inherent in developing and obtaining approval for pharmaceutical and biologic products, there was substantialuncertainty as to whether these milestones would be achieved at the time the license and collaboration agreement wasentered into.Manufacturing revenues—The Company recognizes manufacturing revenues from the sale of products it manufacturesfor resale by its licensees. Manufacturing revenues are recognized when persuasive evidence of an arrangement exists,delivery has occurred and title to the product and associated risk of loss has passed to the customer, the sales price is fixed ordeterminable and collectability is reasonably assured. The sales price for certain of the Company’s manufacturing revenues isbased on the end-market sales price earned by its partners. As the end-market sale occurs after the Company has shipped itsproduct and the risk of loss has passed to its partner, the Company estimates the sales price for such products based oninformation supplied to it by the Company’s partners, its historical transaction experience and other third-party data.Differences between actual manufacturing revenues and estimated manufacturingF-12 Table of ContentsALKERMES PLC AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)revenues are reconciled and adjusted for in the period in which they become known, which is generally within the quarter.The difference between the Company’s actual and estimated manufacturing revenues has not been material.Royalty revenues—The Company recognizes royalty revenues related to the sale of products by its partners thatincorporates the Company's technologies. Royalties, with the exception of those from AMPYRA, are earned under the termsof a license agreement in the period the products are sold by the Company's partner and collectability is reasonably assured.Royalties on AMPYRA are earned in the period that the product is shipped to Acorda. Certain of the Company's royaltyrevenues are recognized by the Company based on information supplied to the Company by its partners and requireestimates to be made. Differences between actual royalty revenues and estimated royalty revenues are reconciled andadjusted for in the period in which they become known, which is generally within the quarter. The difference between theCompany’s actual and estimated royalty revenues has not been material.License revenue—The Company recognizes revenues from the license and the sale of intellectual property, deemed tohave standalone value, when persuasive evidence of an arrangement exists, delivery has occurred, the sales price is fixed ordeterminable and collectability is reasonably assured. The Company considers delivery to have occurred when the buyer hasuse of, and is able to benefit from, the intellectual property and the Company has no remaining obligations under thearrangement.Research and development revenue—R&D revenue consists of funding that compensates the Company for formulation,pre‑clinical and clinical testing under R&D arrangements with its partners. The Company generally bills its partners underR&D arrangements using a full‑time equivalent (“FTE”) or hourly rate, plus direct external costs, if any.Product Sales, NetThe Company’s product sales, net consist of sales of VIVITROL, and since its approval by the U.S. Food and DrugAdministration (“FDA”) in October 2015, ARISTADA, in the U.S. primarily to wholesalers, specialty distributors andpharmacies. Product sales are recognized when persuasive evidence of an arrangement exists, title to the product andassociated risk of loss has passed to the customer, which is considered to occur when the product has been received by thecustomer, the sales price is fixed or determinable and collectability is reasonably assured.The Company records its product sales net of the following significant categories of sales discounts and allowances atthe time of shipment:●Medicaid Rebates—the Company records accruals for rebates to states under the Medicaid Drug Rebate Program asa reduction of sales when the product is shipped into the distribution channel. The Company rebates individualstates for all eligible units purchased under the Medicaid program based on a rebate per unit calculation, which isbased on the Company’s average manufacturer prices. The Company estimates expected unit sales and rebates perunit under the Medicaid program and adjust its rebate based on actual unit sales and rebates per unit. To date,actual Medicaid rebates have not differed materially from the Company’s estimates; ●Chargebacks—chargebacks are discounts that occur when contracted indirect customers purchase directly fromwholesalers and specialty distributors. Contracted customers generally purchase the product at its contracted price.The wholesaler or specialty distributor, in turn, then generally charges back to the Company the difference betweenthe wholesale acquisition cost and the contracted price paid to the wholesaler or specialty distributor by thecustomer. The allowance for chargebacks is based on actual and expected utilization of these programs.Chargebacks could exceed historical experience and the Company’s estimates of future participation in theseprograms. To date, actual chargebacks have not differed materially from the Company’s estimates; ●Product Discounts—cash consideration, including sales incentives, given by the Company under agreements witha number of wholesaler, distributor, pharmacy, and treatment provider customers that provide them with a discounton the purchase price of products. To date, actual product discounts have not differed materially from theCompany’s estimates;●Co‑pay Assistance—the Company has a program whereby a patient can receive monetary assistance each monthtoward their product co‑payment, co‑insurance or deductible, provided the patient meets certain eligibility criteria.Reserves for such co-pay assistance are recorded upon the product sale. To date, actual co‑pay assistance has notdiffered materially from the Company’s estimates; andF-13 ®®Table of ContentsALKERMES PLC AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)●Product Returns—the Company records an estimate for product returns at the time its customer takes title to theCompany’s product. The Company estimates this liability based on its historical return levels and specificallyidentified anticipated returns due to known business conditions and product expiry dates. Return amounts arerecorded as a deduction to arrive at product sales, net. Once product is returned, it is destroyed. At December 31,2017, the product return reserve was estimated to be approximately 1.5% of each of the Company’s VIVITROL andARISTADA gross product sales.Foreign CurrencyThe Company's functional and reporting currency is the U.S. dollar. Transactions in foreign currencies are recorded at theexchange rate prevailing on the date of the transaction. The resulting monetary assets and liabilities are translated into U.S.dollars at exchange rates prevailing on the subsequent balance sheet date. Gains and losses as a result of translationadjustments are recorded within “Other income (expense), net” in the accompanying consolidated statements of operationsand comprehensive loss. During the years ended December 31, 2017, 2016 and 2015, the Company recorded a gain onforeign currency translation of $3.7 million, $0.1 million and $1.4 million, respectively.ConcentrationsFinancial instruments that potentially subject the Company to concentrations of credit risk are receivables andmarketable securities. Billings to large pharmaceutical companies account for the majority of the Company's receivables, andcollateral is generally not required from these customers. To mitigate credit risk, the Company monitors the financialperformance and credit worthiness of its customers. The following represents revenue and receivables from the Company'scustomers exceeding 10% of the total in each category as of, and for the years ended, December 31, 2017, 2016 and 2015: Year Ended December 31, 2017 2016 2015 Customer Receivables Revenue Receivables Revenue Receivables Revenue Janssen 31%33%33%36%44%40%Acorda 14%13%17%15%* 17% *In 2015, receivables related to Acorda did not exceed 10% of the Company’s total receivables as ofDecember 31, 2015. The Company holds its interest‑bearing investments with major financial institutions and, in accordance withdocumented investment policies, the Company limits the amount of credit exposure to any one financial institution orcorporate issuer. The Company’s investment objectives are, first, to assure liquidity and conservation of capital and, second,to obtain investment income.F-14 Table of ContentsALKERMES PLC AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS (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: Year Ended December 31, (In thousands) 2017 2016 2015Revenue by region: U.S. $700,090 $557,312 $448,639Ireland 9,706 4,407 3,902Rest of world 193,578 183,975 175,794Assets by region: Current assets: U.S. $402,481 $382,168 $360,154Ireland 403,167 407,761 394,281Rest of world 3,196 749 527Long-term assets: U.S.: Other $360,641 $236,175 $294,158Ireland: Intangible assets $256,168 $318,227 $379,186Goodwill 92,873 92,873 92,873Other 278,701 288,470 334,565 Research and Development ExpensesFor each of its R&D programs, the Company incurs both external and internal expenses. External R&D expenses includecosts related to clinical and non‑clinical activities performed by contract research organizations, consulting fees, laboratoryservices, purchases of drug product materials and third‑party manufacturing development costs. Internal R&D expensesinclude employee‑related expenses, occupancy costs, depreciation and general overhead. The Company tracks external R&Dexpenses for each of its development programs, however, internal R&D expenses, with the exception of those expensesrelated to BIIB098, are not tracked by individual program as they benefit multiple programs or its technologies in general.Selling, General and Administrative ExpensesSelling, general and administrative (“SG&A”) expenses are primarily comprised of employee-related expenses associatedwith sales and marketing, finance, human resources, legal, information technology and other administrative personnel,outside marketing, advertising and legal expenses and other general and administrative costs.Advertising costs are expensed as incurred. During the years ended December 31, 2017, 2016 and 2015, advertisingcosts totaled $34.4 million, $24.0 million and $10.6 million, respectively.Share‑Based CompensationThe Company’s share‑based compensation programs grant awards which include stock options and restricted stock units(“RSUs”), which vest with the passage of time and, to a limited extent, vest based on the achievement of certain performancecriteria. The Company issues new shares upon stock option exercise or the vesting of RSUs. Certain of the Company’semployees are retirement eligible under the terms of the Company’s stock option plans (the “Plans”), and stock optionawards to these employees generally vest in full upon retirement. Since there are no effective future service requirements forthese employees, the fair value of these awards is expensed in full on the grant date or upon meeting the retirement eligibilitycriteria, whichever is later.Stock OptionsStock option grants to employees expire ten years from the grant date and generally vest one‑fourth per year over fouryears from the anniversary of the date of grant, provided the employee remains continuously employed with the Company,except as otherwise provided in the plan. Stock option grants to directors are for ten‑year terms and generally vest over aone‑year period provided the director continues to serve on the Company’s board of directors through the vesting date,except as otherwise provided in the plan. The estimated fair value of options is recognized over theF-15 Table of ContentsALKERMES PLC AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)requisite service period, which is generally the vesting period. Share‑based compensation expense is based on awardsultimately expected to vest. Forfeitures are estimated based on historical experience at the time of grant and revised insubsequent 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 valuationmodel. The Company uses historical data as the basis for estimating option terms and forfeitures. Separate groups ofemployees that have similar historical stock option exercise and forfeiture behavior are considered separately for valuationpurposes. The ranges of expected terms disclosed below reflect different expected behavior among certain groups ofemployees. Expected stock volatility factors are based on a weighted average of implied volatilities from traded options onthe Company’s ordinary shares and historical share price volatility of the Company’s ordinary shares, which is determinedbased on a review of the weighted average of historical daily price changes of the Company’s ordinary shares. The risk‑freeinterest rate for periods commensurate with the expected term of the share option is based on the U.S. treasury yield curve ineffect at the time of grant. The dividend yield on the Company’s ordinary shares is estimated to be zero as the Company hasnot paid and does not expect to pay dividends. The exercise price of options granted is equal to the closing price of theCompany’s ordinary shares traded on the Nasdaq Global Select Stock Market on the date of grant.The fair value of each stock option grant was estimated on the grant date with the following weighted‑averageassumptions: Year Ended December 31, 2017 2016 2015Expected option term 5 - 8 years 5 - 7 years 5 - 7 yearsExpected stock volatility 43 % - 47 % 39 % - 53 % 38 % - 46 %Risk-free interest rate 1.69 % - 2.38 % 0.95 % - 2.14 % 1.29 % - 2.02 %Expected annual dividend yield — — — Time‑Vested Restricted Stock UnitsTime‑vested RSUs awarded to employees generally vest one‑fourth per year over four years from the anniversary of thedate of grant, provided the employee remains continuously employed with the Company. Shares of the Company’s ordinaryshares are delivered to the employee upon vesting, subject to payment of applicable withholding taxes. The fair value oftime‑vested RSUs is equal to the closing price of the Company’s ordinary shares traded on the Nasdaq Global Select Marketon the date of grant. Compensation expense, including the effect of forfeitures, is recognized over the applicable serviceperiod.Performance-Based Restricted Stock UnitsPerformance-based RSUs awarded to employees vest upon the achievement of certain performance criteria. Theestimated fair value of these RSUs is based on the market value of the Company’s ordinary shares on the date of grant.Compensation expense for performance-based RSUs is recognized from the moment the Company determines theperformance criteria probable to the date the Company deems the event is likely to occur. Cumulative adjustments arerecorded quarterly to reflect subsequent changes in the estimated outcome of performance-related conditions until the dateresults are determined.Income TaxesThe Company recognizes income taxes under the asset and liability method. Deferred income taxes are recognized fordifferences between the financial reporting and tax bases of assets and liabilities at enacted statutory tax rates in effect for theyears in which the differences are expected to reverse. The effect on deferred taxes of a change in tax rates is recognized inincome in the period that includes the enactment date. In evaluating the Company’s ability to recover its deferred tax assets,the Company considers all available positive and negative evidence including its past operating results, the existence ofcumulative income in the most recent fiscal years, changes in the business in which the Company operates and its forecast offuture taxable income. In determining future taxable income, the Company is responsible for assumptions utilized includingthe amount of Irish, U.S. and other foreign pre‑tax operating income, the reversal of temporary differences and theimplementation of feasible and prudent tax planning strategies. These assumptions require significant judgment about theforecasts of future taxable income and are consistent with the plans and estimates that the Company is using to manage theunderlying businesses.F-16 Table of ContentsALKERMES PLC AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)The Company accounts for uncertain tax positions using a more‑likely‑than‑not threshold for recognizing and resolvinguncertain tax positions. The evaluation of uncertain tax positions is based on factors including, but not limited to, changes intax law, the measurement of tax positions taken or expected to be taken in tax returns, the effective settlement of matterssubject to audit, new audit activity and changes in facts or circumstances related to a tax position. The Company evaluatesits tax position on a quarterly basis. The Company also accrues for potential interest and penalties related to unrecognizedtax benefits in income tax expense.Comprehensive LossComprehensive loss consists of net loss and other comprehensive loss. Other comprehensive loss includes changes inequity that are excluded from net loss, such as unrealized holding gains and losses on available‑for‑sale marketablesecurities.Loss Per ShareBasic loss per share is calculated based upon net loss available to holders of ordinary shares divided by the weightedaverage number of ordinary shares outstanding. For the calculation of diluted earnings per share, the Company uses theweighted average number of ordinary shares outstanding, as adjusted for the effect of potential dilutive securities, includingstock options and RSUs.Segment InformationThe Company operates as one business segment, which is the business of developing, manufacturing andcommercializing medicines designed to yield better therapeutic outcomes and improve the lives of patients with seriousdiseases. The Company’s chief decision maker, the Chairman and Chief Executive Officer, reviews the Company’s operatingresults on an aggregate basis and manages the Company’s operations as a single operating unit.Employee Benefit Plans401(k) PlanThe Company maintains a 401(k) retirement savings plan (the “401(k) Plan”), which covers substantially all of itsU.S.‑based employees. Eligible employees may contribute up to 100% of their eligible compensation, subject to certainInternal Revenue Service (“IRS”) limitations. The Company matches 100% of employee contributions up to the first 5% ofemployee pay, up to IRS limits. Employee and Company contributions are fully vested when made. During the years endedDecember 31, 2017, 2016 and 2015, the Company contributed $9.8 million, $8.1 million and $6.6 million, respectively, tomatch employee deferrals under the 401(k) Plan.Defined Contribution PlanThe Company maintains a defined contribution plan for its Ireland‑based employees (the “Defined Contribution Plan”).The Defined Contribution Plan provides for eligible employees to contribute up to the maximum of 40%, depending upontheir age, of their total taxable earnings subject to an earnings cap of €115,000. The Company provides a match of up to 18%of taxable earnings depending upon an individual’s contribution level. During the years ended December 31, 2017, 2016and 2015, the Company contributed $3.7 million, $3.2 million and $3.0 million, respectively, in contributions to theDefined Contribution Plan.New Accounting PronouncementsFrom time to time, new accounting pronouncements are issued by the Financial Accounting Standards Board (“FASB”)or other standard‑setting bodies that are adopted by the Company as of the specified effective date. Unless otherwisediscussed, the Company believes that the impact of recently issued standards that are not yet effective will not have amaterial impact on its financial position or results of operations upon adoption.In May 2014, the FASB issued guidance that outlines a single comprehensive model for entities to use in accounting forrevenue arising from contracts with customers and supersedes most current revenue recognition guidance, includingindustry-specific guidance. The guidance is based on the principle that an entity should recognize revenue to depict thetransfer of goods or services to customers in an amount that reflects the consideration to which the entity expects to beF-17 Table of ContentsALKERMES PLC AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)entitled in exchange for those goods or services. The guidance also requires additional disclosure about the nature, amount,timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments andchanges in judgments and assets recognized from costs incurred to fulfill a contract. Numerous updates have been issuedsubsequent to the initial guidance that provide clarification on a number of specific issues and require additional disclosures.This guidance becomes effective for the Company in its year ending December 31, 2018 and the Company will adopt itusing the modified retrospective method. The Company has determined that the new guidance will necessitate a change inhow it records manufacturing revenue for certain of its arrangements with its licensees. Under current GAAP, the Companyrecords manufacturing revenue from the sale of products it manufactures for resale by its partners after the Company hasshipped such products and risk of loss has passed to the Company’s partner, assuming persuasive evidence of an arrangementexists, the sales price is fixed or determinable and collectability is reasonably assured. Under the new guidance, the termswithin certain of the Company’s manufacturing contracts will require that manufacturing revenue be recorded as products aremanufactured rather than upon shipment. Revenue earned under the Company’s other manufacturing contracts will continueto be recorded at a point in time, when control passes from the Company to the customer. The Company has determined thatthe adoption of this guidance will result in an immaterial change to its January 1, 2018 opening balance sheet and isevaluating the disclosure requirements under this new guidance.In January 2016, the FASB issued guidance that enhances the reporting model for financial instruments by addressingcertain aspects of recognition, measurement, presentation and disclosure of financial instruments. The amendments in thisguidance include: requiring equity securities to be measured at fair value with changes in fair value recognized through theincome statement; simplifying the impairment assessment of equity instruments without readily determinable fair values byrequiring a qualitative assessment to identify impairment; eliminating the requirement to disclose the fair value of financialinstruments measured at amortized cost for entities that are not public business entities; eliminating the requirement forpublic business entities to disclose the method(s) and significant assumptions used to estimate the fair value that is requiredto be disclosed for financial instruments measured at amortized cost on the balance sheet; requiring public business entitiesto use the exit price notion when measuring the fair value of financial instruments for disclosure purposes; requiring an entityto present separately in other comprehensive income the portion of the total change in the fair value of a liability resultingfrom a change in the instrument-specific credit risk when the entity has elected to measure the liability at fair value inaccordance with the fair value option for financial instruments; requiring separate presentation of financial assets andfinancial liabilities by measurement category and form of financial asset; and clarifying that an entity should evaluate theneed for a valuation allowance on a deferred tax asset related to available-for-sale securities in combination with the entity’sother deferred tax assets. This guidance becomes effective for the Company in its year ending December 31, 2018, and theCompany has determined that the adoption of this standard will not have a material impact on its consolidated financialstatements.In February 2016, the FASB issued guidance to increase transparency and comparability among organizations byrecognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements.The main difference between previous GAAP and this guidance is the recognition of lease assets and lease liabilities bylessees for those leases classified as operating leases under previous GAAP. This guidance becomes effective for theCompany in its year ending December 31, 2019, and the Company is currently assessing the impact that this guidance willhave on its consolidated financial statements.In March 2016, the FASB issued guidance as part of its simplification initiative to eliminate the requirement toretroactively adopt the equity method of accounting when an investment qualifies for the use of the equity method as a resultof an increase in the level of ownership interest or degree of influence. This guidance became effective for the Company onJanuary 1, 2017, and the adoption of this guidance did not have an impact on the Company’s consolidated financialstatements.In March 2016, the FASB issued guidance as part of its simplification initiative that involves several aspects of theaccounting for share-based payment transactions. The amendments in this update established that: (i) all excess tax benefitsand tax deficiencies be recognized as income tax expense or benefit in the income statement; (ii) excess tax benefits beclassified as an operating activity in the statement of cash flows; (iii) the entity make an entity-wide accounting policyelection to either estimate the number of awards that are expected to vest, which is current GAAP, or account for forfeitures asthey occur; (iv) the threshold to qualify for equity classification permits withholding up to the maximum statutory tax ratesin the applicable jurisdictions; and (v) cash paid by an employer when directly withholding shares for tax withholdingpurposes be classified as a financing activity in the statement of cash flows. This guidanceF-18 Table of ContentsALKERMES PLC AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)became effective for the Company on January 1, 2017. The amendments related to (i), (iii) and (iv) were adopted by theCompany on a modified retrospective basis, which resulted in a cumulative-effect adjustment to reduce accumulated deficitby $61.5 million related to the timing of when excess tax benefits are recognized. The Company elected to continue torecord expense only for those awards that are expected to vest. The amendments related to (ii) and (v) were adopted using theprospective transition method.In June 2016, the FASB issued guidance to provide financial statement users with more decision-useful informationabout the expected credit losses on financial instruments and other commitments to extend credit held by a reporting entityat each reporting date. To achieve this objective, the amendments in this guidance replace the incurred loss impairmentmethodology in current GAAP with a methodology that reflects expected credit losses and requires consideration of abroader range of reasonable and supportable information to inform credit loss estimates. This guidance becomes effective forthe Company in its year ending December 31, 2020, with early adoption permitted for the Company in its year endingDecember 31, 2019. The Company is currently assessing the impact that this guidance will have on its consolidated financialstatements.In August 2016, the FASB issued guidance to address diversity in practice in how certain cash receipts and cashpayments are presented and classified in the statement of cash flows. This guidance becomes effective for the Company in itsyear ending December 31, 2018, with early adoption permitted. The Company elected to early adopt this guidance as ofJanuary 1, 2017. The adoption of this guidance had no impact on the Company’s statement of cash flows.In October 2016, the FASB issued guidance to simplify and improve accounting on transfers of assets between affiliatedentities. The updated guidance eliminates the prohibition for all intra-entity asset transfers, except for inventory. Thisguidance becomes effective for the Company in its year ending December 31, 2018, and upon adoption of the new standard,a cumulative-effect adjustment of approximately $0.9 million will be recorded within retained earnings, related to thereversal of an unamortized deferred tax charge on a prior sale of intellectual property between Alkermes, Inc. and AlkermesPharma Ireland Limited.In January 2017, the FASB issued guidance to clarify the definition of a business with the objective of adding guidanceto assist entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets orbusinesses. This guidance becomes effective for the Company in its year ending December 31, 2018, with early adoptionpermitted for transactions that occurred before the issuance date or effective date of the guidance if the transactions were notreported in financial statements that have been issued or made available for issuance. The Company elected to early adoptthis guidance, as of January 1, 2017. The adoption of this guidance had no impact on the Company’s consolidated financialstatements.In January 2017, the FASB issued guidance that simplifies the test for goodwill impairment. This guidance removes Step2 of the goodwill impairment test, which requires a hypothetical purchase price allocation. Under the amended guidance, agoodwill impairment charge will now be recognized for the amount by which the carrying value of a reporting unit exceedsits fair value, not to exceed the carrying amount of goodwill. This guidance is effective for the Company in its year endingDecember 31, 2020, with early adoption permitted for any impairment tests performed after January 1, 2017. The Companyelected to early adopt this guidance as of January 1, 2017. The adoption of this guidance had no impact on the Company’sconsolidated financial statements.In May 2017, the FASB issued guidance that amends the scope of modification accounting for share-based paymentarrangements to address both diversity in practice and the cost and complexity of accounting for the change to the terms orconditions of a share-based payment award. The amendment provides guidance about which changes to the terms orconditions of a share-based payment award require an entity to apply modification accounting. The guidance becomeseffective for the Company in its year ending December 31, 2018 and early adoption is permitted. The standard may impactthe Company in future periods if modifications are made to certain of its share-based awards.In July 2017, the FASB issued guidance that addresses narrow issues identified as a result of the complexity associatedwith applying GAAP for certain financial instruments with characteristics of liabilities and equity. The guidance becomeseffective for the Company in its year ending December 31, 2019 and early adoption is permitted. The Company is currentlyassessing the impact that this guidance will have on its consolidated financial statements.F-19 Table of ContentsALKERMES PLC AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)3. INVESTMENTSInvestments consist of the following: Gross Unrealized Losses Amortized Less than Greaterthan EstimatedDecember 31, 2017 Cost Gains One Year One Year Fair ValueShort-term investments: Available-for-sale securities: U.S. government and agency debt securities $150,673 $ 1 $(130) $(233) $150,311Corporate debt securities 56,552 3 (48) (10) 56,497International government agency debt securities 35,478 1 (54) (25) 35,400Total short-term investments 242,703 5 (232) (268) 242,208Long-term investments: Available-for-sale securities: Corporate debt securities 83,924 — (300) (34) 83,590U.S. government and agency debt securities 48,948 — (270) (71) 48,607International government agency debt securities 21,453 — (118) — 21,335 154,325 — (688) (105) 153,532Held-to-maturity securities: Fixed term deposit account 1,667 222 — — 1,889Certificates of deposit 1,791 — — — 1,791 3,458 222 — — 3,680Total long-term investments 157,783 222 (688) (105) 157,212Total investments $400,486 $227 $(920) $(373) $399,420 December 31, 2016 Short-term investments: Available-for-sale securities: U.S. government and agency debt securities $177,203 $96 $(51) $ — $177,248Corporate debt securities 128,119 47 (53) — 128,113International government agency debt securities 5,511 — (16) — 5,495Total short-term investments 310,833 143 (120) — 310,856Long-term investments: Available-for-sale securities: U.S. government and agency debt securities 81,839 — (391) — 81,448Corporate debt securities 31,223 — (89) — 31,134International government agency debt securities 5,992 — (18) — 5,974 119,054 — (498) — 118,556Held-to-maturity securities: Fixed term deposit account 1,667 — (7) — 1,660Certificates of deposit 1,715 — — — 1,715 3,382 — (7) — 3,375Total long-term investments 122,436 — (505) — 121,931Total investments $433,269 $143 $(625) $ — $432,787 Realized gains and losses on the sales and maturities of marketable securities, which were identified using the specificidentification method, were as follows: Year Ended December 31, (In thousands) 2017 2016 2015Proceeds from the sales and maturities of marketable securities $464,494 $560,805 $467,573Realized gains $ 9 $206 $111Realized losses $ 3 $28 $ 3 F-20 Table of ContentsALKERMES PLC AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)The Company’s available‑for‑sale and held‑to‑maturity securities at December 31, 2017 had contractual maturities in thefollowing periods: Available-for-sale Held-to-maturity Amortized Estimated Amortized Estimated(In thousands) Cost Fair Value Cost Fair ValueWithin 1 year $234,771 $234,273 $1,791 $1,791After 1 year through 5 years 162,257 161,467 1,667 1,889Total $397,028 $395,740 $3,458 $3,680 At December 31, 2017, the Company believed that the unrealized losses on its available-for-sale investments weretemporary. The investments with unrealized losses consisted of U.S. government and agency debt securities, corporate debtsecurities and international government agency debt securities. The unrealized losses are a result of market conditions relatedto increasing interest rates. In making the determination that the decline in fair value of these securities was temporary, theCompany considered various factors, including, but not limited to: the length of time each security was in an unrealized lossposition; the extent to which fair value was less than cost; financial condition and near-term prospects of the issuers; and theCompany’s intent not to sell these securities and the assessment that it is more likely than not that the Company would notbe required to sell these securities before the recovery of their amortized cost basis.In February 2016, the Company entered into a collaboration and license option agreement with Reset Therapeutics, Inc.(“Reset”), a related party. The Company made an upfront, non-refundable payment of $10.0 million in partial considerationof the grant to the Company of the rights and licenses included in such agreement, which was included in R&D expense inthe three months ended March 31, 2016, and simultaneously made a $15.0 million investment in exchange for shares ofReset’s Series B Preferred Stock. The Company was accounting for its investment in Reset under the equity method based onits percentage of ownership, its seat on the board of directors and its belief that it can exert significant influence over theoperating and financial policies of Reset.In September 2017, the Company recorded an other-than-temporary impairment charge of $10.5 million within “Otherincome (expense), net” in the accompanying consolidated statements of operations and comprehensive loss, whichrepresented the Company’s remaining investment in Reset, as the Company believes that Reset is unable to generate futureearnings that justify the carrying amount of the investment. During the years ended December 31, 2017 and 2016, theCompany recorded a reduction in its investment in Reset of $2.8 million and $1.7 million, respectively, which representedthe Company’s proportional share of Reset’s net loss for the periods. The Company’s $13.3 million investment at December31, 2016 was included within “Other assets” in the accompanying consolidated balance sheets.In May 2014, the Company entered into an agreement whereby it is committed to provide up to €7.4 million to apartnership, Fountain Healthcare Partners II, L.P. of Ireland (“Fountain”), which was created to carry on the business ofinvesting exclusively in companies and businesses engaged in the healthcare, pharmaceutical and life sciences sectors. As ofDecember 31, 2017, the Company’s total contribution in Fountain was equal to €3.7 million, and its commitment representsapproximately 7% of the partnership’s total funding. The Company is accounting for its investment in Fountain under theequity method. During the years ended December 31, 2017, 2016 and 2015, the Company recorded a reduction in itsinvestment in Fountain of $0.1 million, $0.4 million and $0.2 million, respectively, which represented the Company’sproportional share of Fountain’s net loss for the period.F-21 Table of ContentsALKERMES PLC AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)4. FAIR VALUEThe following table presents information about the Company’s assets and liabilities that are measured at fair value on arecurring basis and indicates the fair value hierarchy and the valuation techniques the Company utilized to determine suchfair value: December 31, (In thousands) 2017 Level 1 Level 2 Level 3Assets: Cash equivalents $1,889 $1,889 $ — $ —U.S. government and agency debt securities 198,918 124,958 73,960 —Corporate debt securities 140,087 — 140,087 —International government agency debt securities 56,735 — 56,735 —Contingent consideration 84,800 — — 84,800Common stock warrants 1,395 — — 1,395Total $483,824 $126,847 $270,782 $86,195 December 31, 2016 Level 1 Level 2 Level 3Assets: Cash equivalents $1,660 $1,660 $ — $ —U.S. government and agency debt securities 258,696 156,370 102,326 —Corporate debt securities 159,247 — 159,247 —International government agency debt securities 11,469 — 11,469 —Contingent consideration 63,200 — — 63,200Common stock warrants 1,392 — — 1,392Total $495,664 $158,030 $273,042 $64,592 The Company transfers its financial assets and liabilities, measured at fair value on a recurring basis, between the fairvalue hierarchies at the end of each reporting period.There were no transfers of any securities from Level 1 to Level 2 or from Level 2 to Level 1 during the year endedDecember 31, 2017. The following table is a rollforward of the fair value of the Company’s investments whose fair value wasdetermined using Level 3 inputs at December 31, 2017:(In thousands) Fair ValueBalance, January 1, 2017 $64,592Increase in the fair value of contingent consideration 21,600Increase in the fair value of warrants 3Balance, December 31, 2017 $86,195 The Company’s investments in U.S. government and agency debt securities, international government agency debtsecurities and corporate debt securities classified as Level 2 within the fair value hierarchy were initially valued at thetransaction price and subsequently valued, at the end of each reporting period, utilizing market-observable data. The market-observable data included reportable trades, benchmark yields, credit spreads, broker/dealer quotes, bids, offers, current spotrates and other industry and economic events. The Company validated the prices developed using the market-observabledata by obtaining market values from other pricing sources, analyzing pricing data in certain instances and confirming thatthe relevant markets are active.The carrying amounts reflected in the consolidated balance sheets for cash and cash equivalents, receivables, othercurrent assets, accounts payable and accrued expenses approximate fair value due to their short‑term nature. The fair value ofthe remaining financial instruments not currently recognized at fair value on the Company’s consolidated balance sheets atDecember 31, 2017 consisted of a $300.0 million term loan, bearing interest at LIBOR plus 2.75% with a LIBOR floor of0.75% and maturity of September 25, 2021 (“Term Loan B‑1”). The estimated fair value of Term Loan B-1, which was basedon quoted market price indications (Level 2 in the fair value hierarchy) and which may not be representative of actual valuesthat could have been, or will be, realized in the future, was as follows at December 31, 2017: Carrying Estimated(In thousands) Value Fair ValueTerm Loan B-1 $281,436 $285,671F-22 Table of ContentsALKERMES PLC AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) 5. INVENTORYInventory consists of the following: December 31, December 31, (In thousands) 2017 2016Raw materials $29,883 $19,413Work in process 38,964 21,811Finished goods 24,428 21,774Total inventory $93,275 $62,998(1)At December 31, 2017 and 2016, the Company had $8.7 million and $7.1 million, respectively, of finished goodsinventory located at its third‑party warehouse and shipping service provider.6. PROPERTY, PLANT AND EQUIPMENTProperty, plant and equipment consist of the following: December 31, December 31, (In thousands) 2017 2016Land $6,293 $5,913Building and improvements 155,198 152,871Furniture, fixtures and equipment 289,455 251,437Leasehold improvements 19,578 19,241Construction in progress 54,270 41,254Subtotal 524,794 470,716Less: accumulated depreciation (240,058) (205,931)Total property, plant and equipment, net $284,736 $264,785 Depreciation expense was $36.5 million, $33.3 million and $27.9 million for the years ended December 31, 2017, 2016and 2015, respectively. Also, during the years ended December 31, 2017, 2016 and 2015, the Company wrote off furniture,fixtures and equipment that had a carrying value of $0.1 million, $0.9 million and $0.1 million, respectively, at the time ofdisposition.Amounts included as construction in progress in the consolidated balance sheets primarily include capital expendituresat the Company’s manufacturing facility in Wilmington, Ohio. The Company continues to evaluate its manufacturingcapacity based on expectations of demand for its products and will continue to record such amounts within construction inprogress until such time as the underlying assets are placed into service. The Company continues to periodically evaluatewhether facts and circumstances indicate that the carrying value of its long‑lived assets to be held and used may not berecoverable. 7. GOODWILL AND INTANGIBLE ASSETSGoodwill and intangible assets consist of the following: Year Ended Year Ended December 31, 2017 December 31, 2016(In thousands) WeightedAmortizableLife (Years) GrossCarryingAmount AccumulatedAmortization NetCarrying Amount GrossCarryingAmount AccumulatedAmortization NetCarrying AmountGoodwill $92,873 $ — $92,873 $92,873 $ — $92,873Finite-lived intangible assets: Collaboration agreements 12 $465,590 $(269,392) $196,198 $465,590 $(218,318) $247,272NanoCrystal technology 13 74,600 (31,283) 43,317 74,600 (24,384) 50,216OCR technologies 12 42,560 (25,907) 16,653 42,560 (21,821) 20,739Total $582,750 $(326,582) $256,168 $582,750 $(264,523) $318,227 The Company’s finite‑lived intangible assets consist of collaborative agreements and the NanoCrystal and OCRtechnologies acquired as part of the EDT acquisition. The Company recorded $62.1 million, $61.0 million and $57.7 millionof amortization expense related to its finite‑lived intangible assets during the years ended December 31, 2017,F-23 (1)Table of ContentsALKERMES PLC AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)2016 and 2015, respectively. Based on the Company’s most recent analysis, amortization of intangible assets includedwithin its consolidated balance sheets at December 31, 2017 is expected to be approximately $65.0 million, $55.0 million,$50.0 million, $40.0 million and $35.0 million in the years ending December 31, 2018 through 2022, respectively. Althoughthe Company believes such available information and assumptions are reasonable, given the inherent risks and uncertaintiesunderlying its expectations regarding such future revenues, there is the potential for the Company’s actual results to varysignificantly from such expectations. If revenues are projected to change, the related amortization of the intangible assetswill change in proportion to the change in revenues.The Company performed its annual goodwill impairment test as of October 31, 2017. The Company elected to assessqualitative factors to determine whether it was necessary to perform the qualitative impairment test. Based on the weight ofall available evidence, the Company determined that the fair value of each reporting unit more-likely-than-not exceeded itscarrying value. 8. ACCOUNTS PAYABLE AND ACCRUED EXPENSESAccounts payable and accrued expenses consist of the following: December 31, December 31, (In thousands) 2017 2016Accounts payable $55,526 $46,275Accrued compensation 54,568 45,622Accrued sales discounts, allowances and reserves 111,137 60,973Accrued other 64,935 54,185Total accounts payable and accrued expenses $286,166 $207,0559. LONG‑TERM DEBTLong‑term debt consists of the following: December 31, December 31, (In thousands) 2017 2016Term Loan B-1, due September 25, 2021 $281,436 $283,666Less: current portion (3,000) (3,000)Long-term debt $278,436 $280,666 Term LoansTerm Loan B‑1 was issued with a principal balance of $300.0 million, interest payable of LIBOR plus 2.75% with aLIBOR floor of 0.75%, and an original issue discount of $3.0 million. Term Loan B‑1 amortizes in equal quarterly amountsof 0.25% of the original principal amount of the loan, with the balance payable at maturity. In October 2016, the Companyamended Term Loan B-1, which, among other things, extended the due date from September 25, 2019 to September 25, 2021(the “Refinancing”).The Refinancing involved multiple lenders who were considered members of a loan syndicate. In determining whetherthe Refinancing was to be accounted for as a debt extinguishment or a debt modification, the Company considered whethercreditors remained the same or changed and whether the changes in debt terms were substantial. A change in the debt termswas considered to be substantial if the present value of the remaining cash flows under the new terms of Term Loan B-1 are atleast 10% different from the present value of the remaining cash flows under the original terms of Term Loan B-1 (commonlyreferred to as the “10% Test”). The Company performed a separate 10% Test for each individual creditor participating in theloan syndication. The loans of any creditors no longer participating in the loan syndication were accounted for as a debtextinguishment. The Refinancing resulted in a $2.1 million charge in the three months ended December 31, 2016, which wasincluded in “Interest expense” in the accompanying consolidated statement of operations and comprehensive loss.A second term loan was issued with a principal balance of $75.0 million, interest payable of LIBOR plus 2.75% with noLIBOR floor, and an original issue discount of $0.4 million (“Term Loan B-2”). Term Loan B-2 amortized in equal quarterlyamounts of 1.25% of the original principal amount of the loan, with the balance payable at maturity. In September 2016,Term Loan B-2 matured and the Company repaid the outstanding principal balance of $60.9 million in its entirety.F-24 Table of ContentsALKERMES PLC AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)Term Loan B-1 is guaranteed by certain subsidiaries of the Company (the “Guarantors”) and is secured by a first prioritylien on substantially all of the assets and properties of the Company and the Guarantors (subject to certain exceptions andlimitations).Scheduled maturities with respect to Term Loan B-1 are as follows (in thousands):Year Ending December 31: 2018 $3,0002019 3,0002020 3,0002021 275,250Total $284,250 Beginning on January 1, 2014, the Company became subject to mandatory prepayments of principal if certain excesscash flow thresholds, as defined in Term Loan B-1, were met.Term Loan B-1 has an incremental facility capacity in an amount of $140.0 million, plus additional amounts as long asthe Company meets certain conditions, including a specified leverage ratio. Term Loan B-1 includes a number of restrictivecovenants that, among other things and subject to certain exceptions and baskets, impose operating and financial restrictionson the Company and certain of its subsidiaries. Term Loan B-1 also contains customary affirmative covenants and events ofdefault. The Company was in compliance with its debt covenants at December 31, 2017.At December 31, 2017, the Company’s balance of unamortized deferred financing costs and unamortized original issuediscount costs were $1.0 million and $1.8 million, respectively. These costs are being amortized to interest expense over theestimated repayment period of Term Loan B-1 using the effective interest method. During the years ended December 31,2017, 2016 and 2015, the Company had amortization expense of $0.8 million, $0.9 million and $0.9 million, respectively,related to deferred financing costs and original issue discount.10. LOSS PER SHAREBasic loss per ordinary share is calculated based upon net loss available to holders of ordinary shares divided by theweighted average number of shares outstanding. For the years ended December 31, 2017, 2016 and 2015, as the Companywas in a net loss position, the diluted loss per share did not assume conversion or exercise of stock options and awards asthey would have an anti-dilutive effect on loss per share.The following potential ordinary equivalent shares were not included in the net loss per ordinary share calculationbecause the effect would have been anti-dilutive: Year Ended December 31, (In thousands) 2017 2016 2015Stock options 9,540 10,166 9,179Restricted stock units 2,119 1,320 1,351Total 11,659 11,486 10,530 11. SHAREHOLDERS’ EQUITYShare Repurchase ProgramOn September 16, 2011, the board of directors authorized the continuation of the Alkermes, Inc. share repurchaseprogram to repurchase up to $215.0 million of the Company’s ordinary shares at the discretion of management from time totime in the open market or through privately negotiated transactions. At December 31, 2017, approximately $101.0 millionwas available to repurchase ordinary shares pursuant to the repurchase program. All shares repurchased are recorded astreasury stock. The repurchase program has no set expiration date and may be suspended or discontinued at any time. Duringthe years ended December 31, 2017 and 2016, the Company did not acquire any ordinary shares under the repurchaseprogram.F-25 Table of ContentsALKERMES PLC AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)12. SHARE‑BASED COMPENSATIONShare‑based Compensation ExpenseThe following table presents share‑based compensation expense included in the Company’s consolidated statements ofoperations and comprehensive loss: Year Ended December 31, (In thousands) 2017 2016 2015Cost of goods manufactured and sold $7,596 $8,633 $8,880Research and development 22,635 24,023 24,201Selling, general and administrative 53,686 61,740 64,260Total share-based compensation expense $83,917 $94,396 $97,341 During the years ended December 31, 2017, 2016 and 2015, $0.4 million, $1.1 million and $1.1 million, respectively, ofshare‑based compensation expense was capitalized and recorded as “Inventory” in the accompanying consolidated balancesheets.Share‑Based Compensation PlansThe Company has two compensation plans pursuant to which awards are currently being made: (i) the 2011 StockOption and Incentive Plan (the “2011 Plan”); and (ii) the 2008 Stock Option and Incentive Plan (the “2008 Plan”). TheCompany has two share‑based compensation plans pursuant to which outstanding awards have been made, but from whichno further awards can or will be made: (i) the 1999 Stock Option Plan (the "1999 Plan"); and (ii) the 2006 Stock Option Planfor Non-Employee Directors (the "2006 Plan"). The 2011 Plan and the 2008 Plan provide for the issuance of non-qualifiedand incentive stock options, restricted stock, restricted stock units, cash-based awards and performance shares to employees,officers and directors of, and consultants to, the Company in such amounts and with such terms and conditions as may bedetermined by the compensation committee of the Company's board of directors, subject to provisions of the 2011 Plan andthe 2008 Plan.At December 31, 2017, there were 9.5 million ordinary shares authorized for issuance under the Company’s stock plans.The 2011 Plan provides that awards other than stock options will be counted against the total number of shares availableunder the plan in a 1.8-to‑1 ratio and the 2008 Plan provides that awards other than stock options will be counted against thetotal number of shares available under the plan in a 2‑to‑1 ratio.Stock OptionsA summary of stock option activity is presented in the following table: Number of WeightedAverage Shares Exercise PriceOutstanding, January 1, 2017 14,202,167 $33.17Granted 2,030,075 $55.04Exercised (1,135,670) $20.95Forfeited (266,433) $51.81Expired (56,727) $68.97Outstanding, December 31, 2017 14,773,412 $36.64Exercisable, December 31, 2017 9,692,044 $29.57 The weighted average grant date fair value of stock options granted during the years ended December 31, 2017, 2016and 2015 was $25.81, $17.11 and $28.88, respectively. The aggregate intrinsic value of stock options exercised during theyears ended December 31, 2017, 2016 and 2015 was $40.4 million, $35.0 million and $127.7 million, respectively.At December 31, 2017, there were 5.0 million stock options expected to vest with a weighted average exercise price of$50.09 per share, a weighted average contractual remaining life of 8.3 years and an aggregate intrinsic value of$39.0 million. At December 31, 2017, the aggregate intrinsic value of stock options exercisable was $259.1 million with aweighted average remaining contractual term of 4.7 years. The number of stock options expected to vest was determined byapplying the pre‑vesting forfeiture rate to the total outstanding options. The intrinsic value of a stock option is the amountby which the market value of the underlying stock exceeds the exercise price of the stock option.F-26 Table of ContentsALKERMES PLC AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)At December 31, 2017, there was $50.6 million of unrecognized compensation cost related to unvested stock options,which is expected to be recognized over a weighted average period of 1.9 years. Cash received from option exercises underthe Company’s award plans during the years ended December 31, 2017, 2016 and 2015 was $23.5 million, $20.3 million and$45.0 million, respectively.Time‑Vested Restricted Stock UnitsA summary of time‑vested RSU activity is presented in the following table: Number of Weighted Average Shares Grant DateFair ValueUnvested, January 1, 2017 2,074,416 $42.60Granted 703,630 $54.85Vested (730,085) $43.14Forfeited (111,153) $44.73Unvested, December 31, 2017 1,936,808 $46.72 The weighted average grant date fair value of time‑vested RSUs granted during the years ended December 31, 2017,2016 and 2015 were $54.85, $32.27 and $71.16, respectively. The total fair value of time‑vested RSUs that vested duringthe years ended December 31, 2017, 2016 and 2015, was $31.5 million, $26.0 million and $21.3 million, respectively.At December 31, 2017, there was $34.4 million of total unrecognized compensation cost related to unvested time‑vestedRSUs, which will be recognized over a weighted average remaining contractual term of 1.9 years.Performance-Based Restricted Stock UnitsIn February 2017, the board of directors approved awards of performance-based restricted stock units (“PRSUs”) to allemployees employed by the Company during 2017, in each case subject to vesting on the achievement of two future keymilestones in the Company’s clinical-stage pipeline and the achievement of a revenue-related goal; provided that, if anysuch vesting event occurs during the first year after grant, the vesting of the PRSU award will not occur until the one-yearanniversary of the grant date. The award will expire if the performance conditions have not been met on or before the three-year anniversary of the grant date.A summary of PRSU activity is presented in the following table: Number of Weighted Average Shares Grant Date Fair ValueUnvested, January 1, 2017 — $ —Granted 1,169,949 $54.73Forfeited (60,700) $54.78Vested (596) $54.57Unvested, December 31, 2017 1,108,653 $54.72 The grant date fair value of the PRSUs was equal to the market value of the Company’s stock on the date of grant. AtDecember 31, 2017, the Company does not consider it probable that the performance criteria will be met and has notrecognized any share-based compensation expense related to these PRSUs. At December 31, 2017, there was $60.7 million ofunrecognized compensation cost related to these PRSUs, which would be recognized in accordance with the terms of theaward when the Company deems it probable that the performance criteria will be met.F-27 Table of ContentsALKERMES PLC AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)13. COLLABORATIVE ARRANGEMENTSThe Company has entered into several collaborative arrangements to develop and commercialize products and, inconnection with such arrangements, to access technologies, financial, marketing, manufacturing and other resources. Referto the “Patents and Proprietary Rights” section in “Part I, Item 1— Business” of this Annual Report for information withrespect to intellectual property protection for these products. The collaboration revenue the Company has earned in the yearsended December 31, 2017, 2016 and 2015 is as follows: Year Ended December 31, (In thousands) 2017 2016 2015MANUFACTURING AND ROYALTY REVENUE: Significant collaborative arrangements $462,568 $431,302 $401,236All other collaborative arrangements 42,740 55,945 74,052Total manufacturing and royalty revenue $505,308 $487,247 $475,288 LICENSE REVENUE: Significant collaborative arrangements $28,000 $ — $ —Total research and development revenue $28,000 $ — $ — RESEARCH AND DEVELOPMENT REVENUE: Significant collaborative arrangements $2,314 $403 $582All other collaborative arrangements 4,918 1,898 3,437Total research and development revenue $7,232 $2,301 $4,019 The Company’s significant collaborative arrangements are described below:JanssenINVEGA SUSTENNA/XEPLION and INVEGA TRINZA/TREVICTAUnder its license agreement with Janssen Pharmaceutica N.V., the Company granted Janssen a worldwide exclusivelicense under its NanoCrystal technology to develop, commercialize and manufacture INVEGA SUSTENNA/XEPLION andINVEGA TRINZA/TREVICTA and related products.Under this license agreement, the Company received milestone payments upon the achievement of certain developmentgoals from Janssen; there are no further milestones to be earned under this agreement. The Company receives tiered royaltypayments between 5% and 9% of INVEGA SUSTENNA/XEPLION and INVEGA TRINZA/TREVICTA end-market net sales ineach country where the license is in effect, with the exact royalty percentage determined based on aggregate worldwide netsales. The tiered royalty payments consist of a patent royalty and a know‑how royalty, both of which are determined on acountry‑by‑country basis. The patent royalty, which equals 1.5% of net sales, is payable in each country until the expirationof the last of the patents claiming the product in such country. The know‑how royalty is a tiered royalty of 3.5%, 5.5% and7.5% 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 first commercial sale of a productin 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 patent litigation or on competing products achieving certain minimumsales thresholds. The license agreement expires upon the later of (i) March 31, 2019 or (ii) the expiration of the last of thepatents subject to the agreement. 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 the Company. TheCompany and Janssen have the right to terminate the agreement upon a material breach of the other party, which is not curedwithin a certain time period, or upon the other party’s bankruptcy or insolvency.Under its agreements with Janssen, the Company recognized royalty revenues from the end-market net sales of INVEGASUSTENNA/XEPLION and INVEGA TRINZA/TREVICTA of $214.9 million, $184.2 million and $149.7 million during theyears ended December 31, 2017, 2016 and 2015, respectively.F-28 Table of ContentsALKERMES PLC AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)RISPERDAL CONSTAUnder a product development agreement, the Company collaborated with Janssen on the development of RISPERDALCONSTA. Under the development agreement, Janssen provided funding to the Company for the development ofRISPERDAL CONSTA and Janssen is responsible for securing all necessary regulatory approvals for the product.Under two license agreements, the Company granted Janssen and an affiliate of Janssen exclusive worldwide licenses touse and sell RISPERDAL CONSTA. Under its license agreements with Janssen, the Company receives royalty paymentsequal to 2.5% of Janssen’s end-market net sales of RISPERDAL CONSTA in each country where the license is in effect basedon the quarter when the product is sold by Janssen. This royalty may be reduced in any country based on lack of patentcoverage and significant competition from generic versions of the product. Janssen can terminate the license agreementsupon 30 days’ prior written notice to the Company. Either party may terminate the license agreements by written noticefollowing a breach which continues for 90 days after the delivery of written notice thereof or upon the other party’sinsolvency. The licenses granted to Janssen expire on a country‑by‑country basis upon the later of: (i) the expiration of thelast patent claiming the product in such country; or (ii) 15 years after the date of the first commercial sale of the product insuch country, provided that in no event will the license granted to Janssen expire later than the twentieth anniversary of thefirst commercial sale of the product in each such country, with the exception of Canada, France, Germany, Italy, Japan, Spainand the United Kingdom, in each case where the fifteen‑year minimum shall pertain regardless. After expiration, Janssenretains a non‑exclusive, royalty‑free license to manufacture, use and sell RISPERDAL CONSTA.The Company exclusively manufactures RISPERDAL CONSTA for commercial sale. Under its manufacturing andsupply agreement with Janssen, the Company records manufacturing revenues when product is shipped to Janssen, based ona percentage of Janssen’s net unit sales price for RISPERDAL CONSTA for the applicable calendar year. This percentage isdetermined based on Janssen’s unit demand for such calendar year and varies based on the volume of units shipped, with aminimum manufacturing fee of 7.5%. The manufacturing and supply agreement terminates on expiration of the licenseagreements. In addition, either party may terminate the manufacturing and supply agreement upon a material breach by theother party, which is not resolved within 60 days after receipt of a written notice specifying the material breach or uponwritten notice in the event of the other party’s insolvency or bankruptcy. Janssen may terminate the agreement upon sixmonths’ written notice to the Company. In the event that Janssen terminates the manufacturing and supply agreementwithout terminating the license agreements, the royalty rate payable to the Company on Janssen’s net sales of RISPERDALCONSTA would increase from 2.5% to 5.0%.Under its agreements with Janssen, the Company recognized manufacturing revenues related to RISPERDAL CONSTAof $64.8 million, $64.9 million and $76.5 million during the years ended December 31, 2017, 2016 and 2015, respectively.Under its agreements with Janssen, the Company recognized royalty revenues related to RISPERDAL CONSTA of $20.1million, $22.3 million and $24.2 million during the years ended December 31, 2017, 2016 and 2015, respectively.AcordaUnder an amended and restated license agreement, the Company granted Acorda an exclusive worldwide license to useand sell and, solely in accordance with its supply agreement, to make or have made AMPYRA/FAMPYRA. The Companyreceives certain commercial and development milestone payments, license revenues and a royalty of approximately 10%based on net sales of AMPYRA/FAMPYRA by Acorda and its sub‑licensee, Biogen. This royalty payment may be reduced inany country based on lack of patent coverage, competing products achieving certain minimum sales thresholds and whetherAlkermes manufactures the product.In June 2009, the Company entered into an amendment of the amended and restated license agreement and the supplyagreement with Acorda and, pursuant to such amendment, consented to the sublicense by Acorda to Biogen of Acorda’srights to use and sell FAMPYRA in certain territories outside of the U.S. (to the extent that such rights were to be sublicensedto Biogen pursuant to its separate collaboration and license agreement with Acorda). Under this amendment, the Companyagreed to modify certain terms and conditions of the amended and restated license agreement and the supply agreement withAcorda to reflect the sublicense by Acorda to Biogen.Acorda has the right to terminate the amended and restated license agreement upon 90 days’ written notice. TheCompany has the right to terminate the amended and restated license agreement for countries in which Acorda fails toF-29 Table of ContentsALKERMES PLC AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)launch a product within a specified time after obtaining the necessary regulatory approval or fails to file regulatory approvalswithin a commercially reasonable time after completion of and receipt of positive data from all pre-clinical and clinicalstudies required for filing a marketing authorization application. Either party has the right to terminate the amended andrestated license agreement by written notice following a material breach of the other party, which is not cured within a certaintime period, or upon the other party’s entry into bankruptcy or dissolution proceedings. If the Company terminates Acorda'slicense in any country, the Company is entitled to a license from Acorda of its patent rights and know-how relating to theproduct as well as the related data, information and regulatory files, and to market the product in the applicable country,subject to an initial payment equal to Acorda's cost of developing such data, information and regulatory files and to ongoingroyalty payments to Acorda. Subject to the termination of the amended and restated license agreement, licenses grantedunder the license agreement terminate on a country-by-country basis on the later of (i) September 26, 2018 or (ii) theexpiration 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 suppliesAMPYRA/FAMPYRA for Acorda (and its sub‑licensee, Biogen). Under the terms of the agreement, Acorda may obtain up to25% of its total annual requirements of product from a second‑source manufacturer. The Company receives manufacturingroyalties equal to 8% of net selling price for all product manufactured by it and a compensating payment for productmanufactured and supplied by a third party. The Company may terminate the commercial manufacturing supply agreementupon 12 months’ prior written notice to Acorda and either party may terminate the commercial manufacturing supplyagreement following a material and uncured breach of the commercial manufacturing supply agreement or amended andrestated license agreement or the entry into bankruptcy or dissolution proceedings by the other party. In addition, subject toearly termination of the commercial manufacturing supply agreement noted above, the commercial manufacturing supplyagreement terminates upon the expiry or termination of the amended and restated license agreement.The Company is entitled to receive the following milestone payments under its amended and restated license agreementwith Acorda for each of the third and fourth new indications of the product developed thereunder:●initiation of a phase 3 clinical trial: $1.0 million;●acceptance of a New Drug Application (“NDA”) by the FDA: $1.0 million;●approval of the NDA by the FDA: $1.5 million; and●the first commercial sale: $1.5 million.In January 2011, the Company entered into a development and supplemental agreement to its amended and restatedlicense agreement and commercial manufacturing supply agreement with Acorda. Under the terms of this agreement, theCompany granted Acorda the right, either with the Company or with a third party, in each case in accordance with certainterms and conditions, to develop new formulations of dalfampridine or other aminopyridines. Under the terms of theagreement, Acorda has the right to select either a formulation developed by the Company or by a third party forcommercialization. The Company is entitled to development fees it incurs in developing formulations under thedevelopment and supplemental agreement and, if Acorda selects and commercializes any such formulation, to milestonepayments (for new indications if not previously paid), license revenues and royalties in accordance with its amended andrestated license agreement for the product, and either manufacturing fees as a percentage of net selling price for productmanufactured by the Company or compensating fees for product manufactured by third parties. If, under the developmentand 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. Thedevelopment and supplemental agreement expires upon the expiry or termination of the amended and restated licenseagreement and may be earlier terminated by either party following an 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 yearsfrom the first commercial sale of such new formulation, and may extend for a longer period of time, depending on theintellectual property rights protecting the formulation, regulatory exclusivity and/or the absence of significant marketcompetition. These financial obligations survive termination of the agreement.During the years ended December 31, 2017, 2016 and 2015, the Company recognized $117.0 million, $114.2 millionand $104.7 million, respectively, of revenues from its arrangements with Acorda.F-30 Table of ContentsALKERMES PLC AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)AstraZenecaIn May 2000, the Company entered into a development and license agreement with Amylin for the development ofexendin products falling within the scope of its patents, including the once-weekly formulation of exenatide marketed asBYDUREON. In August 2012, Bristol-Myers Squibb Company (“Bristol-Myers”) acquired Amylin. From August 2012through January 2014, Bristol-Myers and AstraZeneca jointly developed and commercialized Amylin’s exendin products,including BYDUREON, through their diabetes collaboration. In April 2013, Bristol-Myers completed its assumption of allglobal commercialization responsibility related to the marketing of BYDUREON from Amylin’s former partner, Eli Lilly &Company. In February 2014, AstraZeneca acquired sole ownership from Bristol-Myers of the intellectual property and globalrights related to BYDUREON and Amylin’s other exendin products, including Amylin’s rights and obligations under theCompany’s development and license agreement.Pursuant to the development and license agreement, AstraZeneca has an exclusive, worldwide license to the Company’spolymer-based microsphere technology for the development and commercialization of injectable extended-releaseformulations of exendins and other related compounds. The Company receives funding for research and development andwill also receive royalty payments based on future net product sales. Upon the achievement of certain development andcommercialization goals, the Company received milestone payments consisting of cash and warrants for Amylin commonstock; there are no further milestones to be earned under the agreement. In October 2005 and in July 2006, the Companyamended the development and license agreement. Under the amended development and license agreement (i) the Companyis responsible for formulation and is principally responsible for non-clinical development of any products that may bedeveloped pursuant to the agreement and for manufacturing these products, except to the extent manufacturing rights havebeen transferred to Amylin; and (ii) the Company transferred certain of its technology related to the manufacture ofBYDUREON to Amylin and agreed to the manufacture of BYDUREON by Amylin.Under the Company’s amended development and license agreement, AstraZeneca is responsible for conducting clinicaltrials, securing regulatory approvals, and commercializing exenatide products including BYDUREON, on a worldwide basis.Until December 31, 2021, the Company will receive royalties equal to 8% of net sales from the first 40 million units ofBYDUREON products sold in any particular calendar year and 5.5% of net sales from units sold beyond the first 40 millionunits for that calendar 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 was entitled to, and received a $7.0 million milestonepayment related to the first commercial sale of BYDUREON in the EU and a $7.0 million milestone payment related to thefirst commercial sale of BYDUREON in the U.S.The development and license agreement expires on the later of: (i) ten years from the first commercial sale of the last ofthe products covered by the development and license agreement; or (ii) the expiration or invalidation of all of theCompany’s patents licensed under the agreement. Upon expiration, all licenses become non‑exclusive and royalty‑free.AstraZeneca may terminate the development and license agreement for any reason upon 180 days’ written notice to theCompany. In addition, either party may terminate the development and license agreement upon a material default or breachby the other party that is not cured within 60 days after receipt of written notice specifying the default or breach. Alkermesmay terminate the development and license agreement upon AstraZeneca’s insolvency or bankruptcy.During the years ended December 31, 2017, 2016 and 2015, the Company recognized $45.7 million, $45.6 million and$46.1 million, respectively, of revenues from its arrangements with respect to BYDUREON.BiogenUnder a license and collaboration agreement, the Company granted Biogen a worldwide, exclusive, sublicensablelicense to develop, manufacture and commercialize BIIB098 and other products covered by patents licensed to Biogen underthe agreement. Upon entering into this agreement in November 2017, the Company received an up-front cash payment of $28.0million. The Company is also eligible to receive additional payments upon achievement of milestones, as follows: (i) a$50.0 million option payment upon Biogen’s decision to continue the collaboration after having reviewed certain data fromour long-term safety clinical trial and part A of the head-to-head phase 3 gastrointestinal tolerability clinical trial comparingBIIB098 to TECFIDERA and (ii) a $150.0 million payment upon an approval by the FDA on or before December 31, 2021 ofa 505(b)(2) NDA (or, in certain circumstances, a 505(b)(1) NDA) for BIIB098. The Company isF-31 Table of ContentsALKERMES PLC AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)also eligible to receive additional payments upon achievement of milestones with respect to the first two products, other thanBIIB098, covered by patents licensed to Biogen under the agreement. In addition, the Company will receive a mid-teens percentage royalty on worldwide net sales of BIIB098, subject to,under certain circumstances, minimum annual payments for the first five years following FDA approval of BIIB098. TheCompany will also receive royalties on net sales of products, other than BIIB098, covered by patents licensed to Biogenunder the agreement, at tiered royalty rates calculated as percentages of net sales ranging from high-single digits to sub-teendouble digits. All royalties are payable on a product-by-product and country-by-country basis until the later of (i) the last-to-expire patent right covering the applicable product in the applicable country and (ii) a specified period of time from the firstcommercial sale of the applicable product in the applicable country. Royalties for all products and the minimum annualpayments for BIIB098 are subject to customary reductions. Except in certain limited circumstances, until FDA approval of an NDA for BIIB098, the Company is responsible for thedevelopment of BIIB098 for the treatment of MS. Biogen paid a portion of the BIIB098 development costs the Companyincurred in 2017 and, beginning on January 1, 2018, Biogen will be responsible for all BIIB098 development costs theCompany incurs, subject to annual budget limitations. After the date of FDA approval of an NDA for BIIB098 for thetreatment of MS, Biogen will be responsible for all development and commercialization activities, as well as the costs of allsuch activities, for BIIB098 and all other products covered by patents licensed to Biogen under the agreement. The Companyhas retained the right to manufacture clinical supplies and commercial supplies of BIIB098 and all other products covered bypatents licensed to Biogen under the agreement, subject to Biogen’s right to manufacture or have manufactured commercialsupplies as a back-up manufacturer and subject to good faith agreement by the parties on the terms of such manufacturingarrangements. If BIIB098 discontinuations due to gastrointestinal adverse events in BIIB098’s long-term safety clinical trial exceed acertain pre-defined threshold or BIIB098 demonstrates a greater rate of discontinuations as compared to TECFIDERA in partA of the head-to-head phase 3 gastrointestinal tolerability clinical trial, then “GI Inferiority” shall exist, and (i) Biogen shallhave the right to recapture from the Company its $50.0 million option payment through certain temporary reductions inroyalty rates, (ii) the minimum annual payments Biogen owes to the Company shall terminate, and (iii) there shall be noreversion of BIIB098 to the Company in the event that Biogen terminates the agreement and does not commercializeBIIB098. Unless earlier terminated, the agreement will remain in effect until the expiry of all royalty obligations. Biogen has theright to terminate the agreement at will, on a product-by-product basis or in its entirety. Either party has the right to terminatethe agreement following any governmental prohibition of the transactions effected by the agreement, or in connection withan insolvency event involving the other party. Upon termination of the agreement by either party, if, prior to suchtermination (i) BIIB098 did not meet GI Inferiority or (ii) BIIB098 met GI Inferiority but Biogen commercialized BIIB098,then, at the Company’s request, the BIIB098 program will revert to the Company. 14. INCOME TAXESThe Company’s provision (benefit) for income taxes is comprised of the following: Year Ended December 31, (In thousands) 2017 2016 2015Current income tax provision: U.S. federal $6,964 $3,163 $29,959U.S. state 350 480 1,615Ireland — — 77Rest of world 123 103 94Deferred income tax provision (benefit): U.S. federal 8,188 (9,278) (18,336)U.S. state (933) (269) (604)Ireland (21) (142) (9,647)Total tax provision (benefit) $14,671 $(5,943) $3,158 The income tax provision in 2017 and 2015 and the income tax benefit in 2016 was primarily due to U.S. federal andstate taxes. The unfavorable change in income taxes in 2017, as compared to 2016, was primarily due to the enactment of theTax Cuts and Jobs Act (the “Act” or “Tax Reform”) and an increase in income earned in the U.S.,F-32 Table of ContentsALKERMES PLC AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)partially offset by the recognition of excess tax benefits related to share-based compensation. The favorable change inincome taxes in 2016, as compared to 2015, was primarily due to a reduction in income earned in the U.S. A $4.2 million and$28.6 million benefit was recorded to additional paid‑in capital in the years ended December 31, 2016 and 2015,respectively, with a corresponding reduction to current taxes payable. This was primarily due to the utilization of currentyear tax benefits and NOL carryforwards derived from the exercise of employee stock options and vesting of restricted stockunits.Tax Reform was enacted in December 2017. The Company is primarily subject to the business related provisionsoutlined in Subtitle C to the Act, as well as the international tax provisions for inbound transactions outlined in Subtitle D,Part II, to the Act. The Company recorded a $21.5 million discrete tax expense in the quarter ended December 31, 2017 toaccount for the reduction in the U.S. federal tax rate from 35% to 21%. The Act also removes the exception for performancebased compensation in §162(m) of the Internal Revenue Code (the “Code”) on a prospective basis. Performance basedcompensation provided pursuant to a written binding agreement entered into prior to November 2, 2017 will continue to bedeductible provided no significant modification is made. The Company believes that performance based compensation,provided prior to November 2, 2017, was provided pursuant to written binding agreements and will be deductible. As ofDecember 31, 2017, the Company has a deferred tax asset of $13.3 million for this item, which is recorded as a provisionalamount. If the Company’s position is not sustained, then it would record a deferred tax expense for part or all of this amount.The accounting for this item is incomplete and may change as the Company’s interpretation of the provisions of the Actevolve, additional information becomes available or interpretive guidance is issued by the U.S. Treasury. The finaldetermination will be completed no later than one year from the enactment of the Act. No provision for income tax has been provided on undistributed earnings of the Company's foreign subsidiaries becausesuch earnings may be repatriated to Ireland without incurring any tax liability. Cumulative unremitted earnings of overseassubsidiaries totaled approximately $160.3 million at December 31, 2017.The distribution of the Company’s loss before the provision (benefit) for income taxes by geographical area consisted ofthe following: Year Ended December 31, (In thousands) 2017 2016 2015Ireland $(172,363) $(212,198) $(289,105)U.S. 2,414 (18,935) 38,398Rest of world 26,675 16,746 26,702Loss before provision (benefit) for income taxes $(143,274) $(214,387) $(224,005) The components of the Company’s net deferred tax assets (liabilities) were as follows: December 31, December 31, (In thousands) 2017 2016Deferred tax assets: Irish NOL carryforwards $177,435 $156,147Tax credits 71,366 7,608Share-based compensation 40,048 52,479Other 13,239 12,233Less: valuation allowance (172,797) (141,859)Total deferred tax assets 129,291 86,608Deferred tax liabilities: Intangible assets (18,184) (20,805)Property, plant and equipment (12,040) (17,541)Other (818) (826)Total deferred tax liabilities (31,042) (39,172)Net deferred tax assets $98,249 $47,436 In March 2016, the FASB issued guidance as part of its simplification initiative that involves several aspects of theaccounting for share-based payment transactions including the requirement that all future excess tax benefits and taxdeficiencies be recognized as income tax expense or benefit in the income statement. On January 1, 2017, the Companyadopted this standard on a modified retrospective basis, which resulted in a $57.8 million increase to its deferred tax assets, a$3.7 million decrease in liabilities and a $61.5 million favorable cumulative-effect adjustment to accumulated deficit due tothe change in the accounting treatment of excess tax benefits.F-33 Table of ContentsALKERMES PLC AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)The activity in the valuation allowance associated with deferred taxes consisted of the following: Balance at Balance at Beginning of End of(In thousands) Period Additions PeriodDeferred tax asset valuation for the year ended December 31, 2015 $(71,796) $(34,950) $(106,746)Deferred tax asset valuation for the year ended December 31, 2016 $(106,746) $(35,113) $(141,859)Deferred tax asset valuation for the year ended December 31, 2017 $(141,859) $(30,938) $(172,797)(1)The additions in each of the periods presented relate primarily to Irish NOL’s. At December 31, 2017, the Company maintained a valuation allowance of $9.4 million against certain U.S. state deferredtax assets and $163.4 million against certain Irish deferred tax assets as the Company has determined that it is more-likely-than-not that these net deferred tax assets will not be realized. If the Company demonstrates consistent profitability in thefuture, the evaluation of the recoverability of these deferred tax assets could change and the remaining valuation allowancescould be released in part or in whole. If the Company incurs losses in the U.S. in the future, or experiences significant excesstax benefits arising from the future exercise of stock options and/or the vesting of RSUs, the evaluation of the recoverabilityof the U.S. deferred tax assets could change and a valuation allowance against the U.S. deferred tax assets may be required inpart or in whole.As of December 31, 2017, the Company had $1.2 billion of Irish NOL carryforwards, $5.9 million of state NOLcarryforwards, $57.5 million of federal R&D credits, $10.0 million of alternative minimum tax (“AMT”) credits and$11.9 million of state tax credits which will either expire on various dates through 2037 or can be carried forwardindefinitely. These loss and credit carryforwards are available to reduce certain future Irish and foreign taxable income andtax and, in the case of the alternative minimum tax credits, may be refundable. These loss and credit carryforwards are subjectto review and possible adjustment by the appropriate taxing authorities. These loss and credit carryforwards, which may beutilized in a future period, may be subject to limitations based upon changes in the ownership of the Company's ordinaryshares.In addition to deferred tax assets and liabilities, the Company recorded deferred charges related to certain intercompanyasset transfers. Deferred charges are included in the following accounts: December 31, December 31, (In thousands) 2017 2016Prepaid expenses and other current assets $188 $188Other assets — long-term 686 862Total deferred charges $874 $1,050 The Company will adopt ASU 2016-16 effective January 1, 2018 requiring an unfavorable cumulative-effect adjustmentof $0.9 million recorded to accumulated deficit to write-off the unamortized deferred tax charge at December 31, 2017. Inaddition, the Company will record a $17.8 million deferred tax asset to take account of certain basis differences on intangibleassets, with a corresponding adjustment to valuation allowance.F-34 (1)Table of ContentsALKERMES PLC AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)A reconciliation of the Company’s statutory tax rate to its effective tax rate is as follows: Year Ended December 31, (In thousands, except percentage amounts) 2017 2016 2015 Statutory tax rate 12.5% 12.5% 12.5% Income tax provision at statutory rate $(17,909) $(26,798) $(28,001) Change in valuation allowance 26,771 35,290 37,312 Federal tax law change 21,453 — — Impairment on equity method investment 1,662 — — Uncertain tax positions 830 910 1,213 Foreign rate differential (682) 2,723 13,951 Share-based compensation (1,205) 2,072 738 U.S. state income taxes, net of U.S. federal benefit (558) (2) 557 Intercompany amounts (5,041) (5,209) (3,649) Irish rate differential (2,675) (5,231) (7,318) R&D credit (9,326) (10,572) (12,193) Other permanent items 1,351 874 548 Income tax provision (benefit) $14,671 $(5,943) $3,158 Effective tax rate (10.2)% 2.8% (1.4)% (1)Represents a $21.5 million deferred tax expense recorded as a discrete item during the three months endedDecember 31, 2017, as a result of the reduction in the U.S. federal tax rate from 35% to 21% .(2)Represents income or losses of non-Irish subsidiaries, including U.S. subsidiaries, subject to tax at a rate other thanthe Irish statutory rate.(3)Intercompany amounts include cross-territory eliminations, the pre-tax effect of which has been eliminated inarriving at the Company's consolidated loss before taxes.(4)Represents income or losses of Irish companies subject to tax at a rate other than the Irish statutory rate.(5)Other permanent items include, but are not limited to, non-deductible meals and entertainment expenses, non-deductible lobbying expenses and non-deductible compensation of senior officers of the Company. A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows: Unrecognized(In thousands) Tax BenefitsBalance, December 31, 2014 $2,565Additions based on tax positions related to prior periods —Additions based on tax positions related to the current period 1,213Balance, December 31, 2015 $3,778Reductions based on tax positions related to prior periods (7)Additions based on tax positions related to the current period 917Balance, December 31, 2016 $4,688Reductions based on tax positions related to prior periods (47)Additions based on tax positions related to the current period 877Balance, December 31, 2017 $5,518 The unrecognized tax benefits at December 31, 2017, if recognized, would affect the Company's effective tax rate. TheCompany does not anticipate that the amount of existing unrecognized tax benefits will significantly increase or decreasewithin the next 12 months. The Company has elected to include interest and penalties related to uncertain tax positions as acomponent of its provision for taxes. For the years ended December 31, 2017, 2016 and 2015, the Company's accrued interestand penalties related to uncertain tax positions were not material.The Company’s major taxing jurisdictions include Ireland and the U.S. (federal and state). These jurisdictions havevarying statutes of limitations. In the U.S., the 2014 through 2017 fiscal years remain subject to examination by therespective tax authorities. In Ireland, the years 2013 to 2017 remain subject to examination by the Irish tax authorities.Additionally, because of the Company’s Irish and U.S. loss carryforwards and credit carryforwards, certain tax returns fromfiscal years 1999 onward may also be examined. These years generally remain open for three to four years after the losscarryforwards and credit carryforwards have been utilized.F-35 (1)(2)(3)(4)(5)Table of ContentsALKERMES PLC AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)During 2017, the IRS completed its examination of the year ended December 31, 2014 for Alkermes U.S. Holdings, Inc.without any material adjustments. The State of New York concluded their examination of Alkermes U.S. Holdings, Inc. forthe years ended December 31, 2015 and 2014 and the nine months ended December 31, 2013, without any materialadjustment. The years ended December 31, 2015 and 2014 for Alkermes U.S. Holdings, Inc. are currently under examinationby the State of Illinois.15. DIVESTITUREOn April 10, 2015, the Company completed the Gainesville Transaction with Recro pursuant to a Purchase and SaleAgreement (the “Purchase Agreement”) entered into on March 7, 2015 among the Company and the Purchasers. In accordance with the terms of the Purchase Agreement, at the closing of the Disposition, the Purchasers made an initialcash payment to the Company of $50.0 million, a $4.0 million payment related to the net working capital, and issued theCompany a seven-year warrant to purchase an aggregate of 350,000 shares of Recro common stock at a per share exerciseprice equal to $19.46, two times the closing price of Recro’s common stock on the day prior to closing. The Company is alsoeligible to receive low double-digit royalties on net sales of IV/IM and parenteral forms of Meloxicam and any other productwith the same active ingredient as Meloxicam IV/IM that is discovered or identified using certain of the Company’sintellectual property to which Recro was provided a right of use, through license or transfer, pursuant to the GainesvilleTransaction (together, the “Meloxicam Products”) and up to $125.0 million in milestone payments upon the achievement ofcertain regulatory and sales milestones related to the Meloxicam Products. The gain on the Gainesville Transaction was determined as follows: April 10, 2015 (In thousands) Sales Proceeds: Cash $54,010 Fair value of warrants 2,123 Fair value of contingent consideration 57,600 Total consideration received $113,733 Less net assets sold (101,373) Less transaction costs (2,724) Gain on the Gainesville Transaction $9,636 The Company recorded the gain on the Gainesville Transaction within the accompanying consolidated statement ofoperations and comprehensive loss. The Company determined that the sale of assets in connection with the GainesvilleTransaction did not constitute a strategic shift and that it did not and would not have a major effect on its operations andfinancial results. Accordingly, the operations from the Gainesville Transaction were not reported in discontinued operations.Geraldine Henwood, President and Chief Executive Officer of Recro, was a former member of the Company’s board ofdirectors. On March 7, 2015, Ms. Henwood notified the Company’s board of directors that she was resigning as a member ofthe board of directors effective immediately. Ms. Henwood’s decision was not the result of any disagreement between theCompany and herself on any matter, including with respect to the Company’s operations, policies or practices.During the year ended December 31, 2015, the Gainesville, GA facility and associated intellectual property (“IP”)generated income before income taxes of $4.5 million.At December 31, 2017, the Company determined the value of the Gainesville Transaction’s contingent considerationusing the following valuation approaches:●The Company is entitled to receive $45.0 million upon regulatory approval of an NDA for the first MeloxicamProduct. The fair value of the regulatory milestone was estimated based on applying the likelihood of achieving theregulatory milestone and applying a discount rate from the expected time the milestone occurs to the balance sheetdate. The Company expects the regulatory milestone event to occur in the second quarter of 2018 and used adiscount rate of 3.0%;F-36 Table of ContentsALKERMES PLC AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)●The Company is entitled to receive future royalties on net sales of Meloxicam Products. To estimate the fair value ofthe future royalties, the Company assessed the likelihood of a Meloxicam Product being approved for sale andestimated the expected future sales given approval and IP protection. The Company then discounted these expectedpayments using a discount rate of 15.0%, which it believes captures a market participant’s view of the riskassociated with the expected payments; and●The Company is entitled to receive payments of up to $80.0 million upon achieving certain sales milestones onfuture sales of the Meloxicam Product. The sales milestones were determined through the use of a real optionsapproach, where net sales are simulated in a risk-neutral world. To employ this methodology, the Company used arisk-adjusted expected growth rate based on its assessments of expected growth in net sales of the approvedMeloxicam Product, adjusted by an appropriate factor capturing their respective correlation with the market. Aresulting expected (probability-weighted) milestone payment was then discounted at a cost of debt, which rangedfrom 3.5% to 5.4%.At December 31, 2017 and 2016, the Company determined that the value of the Gainesville Transaction’s contingentconsideration was $84.8 million and $63.2 million, respectively. The Company recorded the increase of $21.6 million and$7.9 million and a decrease of $2.3 million in the value of the contingent consideration during the years ended December 31,2017, 2016 and 2015, respectively, within “Change in the fair value of contingent consideration” in the accompanyingconsolidated statements of operations and comprehensive loss.The warrants that the Company received in connection with the Disposition for the purchase of 350,000 shares ofRecro’s common stock were determined to have a fair value of $2.1 million on the closing date of the transaction. AtDecember 31, 2017, the Company determined that the value of these warrants had decreased to $1.4 million and recorded thewarrants within “Other long-term assets” in the accompanying consolidated balance sheets. The company used a Black-Scholes model with the following assumptions to determine the fair value of these warrants at December 31, 2017:Closing stock price at December 31, 2017 $9.25 Warrant strike price $19.46 Expected term (years) 4.27 Risk-free rate 2.09%Volatility 77.0% The increase in the fair value of the warrants of less than $0.1 million and the decrease in the fair value of the warrants of$0.4 million and $0.3 million during the years ended December 31, 2017, 2016 and 2015, respectively, was recorded within“Other income (expense), net” in the accompanying consolidated statements of operations and comprehensive loss.16. COMMITMENTS AND CONTINGENCIESLease CommitmentsThe Company leases certain of its offices, research laboratories and manufacturing facilities under operating leases thatexpire through the year 2029. Certain of the leases contain provisions for extensions of up to ten years. These leasecommitments are primarily related to the Company’s corporate headquarters in Ireland and its corporate office and R&Dfacility in Massachusetts. As of December 31, 2017, the total future annual minimum lease payments under the Company’snon‑cancelable operating leases are as follows: Payment(In thousands) AmountYears Ending December 31, 2018 $9,1742019 9,0922020 6,4042021 2,4482022 1,195Thereafter 3,615 $31,928 F-37 Table of ContentsALKERMES PLC AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)Rent expense related to operating leases charged to operations was $9.4 million, $8.1 million and $7.2 million for theyears ended December 31, 2017, 2016 and 2015, respectively. The amount in 2015 was net of sublease income of $0.7million. In addition to its lease commitments, the Company had open purchase orders totaling $473.9 million at December31, 2017.LitigationFrom time to time, the Company may be subject to legal proceedings and claims in the ordinary course of business. On aquarterly basis, the Company reviews the status of each significant matter and assesses its potential financial exposure. If thepotential loss from any claim, asserted or unasserted, or legal proceeding is considered probable and the amount can bereasonably estimated, the Company would accrue a liability for the estimated loss. Because of uncertainties related to claimsand litigation, accruals are based on the Company’s best estimates based on available information. On a periodic basis, asadditional information becomes available, or based on specific events such as the outcome of litigation or settlement ofclaims, the Company may reassess the potential liability related to these matters and may revise these estimates, which couldresult in material adverse adjustments to the Company’s operating results. At December 31, 2017, there are no potentiallosses from claims, asserted or unasserted, or legal proceedings the Company feels are probable of occurring. INVEGA SUSTENNA ANDA LitigationIn January 2018, Janssen Pharmaceuticals NV and Janssen Pharmaceuticals, Inc. initiated a patent infringement lawsuitin the United States District Court for the District of New Jersey against Teva, who filed an ANDA seeking approval to marketa generic version of INVEGA SUSTENNA before the expiration of United States Patent No. 9,439,906. Requested judicialremedies included recovery of litigation costs and injunctive relief. The Company is not a party to these proceedings.For information about risks relating to the INVEGA SUSTENNA Paragraph IV litigation, see “Part I, Item 1A—RiskFactors” in this Annual Report and specifically the section entitled “—We or our licensees may face claims againstintellectual property rights covering our products and competition from generic drug manufacturers.” AMPYRA ANDA LitigationTen separate Paragraph IV Certification Notices have been received by the Company and/or its partner Acorda from:Accord Healthcare, Inc. (“Accord”); Actavis Laboratories FL, Inc. (“Actavis”); Alkem Laboratories Ltd. (“Alkem”); ApotexCorporation and Apotex, Inc. (collectively, “Apotex”); Aurobindo Pharma Ltd. (“Aurobindo”); Mylan Pharmaceuticals, Inc.(“Mylan”); Par Pharmaceutical, Inc. (“Par”); Roxane Laboratories, Inc. (“Roxane”); Sun Pharmaceutical Industries Limitedand Sun Pharmaceuticals Industries Inc. (collectively, “Sun”); and Teva Pharmaceuticals USA, Inc. (“Teva,” and collectivelywith Accord, Actavis, Alkem, Apotex, Aurobindo, Mylan, Par, Roxane and Sun, the “ANDA Filers”) advising that each of theANDA Filers had submitted an abbreviated NDA (“ANDA”) to the FDA seeking marketing approval for generic versions ofAMPYRA (dalfampridine) Extended-Release Tablets, 10 mg. The ANDA Filers challenged the validity of the Orange Book-listed patents for AMPYRA, and they also asserted that their generic versions do not infringe certain claims of these patents.In response, the Company and/or Acorda filed lawsuits against the ANDA Filers in the U.S. District Court for the District ofDelaware (the “Delaware Court”) asserting infringement of U.S. Patent No. 5,540,938 (the “‘938 Patent”), which theCompany owns, and U.S. Patent Nos. 8,007,826; 8,354,437; 8,440,703; and 8,663,685, which are owned by Acorda.Requested judicial remedies included recovery of litigation costs and injunctive relief. Mylan challenged the jurisdiction ofthe Delaware Court with respect to the Delaware action. In January 2015, the Delaware Court denied Mylan’s motion todismiss. Subsequently, in January 2015, the Delaware Court granted Mylan’s request for an interlocutory appeal of itsjurisdictional decision to the Federal Circuit. In March 2016, the Federal Circuit denied Mylan’s appeal. Mylan requestedthe Federal Circuit to reconsider its decision. However, on June 20, 2016, the Federal Circuit denied Mylan’s request. Mylanfiled an appeal with the U.S. Supreme Court, which was denied. F-38 Table of ContentsALKERMES PLC AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)All lawsuits were filed within 45 days from the date of receipt of each of the Paragraph IV Certification Notices from theANDA Filers. As a result, a 30-month statutory stay of approval period applied to each of the ANDA Filers’ ANDAs under theU.S. Drug Price Competition and Patent Term Restoration Act of 1984 (the “Hatch-Waxman Act”). The 30-month stay startedon January 22, 2015, and restricted the FDA from approving the ANDA Filers’ ANDAs until July 2017 at the earliest, unless aFederal district court issued a decision adverse to all of the asserted Orange Book-listed patents prior to that date. Lawsuitswith eight of the ANDA Filers have been consolidated into a single case. The Company and/or Acorda entered into a settlement agreement with each of Accord, Actavis, Alkem, Apotex,Aurobindo, Par and Sun (collectively, the “Settling ANDA Filers”) to resolve the patent litigation that the Company and/orAcorda brought against the Settling ANDA Filers in the Delaware Court. As a result of the settlement agreements, the SettlingANDA Filers will be permitted to market generic versions of AMPYRA in the U.S. at a specified date in the future. The partiessubmitted their respective settlement agreements to the U.S. Federal Trade Commission and the U.S. Department of Justice, asrequired by federal law. The settlements with the Settling ANDA Filers did not impact the patent litigation that the Companyand Acorda brought against the remaining ANDA Filers (the “Non-Settling ANDA Filers”), as described in this AnnualReport.On March 31, 2017, after a bench trial, the Delaware Court issued an opinion (the “Delaware Court Decision”),upholding the validity of the ‘938 Patent, which pertains to the formulation of AMPYRA and is set to expire in July 2018,and finding that Apotex, Mylan, Roxane and Teva stipulated that their proposed generic forms of AMPYRA infringed the‘938 Patent. The Delaware Court also invalidated U.S. Patent Nos. 8,007,826; 8,354,437; 8,440,703; and 8,663,685. In May2017, Acorda filed its appeal of the Delaware Court Decision with the U.S. Court of Appeals for the Federal Circuit (the“Federal Circuit”) with respect to the findings on U.S. Patent Nos. 8,007,826; 8,354,437; 8,440,703; and 8,663,685. In June2017, the Non-Settling ANDA Filers filed their cross-appeal of the Delaware Court Decision with the Federal Circuit withrespect to the validity of the ‘938 Patent. The Company and Acorda filed their opening brief on August 7, 2017. The Non-Settling ANDA Filers responded on October 2, 2017. The Company and Acorda filed a response and reply brief on November13, 2017, and the Non-Settling ANDA Filers filed their reply brief on November 27, 2017. A date for oral argument before theFederal Circuit has not yet been set. The Company intends to vigorously enforce its intellectual property rights. For information about risks relating to theAMPYRA Paragraph IV litigations and other proceedings see “Part I, Item 1A—Risk Factors” in this Annual Report andspecifically see the section entitled “—We or our licensees may face claims against intellectual property rights covering ourproducts and competition from generic drug manufacturers.”Government MattersOn June 22, 2017, the Company received a subpoena from an Office of the U.S. Attorney for documents related toVIVITROL. The Company is cooperating with the government.Securities LitigationOn November 22, 2017, a purported stockholder of the Company filed a putative class action against the Company andcertain of its officers in the United States District Court for the Southern District of New York captioned Gagnon v. Alkermesplc, et al., No. 1:17-cv-09178. The complaint was filed on behalf of a putative class of purchasers of Alkermes securitiesduring the period of February 24, 2015 to November 3, 2017, and alleges violations of Sections 10(b) and 20(a) of theSecurities Exchange Act of 1934, as amended, based on allegedly false or misleading statements and omissions regarding theCompany’s marketing practices related to VIVITROL. The lawsuit seeks, among other things, unspecified damages foralleged inflation in the price of securities, and reasonable costs and expenses, including attorneys’ fees. For informationabout risks relating to this action, see “Part I, Item 1A—Risk Factors” of this Annual Report and specifically the sectionentitled “—Litigation or arbitration against Alkermes, including securities litigation, or citizen petitions filed with the FDA,may result in financial losses, harm our reputation, divert management resources, negatively impact the approval of ourproducts, or otherwise negatively impact our business.” F-39Exhibit 10.10 A complete version of this Exhibit has been filed separately with the Securities and ExchangeCommission pursuant to an application requesting confidential treatment pursuant to Rule 24b-2 promulgated under the Securities Act of 1934, as amended. Certain confidential portions ofthis Exhibit were omitted and replaced with double asterisks ([**]). Execution Version LICENSE AND COLLABORATION AGREEMENT BETWEEN ALKERMES PHARMA IRELAND LIMITED AND BIOGEN SWISS MANUFACTURING GMBHNOVEMBER 27, 2017  TABLE OF CONTENTS PageARTICLE 1 DEFINITIONS11.1.Defined Terms11.2.Additional Definitions121.3.Interpretation13ARTICLE 2 MANAGEMENT OF THE COLLABORATION142.1.Joint Steering Committee142.2.Alkermes’ Participation in the JSC162.3.Disbandment of the JSC16ARTICLE 3 DEVELOPMENT173.1.Development Team173.2.Development Responsibilities and Rights193.3.Regulatory Filings223.4.Regulatory Meetings and Communications243.5.Debarment Limitations253.6.Compliance253.7.Safety Reporting253.8.Development Costs263.9.Initial Development Plan Budget26ARTICLE 4 COMMERCIALIZATION274.1.Commercialization Rights274.2.Commercialization Efforts274.3.Commercialization Costs274.4.Compliance27ARTICLE 5 MANUFACTURE AND SUPPLY275.1.Supply and Quality Agreements275.2.Supply Team29ARTICLE 6 LICENSE GRANTS296.1.Patent and Know-How License Grant296.2.Patent Update30-i- Table of Contents(continued) Page6.3.Termination of License to Contested Patent Rights306.4.Non-Suit306.5.Non-Interference316.6.Exclusivity31ARTICLE 7 INTELLECTUAL PROPERTY RIGHTS327.1.Ownership of Intellectual Property327.2.Disclosure of Inventions337.3.Patent Committee337.4.Patent Filings337.5.Enforcement Rights357.6.Infringement Defense367.7.Patent Marking377.8.Orange Book Listings377.9.Trademark Infringement38ARTICLE 8 CONFIDENTIALITY; PUBLICITY388.1.Confidentiality388.2.Authorized Use and Disclosure398.3.Disclosure to Investors408.4.Survival408.5.Publications or Presentations40ARTICLE 9 PAYMENTS419.1.Up-Front Payment419.2.Option Payment419.3.NDA Approval Payment419.4.Development Milestones for Products other than the Alkermes 8700 Product419.5.Royalties429.6.Reporting and Paying Net Sales449.7.Records and Reporting; Audits459.8.Manner of Payments46-ii- Table of Contents(continued) Page9.9.Interest on Late Payments469.10.Currency of Payments/Exchange Rates469.11.Taxes46ARTICLE 10 REPRESENTATIONS AND WARRANTIES; COVENANTS;DISCLAIMER4710.1.Disclaimer4710.2.Mutual Representations, Warranties and Covenants4810.3.Alkermes Representations and Warranties4810.4.Biogen Representations and Warranties5110.5.Responsibility for Government Approvals51ARTICLE 11 LIABILITY5111.1.Limitation of Liability5111.2.Biogen Indemnification5211.3.Alkermes Indemnification5211.4.Indemnification Procedures5311.5.Cooperation5311.6.Insurance53ARTICLE 12 DISPUTE RESOLUTION5412.1.Disputes5412.2.Jurisdiction5512.3.Determination of Disputes Relating to Patents5512.4.Equitable Relief55ARTICLE 13 TERM AND TERMINATION5613.1.Term5613.2.Right to Terminate for Government Prohibition5613.3.Biogen’s Right to Terminate for Convenience5613.4.Right to Terminate Upon Bankruptcy5613.5.Effects of Termination5613.6.Bankruptcy5913.7.Survival of Certain Provisions60-iii- Table of Contents(continued) PageARTICLE 14 GENERAL PROVISIONS6014.1.Notices6014.2.Governing Law6114.3.Entire Agreement; Amendment6114.4.Binding Effect and Assignment6114.5.Waiver6214.6.Severability6214.7.Counterparts and Signatures6214.8.Force Majeure6214.9.Ambiguities6214.10.Headings6214.11.No Partnership6214.12.No Third Party Beneficiaries6314.13.Performance by an Affiliate6314.14.Further Assurances63 -iv-  LICENSE AND COLLABORATION AGREEMENTThis License And Collaboration Agreement (the “Agreement”) is entered into effective as ofNovember 27, 2017 (the “Effective Date”) by and between Alkermes Pharma Ireland Limited, aprivate limited company incorporated in Ireland (registered number 448848) whose registered addressis Connaught House, 1 Burlington Road, Dublin 4, Ireland (“Alkermes”), and Biogen SwissManufacturing GmbH, a Swiss limited liability company with its principal office at Landis & GyrStrasse 3, CHR-6300 Zug, Switzerland (“Biogen”).Recitals:Whereas, Alkermes is developing the Alkermes 8700 Product for the treatment of MS;Whereas, Biogen has experience and expertise in the development and commercialization ofpharmaceutical products;Whereas, Alkermes will continue the development of the Alkermes 8700 Product in the U.S.for the treatment of MS through the Transfer Completion Date pursuant to the terms of this Agreement;Whereas, Alkermes will manufacture and supply to Biogen Clinical Supplies of the Alkermes8700 Product and potentially other Products pursuant to the terms of a Clinical Supply Agreement;Whereas, on all of the terms and subject to the conditions set forth in this Agreement Biogendesires to appoint Alkermes as the toll manufacturer for Commercial Supplies of the Alkermes 8700Product in the Territory at a site outside of the United States, and Alkermes is willing to accept suchappointment, subject to the terms of a supply agreement to be negotiated by the Parties; andWhereas, Alkermes wishes to grant to Biogen, and Biogen wishes to obtain, an exclusivelicense to Exploit the Products in the Field in the Territory, all on the terms and subject to theconditions set forth in this Agreement.Now, Therefore, in consideration of the premises and the mutual covenants and agreements setforth herein, and other good and valuable consideration, the receipt and sufficiency of which arehereby acknowledged, the Parties agree as follows:Article 1Definitions1.1.Defined Terms. When used in this Agreement, each of the following terms shall havethe meanings set forth in this Article 1:1.1.1.“Affiliate” with respect to any Party, means any entitythat, directly or indirectly, controls, is controlled by, or is under common control with such Party, butonly for so long as such control continues. For these purposes, “control” will refer to: (i) the1  possession, directly or indirectly, of the power to direct the management or policies of an entity,whether through ownership of voting securities, by contract or otherwise or (ii) the ownership, directlyor indirectly, of at least fifty percent (50%) of the equity securities of the entity entitled to vote in theelection of directors (or, in the case of an entity that is not a corporation, at least fifty percent (50%) ofthe equity securities of the entity entitled to vote in the election of the corresponding managingauthority or entitled to direct the management and policies of such entity).1.1.2.“Alkermes 8700 Product” means the oral Product inDevelopment by Alkermes as of the Effective Date and containing as its active ingredient thecompound having the structure set forth in Exhibit A.1.1.3.“Alkermes 8700 Product 505(b)(2) NDA” means theNDA for the Alkermes 8700 Product in the Initial Indication to be submitted by Alkermes to the FDAin the U.S. pursuant to (a) the 505(b)(2) regulatory pathway, as set forth in the Initial DevelopmentPlan or (b) the 505(b)(1) regulatory pathway, solely in the event that Biogen grants to Alkermes theright of reference in accordance with Section 3.3.2. 1.1.4.“Alkermes Collaboration Know-How” meansCollaboration Know-How invented solely by Alkermes’ or its Affiliates’ employees, agents orindependent contractors in the performance of activities under the Initial Development Plan during theTerm.1.1.5.“Alkermes Collaboration Patents” means allCollaboration Patents that Cover Alkermes Collaboration Know-How.1.1.6.“Allocable Overhead” means [**].1.1.7.“Applicable Law” means all applicable laws, statutes,rules, regulations, ordinances and other pronouncements having the binding effect of law of anyapplicable Governmental Authority, including any rules, regulations, guidelines or other requirementsof the Regulatory Authorities, that may be in effect from time to time in the Territory.1.1.8.“Bankruptcy Code” means Title 11, U.S. Code, oranalogous provisions of Applicable Law outside the U.S.1.1.9.“Biogen Collaboration Know-How” meansCollaboration Know-How invented solely by Biogen’s or its Affiliates’ or Sublicensees’ employees,agents or independent contractors in the performance of activities under the Initial Development Planduring the Term.1.1.10.“Biogen Collaboration Patents” means allCollaboration Patents that Cover Biogen Collaboration Know-How.1.1.11. “Business Day” means a day on which bankinginstitutions in Cambridge, Massachusetts, Zug, Switzerland and Dublin, Ireland are open for business.2  1.1.12.“Calendar Quarter” means each three (3)-monthperiod of January through March, April through June, July through September and October throughDecember.1.1.13.“Calendar Year” means each annual twelve (12)-month period starting on January 1 and ending on December 31.1.1.14.“Change of Control” means, with respect to a Party, (i)an acquisition, reorganization, merger or consolidation of such Party with a Third Party in which theholders of the voting securities of such Party outstanding immediately prior thereto cease to beneficiallyown at least fifty percent (50%) of the combined voting power of the surviving entity, directly orindirectly, immediately after such acquisition, reorganization, merger or consolidation, (ii) a transactionor series of related transactions in which a Third Party, together with its Affiliates (if applicable),becomes the beneficial owner of fifty percent (50%) or more of the combined voting power of theoutstanding securities of such Party, or (iii) the sale or other transfer to a Third Party of all orsubstantially all of such Party’s assets.1.1.15.“Clinical Supplies” means supplies of a Product andPlacebo to be used for the conduct of pre-clinical studies, Post-Marketing Commitments or ClinicalTrials of a Product in the Field in the Territory pursuant to this Agreement.1.1.16.“Clinical Supply Agreement” means a supplyagreement between the Parties for the Manufacture by Alkermes of Clinical Supplies.1.1.17.“Clinical Trials” means human studies designed tomeasure the safety or efficacy of a Product. 1.1.18.“Code” means the Code on Interactions withHealthcare Professionals promulgated by the Pharmaceutical Research and Manufacturers of America(PhRMA) and the American Medical Association (AMA) Guidelines on Gifts to Physicians fromIndustry.1.1.19.“Collaboration Know-How” means any Know-Howinvented during the Term by a Party’s or its Affiliates’, licensees’ or Sublicensees’ employees, agentsor independent contractors, either alone or jointly with the other Party’s or its Affiliates’, licensees’ orSublicensees’ employees, agents or independent contractors, in the performance of activities under theInitial Development Plan during the Term.1.1.20.“Collaboration Patents” means any Patent Rightsinvented by a Party’s or its Affiliates’, licensees’ or Sublicensees’ employees, agents or independentcontractors, either alone or jointly with the other Party’s or its Affiliates’, licensees’ or Sublicensees’employees, agents or independent contractors, in the performance of activities under the InitialDevelopment Plan during the Term that Cover any Collaboration Know-How.1.1.21.“Collaboration Technology” means the CollaborationKnow-How and the Collaboration Patents.1.1.22.“Combination Product” means any single product infinished form containing as active ingredients both (i) a Product and (ii) one or more otherpharmaceutically active compounds or substances that are not Products, whether co-formulated or co-packaged3  (i.e., within a single box or sales unit); (such pharmaceutically active compounds or substances, the“Other Components”).1.1.23.“Commercial Supplies” or “Commercial Supply”means supplies of a Product for commercial sale or as promotional samples, or for use in Post-Marketing Clinical Trials.1.1.24.“Commercialization” means the performance of anyand all activities directed to promoting, marketing, importing, exporting, distributing, selling or offeringto sell a Product following or in expectation of receipt of Regulatory Approval (but excludingDevelopment and Manufacture). When used as a verb, “Commercialize” means to engage inCommercialization.1.1.25.“Commercially Reasonable Efforts” [**].1.1.26.“Complete GI Tolerability Data Package” means, withrespect to Part B of the GI Tolerability Clinical Trial and the Long-Term Safety Clinical Trial, in eachcase, full demographic and patient-level data for all patients enrolled in each such trial (including, forthe Long-Term Safety Clinical Trial, a breakdown of those patients that were previously enrolled in theGI Tolerability Clinical Trial and those patients not previously enrolled in such trial) and a complete setof all data and results available for each such trial, including all data and results that would fall into thecategories set forth on Schedule 1.1.26 for each of Part B of the GI Tolerability Clinical Trial and theLong-Term Safety Clinical Trial. 1.1.27.“Confidentiality Agreements” means (i) the MutualConfidentiality Agreement dated September 9, 2015 by and between Alkermes and Biogen, Inc., asreinstated, amended and extended on September 15, 2017 and (ii) the Confidentiality Agreement datedApril 8, 2013 between Alkermes, Inc. and Biogen, Inc. (formerly known as Biogen Idec Inc.).1.1.28.“Controlled” means, with respect to Patent Rights orKnow-How, that the applicable Party, in whole or in part, owns or has a license to such Patent Rightsor Know-How (but without taking into account any rights granted by one Party to the other Partypursuant to this Agreement) and has the ability to grant a license or a sublicense, as applicable, or tootherwise disclose proprietary or trade secret information, to such other Party, without misappropriatingthe proprietary or trade secret information of a Third Party or violating the terms of any agreement orother arrangement with any Third Party existing and in effect at the time such Party would be requiredhereunder to grant the other Party such license or sublicensee; provided, however, that if a Party isacquired pursuant to a Change of Control, the acquired Party will not be deemed to Control anyKnow-How, Patent Rights or other intellectual property rights owned or controlled prior to suchChange of Control by any entities that were not Affiliates of the acquired Party prior to such Change ofControl and become Affiliates of the acquired Party in connection with such Change of Control.1.1.29.“Cover” means, as to a particular subject matter at issueand a claim of a relevant Patent Right, that, in the absence of a license granted under, or ownership of,such Patent Right, the making, using, selling, offering for sale or importation of such subject4  matter would infringe such Patent Right or, as to a pending claim included in such Patent Right, themaking, using, selling, offering for sale or importation of such subject matter would infringe suchpending claim if such claim were to issue in an issued patent without modification.1.1.30.“Development” means the performance of any and allactivities relating to preparation, submission, obtaining, supporting or maintaining Regulatory Approvalof a Product in the Field in the Territory and to maintaining, supporting or expanding such RegulatoryApproval, including pre-clinical studies, pharmacokinetic studies, toxicology studies, formulation, testmethod development, assay development and stability testing, manufacturing process development,manufacturing technical support, biomarker development, validation and scale-up (including bulkcompound production), Manufacturing of Clinical Supplies and activities relating to developing theability to Manufacture and to continue to Manufacture the Product, quality assurance and qualitycontrol for formulations of a Product, design and conduct of Clinical Trials or studies (including allPost-Marketing Commitments), report writing, statistical analysis and regulatory affairs includingregulatory legal services. When used as a verb, “Develop” means to engage in Development.1.1.31.“Development Costs” means all costs incurred (i.e.,paid or accrued) by either Party or each such Party’s Affiliates or licensees or Sublicensees (asapplicable), in each case, in accordance with GAAP applied on a consistent basis, to the extentattributable to Development of the Alkermes 8700 Product in the Initial Indication for the purpose ofobtaining, supporting or maintaining Regulatory Approval of the Alkermes 8700 Product in the U.S.(including the performance of all Post-Marketing Commitments) or fulfilling such Party’sresponsibilities under the Initial Development Plan in accordance therewith and with thisAgreement. Such costs shall include:(i)costs of research or Development,including costs of studies on the toxicological, pharmacokinetic, metabolic or clinical aspects of theAlkermes 8700 Product in the Initial Indication conducted internally or by individual investigators orconsultants, necessary or desirable for the purpose of obtaining, supporting or maintaining RegulatoryApproval of the Alkermes 8700 Product in the Initial Indication in the U.S. and for conducting Post-Marketing Commitments to support or maintain such Regulatory Approval, including the costs ofpersonnel engaged in the foregoing activities at the applicable Development FTE Rate;(ii)Fully Burdened Manufacturing Costs of Clinical Supplies;(iii)costs of manufacturing process development, validations, scale-up,quality assurance and quality control for the Alkermes 8700 Product pursued by the Parties under theInitial Development Plan, to the extent not included in the Fully Burdened Manufacturing Costs ofClinical Supplies;(iv)costs of preparing and reviewing data or information for the purposeof submitting the Alkermes 8700 Product 505(b)(2) NDA to the FDA;(v)costs of communications and meetings with the FDA, and exchangeof information and assistance related thereto, in each case, until the earlier of (a)5  Regulatory Approval of the Alkermes 8700 Product 505(b)(2) NDA and completion of all associatedPost-Marketing Commitments or (b) the date of an Alkermes Approval Failure; and(vi)costs incurred in connection with receiving, investigating, recording,reviewing, communicating and exchanging adverse events and other reportable information, in eachcase, as provided in any safety data exchange agreement entered into between the Parties to the extentrelating to the Development of the Alkermes 8700 Product in the Initial Indication in the U.S.For clarity, any Development Cost incurred by a Party or its Affiliates orlicensees or Sublicensees (as applicable) under this Agreement or any Supply Agreement shall becharged only once.1.1.32.“Development FTE Rate” means initially an amountequal to [**] U.S. Dollars (US$[**]) per FTE per year; on January 1, 2019, and annually thereafter,such amount shall be adjusted to reflect any increase, since the prior adjustment (or the initial rate, asapplicable), based on the most recent monthly index available as of the adjustment date set forth inthe Bureau of Labor Statistics Consumer Price Index for Urban Wage Earners and Clerical Workers(CPI-W), Size Class A, all items less energy, which, for clarity, was 266.558 in June 2017.1.1.33.“Distributor” means, with respect to a country, anyThird Party that purchases its requirements for Products in such country from Biogen or its Affiliates orSublicensees and is appointed as a distributor to distribute, market and resell such Product in suchcountry, even if such Third Party is granted ancillary rights to develop, package or obtain RegulatoryApproval of such Product in order to distribute, market or sell such Product in such country.1.1.34.“DMF” means dimethyl fumarate.1.1.35.“EMA” means the European Medicines Agency or anysuccessor agency.1.1.36.“Exploit” means to perform Medical Activities,Develop, Manufacture and Commercialize, including to make, have made, use, sell, offer for sale,import and export.1.1.37.“FDA” means the U.S. Food and Drug Administrationor any successor agency.1.1.38.“Field” means the treatment, prevention or diagnosis ofany human disease, disorder or condition.1.1.39.“First Commercial Sale” means, with respect to aProduct in a country in the Territory, the first sale for use or consumption by the general public of suchProduct by Biogen or an Affiliate or Sublicensee to a Third Party in such country after such Producthas been granted Regulatory Approval by the appropriate Regulatory Authority(ies) in such country.Any transfer of a Product as part of an expanded access program, compassionate6  sales or use program, an indigent program, as bona fide samples, as donations, for the performance ofClinical Trials or for similar bona fide business purposes in accordance with Applicable Law shall notconstitute a “First Commercial Sale” hereunder.1.1.40.“First FDA Approval” means the FDA’s approval ofan NDA for the Alkermes 8700 Product in the Initial Indication in the U.S.1.1.41.“FTE” means the equivalent of one (1) person who isemployed by a Party or its Affiliates, or (solely with respect to technical personnel) hired as anindependent contractor by a Party or its Affiliates in lieu of such Party’s own employees, who isqualified to perform the tasks assigned to such person. For FTEs performing Development activitiespursuant to the Initial Development Plan, one (1) FTE shall perform a total of [**] hours of work perCalendar Year. Any FTE who devotes less or more than and [**] hours of work per Calendar Year tosuch work shall be treated as an FTE on a pro-rata basis calculated by dividing the actual number ofhours spent on such work during such Calendar Year by and [**]. Such FTEs shall be charged at anhourly rate hereunder by the Parties. 1.1.42.“Fully Burdened Manufacturing Cost” means thecosts incurred (i.e., paid or accrued) by a Party, its Affiliates or agents in the Manufacture (includingshipping or storage costs) of a Product or Placebo, as applicable, which shall be the sum of direct labor,direct material and Allocable Overhead incurred in the Manufacture of such Product or Placebo asdetermined in accordance with GAAP as consistently applied by such Party or its Affiliates.Notwithstanding the foregoing, Fully Burdened Manufacturing Costs exclude (i) all payments(including upfront fees, milestones and royalties) to any Third Party to obtain rights (whether byacquisition, license or otherwise) to any intellectual property that is necessary or useful to ManufactureClinical Supplies or Commercial Supplies in any country and (ii) any and all costs and expensesincurred in connection with the acquisition of any such rights.1.1.43.“Fumaderm” means Biogen’s oral fumaric acid esterpharmaceutical product.1.1.44.“GAAP” means U.S. Generally Accepted AccountingPrinciples.1.1.45.“GI” means gastrointestinal.1.1.46.“GI Event” means any one or more of nausea,vomiting, diarrhea, abdominal pain, upper abdominal pain or lower abdominal pain, in any case,experienced by a patient in a Clinical Trial.1.1.47.“GI Inferiority” will be deemed to exist if (i) the [**] ofpatients not previously enrolled in the GI Tolerability Clinical Trial or otherwise exposed to a fumaratethat discontinue participation in the Long-Term Safety Clinical Trial due to a GI Event is greater than[**] or (ii) the percentage of patients who discontinue participation in the ALKS 8700 arm of Part B ofthe GI Tolerability Clinical Trial due to a GI Event is greater than the percentage of patients whodiscontinue participation in the Tecfidera arm of Part B of the GI Tolerability Clinical Trial due to aGI Event, in all cases as set forth in the Complete GI Tolerability Data Package, provided that, if therate of discontinuations due to a GI Event in Part A of the GI Tolerability Clinical Trial is lower in theTecfidera arm of such trial and the Parties jointly7 ®®® agree in writing not to conduct Part B of the GI Tolerability Clinical Trial, then GI Inferiority will bedeemed to exist. If the Parties jointly agree in writing not to conduct Part B of the GI TolerabilityClinical Trial for reasons other than because the rate of discontinuations due to a GI Event in Part A ofthe GI Tolerability Clinical Trial is lower in the Tecfidera arm of such trial, then, unless the Partiesjointly agree otherwise in writing, GI Inferiority will not be deemed to exist. 1.1.48.“GI Tolerability Clinical Trial” means the ClinicalTrial sponsored by Alkermes, Inc., an Affiliate of Alkermes, with ClinicalTrials.gov identifierNCT03093324.1.1.49.“Governmental Approvals” means all applications,notices, petitions, filings, ruling requests, and other documents and obtaining all consents, waivers,licenses, orders, registrations, approvals, permits, rulings, authorizations and clearances necessary oradvisable to be obtained from any Governmental Authority in order to consummate the transactionscontemplated by this Agreement.1.1.50.“Governmental Authority” means any court, tribunal,agency, department, legislative body, commission or other instrumentality of any supra-national,national, state, county, city or other political subdivision in the world.1.1.51.“HSR Act” means the Hart-Scott-Rodino AntitrustImprovements Act of 1976 and the rules and regulations thereunder, each as amended.1.1.52.“IND” means an Investigational New DrugApplication, as defined in the Federal Food, Drug, and Cosmetic Act, as amended or similarapplication or submission that is required to be filed with any Regulatory Authority before beginningClinical Trials of a pharmaceutical product.1.1.53.“Initial GI Tolerability Data Package” means (a) withrespect to Part A of the GI Tolerability Clinical Trial, full demographic and patient-level data for allpatients enrolled therein and those elements set forth on Schedule 1.1.26 and (b) with respect to theLong-Term Safety Clinical Trial, full demographic and patient-level data for all patients enrolled insuch trial (including a breakdown of those patients that were previously enrolled in the GI TolerabilityClinical Trial and those patients not previously enrolled in such trial) and a complete set of all data andresults available for such trial, including all data and results that would fall into the categories set forthon Schedule 1.1.26, provided that the information set forth in clause (b) will only be provided as of thedate that the information set forth in the foregoing clause (a) of this definition is available. 1.1.54.“Initial Indication” means the treatment of MS.1.1.55.“Know-How” means all non-public, proprietary dataand results, technical information, know-how, inventions, discoveries, trade secrets, processes,procedures, techniques, new developments, compositions, products, compounds, material, methods,formulas, formulation, improvements, protocol, result of experimentation or testing, technology, ideasor other proprietary information and documentation thereof (including related papers, inventiondisclosures, blueprints, drawings, flowcharts, diagrams, diaries, notebooks, specifications,8 ® methods of Manufacture, methods of service, data processing techniques, compilations of information,customer and supplier lists, pricing and cost information, and business and marketing plans andproposals), design or other know-how, whether or not patentable or copyrightable. Know-How shallnot include any Patent Rights with respect thereto.1.1.56.“Knowledge” means, with respect to Alkermes, theactual knowledge of [**] based on such individuals’ good faith understanding of the facts andinformation in their possession or control following reasonable inquiry and investigation of Alkermespersonnel and [**], in each case, with relevant functional responsibilities with respect to such facts andinformation.1.1.57.“Licensed Know-How” means (i) any Know-HowControlled by Alkermes or its Affiliates on the Effective Date or during the Term that (a) is or wasused in the Development or Manufacture of Products, (b) is or was embodied in Products or (c) isnecessary to Exploit the Products in the Field in the Territory, (ii) all Alkermes Collaboration Know-How and (iii) Alkermes’ interest in the Joint Collaboration Know-How. 1.1.58.“Licensed Patents” means (i) the Patent Rights set forthon Exhibit B, (ii) any Patent Rights Controlled by Alkermes or its Affiliates issuing from or claimingpriority directly or indirectly to Patent Rights listed on Exhibit B, (iii) the Alkermes CollaborationPatents, (iv) Alkermes’ interest in the Joint Collaboration Patents and (v) any Patent Rights Controlledby Alkermes or its Affiliates on the Effective Date or during the Term that Cover Licensed Know-How or that are necessary to Exploit any compound or product Covered by any Patent Rights set forthin the foregoing clauses (i) through (iv), in each case, in the Field in the Territory. The LicensedPatents as of the Effective Date are listed on Exhibit B, provided that any Patent Right that is not listedon Exhibit B, but is otherwise described in this Section 1.1.58, shall still be considered a LicensedPatent hereunder.1.1.59.“Long-Term Safety Clinical Trial” means the ClinicalTrial sponsored by Alkermes, Inc., an Affiliate of Alkermes, with ClinicalTrials.gov identifierNCT02634307.1.1.60.“Manufacturing” means the performance of any or allactivities directed to producing, manufacturing, validating, scaling up, processing, filling, finishing,quality control, quality assurance, testing and release, shipping and warehousing of a Product orPlacebo. When used as a verb, “Manufacture” means to engage in Manufacturing.1.1.61.“Medical Activities” means any and all activitiesdirected to the formulation and performance of (i) Post-Marketing Clinical Trials; (ii) market and keyopinion leader plans for the development of the Products, including plans to support continuingmedical education; (iii) publication plans for the Products; (iv) plans to ensure appropriate medicalinformation responses with respect to the Products; (v) safety monitoring plans for the Products; (vi)plans and expected activities for field based medical affairs personnel for the Products; and (vii) othercomparable medical affairs activities.1.1.62.“MMF” means monomethyl fumarate.1.1.63.“MS” means multiple sclerosis.9  1.1.64.“NDA” means a New Drug Application filed with theFDA as described in 21 C.F.R. § 314 or any equivalent or corresponding application for RegulatoryApproval (including pricing and reimbursement approval required by Applicable Law prior to sale of apharmaceutical product) in any country or regulatory jurisdiction other than the U.S.1.1.65. “Net Sales” means, with respect to any Product, theamount billed in arm’s-length transactions by a Party, an Affiliate of such Party, or any permittedSublicensee [**].1.1.66.“OIG Guidance” means the Office of InspectorGeneral of the Department of Health and Human Services Compliance Program Guidance forPharmaceutical Manufacturers.1.1.67.“Party” means Biogen or Alkermes and, when used inthe plural, will mean both Biogen and Alkermes.1.1.68.“Patent Rights” means any and all of the following: (i)patent applications (including provisional patent applications) and patents (including the inventor’scertificates); (ii) any substitution, extension (including patent term extensions, patent term adjustments,supplementary protection certificates and pediatric exclusivity periods), registration, confirmation,reissue, continuation, divisional, continuation-in-part, reexamination, renewal, patent of addition or thelike thereof or thereto; and (iii) all foreign counterparts of any of the foregoing, including PCTapplications.1.1.69.“Person” means any individual, firm, corporation,partnership, trust, business trust, joint venture, limited liability company, Governmental Authority,association or other entity.1.1.70.“Placebo” means an inactive substitute for a Product.1.1.71.“Post-Marketing Clinical Trial” means a clinical trialof a Product in human patients (including investigator-initiated trials) that is conducted for a purposeother than to obtain, support or maintain Regulatory Approval.1.1.72.“Post-Marketing Commitments” means any and allitems, tasks, activities, studies, trials or other commitments the completion of which is recommended orrequired by the FDA in connection with the initial grant of Regulatory Approval for the Alkermes8700 Product in the Initial Indication in the U.S. or to support or maintain such Regulatory Approval. 1.1.73.“Product” means any product that is Covered by aValid Claim of a Licensed Patent; provided, however, that, if any Product ceases to meet the precedingdefinition in a country due to the expiration of the last Valid Claim of a Licensed Patent Covering suchproduct in such country, then such product shall continue to constitute a “Product” under thisAgreement.1.1.74.“Regulatory Approval” means all approvals necessaryfor the Commercialization of a pharmaceutical product for one or more indications in a country or10  regulatory jurisdiction, which may include satisfaction of applicable regulatory and notificationrequirements and, where required by Applicable Law, separate pricing and reimbursement approvalsprior to sale of a pharmaceutical product.1.1.75.“Regulatory Authority” means any applicablesupranational, national, regional, state or local regulatory agency, department, bureau, commission,council, or other government entity involved in regulating Development and granting RegulatoryApproval for a pharmaceutical product in a regulatory jurisdiction within the Territory, including theFDA and the EMA.1.1.76.“Serious Failure to Supply” shall mean that in a givenCalendar Year, for reasons other than a Force Majeure Delay or a default of Biogen, Alkermes fails onat least [**] occasions to supply Biogen with those quantities of Product forecasted and ordered inaccordance with the terms of the applicable Supply Agreement, and the cumulative shortfall for suchCalendar Year attributable to such failure(s) is at least [**] of the aggregate amount so forecasted andordered from Alkermes for delivery in such Calendar Year.1.1.77.“Sublicense Agreement” means a written, definitiveagreement for a sublicense between Biogen and a Sublicensee.1.1.78.“Sublicensee” means any Third Party, other than aDistributor, to whom rights are granted under any of the rights licensed to Biogen by Alkermes underSection 6.1 with respect to any Product, including through any license, sublicense, co-development,co-discovery, co-promotion, distribution, joint venture, Development and Commercializationcollaboration or similar transaction between Biogen (or an Affiliate of Biogen) and such Third Party. 1.1.79.“Supply Agreement” means the Clinical SupplyAgreement or any supply agreement entered into between the Parties for the toll manufacture byAlkermes of Commercial Supplies.1.1.80.“Tecfidera” means Biogen’s oral DMFpharmaceutical product.1.1.81.“Tecfidera Competing Product” means anypharmaceutical product of any Third Party which contains the same active pharmaceutical ingredient asTecfidera, and is approved in reliance, in whole or in part, on a prior Regulatory Approval ofTecfidera, provided that Tecfidera Competing Product shall not include such pharmaceutical productof a Third Party where Biogen licenses or sublicenses rights to such Third Party to commercialize suchpharmaceutical product (whether directly or by license, covenant not to sue, settlement agreement,release or any other arrangement or means).1.1.82.“Tecfidera Competition” means, with respect to agiven Calendar Year in the U.S., that during such Calendar Year, the aggregate net revenue earned byBiogen and its Affiliates and their respective sublicensees and licensees from sales of Tecfidera andthe Alkermes 8700 Product, in each case in the U.S. in such Calendar Year, is less than [**] of theaggregate net revenue earned by Biogen and its Affiliates and their respective sublicensees andlicensees from sales of Tecfidera and the Alkermes 8700 Product, in each case, in the U.S. in11 ®®®®®®®® the last full Calendar Year prior to the Calendar Year in which a Tecfidera Competing Product is firstsold in the U.S. 1.1.83.“Territory” means all countries of the world.1.1.84.“Third Party” means any Person other than the Partiesor their respective Affiliates.1.1.85.“U.S.” means the United States of America.1.1.86.“U.S. Dollars” or “US$” means United States Dollars.1.1.87.“Valid Claim” means a claim of an issued andunexpired Patent Right or pending claim of a patent application, which claim or pending claim has notbeen revoked or held unenforceable, unallowable, unpatentable or invalid by a decision of a court orother Governmental Authority of competent jurisdiction, which claim or pending claim is notappealable or has not been appealed within the time allowed for appeal, and which claim or pendingclaim has not been cancelled, withdrawn from consideration, abandoned, disclaimed, denied oradmitted to be invalid or unenforceable through reissue, re-examination, inter partes review, post-grantreview or disclaimer, opposition procedure, nullity suit, or otherwise; provided, however, that if theholding of such court or Governmental Authority is later reversed by a court or GovernmentalAuthority with overriding authority, the claim shall be reinstated as a Valid Claim with respect to NetSales made after the date of such reversal; and provided, further, that a claim of a patent applicationpending for more than [**] years ([**]) years from the earliest date from which such patent applicationclaims priority shall not be considered to be a Valid Claim for purposes of this Agreement unless anduntil a patent with respect to such application issues with such claim, in which case such claim will bereinstated and be deemed to be a Valid Claim, but only as of the date of issuance of such patent.1.2.Additional Definitions. The following terms have the meanings set forth in thecorresponding Sections of this Agreement:TermsSectionAgreementPreambleAlkermesPreambleAlkermes Approval Failure3.3.1Alkermes Indemnified Party11.2Alkermes Manufacturing Know-How3.2.3(iv)ANDA7.5.2(ii)Auditing Party9.7.2BiogenPreambleBiogen Indemnified Party11.3Claim11.2Complaining Party12.1.2Confidential Information8.1CPR Rules12.1.3Dispute12.1.112 ® TermsSectionDispute Notice12.1.2DT3.1.1Effective DatePreambleForce Majeure Delay14.8GI Tolerability Data Package Notice3.2.5(i)Hatch-Waxman Act7.5.1Indemnitee11.4Infringement7.5.1Infringement Claim7.6.1Initial Development Plan3.1.2IP13.6.1Joint Collaboration Know-How7.1.2(i)Joint Collaboration Patents7.1.2(i)Joint Collaboration Technology7.1.2(i)JSC2.1.1Losses11.2Minimum Annual Payment(s)9.5.1(ii)Minimum Annual Payment Term9.5.1(ii)Minimum Payment Commencement Date9.5.1(ii)Option Payment9.2Other Component1.1.22Patent Action6.3Patent Committee7.3Product Trademarks7.6.1Prosecution7.4.1(i)Protection7.4.1(ii)Quality Agreement3.3.1Recording Party9.7.1Related Party1.1.65Response12.1.2Royalty Term9.5.3Senior Management12.1.2ST5.2Sued Party7.6.1Surviving Sublicensee13.5.4Team Leader3.1.1Term13.1Transfer Completion Date3.3.1Transition Plan3.2.3(iii)Up-Front Payment9.1VAT9.11.4 1.3.Interpretation. Except where the context expressly requires otherwise in thisAgreement, (a) the use of any gender herein shall be deemed to encompass references to either or13  both genders, and the use of the singular shall be deemed to include the plural (and vice versa); (b) thewords “include,” “includes,” and “including” shall be deemed to be followed by the phrase “withoutlimitation” and shall not be interpreted to limit the provision to which it relates; (c) the word “will” shallbe construed to have the same meaning and effect as the word “shall”; (d) any definition of or referenceto any agreement, instrument or other document herein shall be construed as referring to suchagreement, instrument or other document as from time to time amended, supplemented or otherwisemodified (subject to any restrictions on such amendments, supplements or modifications set forthherein); (e) any reference herein to any Person shall be construed to include the Person’s successorsand assigns to the extent not prohibited by this Agreement; (f) the words “herein,” “hereof,” and“hereunder,” and words of similar import, shall be construed to refer to this Agreement in its entirety,as the context requires, and not to any particular provision hereof; (g) all references herein to Sections,Articles, Exhibits, or Schedules shall be construed to refer to Sections, Articles, Exhibits, or Schedulesof this Agreement, and references to this Agreement include all Schedules and Exhibits hereto; (h) theword “notice” means notice in writing (whether or not specifically stated) and shall include notices,consents, approvals and other written communications contemplated under this Agreement; (i)provisions that require that a Party, the Parties or any committee hereunder “agree,” “consent,” or“approve” or the like shall require that such agreement, consent or approval be specific and in writing,whether by written agreement, letter, approved minutes or otherwise (but excluding e-mail and instantmessaging); (j) references to any specific law, rule or regulation, or article, Section or other divisionthereof, shall be deemed to include the then-current amendments thereto or any replacement orsuccessor law, rule or regulation thereof; (k) the term “or” shall be interpreted in the inclusive sensecommonly associated with the term “and/or”; (l) references to a particular statute or regulation includeall rules and regulations thereunder and any predecessor or successor statute, rules or regulations, ineach case, as amended or otherwise modified from time to time; and (m) whenever this Agreementrefers to a number of days, such number shall refer to calendar days unless Business Days arespecified.Article 2MANAGEMENT OF THE COLLABORATION2.1.Joint Steering Committee. 2.1.1.Establishment of the JSC. Within thirty (30) days after the Effective Date, theParties shall establish the joint steering committee (the “JSC”), which will have overall responsibilityfor the collaboration between the Parties with respect to the Development of the Alkermes 8700Product in the Initial Indication in the U.S. as contemplated by this Agreement. The JSC will comprisetwo (2) representatives of each Party, who will be appointed (and may be replaced at any time) by eachParty upon notice to the other Party in accordance with this Agreement. Such representatives willinclude individuals of each Party with decision-making authority with respect to the matters within theauthority of the JSC. To conduct the activities described in Section 2.1.2 below, the JSC will meet atleast once each Calendar Quarter until disbandment of the JSC pursuant to Section 2.2, or morefrequently if agreed by the JSC.14  2.1.2.JSC Responsibilities. The JSC will perform the following functions:(i)for the Alkermes 8700 Product in the Initial Indication inthe U.S., review and, in its discretion, approve amendments to the Initial Development Plan, includingthe applicable annual budget or the regulatory strategy, in each case, as set forth therein; (ii)review reports received from the ST (the supply teamestablished pursuant to Section 5.2) and provide direction to the ST regarding the performance of itsresponsibilities under the Clinical Supply Agreement;(iii)serve as the first forum for the settlement of disputes ordisagreements between the Parties arising in the DT (the development team established pursuant toSection 3.1.1) or the ST; and(iv)perform such other functions as appropriate to further thepurposes of this Agreement as determined by mutual agreement of the Parties.2.1.3.JSC Chairperson; Procedures. For a one (1)-year period commencing on theEffective Date, a Biogen representative to the JSC will serve as the chairperson of the JSC. For eachsubsequent one (1)-year period, JSC representatives of the Parties will alternate as the chairperson ofthe JSC. The chairperson will establish the timing and agenda for all JSC meetings and will sendnotice of such meetings, including the agenda therefor, to all JSC members; provided, however, thateither Party may request that specific items be included in the agenda and may request that additionalmeetings be scheduled as needed. The location of each regularly scheduled JSC meeting will beagreed upon by the Parties. Meetings may also be held telephonically or by videoconference. Aquorum of at least one (1) JSC representative appointed by each Party shall be present at or shallotherwise participate in each JSC meeting. If mutually agreed by the Parties on a case-by-case basis,the JSC may invite other non-members to participate in the discussions and meetings of the JSC,provided that the presence of such participants shall not be considered in determining whether there is aquorum at the JSC. The chairperson shall appoint one (1) person (who need not be a member of theJSC) to attend each meeting and record the minutes of such meeting in writing. Such minutes shall becirculated to the Parties promptly following each meeting for review, comment and approval. If nocomments are received from a Party within thirty (30) days after receipt of the minutes by such Party,then such minutes shall be deemed to be approved by such Party.2.1.4.JSC Decision Making. As a general principle, the JSC will operate byconsensus, with the JSC representatives of each Party collectively having one (1) vote, respectively. Inthe event that the JSC members do not reach consensus with respect to a matter that is within the JSC’sdecision-making authority within twenty (20) days after they have met and attempted to reach suchconsensus, such matter may be escalated to resolution by Senior Management by the written request ofeither Party. If Senior Management is unable to resolve such matter within ten (10) days of suchwritten request, then:15  (i)Alkermes shall have the final decision-making authorityif such matter relates to (a) the contents of the Alkermes 8700 Product 505(b)(2) NDA or the conductof any Clinical Trial of the Alkermes 8700 Product in the Initial Indication conducted by or on behalfof Alkermes pursuant to the Initial Development Plan, including the decision to remove Developmentactivities (other than the GI Tolerability Clinical Trial) not required by the FDA for approval of theAlkermes 8700 Product 505(b)(2) NDA; (b) subject to Section 3.2.4(iv), the design and conduct ofPart B of the GI Tolerability Clinical Trial (but, not whether to discontinue such trial); (c) theManufacture of Clinical Supplies of the Alkermes 8700 Product, subject to the terms of the ClinicalSupply Agreement; and (d) prior to the Transfer Completion Date, Regulatory Authority interactions,regulatory strategy (provided that Alkermes may not deviate from pursuit of obtaining RegulatoryApproval of the Alkermes 8700 Product in the Initial Indication via the 505(b)(2) regulatory pathwayunless the right of reference is granted to Alkermes in accordance with Section 3.3.2), communications,and activities related to the Alkermes 8700 Product in the Initial Indication and regulatory filings for,and Regulatory Approval of, the Alkermes 8700 Product in the Initial Indication in the U.S.;(ii)with respect to any amendments to the Initial Development Plan to add one(1) or more Development activities, Alkermes shall have final decision-making authority with respectto the design and execution of such Development activities and Biogen shall have final decision-making authority with respect to any increase in the Initial Development Plan budget associated withsuch Development activities; and (iii)Biogen shall have the final decision-making authority with respect to anyother matter not set forth in Section 2.1.4(i) and Section 2.1.4(ii).Notwithstanding anything to the contrary, to the extent any matters are required by Applicable Law ordue to safety concerns with respect to a Product to be resolved within a shorter period of time than theperiods set forth in this Section 2.1.4, the periods set forth in this Section 2.1.4 will be shortened asappropriate to permit the resolution of such matters within the required period.2.2.Alkermes’ Participation in the JSC. The Parties agree that participation in the JSC isa right rather than an obligation of Alkermes, and Alkermes may elect at any time or from time to timenot to participate in the JSC or any other committee, subcommittee, team or subteam contemplatedhereunder. Accordingly, the Parties also agree that Alkermes’ decision not to participate in the JSC orany other committee, subcommittee, team or subteam contemplated hereunder will not constitute abreach of Alkermes’ material obligations hereunder. During any period that Alkermes has elected notto participate in the JSC or any other committee, subcommittee, team or subteam contemplatedhereunder, each Party shall have the obligation to provide and the right to continue to receive theinformation it would otherwise be required to provide and entitled to receive under this Agreement andto participate directly with the other Party in discussions, reviews and approvals currently allocated tothe JSC or such other committee, subcommittee, team or subteam pursuant to this Agreement.2.3.Disbandment of the JSC. The JSC will automatically disband on the earlier of (a) themutual written agreement of the Parties and (b) the Transfer Completion Date. Thereafter,16  Biogen shall have the sole decision-making authority over all matters that were within the authority ofthe JSC prior to such disbandment.Article 3DEVELOPMENT3.1.Development Team. 3.1.1.Establishment of Development Team. Within thirty (30) days after theEffective Date, the Parties shall establish the development team (the “DT”) to coordinate andimplement all activities for the Development of the Alkermes 8700 Product in the Initial Indication inthe United States, within the annual budgets included in the Initial Development Plan. One (1)representative from each Party shall be designated as that Party’s “Team Leader” to act as the primaryDT contact for that Party. Unless otherwise agreed by the Parties, the DT shall comprise an equalnumber of representatives of each Party as is reasonably necessary to accomplish the goals of the DThereunder. Such representatives will include individuals with expertise and responsibilities in the areasof clinical development, process sciences, quality control, quality assurance, regulatory affairs andproduct development. Either Party may replace any or all of its DT representatives, including its TeamLeader, at any time upon notice to the other Party in accordance with this Agreement.3.1.2.Development Team Responsibilities. The DT will perform the followingfunctions: (i)for the Alkermes 8700 Product in the Initial Indication inthe U.S., formulating amendments to the Initial Development Plan, including, in each case, theapplicable annual budget or the regulatory strategy, in each case, set forth therein;(ii)coordinating implementation of all Development activitiesfor the Alkermes 8700 Product in the Initial Indication in the U.S. pursuant to the Initial DevelopmentPlan;(iii)generating forecasts of supply requirements for theAlkermes 8700 Product and Placebo pursuant to the Initial Development Plan and delivering suchforecasts to the ST;(iv)exchanging information and facilitating cooperation andcoordination between the Parties as they exercise their respective rights and meet their respectiveobligations under the Initial Development Plan;(v)providing status updates to the JSC regardingDevelopment activities for the Alkermes 8700 Product in the Initial Indication in the U.S. pursuant tothe Initial Development Plan, including progress towards achieving key milestone events andDevelopment Cost expenditures; and(vi)performing such other functions as appropriate to furtherthe purposes of this Agreement as determined by mutual agreement of the Parties.17  In addition, the DT may designate subteams as appropriate to facilitate coordination andcooperation in key areas. The development plan for the Alkermes 8700 Product in the InitialIndication in the U.S. and the accompanying budget are attached hereto as Exhibit C (as amended fromtime to time in accordance with this Agreement, the “Initial Development Plan”). This InitialDevelopment Plan shall be deemed to have been reviewed and approved by the JSC. The InitialDevelopment Plan attached hereto as Exhibit C covers Development activities for the Alkermes 8700Product in the Initial Indication in the U.S. through the filing of the Alkermes 8700 Product 505(b)(2)NDA (including the regulatory strategy for obtaining, supporting or maintaining Regulatory Approvalof the Alkermes 8700 Product in the Initial Indication in the U.S.). The Initial Development Plan maybe amended upon the written agreement of each Party to include additional Development activities forthe Alkermes 8700 Product in the Initial Indication in the U.S. but, notwithstanding anything to thecontrary set forth under this Agreement, will not include any Post-Marketing Commitments or Post-Marketing Clinical Trials for the Alkermes 8700 Product. The DT may formulate amendments to theInitial Development Plan at any time and submit such amendments to the JSC for review and approvalin accordance with Section 2.1.2(i). 3.1.3.Development Team Procedures. For a one (1)-year period beginning on theEffective Date, the Team Leader of Alkermes shall serve as the chairperson of the DT. Thereafter, theTeam Leader of Biogen shall serve as the chairperson of the DT. The chairperson shall establish thetiming and agenda for all DT meetings and shall send notice of such meetings, including the agendatherefor, to all DT members; provided, however, that either Party may request that specific items beincluded in the agenda and may request that additional meetings be scheduled as needed. The DT willmeet at least once each month or as agreed by the DT, until the disbandment of the DT pursuant toSection 3.1.5. The first DT meeting shall be held at Alkermes’ offices. Thereafter, the location ofregularly scheduled DT meetings shall alternate between the offices of the Parties, unless otherwiseagreed. Meetings may be held telephonically or by videoconference. A quorum of at least two (2) DTmembers appointed by each Party shall be present at or shall otherwise participate in each DTmeeting. If mutually agreed by the Parties on a case-by-case basis, the DT may invite other non-members to participate in the discussions and meetings of the DT, provided that the presence of suchparticipants shall not be considered in determining whether there is a quorum at the DT. Thechairperson shall appoint one (1) person (who need not be a member of the DT) to attend each meetingand record the minutes of such meeting in writing. Such minutes shall be circulated to the Partiespromptly following the meeting for review, comment and approval. If no comments are received froma Party within ten (10) Business Days after receipt of the minutes by such Party, such minutes shall bedeemed to be approved by such Party.3.1.4.Development Team Decision Making. As a general principle, the DT willoperate by consensus, with the DT representatives of each Party collectively having one (1) vote,respectively. In the event that the DT members do not reach consensus with respect to a matter that iswithin the purview of the DT within twenty (20) days after they have met and attempted to reach suchconsensus, such matter shall be presented to the JSC for resolution.3.1.5.Disbandment of the DT. The DT will automatically disband on the earlier of(i) the mutual written agreement of the Parties and (ii) the Transfer Completion18  Date. Thereafter, Biogen shall have the sole decision-making authority over all matters that werewithin the authority of the DT prior to such disbandment.3.2.Development Responsibilities and Rights. 3.2.1.Development Responsibilities of Alkermes. During the Term, Alkermes shalluse commercially reasonable efforts to perform all activities allocated to Alkermes in the InitialDevelopment Plan. During the Term, until the earlier of the Transfer Completion Date or an AlkermesApproval Failure, Alkermes shall be responsible for any and all interactions with the FDA in relation tothe Initial Development Plan, activities conducted thereunder and the Alkermes 8700 Product 505(b)(2) NDA (other than in connection with any Post-Marketing Commitments, for which Biogen shall beresponsible), including any required modifications to such Alkermes 8700 Product 505(b)(2) NDA. Inaddition, and without limiting the generality of the foregoing, during the Term, until the earlier of theTransfer Completion Date or an Alkermes Approval Failure, Alkermes shall use reasonable efforts topursue and obtain Regulatory Approval of the Alkermes 8700 Product in the Initial Indication in theU.S. If Alkermes desires to perform any tasks, obligations or support that Alkermes is required toperform or provide hereunder through any of its Affiliates, contractors or agents, then Alkermes mayengage such Affiliates, contractors or agents to perform such tasks, obligations or support, butAlkermes shall remain responsible for performance of its obligations hereunder. 3.2.2.Development Rights of Biogen.(i)Following the Transfer Completion Date, Biogen shallhave the unilateral right, itself or through its Affiliates, Sublicensees, subcontractors or Distributors, toconduct Development of the Alkermes 8700 Product in the Initial Indication in the U.S., and toperform Medical Activities, in each case, in its sole discretion (unless otherwise agreed by the Parties).(ii)During the Term, Biogen shall have the unilateral right,itself or through its Affiliates, Sublicensees, subcontractors or Distributors, to conduct Development of,and perform Medical Activities with respect to, Products throughout the Territory, other than theAlkermes 8700 Product in the Initial Indication in the U.S. (which is covered in Section 3.2.2(i)), ineach case, in its sole discretion. (iii)Subject to Section 3.3.4, following receipt of RegulatoryApproval for the Alkermes 8700 Product 505(b)(2) NDA, Biogen shall use Commercially ReasonableEfforts to conduct any Post-Marketing Commitments for the Alkermes 8700 Product in the InitialIndication in the U.S. required in connection with such Regulatory Approval.3.2.3.Transfer of Data and Technology. (i)As of the Effective Date. Promptly following theEffective Date, but in any event no later than sixty (60) days thereafter, Alkermes shall transfer toBiogen, at Biogen’s sole cost and expense [**] and thereafter at Alkermes’ cost, a true and completecopy of (a) all data and results generated from any Development activities conducted by or on behalf ofAlkermes with respect to any Product prior to the Effective Date (as evidenced by all completed pre-clinical study reports and completed clinical study reports for Clinical Trials of19  the Alkermes 8700 Product in the Initial Indication) and (b) all Trial Master Files (including any TrialMaster File plans, tables of contents or indices and any evidence or certification of related qualitychecks) or equivalents thereof, for all completed or ongoing Clinical Trials of any Product conductedby or on behalf of Alkermes. If Biogen requests other tangible embodiments of the Licensed Know-How or additional data or results or any other documentation relating to such data or results in respectof Development activities conducted by or on behalf of Alkermes prior to the Effective Date, where theapplicable pre-clinical study report or clinical study report for such activities has not yet beencompleted, then Alkermes shall attempt in good faith to provide such requested embodiments, data orresults or other documentation related thereto to Biogen.(ii)During the Term. Thereafter, on a quarterly basis untilAlkermes’ completion of all of its obligations under the Initial Development Plan in accordance withSection 3.2.1, or more frequently as (a) new data and results with respect to the Products or (b) new orupdated Trial Master Files, in each case ((a) and (b)), come into Alkermes’ possession or Control, andin any event sufficiently prior to the date of the First FDA Approval such that the transfer of theAlkermes 8700 Product 505(b)(2) NDA pursuant to Section 3.3.1 can occur immediately following theFirst FDA Approval, Alkermes shall transfer to Biogen, at Biogen’s sole cost and expense, a true andcomplete copy of any such new data and results (including all elements set forth on Schedule 1.1.26)generated from any Development activities conducted by or on behalf of Alkermes with respect to anyProduct for all ongoing Clinical Trials conducted by or on behalf of Alkermes (including the Long-Term Safety Clinical Trial and the GI Tolerability Clinical Trial), as evidenced by all completed pre-clinical study reports and completed clinical study reports for other Clinical Trials of the Alkermes8700 Product in the Initial Indication, or new or updated Trial Master Files or new tangibleembodiments of the Licensed Know-How. Without limiting the foregoing, Alkermes shall, prior to theTransfer Completion Date, transfer or have transferred to Biogen true and complete copies of (1) alldata and results generated from any Development activities conducted by or on behalf of Alkermeswith respect to the Products for all completed Clinical Trials conducted by or on behalf of Alkermes(including all pre-clinical studies and Clinical Trials of the Alkermes 8700 Product in the InitialIndication) and (2) all Trial Master Files (including any Trial Master File plans, tables of contents orindices and any evidence or certification of related quality checks) or equivalents thereof, for allcompleted Clinical Trials of the Alkermes 8700 Product conducted by or on behalf of Alkermes. Anytransfer under this Section 3.2.3 shall be in such format as mutually agreed by the Parties, provided thatupon Biogen’s request, Alkermes agrees to transfer such materials in electronic form. If Biogenrequests other tangible embodiments of the Licensed Know-How or additional data or results or anyother documentation relating to such data or results in respect of Development activities conducted byor on behalf of Alkermes under the Initial Development Plan, where the applicable pre-clinical studyreport or clinical study report for such activities has not yet been completed, then Alkermes shallattempt in good faith to provide such requested embodiments, data or results or other documentationrelated thereto to Biogen.(iii)Transition Plan. Following the completion of Alkermes’obligations under the Initial Development Plan in accordance with Section 3.2.1, the Parties shallcooperate with each other to ensure a smooth transition to Biogen or Biogen’s designee of ongoingDevelopment activities related to the Alkermes 8700 Product in the Initial Indication,20  including taking the actions specified in a transition plan that may be entered into between the Partiesafter the Effective Date by written agreement of the Parties, as such plan may be updated from time totime upon written agreement of the Parties (the “Transition Plan”). If there is any inconsistencybetween the Transition Plan and this Agreement, the terms of this Agreement shall prevail.(iv)Manufacturing Technology Transfer. Upon Biogen’swritten request, Alkermes will promptly make available to Biogen all Licensed Know-How (includingall historical process or analytical information (i.e., all experimentally or literature-derived data used toManufacture any Product)) to enable the Manufacture of all Products by or on behalf of Biogen (the“Alkermes Manufacturing Know-How”), by providing copies or samples of relevant documentation,materials and other embodiments of such Licensed Know-How, including data within reports,notebooks and electronic files. Alkermes will perform services reasonably requested by Biogen tofacilitate the technology transfer described in this Section 3.2.3(iv) in a professional and workmanlikemanner in accordance with Biogen’s reasonable instructions, and Biogen will reimburse Alkermes atthe Development FTE Rate for all internal costs incurred in connection with the performance of suchservices performed and for all external expenses directly related thereto. Any materials provided byAlkermes in connection with the transfer of the Alkermes Manufacturing Know-How will remain thesole property of Alkermes. 3.2.4.Initial GI Tolerability Data Package Transfer. (i)Initial GI Tolerability Data Package. Within areasonable time period following the completion of the last visit for the last patient of Part A of the GITolerability Clinical Trial (including the two (2) week safety follow-up period for such last patient),Alkermes will provide written notice to Biogen (such notice, a “GI Tolerability Data PackageNotice”) that includes:(A)The Initial GI Tolerability Data Package; and(B)Wire transfer instructions for payment of the Option Paymentpursuant to Section 9.2 of this Agreement.(ii)Incomplete Initial GI Tolerability Data Package. Following receipt of the Initial GI Tolerability Data Package Notice as set forth under Section 3.2.4(i),Biogen will have fifteen (15) days to notify Alkermes if the GI Tolerability Data Package includedtherein is missing any information related to Part A of the GI Tolerability Clinical Trial set forth inclause (a) of the definition of Initial GI Tolerability Data Package, which notice will describe theinformation that is missing from such Initial GI Tolerability Data Package. Alkermes will provideBiogen with such missing information identified in such notice, to the extent such information isControlled by Alkermes, as soon as reasonably practicable. (iii)Extension of the Initial GI Tolerability Data PackagePeriod. If Alkermes provides any information to Biogen following the receipt of the GI TolerabilityData Package Notice pursuant to Section 3.2.4(i) and such information is, in Biogen’s reasonablediscretion, material information that was not previously provided to Biogen, then upon written noticefrom Biogen to Alkermes, the [**]-day period within which Biogen would be obligated to21  make the Option Payment in accordance with Section 9.2 will be extended such that there is at least[**] days between Biogen’s receipt of such information and the date on which Biogen would beobligated to make such Option Payment under Section 9.2. (iv)Discussion Regarding Part B. Following receipt of theGI Tolerability Data Package Notice as set forth under Section 3.2.4(i), (a) the Parties will discuss ingood faith whether to conduct Part B of the GI Tolerability Clinical Trial and (b) unless the Partieshave agreed not to conduct such Part B of the GI Tolerability Clinical Trial, Alkermes will usecommercially reasonable efforts to develop and provide to Biogen no later than thirty (30) days afterthe delivery of the GI Tolerability Data Package (1) a plan for Part B of such trial that is reasonablydesigned and powered to sufficiently differentiate between the Alkermes 8700 Product and Tecfiderawith respect to GI Events and (2) a proposed budget for the conduct of activities under such plan forPart B of the GI Tolerability Clinical Trial. Thereafter, at Biogen’s request, the Parties will discuss ingood faith such plan and associated budget and if Biogen wishes to make any changes to the plan(including to increase the scope or power of such trial) in a manner that increases the associated budgettherefor, then the Parties would discuss such proposed changes in good faith and attempt to reachagreement on such expanded scope or power and associated increase in budget. If the Parties mutuallyagree in writing with respect to the plan for the conduct of Part B of the GI Tolerability Clinical Trialand the associated budget for the Development activities to be conducted under such plan, then (A) theDT will amend the Initial Development Plan to include the conduct of Part B of the GI TolerabilityClinical Trial in accordance with the agreed-to plan and the agreed-to budget associated with suchDevelopment activities in accordance with Section 3.1.2 and (B) Alkermes will conduct Part B of theGI Tolerability Clinical Trial materially in accordance with such agreed-to plan, unless otherwisejointly agreed in writing by the Parties.3.2.5.Complete GI Tolerability Data Package Transfer. (i) Complete GI Tolerability Data Package. Within a reasonable time periodfollowing the completion of the last visit for the last patient of Part B of the GI Tolerability ClinicalTrial (including any applicable safety follow-up period for such last patient), Alkermes will provide toBiogen the Complete GI Tolerability Data Package.(ii) Incomplete Complete GI Tolerability Data Package. Following receipt ofthe Complete GI Tolerability Data Package, Biogen will have fifteen (15) days to notify Alkermes ifthe Complete GI Tolerability Data Package is missing any information, which notice will describe theinformation that is missing from such Complete GI Tolerability Data Package. Alkermes will provideBiogen with such missing information identified in such notice, to the extent such information isControlled by Alkermes, as soon as reasonably practicable. 3.3.Regulatory Filings. 3.3.1.Alkermes 8700 Product in the Initial Indication in the U.S. Until theTransfer Completion Date, Alkermes shall be responsible for making all regulatory filings with theFDA in respect of the Alkermes 8700 Product in the Initial Indication, including the Alkermes 8700Product 505(b)(2) NDA. Alkermes shall use commercially reasonable efforts to submit all suchregulatory filings in accordance with the Initial Development Plan. All such22 ® filings and Regulatory Approval (if granted) for the Alkermes 8700 Product 505(b)(2) NDA shallinitially be held by and in the name of Alkermes until assignment thereof to Biogen pursuant to thisSection 3.3.1. Alkermes will (A) send a letter to the FDA to transfer and assign to Biogen Alkermes’entire right, title and interest in and to all regulatory filings related to the Alkermes 8700 Product in theInitial Indication, including the Alkermes 8700 Product 505(b)(2) NDA and (B) transfer to Biogen acomplete copy of the approved Alkermes 8700 Product 505(b)(2) NDA and all regulatory filings,regulatory documentation and other supplements and records related to such NDA that are required tobe kept under 21 C.F.R. § 314.81, in each case, within one (1) Business Day following:(i)receipt of Regulatory Approval of the Alkermes 8700Product 505(b)(2) NDA; or(ii)Biogen’s request, if (a) Alkermes receives a completeresponse letter from the FDA in connection with the Alkermes 8700 Product 505(b)(2) NDA failing togrant Regulatory Approval for the Alkermes 8700 Product in the Initial Indication in the U.S. thatsuggests additional Development activities or other requirements, (b) after using reasonable efforts todiscuss with the FDA, Alkermes is not able to narrow or eliminate such suggested additionalDevelopment activities or such other requirements and (c) even if Alkermes were to perform suchadditional Development activities or comply with such other requirements (including through the grantfrom Biogen of the right of reference in accordance with Section 3.3.2), there could be no reasonableexpectation that the 8700 Product 505(b)(2) NDA could receive Regulatory Approval by December31, 2021 (the occurrence of the events set forth in the foregoing clauses ((a) through (c)), an “AlkermesApproval Failure”);The date on which Alkermes completes its obligations set forth in clauses (A) and (B) of this Section3.3.1 shall be deemed the “Transfer Completion Date.”3.3.2.Right of Reference. If, subsequent to filing the Alkermes 8700 Product 505(b)(2) NDA, (i) Alkermes receives feedback from the FDA, whether through a complete response letter orotherwise, that the FDA requires access to certain additional data to determine whether to grantapproval for the Alkermes 8700 Product in the Initial Indication in the U.S. and (ii) the Parties,working in good faith, agree that such information is included in the U.S. Regulatory Approvals forTecfidera or related submissions filed with the FDA and should be included in the Alkermes 8700Product 505(b)(2) NDA, then, until the earliest of the date of (a) approval of the Alkermes 8700Product 505(b)(2) NDA, (b) an Alkermes Approval Failure or (c) any notice of termination of thisAgreement, Biogen will, within two (2) Business Days of the occurrence of the events set forth in theforegoing clauses (i) and (ii), grant to Alkermes a fully paid-up and royalty-free right of reference tosuch U.S. Regulatory Approvals for Tecfidera and related submissions filed with the FDA, for thesole purpose of obtaining Regulatory Approval of the Alkermes 8700 Product 505(b)(2) NDA. Upon such grant of a right of reference, Biogen will take such actions as may be reasonably requestedby Alkermes to give effect to the intent and benefit of such right of reference as set forth in this Section3.3.2.3.3.3.Other Products. Biogen shall have the unilateral right, in its sole discretion andat its own cost and expense, to submit any regulatory filings, including INDs and NDAs for, and seekRegulatory Approval of, any Products in the Field in the Territory, other23 ®® than the Alkermes 8700 Product in the Initial Indication in the U.S., prior to the date of the AlkermesApproval Failure.3.3.4.Alkermes Approval Failure. Notwithstanding anything else in this Agreement,in the event of an Alkermes Approval Failure, Biogen shall have no obligation to Exploit (including,for clarity, to seek Regulatory Approval for) the Alkermes 8700 Product. In addition, in the event ofsuch an Alkermes Approval Failure, upon written agreement of the Parties, Alkermes may conductadditional Development of the Alkermes 8700 Product in the Initial Indication in the U.S. at its owncost and expense, including Clinical Trials (and, for clarity, the costs of such Development activitieswill not be treated as Development Costs for purposes of this Agreement unless otherwise agreed bythe Parties).3.4.Regulatory Meetings and Communications. 3.4.1.Responsibilities for the Alkermes 8700 Product in the Initial Indication inthe U.S. Until the Transfer Completion Date, Alkermes shall be primarily responsible for conductingmeetings and discussions with the FDA related to the Alkermes 8700 Product in the Initial Indication,subject to Section 3.4.3.3.4.2.Responsibilities for Other Products. Biogen shall have the unilateral right,itself or through its Affiliates, Sublicensees, subcontractors or Distributors, to conduct meetings anddiscussions with Regulatory Authorities in the Territory related to Products in the Field, other than,prior to the Transfer Completion Date, discussions with the FDA related to the Alkermes 8700 Productin the Initial Indication, in its sole discretion.3.4.3.Regulatory Authority Communications by Alkermes. (i)Alkermes shall give Biogen reasonable advance notice ofmeetings and discussions, including meetings or discussions that take place via teleconference orvideoconference, with the FDA related to the Alkermes 8700 Product in the Initial Indication, andBiogen shall have the right to send one (1) representative of its regulatory department with expertise inmatters related to interactions with Regulatory Authorities to participate in person at all such meetingsand discussions. (ii)If Alkermes has written communications with the FDA(other than administrative correspondence) relating to the Alkermes 8700 Product in the InitialIndication, then Alkermes shall notify Biogen and, (a) as soon as practicable, but in no case later thanforty-eight (48) hours following receipt of any such written communication from the FDA, provide acopy to Biogen of such communication(s) and (b) no later than twenty-four (24) hours in advance ofsending any written communication to the FDA in response to such FDA communication, provide anadvance copy to Biogen of any such written communication. Alkermes shall provide to Biogensubstantive drafts of the NDA for the Alkermes 8700 Product in the Initial Indication prior to itssubmission, (a) following completion of material modules of such NDA or (b) at the request of Biogen.Alkermes shall consider in good faith any comments received from Biogen’s representative related tothe draft NDA for the Alkermes 8700 Product in the Initial Indication, communications with the FDAas set forth in this Section 3.4.3(ii) and any Post-Marketing Commitments, in each case, as described inthis Section 3.4. In the event that, at24  any time prior to the Transfer Completion Date, Biogen receives any written communication from theFDA relating to the Alkermes 8700 Product in the Initial Indication, Biogen shall notify Alkermes andprovide a copy to Alkermes of any such written communication promptly following suchcommunication’s receipt. Prior to the Transfer Completion Date, Biogen shall not respond to any suchcommunication but shall permit Alkermes to respond on Biogen’s behalf; provided, however, thatBiogen shall have the right to respond to communications from the FDA to the extent reasonablyrequired to comply with Applicable Laws. (iii)In the event that, at any time during the Term, Alkermesreceives any written communication from any Regulatory Authority relating to any Product, other thanany such communication from the FDA relating to the Alkermes 8700 Product in the Initial Indicationprior to the Transfer Completion Date, Alkermes shall notify Biogen and provide a copy to Biogen ofany such written communication promptly following receipt of such communication. Alkermes shallnot respond to any such communication and instead shall permit Biogen to respond on Alkermes’behalf; provided, however, that during any period in which Alkermes is responsible for Manufacturingany Product, Alkermes shall have the right to respond to communications from the FDA or otherRegulatory Authority to the extent solely related to the Manufacture of a Product by or on behalf ofAlkermes or its Affiliate or reasonably required to comply with Applicable Laws.3.5.Debarment Limitations. In the course of Development of the Products in theTerritory by or on behalf of a Party, each Party shall not knowingly use any employee or consultantwho is or has been debarred by the FDA or any other Regulatory Authority, or, to the best of suchParty’s knowledge, who is or has been the subject of debarment proceedings by the FDA or any suchRegulatory Authority. Such Party shall promptly notify the other Party of, and provide the other Partywith a copy of, any correspondence or other reports that such Party receives from any Third Party withrespect to any use of a debarred employee or consultant in connection with such Party’s performanceof its obligations under this Agreement.3.6.Compliance. Each Party shall conduct its Development activities under thisAgreement in compliance with all Applicable Laws and the terms and conditions set forth in thisAgreement.3.7.Safety Reporting. Within sixty (60) days after the Effective Date, the Parties shallenter into a mutually acceptable safety data exchange agreement, setting forth guidelines andprocedures for the receipt, investigation, recordation, review, communication, and exchange (asbetween the Parties) of adverse event reports, pregnancy reports, technical complaints and any otherinformation concerning the safety of the Products, as well as safety governance and decision-makingroles. Such guidelines and procedures shall be in accordance with, and enable the Parties and theirAffiliates to fulfill, reporting obligations to the FDA or any other Regulatory Authority. Furthermore,such guidelines and procedures shall be consistent with relevant International Council onHarmonization (ICH) guidelines, except where said guidelines may conflict with reportingrequirements of local Regulatory Authorities, in which case local reporting requirements shallprevail. The Parties’ costs incurred in connection with receiving, investigating, recording, reviewing,communicating and exchanging adverse events and other reportable information as provided in suchsafety data exchange agreement shall be included as an element of Development Costs (to the extentrelating to the Development of a Product).25  3.8.Development Costs. 3.8.1.Development Costs Incurred by Alkermes. Biogen shall be responsible forfifty percent (50%) of all Development Costs in excess of the first Fifty-Six Million U.S. Dollars(US$56,000,000) incurred by Alkermes in the conduct of the activities under the Initial DevelopmentPlan during Calendar Year 2017. Starting with Calendar Year 2018 and thereafter until the completionof the activities allocated to Alkermes under the Initial Development Plan, Biogen shall be responsiblefor all Development Costs incurred by Alkermes in the conduct of its activities in the InitialDevelopment Plan, to the extent such Development Costs do not exceed [**] percent ([**]%) of theaggregate costs and expenses set forth in the annual budget for the Initial Development Plan for eachsuch Calendar Year. Subject to the last sentence of Section 3.9, (a) to the extent Alkermes incurs anyDevelopment Costs that exceed [**] percent ([**]%) of the aggregate costs and expenses set forth inthe annual budget for the Initial Development Plan for such Calendar Year, each Party shall beresponsible for [**] percent ([**]%) of such excess amounts, up to an amount equal to [**] percent([**]%) of the aggregate costs and expenses set forth in the annual budget for the Initial DevelopmentPlan for such Calendar Year and (b) to the extent Alkermes incurs any Development Costs that exceed[**] percent ([**]%) of the aggregate costs and expenses set forth in the annual budget for the InitialDevelopment Plan for such Calendar Year, Alkermes shall be responsible for such excess amounts;provided that, if the Alkermes 8700 Product 505(b)(2) NDA receives Regulatory Approval from theFDA prior to December 31, 2021, then Biogen will reimburse Alkermes for [**] percent ([**]%) of allsuch Development Costs in excess of [**] percent ([**]%) of the aggregate costs and expenses setforth in the annual budget for the Initial Development Plan for such Calendar Year to the extent thatsuch Development Costs are incurred in the performance of activities that generate data and results thatare submitted as part of such approved Alkermes 8700 Product 505(b)(2) NDA. 3.8.2.Development Costs Incurred by Biogen. Biogen shall be solely responsible forall Development Costs incurred by Biogen.3.8.3.Development Costs Payments. Biogen will, within forty-five (45) days afterthe end of Calendar Year 2017, pay Alkermes the Development Costs due under Section 3.8.1 forsuch Calendar Year. Starting with Calendar Year 2018 and thereafter, for each Calendar Quarter forwhich Development Costs are payable by Biogen to Alkermes pursuant to Section 3.8.1, Biogen will,within forty-five (45) days after the receipt of an invoice from Alkermes for such Development Costs,pay Alkermes the amount due for such Calendar Quarter. 3.9.Initial Development Plan Budget. Responsibility for amendments to the InitialDevelopment Plan budget shall rest with the DT, subject to review and approval by the JSC. Updatesto such budget will be prepared on an annual basis as set forth in Section 3.1.2. In addition, ifAlkermes identifies a potential overage of greater than [**] percent ([**]%) of the aggregate costs andexpenses expected to be incurred in performing Development activities pursuant to the InitialDevelopment Plan for a given Calendar Year, then Alkermes shall notify Biogen of such potentialoverage (through the DT). Following such notice, the DT shall discuss in good faith at its next meetingwhether to make any amendment to the Initial Development Plan budget to account for such potentialoverage, which amendment, if applicable, shall be presented to the JSC for its review andapproval. Notwithstanding anything to the contrary set26  forth in this Agreement, Biogen shall not be responsible for bearing its share of any DevelopmentCosts that exceed [**] percent ([**]%) of the amounts set forth in the annual budget under the InitialDevelopment Plan in accordance with Section 3.8.1 to the extent that such excess Development Costsare incurred as a result of (i) Alkermes’ failure to perform its Development obligations in accordancewith the Initial Development Plan or this Agreement, or (ii) a delay in Development of the Alkermes8700 Product due to the gross negligence or willful misconduct of Alkermes.Article 4COMMERCIALIZATION4.1.Commercialization Rights. During the Term, Biogen shall have the unilateral right,itself or through its Affiliates, Sublicensees, subcontractors or Distributors, to Commercialize theProducts in the Field in the Territory in its sole discretion. 4.2.Commercialization Efforts. Subject to Section 3.3.4, following (i) receipt ofRegulatory Approval for the Alkermes 8700 Product in the Initial Indication in the U.S., (ii) theTransfer Completion Date and (iii) the completion of any Post-Marketing Commitments that the FDArequires be completed prior to the commencement of Commercialization activities, Biogen shall useCommercially Reasonable Efforts to Commercialize the Alkermes 8700 Product in the InitialIndication in the U.S. 4.3.Commercialization Costs. Biogen shall be responsible for all costs of conductingCommercialization of Products. 4.4.Compliance. Biogen shall Commercialize the Products in the Field in the Territory incompliance with all Applicable Laws, the Code, the OIG Guidance and the terms and conditions setforth in this Agreement.Article 5MANUFACTURE AND SUPPLY5.1.Supply and Quality Agreements. 5.1.1.Clinical Supplies. Within ninety (90) days after the Effective Date, the Partieswill negotiate in good faith and execute a Clinical Supply Agreement pursuant to which Alkermes willManufacture or have Manufactured, and Biogen and its Affiliates and Sublicensees will purchaseexclusively from Alkermes, Clinical Supplies (provided that Biogen may qualify to Manufacture, orengage and qualify a Third Party to Manufacture, Clinical Supplies as a back-up manufacturer in theevent of a Force Majeure Delay or a Serious Failure to Supply). The Clinical Supply Agreement willreflect the terms and conditions included in Exhibit D and such other commercially reasonable andcustomary terms and conditions, satisfactory in form and substance to the Parties and their legaladvisors, as are necessary or appropriate for transactions of this type and that will allow Biogen to besupplied with Product in a manner appropriate to meet its obligations and exercise its rights under thisAgreement, subject to both Parties’ compliance with the terms and conditions of such Clinical SupplyAgreement.27  Notwithstanding anything to the contrary set forth in this Agreement or the Clinical Supply Agreement,the Fully Burdened Manufacturing Costs of Clinical Supplies will be included in the DevelopmentCosts under this Agreement and will not be charged to Biogen under the Clinical Supply Agreement.Within one hundred and twenty (120) days after the Effective Date, the Parties will negotiate in goodfaith and execute a technical and quality agreement, which will be appended to the Clinical SupplyAgreement and which will specify certain quality assurance and quality control requirements relating tothe Manufacture of such Clinical Supplies. Notwithstanding anything to the contrary set forth in thisSection 5.1.1, if (i) Alkermes foregoes its exclusive right to Manufacture or have ManufacturedClinical Supplies or (ii) there is a Serious Failure to Supply, then, in any case ((i) – (ii)), (a) Biogen andits Affiliates and Sublicensees shall have no further obligation to purchase Clinical Supplies fromAlkermes, (b) Biogen shall have the exclusive right to Manufacture or to have Manufactured ClinicalSupplies and (c) Alkermes shall promptly conduct a transfer of Manufacturing technology to Biogen orits designee to enable Biogen or such designee to Manufacture Clinical Supplies. In addition, in theevent of a Force Majeure Delay (and for the duration thereof), until such time as Alkermes is able toresume sufficient Manufacturing to meet Biogen’s demand for Clinical Supplies, Biogen mayManufacture itself or have Manufactured by its back-up manufacturer, all Clinical Supplies for whichAlkermes is unable to meet Biogen’s demand.5.1.2.Commercial Supplies. Pursuant to this Agreement, Biogen has the right toManufacture or have Manufactured Commercial Supplies. Biogen has considered in good faith, andhereby appoints, Alkermes as the toll manufacturer for such Commercial Supplies forCommercialization in the Territory at a site outside of the United States, and Biogen and its Affiliatesand Sublicensees will purchase Commercial Supplies exclusively from Alkermes (provided thatBiogen may qualify to Manufacture, or engage and qualify a Third Party to Manufacture, CommercialSupplies as a back-up manufacturer so long as such Third Party Manufacturer does not Manufacturemore than [**] percent ([**]%) of Commercial Supplies in the aggregate in any Calendar Year, exceptin the event of a Force Majeure Delay or a Serious Failure to Supply). This appointment is subject tothe Parties negotiating in good faith and entering into a commercial supply agreement pursuant towhich Biogen would engage Alkermes on a toll manufacturing basis to Manufacture CommercialSupplies and Biogen would purchase such Commercial Supplies in accordance with the terms andconditions included in Exhibit E and such other commercially reasonable and customary terms andconditions, satisfactory in form and substance to the Parties and their legal advisors, as are necessary orappropriate for transactions of this type and that will allow Biogen to be supplied with Product in amanner appropriate to meet its obligations and exercise its rights under this Agreement, subject to bothParties’ compliance with the terms and conditions of such commercial supply agreement. Inconnection with such commercial supply agreement, the Parties will also negotiate in good faith andexecute a technical and quality agreement, which will be appended to the commercial supplyagreement and which will specify certain quality assurance and quality control requirements relating tothe Manufacture of such Commercial Supplies. If, following the use of good faith efforts, the Partiesare unable to reach agreement on the terms of a commercial supply agreement within a period of six (6)months from the commencement of negotiations, then Biogen shall have the right (in its sole discretion)to Manufacture or have Manufactured Commercial Supplies. Notwithstanding anything to the contraryset forth in this Section 5.1.2, if (i) Alkermes foregoes its exclusive right to Manufacture or haveManufactured Commercial Supplies, (ii) Alkermes undergoes a Change of Control in which theacquirer is a competitor of28  Biogen set forth on Schedule 5.1 or a Third Party toll manufacturer that Manufactures a competingfumarate product or (iii) there is a Serious Failure to Supply, then, in any case ((i) – (iii)), (a) Biogenand its Affiliates and Sublicensees shall have no further obligation to exclusively purchase CommercialSupplies from Alkermes, (b) Biogen shall have the exclusive right to Manufacture or to haveManufactured Commercial Supplies and (c) Alkermes shall promptly conduct a transfer ofManufacturing technology to Biogen or its designee to enable Biogen or such designee to ManufactureCommercial Supplies. In addition, in the event of a Force Majeure Delay (and for the duration thereof),until such time as Alkermes is able to resume sufficient Manufacturing to meet Biogen’s demand forCommercial Supplies, Biogen may Manufacture itself or have Manufactured by its back-upmanufacturer, all Commercial Supplies for which Alkermes is unable to meet Biogen’s demand.5.2.Supply Team. The Parties will establish a supply team (the “ST”) pursuant to theprovisions of the Clinical Supply Agreement. The ST will report to the JSC.Article 6LICENSE GRANTS6.1.Patent and Know-How License Grant. 6.1.1.Grant to Biogen. Subject to the terms and conditions of this Agreement,Alkermes hereby grants to Biogen an exclusive (even as to Alkermes and its Affiliates, except asexpressly set forth in Section 6.1.4), royalty-bearing, worldwide license, with the right to sublicensethrough multiple tiers pursuant to Section 6.1.2, under the Licensed Patents and the Licensed Know-How to Exploit the Products in the Field in the Territory.6.1.2.Sublicenses. Biogen will have the right to grant sublicenses through multipletiers to Affiliates and Third Parties of the rights granted to Biogen under this Agreement in accordancewith the terms and conditions of this Section 6.1.2. The grant of any such sublicense will not relieveBiogen of its obligations under this Agreement (including its financial obligations). In addition, suchsublicense will be consistent in all respects with all applicable terms and conditions of thisAgreement. With respect to any sublicense with a Sublicensee other than an Affiliate, Biogen shallprovide Alkermes with a copy of such sublicense, and any modification or termination thereof,promptly after execution of such sublicense, modification or termination (and in any event within thirty(30) days after such sublicense has been fully executed or modified or termination of such sublicensehas occurred); provided that any such copy may be redacted to remove any confidential, proprietary orcompetitive information of Biogen or its Sublicensee, and any other information not necessary forAlkermes to assess Biogen’s compliance with the terms of this Section 6.1.2.6.1.3.No Implied Licenses; Negative Covenant. Except as expressly granted herein,neither Party grants to the other Party any right or license under any intellectual property rightsControlled by such first Party. 6.1.4.Alkermes Reservation of Rights. The license granted in Section 6.1.1 is subjectto a reserved non-exclusive, non-transferable, and, except as necessary or29  useful for Alkermes to Manufacture Clinical Supplies and Commercial Supplies in accordance withthis Agreement and the applicable Supply Agreements, non-sublicenseable right of Alkermes under theLicensed Patents and Licensed Know-How solely to exercise its rights and perform its obligationsunder this Agreement and any Supply Agreement.6.2.Patent Update. At least once annually, Alkermes will provide to Biogen an update tothe list of Licensed Patents set forth on Exhibit B, and Exhibit B shall automatically be modified toinclude such updates. Notwithstanding the foregoing, and for the avoidance of doubt, any Patent Rightthat satisfies the definition of a “Licensed Patent” under Section 1.1.58 shall automatically constitute aLicensed Patent under this Agreement, notwithstanding any failure or delay in including such PatentRight on the list of Licensed Patents set forth on Exhibit B.6.3.Termination of License to Contested Patent Rights. If Biogen or any of itsAffiliates or Sublicensees initiates or provides financial support (other than equity funding) orinformation to a Third Party for purposes of initiating any action or proceeding in any forum ofcompetent jurisdiction in the Territory (including a court, a patent office or an arbitral tribunal, andwhether in the form of petitions for declaratory relief, claims, counterclaims, defenses, interferences,petitions for reexamination, inter partes review, post-grant review, or otherwise, but excluding anyaction that may be necessary or reasonably required in response to a subpoena or court oradministrative law request or order) that any Patent Right (or any claim thereof) within the LicensedPatents is unpatentable, invalid, unenforceable, or not infringed (any such action or proceeding, a“Patent Action”) and a final, non-appealable order is made in any such forum that such Patent Right orclaim thereof is patentable, valid, enforceable or infringed, as applicable, then Alkermes, as the licensorof the Licensed Patents under this Agreement, may at its discretion, (a) invoice Biogen for all expensesincurred by Alkermes in such Patent Action, including reasonable attorneys’ fees, experts’ fees andother costs of investigation or defense, court costs and other litigation expenses, and Biogen shall payall undisputed amounts set forth in such invoice within sixty (60) days after receipt of such invoice, (b)terminate its license to Biogen pursuant to this Article 6 to such Patent Right, whereupon such PatentRight will no longer be deemed to be within the Licensed Patents or (c) take both actions outlined inclauses (a) and (b) of this sentence. Notwithstanding the foregoing, (1) if any Affiliate of Biogen thatbecomes an Affiliate of Biogen through a Change of Control of Biogen is engaged in a Patent Actionat the time of such Change of Control, the provisions of this Section 6.3 shall not be deemed to applyas a result of such Patent Action by such Affiliate of Biogen, (2) Biogen shall have the right to defenditself against any action or proceeding in any forum of competent jurisdiction in the Territory broughtby Alkermes or any of its Affiliates or Sublicensees alleging infringement of any Patent Right and (3)in the case of a Patent Action by a Sublicensee, Alkermes shall not have the right to take the actionsdescribed in the preceding sentence unless Biogen fails to either terminate the applicable sublicense orcause the Sublicensee to cease pursuing such Patent Action within sixty (60) days of the date thatBiogen becomes aware of such Patent Action.6.4.Non-Suit. During the Term until the Transfer Completion Date, Biogen, on behalf ofitself and of any Affiliates, Sublicensees, successors and assigns, agrees on a worldwide basis not tofile or maintain any lawsuit, cause of action or other legal action against Alkermes or its Affiliatesunder any Patent Rights Controlled by Biogen that Cover the Alkermes 8700 Product solely forpurposes of Exploiting the Alkermes 8700 Product in accordance with30  this Agreement. Biogen shall cause all of its Affiliates, Sublicensees, successors and assigns to bebound by the obligations of this Section 6.4. 6.5.Non-Interference. During the Term until the Transfer Completion Date, Biogen andits Affiliates, Sublicensees, successors and assigns shall not, and shall not cause or provide support toany Third Party to, initiate or otherwise undertake any of the following actions against the Alkermes8700 Product: interfering with efforts to obtain and maintain Regulatory Approval of the Alkermes8700 Product in the U.S., or advocating for non-approval or limited Regulatory Approval of theAlkermes 8700 Product in the U.S., including the filing of a lawsuit against the FDA or the filing orsubmission of any Citizen Petitions, correspondence or other written submissions with the FDA. Biogen shall cause all of its Affiliates, Sublicensees, successors and assigns to be bound by theseobligations. 6.6.Exclusivity. During the Term, neither Party nor any of such Party’s Affiliates, orSublicensees (who are granted research and Development rights under this Agreement), shall (i)directly or indirectly research, develop or commercialize any pro-drug or salt of MMF or DMF or (ii)acquire any right, title or interest from a Third Party in any pro-drug or salt of MMF or DMF, except,in each case (i) or (ii), with respect to the conduct of such activities by Biogen or its Affiliates withrespect to Tecfidera and Fumaderm (in each case, using the same active pharmaceutical ingredient(s)included in Tecfidera or Fumaderm, as applicable, as of the Effective Date, in any form, formulation,combination, administration, dosage or delivery mechanism (but not including any pro-drug or salt ofDMF or MMF (other than DMF))) or any Product. Notwithstanding anything to the contrary in thisAgreement, upon a finding of GI Inferiority of the Alkermes 8700 Product, (a) if Biogen hasCommercialized the Alkermes 8700 Product, then the exclusivity obligations of Alkermes and itsAffiliates set forth in this Section 6.6 shall remain in effect, and the exclusivity obligations of Biogenand its Affiliates and Sublicensees (who are granted research and Development rights under thisAgreement) set forth in this Section 6.6 shall automatically terminate or (b) if Biogen has notCommercialized the Alkermes 8700 Product in the U.S. within six (6) months after the receipt ofRegulatory Approval for the Alkermes 8700 Product in the Initial Indication in the U.S. and thecompletion of any Post-Marketing Commitments that the FDA requires be completed prior to thecommencement of Commercialization activities, then the exclusivity obligations of Alkermes andBiogen and their respective Affiliates, and with respect to Biogen, Sublicensees (who are grantedresearch and Development rights under this Agreement), set forth in this Section 6.6 shall automaticallyterminate. In the event that a Party or its Affiliate, or Sublicensee (who is granted research anddevelopment rights under this Agreement), obtains, whether through acquisition, merger or othersimilar transaction, control of any entity that is engaging in any activities that would cause such Party tobreach this Section 6.6, then such Party shall not be deemed in breach of this Section 6.6 if (1) suchParty or its Affiliate or, with respect to Biogen, Sublicensee, or the applicable entity divests such rights(through sale, exclusive license or other transfer) within six (6) months from the date such rights areobtained and (2) all activities by such Party or its Affiliate or Sublicensee with respect to the applicablecompetitive compound or product during such six (6)-month period are conducted independently of theactivities conducted by such Party or its Affiliates or Sublicensees pursuant to this Agreement withcustomary firewall separations, and no intellectual property of such Party or its Affiliates or the otherParty or its Affiliates relating to any Product is used in the conduct of such activities. Notwithstandinganything to the contrary in this Section 6.6, if a Party or its Affiliate or31 ®®®® Sublicensee undergoes a Change of Control (in the case of a Sublicensee, applying that term as if suchSublicensee were a Party) in which the acquirer or its Affiliate (in each case, that was not an Affiliateof such Party prior to such Change of Control) is engaging in any activities that would cause suchParty to breach this Section 6.6, such Party shall not be deemed to be in breach of this Section 6.6 as aresult of such Change of Control, provided that, during the period in which such Party is subject toexclusivity obligations under this Section 6.6, all activities by such Party or its Affiliate or Sublicenseewith respect to the applicable competitive compound or product are conducted independently of theactivities conducted pursuant to this Agreement with customary firewall separations, and no intellectualproperty of such Party or its Affiliates or the other Party or its Affiliates relating to any Product is usedin the conduct of such activities.Article 7INTELLECTUAL PROPERTY RIGHTS7.1.Ownership of Intellectual Property. 7.1.1.Product Trademarks. Biogen may, in its sole discretion, select anytrademarks, trade dress, designs, logos or slogans to be used in connection with the Exploitation of theProducts in the Field in the Territory (collectively, the “Product Trademarks”) and will own all suchProduct Trademarks. Neither Alkermes nor its Affiliates shall use or seek to register, anywhere in theworld, any trademarks that are confusingly similar to any Product Trademark. 7.1.2.Collaboration Technology.(i)Ownership. Alkermes shall own all rights, title andinterests in and to any and all Alkermes Collaboration Know-How and Alkermes CollaborationPatents. Biogen shall own all rights, title and interests in and to any and all Biogen CollaborationKnow-How and Biogen Collaboration Patents. The Parties shall jointly own any and all CollaborationKnow-How invented jointly by a Party’s or its Affiliates’ employees, agents or independentcontractors, on the one hand, and the other Party’s or its Affiliates’ employees, agents or independentcontractors, on the other hand, in the performance of activities under the Initial Development Planduring the Term (“Joint Collaboration Know-How”), and any and all Collaboration Patents Coveringsuch Collaboration Know-How (“Joint Collaboration Patents” and, collectively with the JointCollaboration Know-How, the “Joint Collaboration Technology”). Subject to Section 6.6 and thelicenses granted under this Agreement, each Party shall be free to exploit, either itself or through thegrant of licenses to Third Parties (which Third Party licenses may be further sublicensable), its rights inand to the Joint Collaboration Technology, throughout the world without restriction, without the needto obtain further consent from the other Party, and without any duty to account or payment of anycompensation to the other Party; provided, however, that if either Party disclaims in writing itsownership interest in any Joint Collaboration Technology, then such Joint Collaboration Technologyshall become solely owned by the other Party and such disclaiming Party will and hereby does assignto the other Party its rights, title and interests in and to such disclaimed CollaborationTechnology. Inventorship of any Collaboration Technology shall be determined in accordance withUnited States patent laws. 32  (ii)Assignment of Inventions. To the extent either Party orany of its Affiliates obtains any rights, title or interests in or to any Collaboration Technology of theother Party, such first Party, on behalf of itself and its Affiliates, hereby assigns to the other Party allsuch rights, title and interests to the extent necessary to effectuate the allocation of ownership set forthin Section 7.1.2(i). Each employee, agent or independent contractor (including all subcontractors) of aParty or its respective Affiliates performing work under this Agreement shall, prior to commencingsuch work, be bound by invention assignment obligations, including: (a) promptly reporting anyinvention, discovery, process or other intellectual property right; (b) presently assigning to theapplicable Party or Affiliate all of his or her right, title and interest in and to any invention, discovery,process or other intellectual property; (c) cooperating in the preparation, filing, prosecution,maintenance and enforcement of any patent or patent application; and (d) performing all acts andsigning, executing, acknowledging and delivering any and all documents required for effecting theobligations and purposes of this Agreement. It is understood and agreed that such inventionassignment agreement need not reference or be specific to this Agreement.7.2.Disclosure of Inventions. During the Term, each Party will promptly (but no laterthan sixty (60) days following such Party’s receipt of an invention disclosure) provide to the otherParty any invention disclosure submitted to such Party that discloses any Collaboration Technology.7.3.Patent Committee. Each Party will appoint one (1) representative with patent andintellectual property expertise no later than forty-five (45) days after the Effective Date. Suchrepresentatives (the “Patent Committee”) will meet (in person, by telephone or videoconference) uponrequest by either Party during the Term to coordinate, discuss, and review strategies with respect toProsecuting and enforcing the Licensed Patents and the Joint Collaboration Patents. 7.4.Patent Filings. 7.4.1.Prosecution. (i)By Alkermes. Alkermes will have the first right, at itsown cost and expense and using patent counsel of its choosing, to prepare, file, prosecute and maintainthe Licensed Patents and the Joint Collaboration Patents, including any appeal proceeding made at theapplicable patent office following such patent office’s failure to issue any such patent (collectively,“Prosecution” and when used as a verb, “Prosecute” means to engage in Prosecution). Alkermes willprovide Biogen with copies of all material documents and correspondence relating to the Prosecutionof the Licensed Patents and the Joint Collaboration Patents (a) promptly after receipt, with respect tocommunications from applicable patent authorities and (b) a reasonable time in advance of filing, fordocuments to be filed by Alkermes, in each case (a) and (b), to allow Biogen time to review suchmaterials and comment thereon. Alkermes will reasonably consider Biogen’s reasonable comments onthe documents filed, but Alkermes will not be obligated to implement such comments. Biogen willprovide Alkermes all reasonable assistance in the Prosecution of such Licensed Patents and JointCollaboration Patents, including by making its employees, agents and consultants reasonably availableto Alkermes (or33  Alkermes’ authorized attorneys, agents or representatives), to the extent reasonably necessary to enableAlkermes to undertake Prosecution as contemplated by this Agreement. (ii)By Biogen. If Alkermes elects to halt Prosecution of anypatents or patent applications within the Licensed Patents or the Joint Collaboration Patents in anycountry in the Territory, then Alkermes will notify Biogen in a timely manner to permit thepreservation of any rights in such country with respect to such Licensed Patents or Joint CollaborationPatents. Following written notification from Biogen to Alkermes that Biogen wishes to assumeProsecution of such Licensed Patents or Joint Collaboration Patents in such country, Alkermes willpermit Biogen to so assume Prosecution of such Licensed Patents or Joint Collaboration Patents (asapplicable), at its own cost and expense and using patent counsel of its choosing. In addition, andnotwithstanding anything to the contrary set forth in this Agreement, Biogen will have the first right, atits sole cost and expense and using patent counsel of its choosing, to direct and control any patentinterferences, reexaminations, inter partes reviews, reissuances, revocations, oppositions and appealsfrom any such proceedings of the Licensed Patents and the Joint Collaboration Patents (collectively,“Protection”). Alkermes will provide Biogen reasonable assistance in the Prosecution and Protectionof such Licensed Patents or Joint Collaboration Patents, including by making its employees, agents andconsultants reasonably available to Biogen (or Biogen’s authorized attorneys, agents orrepresentatives), to the extent reasonably necessary to enable Biogen to undertake Prosecution andProtection as contemplated by this Agreement. If Biogen elects to halt Protection of any patents orpatent applications within the Licensed Patents or the Joint Collaboration Patents in any country in theTerritory, then Biogen will notify Alkermes in a timely manner to permit the preservation of any rightsin such country with respect to such Licensed Patents or Joint Collaboration Patents. Followingwritten notification from Alkermes to Biogen that Alkermes wishes to assume Protection of suchLicensed Patents or Joint Collaboration Patents in such country, Biogen will permit Alkermes to soassume Protection of such Licensed Patents or Joint Collaboration Patents (as applicable) at its owncost and expense and using patent counsel of its choosing. Biogen will provide reasonable assistance inthe Protection of such Licensed Patents or Joint Collaboration Patents, including by making itsemployees, agents and consultants reasonably available to Alkermes (or Alkermes’ authorizedattorneys, agents or representatives), to the extent reasonably necessary to enable Alkermes toundertake Protection as contemplated by this Agreement. Notwithstanding the foregoing, Biogen shallforfeit its right to control Protection of any Licensed Patents and Joint Collaboration Patents that are orbecome subject to a Patent Action under Section 6.3.(iii)Other Patent Rights. Except as expressly provided inthis Section 7.4.1, each Party shall have the sole right, in its sole discretion, to conduct Prosecution ofany Patent Rights owned by such Party.7.4.2.Common Interest. All information exchanged between the Parties or betweenthe Parties’ outside patent counsel regarding Prosecution of the Licensed Patents, and the JointCollaboration Patents shall be deemed Confidential Information of the prosecuting Party subject toArticle 8. In addition, the Parties acknowledge and agree that, with regard to Prosecution of theLicensed Patents and the Joint Collaboration Patents, the interests of the Parties as licensor and licenseeare aligned and are legal in nature. The Parties agree and acknowledge that they have not waived, andnothing in this Agreement constitutes a waiver of,34  any legal privilege concerning the Licensed Patents or the Joint Collaboration Patents, includingprivilege under the common interest doctrine and similar or related doctrines.7.4.3.Patent Term Extensions. The Parties will use reasonable efforts and cooperatewith one another to obtain all available supplementary protection certificates, patent term restorationsand other patent extensions with respect to the Products, and to make any filings with respect thereto.Alkermes will cooperate with Biogen with respect to any such filings, including by executing suchauthorizations and other documents and taking such other actions as may be reasonably requested byBiogen to obtain such extensions. 7.5.Enforcement Rights. 7.5.1.Notification of Infringement. If either Party learns of any actual or threatenedinfringement by a Third Party of a Licensed Patent or Collaboration Patent in the Territory or, otherthan Prosecution-related matters, any attack by a Third Party on the validity or enforceability of aLicensed Patent or Collaboration Patent in the Territory, including any certification received by suchParty under the U.S. Drug Price Competition and Patent Term Restoration Act of 1984 (Public Law98-417, as amended, the “Hatch-Waxman Act”), with respect to a Licensed Patent or CollaborationPatent and a Product in the Field (each, an “Infringement”), such Party will promptly, and in any eventwithin five (5) days, notify the other Party and will provide the other Party with available evidence ofsuch events. 7.5.2.Enforcement of Licensed Patents and Joint Collaboration Patents. (i)Biogen shall have the first right, but not the obligation, at its own cost andexpense and using counsel of its choosing, to institute any action, suit or proceeding against anyInfringement of a Licensed Patent or Joint Collaboration Patent. Biogen shall have the right to causeAlkermes to join Biogen as a party plaintiff to any such action, suit or proceeding, at Biogen’s soleexpense. Biogen will keep Alkermes reasonably informed regarding such action, suit or proceedingand will reasonably consider Alkermes’ input regarding such action, suit or proceeding. (ii)If, after sixty (60) days following the date of notice given pursuant toSection 7.5.1 (or at least twenty (20) days before the expiration of any time limit set forth under 21U.S.C. §355), Biogen has not provided written notification to Alkermes that Biogen will institute anaction, suit or proceeding against the applicable Infringement or provided Alkermes with informationand arguments demonstrating that there is insufficient basis for the allegation of such Infringement, thenAlkermes shall have the right, but not the obligation, at its own cost and expense and using counsel ofits choosing, to institute any action, suit or proceeding against such Infringement, provided that, ifBiogen provides notice to Alkermes that Biogen has determined, for reasons related to the benefit ofthe Alkermes 8700 Product in the aggregate not to institute an action, suit or proceeding against suchInfringement, Alkermes shall not have the right to institute an action, suit or proceeding against suchInfringement. Notwithstanding the foregoing provisions of this Section 7.5.2(ii), if Biogen forms agood faith belief that instituting an action, suit or proceeding against such Infringement would notbenefit the Alkermes 8700 Product in the aggregate, then Biogen shall consult with Alkermes in35  reasonable detail regarding Biogen’s reasonable good faith rationale for such determination, and if aftersuch consultation with Alkermes, Biogen maintains such belief in good faith, then Alkermes shall agree to a reasonable request from Biogen not to institute any such action, suit or proceeding againstsuch Infringement; provided that, if the Parties disagree as to whether any such request from Biogennot to institute any such action, suit or proceeding against such Infringement is reasonable, thenAlkermes will not institute any such action, suit or proceeding against such Infringement unless anduntil (a) in the case of an abbreviated new drug application (“ANDA”) under the Hatch-Waxman Act,Senior Management has attempted in good faith to discuss and resolve such disagreement at least five(5) days before the expiration of any time limit set forth under 21 U.S.C. §355 (and each Party agreesthat it will use its best efforts to make its respective Senior Management available for such discussionwithin such timeframes) and (b) other than in the case of an ANDA, such request by Biogen isdetermined not to be reasonable in accordance with the Senior Management escalation and disputeresolution procedure set forth in Section 12.1.2 and, if such dispute remains unresolved after suchprocedure, then in accordance with the procedure set forth in Section 12.1.3, which escalation anddispute resolution procedures shall be conducted in an expedited manner so as to allow Alkermes toproceed with an action, suit or proceeding against such Infringement if such request by Biogen isdetermined not to be reasonable. In connection with any action, suit or proceeding pursuant to thisSection 7.5.2, the Parties will cooperate with and assist each other in all reasonable respects.7.5.3.Recoveries. In the event that either Party exercises the rights conferred inSection 7.5.2 and recovers any damages or other sums in such action, suit or proceeding or insettlement thereof, such damages or other sums recovered shall first be applied to all reasonable out-of-pocket costs and expenses incurred by the Parties in connection therewith, including attorneys’ fees. Ifsuch recovery is insufficient to cover all such costs and expenses of both Parties, it shall be shared prorata in proportion to the total of such costs and expenses incurred by each Party. If, after suchreimbursement, any funds shall remain from such damages or other sums recovered, and (i) if Biogeninstitutes the action, suit or proceeding pursuant to Section 7.5.2(i) that results in such damages or othersums recovered, then Biogen shall pay Alkermes a payment calculated by multiplying the applicableroyalty rate for the Alkermes 8700 Product (that Biogen would have paid to Alkermes if such damagesor other sums recovered were treated as Net Sales hereunder) by the amount of such damages or othersums recovered and Biogen shall retain the remainder or (ii) if Alkermes institutes the action, suit orproceeding pursuant to Section 7.5.2(ii) that results in such damages or other sums recovered, thenAlkermes shall pay Biogen a payment calculated by multiplying the applicable royalty rate for theAlkermes 8700 Product (that Biogen would have paid to Alkermes if such damages or other sumsrecovered were treated as Net Sales hereunder) by the amount of such damages or other sumsrecovered and Alkermes shall retain the remainder.7.5.4.Other Patent Rights. Except as expressly provided in Section 7.5.2, each Partyshall have the sole right, in its sole discretion, to institute any action, suit or proceeding against anyactual or threatened infringement by a Third Party of any Patent Right owned by such Party.7.6.Infringement Defense. 36  7.6.1.Notice. In the event that a Third Party at any time provides written notice of aclaim to, or brings an action, suit or proceeding against, either Party, or any of their respective Affiliatesor sublicensees (each Person so sued being referred to herein as a “Sued Party”), claiminginfringement of such Third Party’s Patent Rights or unauthorized use or misappropriation of its Know-How based upon an assertion or claim arising out of the Exploitation of a Product in the Field in theTerritory (“Infringement Claim”), such Party shall promptly notify the other Party of the InfringementClaim or the commencement of such action, suit or proceeding, enclosing a copy of the InfringementClaim and all papers served. 7.6.2.Right to Defend. If the Sued Party with respect to any Infringement Claim isentitled to indemnification under Article 11 with respect to such Infringement Claim, then the terms andconditions of Article 11 and not this Section 7.6.2 shall apply to such Infringement Claim. In all othercases, Biogen shall have the right, but not the obligation, at its own cost and expense and using counselof its choosing, to defend against any Infringement Claim brought against Biogen or its Affiliates orSublicensees and Alkermes shall have the right, but not the obligation, at its own cost and expense andusing counsel of its choosing, to defend against any Infringement Claim brought against Alkermes orits Affiliates or sublicensees. The Sued Party shall keep the other Party reasonably informed of allmaterial developments in connection with any such suit and shall not, without the other Party’s priorwritten consent, enter into any settlement or consent decree that requires any payment by or admits orimparts any other liability to the other Party. The other Party shall make available to the Sued Party itsadvice and counsel regarding any Infringement Claim and shall offer reasonable assistance inconnection with any Infringement Claim to the Sued Party, at the Sued Party’s cost and expense.7.7.Patent Marking. Biogen agrees to mark, and to require any of its Affiliates orSublicensees to mark, any Products (or their containers or labels) made, sold, or otherwise distributedby it or them with any notice of Patent Rights required under Applicable Law to enable such PatentRights to be enforced to their full extent in any country where Products are made, used, sold, or offeredfor sale.7.8.Orange Book Listings. With respect to patent listings in the FDA Orange Book forissued patents for the Alkermes 8700 Product in the Initial Indication, the Parties shall determine bymutual agreement which patents to list in the FDA Orange Book (a) prior to the submission of theAlkermes 8700 Product 505(b)(2) NDA, or any other NDA for the Alkermes 8700 Product submittedto the FDA and (b) within twenty (20) days after the receipt of Regulatory Approval for the Alkermes8700 Product in the Initial Indication. If the Parties are unable to reach agreement on any such listingswithin twenty (20) days before submission of the Alkermes 8700 Product 505(b)(2) NDA, or any otherNDA for the Alkermes 8700 Product submitted to the FDA or within twenty (20) days after receipt ofRegulatory Approval for the Alkermes 8700 Product in the Initial Indication in the U.S. prior to theTransfer Completion Date, then Alkermes will have the right to make the determination with respect towhich patents to list in the FDA Orange Book. After the Transfer Completion Date, Biogen shall havethe sole right, in its sole discretion, to determine which patents to list in the FDA Orange Book (or itsforeign equivalent in any country in the Territory) for the Alkermes 8700 Product. With respect topatent listings in the FDA Orange Book (or its foreign equivalent in any country in the Territory) forissued patents for any other Product or for the Alkermes 8700 Product in any other indication37  than the Initial Indication in the Field, in each case, Biogen shall have the sole right, in its solediscretion, to determine which patents to list. 7.9.Trademark Infringement. 7.9.1.Notification of Infringement. If Alkermes learns that a Third Party is infringingany Product Trademark in the Territory, Alkermes will promptly notify Biogen.7.9.2.Infringement Action. Biogen will have the sole right, at its own cost andexpense and in its sole discretion, to take any action with respect to any infringement of a ProductTrademark in the Territory, with counsel of its own choice. Any recovery from any settlement orjudgment from such action will be retained by Biogen. Article 8CONFIDENTIALITY; PUBLICITY8.1.Confidentiality. Except to the extent authorized by this Agreement or otherwiseagreed upon in writing, the Parties agree that the receiving Party will keep confidential and will notpublish or otherwise disclose or use for any purpose, any proprietary and confidential information andmaterials furnished to it by the disclosing Party pursuant to this Agreement or the ConfidentialityAgreements (collectively, “Confidential Information”), except to the extent that it can be establishedby the receiving Party that such Confidential Information:8.1.1.was already known to the receiving Party or its Affiliates, as demonstrated bycompetent written records, other than under an obligation of confidentiality, at the time of disclosure bythe disclosing Party;8.1.2.was generally available to the public or otherwise part of the public domain at thetime of its disclosure by the disclosing Party;8.1.3.became generally available to the public or otherwise part of the public domainafter its disclosure by the disclosing Party and other than through any act or omission of the receivingParty or its Affiliates in breach of this Agreement;8.1.4.was disclosed to the receiving Party or its Affiliates, other than under anobligation of confidentiality, by a Third Party who had no obligation to the disclosing Party not todisclose such information to others; or8.1.5.was subsequently developed by the receiving Party or its Affiliates without useof or reference to the Confidential Information of the disclosing Party as demonstrated by competentwritten records.Licensed Know-How and unpublished Licensed Patents (to the extent that such LicensedKnow-How or unpublished Licensed Patents are not subject to any of the foregoing exceptions setforth under this Section 8.1) will be considered Confidential Information of Alkermes, provided thatBiogen may use or disclose such Licensed Know-How and Licensed Patents in38  accordance with Article 8. Notwithstanding anything to the contrary set forth in this Agreement, duringthe Term Alkermes will use at least the same degree of care to protect the secrecy of such LicensedKnow-How and unpublished Licensed Patents that it uses to prevent the disclosure of its own otherconfidential information of similar importance and in any event a reasonable duty of care.8.2.Authorized Use and Disclosure. Each Party will maintain the ConfidentialInformation of the other Party in confidence and may use the Confidential Information of the otherParty only in performance of its obligations under this Agreement and any Supply Agreement. EachParty may disclose such Confidential Information to its employees, Affiliates, sublicensees, agents,consultants or other Third Parties who need to know such Confidential Information in connection withthe performance of such Party’s obligations under this Agreement or any Supply Agreement and whoare bound by obligations of confidentiality and non-use at least substantially equivalent to theobligations of this Article 8. Each Party will be liable for any unauthorized use or disclosure ofConfidential Information by its employees, Affiliates, sublicensees, agents, consultants or other ThirdParties to which it has disclosed or transferred such Confidential Information.Without limiting the generality of the foregoing paragraph, a Party may disclose ConfidentialInformation of the other Party to the extent that such disclosure is reasonably necessary in connectionwith:8.2.1.filing or prosecuting patent or trademark applications relating to the Products;8.2.2.prosecuting or defending litigation relating to the Products;8.2.3.Exploiting the Products;8.2.4.seeking Regulatory Approval of a Product, including Regulatory Approval of aManufacturing facility for a Product;8.2.5.seeking reimbursement or pricing approvals for a Product from GovernmentalAuthorities;8.2.6.complying with Applicable Laws, including securities laws and the rules of anysecurities exchange or market on which a Party’s or its Affiliates’ securities are listed or traded; or8.2.7.complying with subpoenas or requests for information from GovernmentalAuthorities.In making any disclosures set forth in Section 8.2.1 through Section 8.2.7 above, the disclosing Partywill, except where impracticable for necessary disclosures (as in the event of medical emergency), givesuch advance notice to the other Party of such disclosure requirement as is reasonable under thecircumstances and, except to the extent inappropriate (as in the case of patent applications), use itsreasonable efforts to cooperate with the other Party in order to secure confidential treatment of suchConfidential Information required to be disclosed, except to the39  extent that the disclosing Party receives advice from its legal counsel or independent registered publicaccounting firm that such information is required to be disclosed under Applicable Laws, includingsecurities laws and the rules of any securities exchange or market on which a Party’s or its Affiliates’securities are listed or traded.8.3.Disclosure to Investors. The Parties acknowledge that each Party may, from time totime, engage or have engaged in fundraising or other business activities. The Parties may disclose acopy of this Agreement, under terms of confidentiality no less strict than those contained in thisAgreement, to their respective actual or bona fide potential investors or business partners (and to theirrespective bankers, lawyers, accountants and agents); provided that any such copy may be redacted toremove any confidential, proprietary or competitive information of the disclosing Party and any otherinformation not necessary in connection with their evaluation of such potential or actual investment.8.4.Survival. This Article 8 will survive the termination or expiration of this Agreementfor a period of [**] years.8.5.Publications or Presentations. 8.5.1.General. Biogen shall have the sole right, in its sole discretion, to present atsymposia, national or regional professional meetings and to publish in journals regarding the Productsand any activities under this Agreement, provided that any such presentation or publication shall notinclude any Confidential Information of Alkermes. Alkermes shall have no right to present atsymposia, national or regional professional meetings or to publish in journals regarding the Products orany activities under this Agreement.8.5.2.Publicity. A joint press release approved by each Party announcing thisAgreement is attached hereto as Exhibit F. Biogen retains the right to make publications about itsactivities under the Agreement (i) prior to the Transfer Completion Date and with respect to theAlkermes 8700 Product, with the consent of Alkermes, which consent shall not be unreasonablywithheld or delayed, and (ii) (a) with respect to any Product other than the Alkermes 8700 Product and,(b) following the Transfer Completion Date, with respect to the Alkermes 8700 Product, in each case(a) and (b), without the consent of Alkermes. Neither Party shall be required to seek the permission ofthe other Party to repeat any information regarding the terms of this Agreement or the arrangementshereunder to the extent the same has already been publicly disclosed by such Party or by the otherParty; provided that such information remains true, correct and consistent with the most recentinformation related thereto that has been publically disclosed. Routine references to this Agreement andthe arrangements hereunder in the context of disclosures or publications regarding a Party’s business ingeneral will be allowed in the usual course of a Party’s business, including the use of other Party’sname. Each Party may use the other Party’s corporate logo(s) or Product Trademarks only with theprior written consent of the other Party.40  Article 9PAYMENTS9.1.Up-Front Payment. Within ten (10) Business Days after the Effective Date, as anupfront, one-time, nonrefundable and non-creditable fee in consideration of the grant of the licenses setforth in Section 6.1, Biogen will pay to Alkermes the amount of Twenty Eight Million U.S. Dollars(US$28,000,000) (the “Up-Front Payment”).9.2.Option Payment. Within [**] days after Biogen’s receipt from Alkermes of the InitialGI Tolerability Data Package in accordance with Section 3.2.4(i), subject to any extension pursuant toSection 3.2.4(iii), Biogen will make a one-time, nonrefundable and non-creditable payment toAlkermes in the amount of Fifty Million U.S. Dollars (US$50,000,000) (the “Option Payment”),unless, following the Parties’ discussions as set forth in Section 3.2.4(iv), the Parties jointly agree inwriting not to conduct Part B of the GI Tolerability Clinical Trial because the rate of discontinuationsdue to a GI Event in Part A of the GI Tolerability Clinical Trial is lower in the Tecfidera arm of suchtrial (in which case GI Inferiority will be deemed to exist and Biogen will not be obligated to make theOption Payment). If Biogen does not make the Option Payment in accordance with this Section 9.2 forany reason other than the Parties jointly agreeing in writing not to conduct Part B of the GI TolerabilityClinical Trial because the rate of discontinuations due to a GI Event in Part A of the GI TolerabilityClinical Trial is lower in the Tecfidera arm of such trial, and Biogen fails to make such OptionPayment within five (5) Business Days following written notice from Alkermes of such failure, thenBiogen will be deemed to have given notice of termination for convenience in accordance with Section13.3. 9.3.NDA Approval Payment. If the Alkermes 8700 Product 505(b)(2) NDA approval isobtained on or prior to December 31, 2021, then within [**] days after the Transfer Completion Date,Biogen will make a one-time, nonrefundable and non-creditable payment to Alkermes in the amount ofOne Hundred Fifty Million U.S. Dollars (US$150,000,000). 9.4.Development Milestones for Products other than the Alkermes 8700 Product. As further consideration of the grant of the licenses set forth in Section 6.1 and the performance ofAlkermes’ other obligations hereunder, Biogen shall pay to Alkermes the amounts set forth below nolater than [**] days after the earliest date on which the corresponding milestone event has first beenachieved with respect to the first two Products other than the Alkermes 8700 Product:Development Milestone EventAmountThe first administration to the first patient in a Clinical Trial of suchProduct.[**]The first administration of such Product to the first patient in a phase 3Clinical Trial.[**]Receipt of Regulatory Approval of an NDA from the FDA in the U.S. forsuch Product.[**] 41 ®® The milestone payments set forth in this Section 9.4 will be paid on a Product-by-Product basis on thefirst occurrence of each such applicable milestone for each of the first two Products (other than theAlkermes 8700 Product).9.5.Royalties. 9.5.1.Royalty Payments for Alkermes 8700 Product. (i)Royalty Percentages. As further consideration of thegrant of the licenses set forth in Section 6.1 and the performance of Alkermes’ other obligationshereunder, Biogen will pay to Alkermes royalty payments on Net Sales of the Alkermes 8700 Productin the Territory on a country-by-country basis during the applicable Royalty Term at the rate of [**]percent ([**]%) of Net Sales. Notwithstanding the foregoing, in the event of a determination of GIInferiority, if Biogen has made the Option Payment to Alkermes, then the royalty rate during eachRoyalty Term for the Alkermes 8700 Product in each country in the Territory shall be [**] percent([**]%) of Net Sales until such time as the aggregate royalty payments paid to Alkermes across allcountries equal Fifty Million U.S. Dollars ($50,000,000), after which time such royalty rate shall returnto its prior level, before the determination of GI Inferiority that resulted in such royalty rate of [**]percent ([**]%) (but subject in any event to Section 9.5.5, Section 9.5.6 and Section 9.5.7). (ii)Minimum Annual Payments. As further considerationfor the grant of the licenses set forth in Section 6.1 and the performance of Alkermes’ other obligationshereunder, Biogen will pay Alkermes a minimum aggregate royalty payment during each twelve (12)-month period (each, a “Minimum Annual Payment” and together, the “Minimum AnnualPayments”) in the amounts set forth in the table below, commencing on the first day of the first monthfollowing the date of the First FDA Approval (such first day of such first month, the “MinimumPayment Commencement Date”) and continuing for a period of five (5) years, unless earlierterminated as set forth in Section 9.5.1(iii) (the “Minimum Annual Payment Term”). 42  For clarity, for each twelve (12)-month period during the Minimum Annual Payment Term in whichthe aggregate amount payable to Alkermes as royalties under Section 9.5.1(i) is less than the applicableMinimum Annual Payment, Biogen shall pay Alkermes an amount equal to the applicable MinimumAnnual Payment for such twelve (12)-month period, minus the aggregate amount already paid toAlkermes as royalties under Section 9.5.1(i) for such twelve (12)-month period.Twelve (12)-Month PeriodMinimum AnnualPaymentFirst twelve (12)-month period following the Minimum PaymentCommencement Date[**]Second twelve (12)-month period following the Minimum PaymentCommencement Date[**]Third twelve (12)-month period following the Minimum PaymentCommencement Date[**]Fourth twelve (12)-month period following the Minimum PaymentCommencement Date[**]Fifth twelve (12)-month period following the Minimum PaymentCommencement Date[**] (iii)Termination of Minimum Annual Payments. Notwithstanding anything to the contrary in Section 9.5.1(ii), the Minimum Annual Payment Termshall immediately terminate, and no further Minimum Annual Payments shall be payable under thisAgreement, if any of the following conditions is met: (A)(i) [**] and (ii) [**];(B)[**]; or(C)[**].Notwithstanding anything to the contrary, if any of the foregoing conditions in clauses (A) through (C)exist prior to the Minimum Payment Commencement Date, then the Minimum Annual Payment Termshall be deemed not to commence and no Minimum Annual Payments shall be payable under thisAgreement.9.5.2.Royalty Payments for Products other than the Alkermes 8700 Product. Asfurther consideration of the grant of the licenses set forth in Section 6.1 and the performance ofAlkermes’ other obligations hereunder, Biogen will pay to Alkermes tiered royalty payments on annualaggregate worldwide Net Sales of Products, other than the Alkermes 8700 Product, on a Product-by-Product basis during the applicable Royalty Term as follows: (i) for Net Sales less than or equal to[**] U.S. Dollars (US$[**]), [**] percent ([**]%) of such Net Sales and (ii) for Net Sales greater than[**] U.S. Dollars (US$[**]), [**] percent ([**]%) of such Net Sales.9.5.3.Duration of Royalty Payments. Biogen will pay royalties to Alkermes, as setforth in Section 9.5.1(i) and Section 9.5.2, on a country-by-country and43  Product-by-Product basis, during the period commencing on the First Commercial Sale of a Product ina country and ending on the later of (i) the expiration of all Valid Claims of the Joint CollaborationPatents and Licensed Patents that Cover the use or sale of such Product in such country and (ii) [**]years after the First Commercial Sale of such Product in such country (any such period, a “RoyaltyTerm”). Following expiration of the Royalty Term for any Product in a country, no further royaltiesshall be payable in respect of sales of such Product in such country and, thereafter, the license grantedto Biogen under Section 6.1.1 with respect to such Product in such country shall be non-exclusive,fully paid-up, perpetual, irrevocable and royalty-free.9.5.4.Cumulative Royalties. The obligation to pay royalties under this Agreementshall be imposed only once with respect to a single unit of a Product regardless of how many ValidClaims of the Licensed Patents Cover the use or sale of such Product in the applicable country.9.5.5.No Valid Claim. On a country-by-country and Product-by-Product basis, inany country in which a Product is Commercialized and there are no remaining Valid Claims of theLicensed Patents that Cover the use or sale of such Product in such country, the royalties payable toAlkermes on Net Sales of such Product pursuant to (i) Section 9.5.1(i) will be reduced to [**] percent([**]%) of such Net Sales for the Alkermes 8700 Product and (ii) Section 9.5.2 will be reduced to [**]percent ([**]%) of the applicable royalty rate for any Product (other than the Alkermes 8700 Product). 9.5.6.Third Party Payment Obligations. If Biogen or its Affiliates or Sublicenseesare required to make any payments (including upfront fees, milestones or royalties) to a Third Party toobtain rights to any intellectual property that is necessary to Exploit a Product in the Field in anycountry, then Biogen may deduct up to [**] percent ([**]%) of such Third Party payments as andwhen incurred from any royalty payment or Minimum Annual Payment due to Alkermes under Section9.5.1 or Section 9.5.2 with respect to such Product and such country; provided that Biogen may notdeduct from any payments due to Alkermes hereunder any such Third Party payments due under anyarrangement entered into prior to the Effective Date. 9.5.7.Royalty Floor. Notwithstanding anything to the contrary herein, in no eventshall the royalty payments or Minimum Annual Payments due to Alkermes under Section 9.5.1 orSection 9.5.2 for any Product in a given Calendar Quarter be reduced as a result of the application ofthe reductions and offsets described in this Section 9.5 below [**] percent ([**]%) of the amountsotherwise payable to Alkermes under Section 9.5.1 or Section 9.5.2 with respect to such Product. Anyreductions or offsets that are not used to reduce payments under Section 9.5.1 or Section 9.5.2 in agiven Calendar Quarter as a result of the foregoing limitations may be carried over to reduce paymentsdue under Section 9.5.1 and Section 9.5.2 in subsequent Calendar Quarters. 9.6.Reporting and Paying Net Sales. For each Calendar Quarter for which royalties arepayable by Biogen to Alkermes pursuant to Section 9.5.1(i) or Section 9.5.2, Biogen will (i) deliver toAlkermes, within five (5) days after the end of each such Calendar Quarter, a non-binding estimatedreport prepared in good faith, (ii) deliver to Alkermes, within forty-five (45) days after the end of eachsuch Calendar Quarter a true and accurate report, in each case,44  providing in reasonable detail (A) an accounting of all Net Sales made on a country-by-country andProduct-by-Product basis in the Territory during such Calendar Quarter, including the amount of grosssales of Products and the aggregate allowable deductions therefrom, (B) the number of units ofProducts sold, (C) the currency conversion rates used, (D) the U.S. Dollar-equivalent of such Net Salesduring such Calendar Quarter and (E) a calculation of the amount of royalty payment due on such NetSales, and (iii) within forty-five (45) days after the end of each such Calendar Quarter, pay Alkermesthe royalties due under Section 9.5.1(i) and Section 9.5.2 with respect to such Calendar Quarter asprovided for in the report delivered under (ii) above. In addition, within forty-five (45) days of the endof the first Calendar Quarter following each twelve (12)-month period during the Minimum AnnualPayment Term, Biogen shall pay Alkermes any amount due under Section 9.5.1(ii) for such twelve(12)-month period of the Minimum Annual Payment Term. Each report delivered hereunder shall beconsidered Confidential Information of Biogen, subject to the terms and conditions of Article 8 hereof.Any payments due hereunder for less than a full Calendar Quarter will be prorated.9.7.Records and Reporting; Audits. 9.7.1.Records and Reporting. Each Party shall keep, and shall cause its Affiliatesand Sublicensees to keep, such accurate and complete records of Net Sales and its Development Costsas are necessary to determine the amounts due to Alkermes under this Agreement, including timerecords. Records of Net Sales and Development Costs shall be retained by each Party or any of itsAffiliates and Sublicensees (in such capacity, the “Recording Party”) for three (3) years following theend of the Calendar Year to which they pertain.9.7.2.Audits. During normal business hours and with reasonable advance notice tothe Recording Party, such records shall be made available for inspection, review and audit, at therequest and expense of the other Party (the “Auditing Party”), by an independent certified publicaccountant, appointed by such Auditing Party and reasonably acceptable to the Recording Party, forthe sole purpose of verifying the accuracy of the Recording Party’s accounting reports and paymentsmade or to be made pursuant to this Agreement or any Supply Agreement; provided, however, thatsuch audits may not be performed by the Auditing Party more than once per Calendar Year, that suchaudits may only cover records pertaining to any period commencing not more than two (2) CalendarYears prior to the date of such audit, and that such Auditing Party shall not be permitted to audit thesame period of time more than once. Such accountants, prior to any review hereunder, shall haveentered into an appropriate confidentiality agreement with the Recording Party on mutually acceptableterms and shall have been instructed not to reveal to the Auditing Party the details of their review,except for (i) such information as is required to be disclosed under this Agreement and (ii) suchinformation presented in a summary fashion as is necessary to report the accountants’ conclusions tothe Auditing Party. The report prepared by such accountants shall be sent or otherwise provided to theRecording Party by such accountants at the same time it is sent or otherwise provided to the AuditingParty. All costs and expenses incurred in connection with performing any such audit shall be paid bythe Auditing Party unless the audit uncovers a net underpayment of amounts owed or overreporting ofexpenses by a Recording Party of five percent (5%) of total amounts owed or expenses reported bysuch Recording Party for any Calendar Year period covered by the audit, in which case the RecordingParty will bear the full cost of such audit. If either Party is found to have been underpaid any amountspayable to such45  Party hereunder or to have overpaid to the other Party any amounts payable hereunder, such first Partywill be entitled to recover any undisputed discrepancy, plus interest calculated in accordance withSection 9.9, within forty-five (45) days after receipt of such audit report. If either Party disagrees withany discrepancy identified during the course of any audit conducted pursuant to this Section 9.7.2, theneither Party may submit the issue for resolution in accordance with Article 12. 9.8.Manner of Payments. All sums due to Alkermes or Biogen under this Agreementshall be payable in U.S. Dollars by bank wire transfer in immediately available funds to such bankaccount(s) as Alkermes and Biogen, respectively, shall designate from time to time. Each Party shallendeavor to notify the other Party as to the date and amount of any such wire transfer to the other Partyat least two (2) Business Days prior to such transfer, but in no event later than the Business Day ofsuch transfer.9.9.Interest on Late Payments. Without limitation on other available rights or remedies,any payments or portions thereof due hereunder that are not paid at the latest five (5) days followingthe date such payments are due under this Agreement will bear interest at the lower of (i) the PrimeRate as determined by Bank of America in effect on the due date, or (ii) the maximum rate permittedby Applicable Law, calculated on the number of days such payment is delinquent. 9.10.Currency of Payments/Exchange Rates. All payments to be made under thisAgreement will be made in U.S. Dollars. The royalty due on Net Sales and the price for anyapplicable Product sold in the Territory (other than in the U.S.) will be calculated on the basis of thelocal currency sales figures translated into U.S. Dollars according to Biogen’s standard currencytranslation methodology. As of Effective Date, Biogen converts revenue in local currency using theaverage FX rates for the month downloaded from the Bloomberg end of day rates on the second lastbusiness day of the month. The methodology employed by Biogen will be that methodology used byBiogen from time to time in the translation of its foreign currency operating results for externalreporting and will be consistent with GAAP, and in any event will not be impacted by Biogen’shedging program.9.11.Taxes. 9.11.1.Withholding. Biogen will make all payments to Alkermes under thisAgreement without deduction or withholding except to the extent that any such deduction orwithholding is required by Applicable Law. It is the intention of the Parties that all payments will bemade by Biogen hereunder from its offices in Zug, Switzerland. No such payments will be made byBiogen hereunder from any other jurisdiction, unless Biogen and Alkermes agree in advance that suchpayments would not adversely affect the withholding tax position of such payments. In the event ofBiogen’s breach of this Section 9.11.1 resulting in an adverse effect on Alkermes’ withholding taxposition of such payments, Biogen shall make true-up payments to Alkermes as compensation for suchadverse effect.9.11.2.Payment of Taxes. Any tax required to be withheld by ApplicableLaw on amounts payable under this Agreement will promptly be paid by Biogen on behalf ofAlkermes or Alkermes on behalf of Biogen, as applicable, to the appropriate Governmental46  Authority, and the Party making such payment will furnish the other Party with proof of payment ofsuch tax within one (1) calendar month of such payment. The Party making tax payments hereunderwill give ten (10) days’ advance notice of its intention to begin withholding any such tax in advance ofsuch withholding.9.11.3.Cooperation and Documentation. Biogen and Alkermes willcooperate (i) in all respects necessary to take advantage of any double taxation agreements or similaragreements as may, from time to time, be available in order for the payments under this Agreement tobe made without any deduction or withholding and (ii) with respect to producing all documentationrequired by any Governmental Authority including an IRS Form W-8BEN-E with respect to taxes oras reasonably requested by Biogen or Alkermes, as applicable, to secure a reduction in the rate ofapplicable withholding taxes or to secure a credit or refund for withheld taxes. Alkermes shall prepareand deliver to Biogen a complete, accurate IRS Form W-8BEN-E for the Up-Front Payment withinthree (3) days after the Effective Date.9.11.4.Value Added Tax. All payments to Alkermes under this Agreementare exclusive of any applicable value added tax (“VAT”), for which, if applicable, Biogen will beresponsible; provided that Alkermes will issue an appropriate VAT invoice to Biogen. 9.11.5.Pharmaceutical Excise Taxes. Biogen may invoice Alkermes eachCalendar Quarter for its pro rata share of any pharmaceutical excise taxes (based on the applicableProduct royalty rate(s) in effect at the time of such Product sales to which the tax applies) imposed bythe United States Patient Protection and Affordable Care Act of 2010 due with respect to sales of theProducts in the U.S. at the time Biogen accrues such taxes in accordance with GAAP. Biogen willprovide a summary of the amount invoiced and a roll-forward of the accrual balance. Alkermes will,within forty-five (45) days after the receipt of an invoice from Biogen for such pharmaceutical excisetaxes, pay Biogen the undisputed amounts set forth in such invoice. Alkermes will notify Biogen ofany disputed amounts within ten (10) days of receipt of any such invoice and will work with Biogen toresolve such issues on a timely basis. If such issue cannot be resolved by the Parties, then such matterwill be resolved in accordance with the dispute resolution process set forth in Article 12. If the amountof such pharmaceutical excise taxes owed by Biogen differs from the amount accrued by Biogen inrespect of such taxes for the applicable period, then Biogen will reflect such differences in Alkermes’next accrual payment.Article 10REPRESENTATIONS AND WARRANTIES; COVENANTS; DISCLAIMER10.1.Disclaimer. EXCEPT AS EXPRESSLY PROVIDED IN THIS AGREEMENT,EACH PARTY DISCLAIMS ALL REPRESENTATIONS AND WARRANTIES, EXPRESS ORIMPLIED, INCLUDING WARRANTIES OF COMMERCIAL UTILITY,MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, VALIDITY OR SCOPEOF PATENT RIGHTS OR NON-INFRINGEMENT OF THIRD PARTY INTELLECTUALPROPERTY RIGHTS. Each Party acknowledges and agrees that nothing in this Agreement will beconstrued as representing any estimate or projection of (a) the successful Development or47  Commercialization of any Product under this Agreement, (b) the number of Products that will or maybe successfully Developed or Commercialized under this Agreement, (c) anticipated sales or the actualvalue of any Products that may be successfully Developed or Commercialized under this Agreement or(d) the damages, if any, that may be payable if this Agreement is terminated for any reason. Withoutlimiting the foregoing, Biogen makes no representation, warranty or covenant, either express orimplied, that (i) it will successfully Develop, Manufacture, Commercialize or continue toCommercialize any Product in any country, (ii) if Commercialized, that any Product will achieve anyparticular sales level, whether in any individual country or cumulatively throughout the Territory or (iii)other than is expressly required under Section 4.2, that it will devote, or cause to be devoted, any levelof diligence or resources to Developing or Commercializing any Product in any country, or in theTerritory in general.10.2.Mutual Representations, Warranties and Covenants. Each Party represents,warrants and covenants to the other as of the Effective Date as follows:10.2.1.this Agreement has been duly executed and delivered by such Partyand constitutes the valid and binding obligation of such Party, enforceable against such Party inaccordance with its terms, except as enforceability may be limited by bankruptcy, fraudulentconveyance, insolvency, reorganization, moratorium and other Applicable Laws relating to or affectingcreditors’ rights generally and by general equitable principles;10.2.2.such Party has the full right, power and authority to execute, deliverand perform this Agreement;10.2.3.the execution, delivery and performance of this Agreement have beenduly authorized by all necessary action on the part of such Party and its officers and directors;10.2.4.the execution, delivery and performance of this Agreement do notbreach, violate, contravene or constitute a default under any contracts, arrangements or commitments towhich such Party is a party or by which it is bound nor do the execution, delivery and performance ofthis Agreement by such Party violate any order or Applicable Law of any court or GovernmentalAuthority having authority over it; and10.2.5.such Party will not enter into any contract, arrangement or commitmentin the future that conflicts with or violates any term or provision of this Agreement.10.3.Alkermes Representations and Warranties. Alkermes further represents andwarrants to Biogen as of the Effective Date as follows: 10.3.1.Exhibit B contains a complete and correct list of all Patent RightsControlled by Alkermes or its Affiliates as of the Effective Date that (i) are necessary for theExploitation of the Alkermes 8700 Product in the Field in the Territory or (ii) Cover any Know-HowControlled by Alkermes or its Affiliates on the Effective Date that (a) is or was used in theDevelopment or Manufacture of Products or (b) is or was embodied in Products;48  10.3.2.Alkermes has and will have the full right, power and authority to grant,and is not required to obtain the consent of any Third Party to grant, the rights and licenses granted toBiogen under Article 6;10.3.3.Except as set forth in Schedule 10.3.3, Alkermes owns the entire right,title and interest in and to the Licensed Patents and the Licensed Know-How, free of anyencumbrance, lien, charge, license grant, option grant or other burden, and any such encumbrance,lien, charge, license grant, option grant or other burden set forth in Schedule 10.3.3 will not negativelyaffect Alkermes’ right to grant the license to Biogen pursuant to Article 6;10.3.4.the polymorph used by Alkermes in the Alkermes 8700 Product wasdisclosed in WO2014/152494, which published September 25, 2014 and is owned or otherwiseControlled by Alkermes, as compound (14) of Example 1, and which is further characterized inExample 7 and Figure 7 therein; 10.3.5.the data provided by Alkermes to Biogen that characterizes thepolymorph used by Alkermes in the Alkermes 8700 Product, including the x-ray powder diffractiondata, is true and complete and correct in all material respects;10.3.6.Alkermes has complied in all material respects with all ApplicableLaws in connection with the Prosecution of the Licensed Patents, including, with respect to any issuedpatents and pending patent applications, any disclosure requirements of the United States Patent andTrademark Office or any other Governmental Authority and has timely paid all filing and renewal feespayable with respect thereto;10.3.7.Alkermes has obtained, or caused its Affiliates, as applicable, to obtain,assignments from the inventors of all inventorship rights to the Licensed Patents, and all suchassignments are valid and enforceable, and the inventorship of the Licensed Patents is properlyidentified on each patent or patent application;10.3.8.to Alkermes’ Knowledge, no Third Party is infringing any LicensedPatent;10.3.9.to Alkermes’ Knowledge, the Exploitation of the Alkermes 8700Product in the Field in the Territory does not infringe any issued Patent Right of any Third Party andAlkermes has disclosed to Biogen, to Alkermes’ Knowledge, any pending Patent Rights that, if issued,may be infringed by the Exploitation of the Alkermes 8700 Product in the Field in the Territory;10.3.10.Alkermes has not received notice of any claims, and there are nojudgments or settlements against or owed by Alkermes or, to Alkermes’ Knowledge, any pending orthreatened claims or litigation, in each case, claiming that a Patent Right owned by such Third Partywould be infringed by Exploitation of the Products in the Field in the Territory;10.3.11.to Alkermes’ Knowledge, Alkermes has the right to use, and to permitBiogen, Biogen’s Affiliates and Biogen’s Sublicensees to use, the Licensed Know-How for allpermitted purposes under this Agreement;49  10.3.12.to Alkermes’ Knowledge, the Manufacture of the Alkermes 8700Product as conducted or as currently planned to be conducted (including for Commercial Supplies), ineach case, as of the Effective Date does not and will not infringe any Patent Right of any Third Partyor misappropriate any Know-How of any Third Party (for clarity, this provision applies to PatentRights and Know-How of Third Parties that Cover the process of manufacturing the Alkermes 8700Product);10.3.13.Alkermes and its Affiliates have taken commercially reasonablemeasures consistent with industry practices to protect the secrecy, confidentiality and value of allLicensed Know-How that constitutes trade secrets under Applicable Law (including requiring allemployees, consultants and independent contractors to execute binding and enforceable agreementsrequiring all such employees, consultants and independent contractors to maintain the confidentiality ofsuch Licensed Know-How) and, to Alkermes’ Knowledge, such Licensed Know-How has not beenused, disclosed to or discovered by any Third Party except pursuant to such confidentiality agreementsand there has not been a breach by any party to such confidentiality agreements;10.3.14.the Licensed Patents are, to Alkermes’ Knowledge, valid andenforceable, and no Third Party has made any claim made against Alkermes or its Affiliates assertingthe invalidity, unenforceability or non-infringement of any Licensed Patents (including, by way ofexample, through the institution or written threat of institution of interference, nullity, opposition, interpartes or post-grant review or similar invalidity proceedings before the United States Patent andTrademark Office or any analogous foreign Governmental Authority);10.3.15.Except as set forth in Schedule 10.3.3, the Licensed Patents andLicensed Know-How are not subject to any funding agreement with any Governmental Authority orany other Third Party, and are not subject to the requirements of the Bayh-Dole Act or any similarprovision of any Applicable Law;10.3.16.neither Alkermes nor any of its Affiliates (i) are subject to anyobligation to or with any Third Party that causes Alkermes or its Affiliates not to Control (or otherwisenot have rights to) any Patent Right or Know-How that would, but for such obligation, be included inthe Licensed Patents or the Licensed Know-How or (ii) hold for use or otherwise have rights to, but donot Control, any Patent Rights or Know-How that would otherwise be included in the LicensedPatents or Licensed Know-How if such Patent Rights or Know-How were Controlled by Alkermes oran Affiliate;10.3.17.there is no action, claim, demand, suit, proceeding, arbitration,grievance, citation, summons, subpoena, inquiry or investigation of any nature, civil, criminal,regulatory or otherwise, in law or in equity, pending or, to Alkermes’ Knowledge, threatened, with anyjudicial or arbitrative body against Alkermes or any of its Affiliates in connection with the LicensedPatents, the Licensed Know-How or the Products;10.3.18.the Development and Manufacture of the Alkermes 8700 Producthave been conducted in all material respects in accordance with Applicable Law;50  10.3.19.in the Development and Manufacture of the Alkermes 8700 Product,Alkermes is not, as of the Effective Date, using any employee who is debarred by the FDA or anyother Regulatory Authority, or who is the subject of debarment proceedings by the FDA or any suchRegulatory Authority;10.3.20.to Alkermes’ Knowledge, in the Development and Manufacture of theAlkermes 8700 Product, Alkermes has not previously used any employee and has not previously used,and is not currently using, any consultant, in each case, who is or has been debarred by the FDA orany other Regulatory Authority, or, to Alkermes’ Knowledge, who is or has been the subject ofdebarment proceedings by the FDA or any such Regulatory Authority; and10.3.21.Alkermes has not knowingly withheld from Biogen informationrelating to the Licensed Patents, the Licensed Know-How and the Alkermes 8700 Product, in eachcase, that Alkermes reasonably believes would be material to Biogen’s decision to enter into thisAgreement and undertake the commitments and obligations set forth herein.10.4.Biogen Representations and Warranties. Biogen further represents and warrantsto Alkermes that, as of the Effective Date, Biogen has undertaken an assessment of the reportability ofthe transactions contemplated by this Agreement under the HSR Act, and following such assessment,Biogen has concluded that pursuant to 16 CFR 801.10, a filing under the HSR Act is not required as ofthe Effective Date.10.5.Responsibility for Government Approvals. Biogen, as the acquirer of the licensesgranted in Article 6, shall determine, control and direct strategy regarding requesting GovernmentalApprovals in connection with the transactions contemplated by this Agreement, including with respectto determining the necessity of requesting Governmental Approvals for the transactions contemplatedby this Agreement by any Governmental Authority, and if applicable, all matters relating to any reviewby any Governmental Authority, or any litigation by, or negotiations with, any GovernmentalAuthority related thereto, and will take the lead in all meetings, discussions, and communications, ifany, with any Governmental Authority relating to requesting or obtaining all Governmental Approvalsfor the transactions contemplated by this Agreement (provided that this Section 10.5 shall not apply toany Regulatory Approvals that may be required to Exploit the Alkermes 8700 Product prior to theTransfer Completion Date). Article 11LIABILITY11.1.Limitation of Liability. EXCEPT FOR (i) LIABILITY FOR EITHER PARTY’SBREACH OF ARTICLE 8, (ii) THE PARTIES’ INDEMNIFICATION OBLIGATIONSPURSUANT TO SECTIONS 11.2 AND 11.3 OR (iii) ANY LIABILITY ARISING FROM APARTY’S FRAUD OR WILLFUL MISCONDUCT, NEITHER PARTY WILL BE LIABLE TOTHE OTHER PARTY OR ANY OF SUCH OTHER PARTY’S REPRESENTATIVES ORSTOCKHOLDERS FOR ANY INDIRECT, INCIDENTAL, SPECIAL, PUNITIVE,EXEMPLARY OR CONSEQUENTIAL DAMAGES OR LOST PROFITS OR LOSTREVENUES ARISING OUT OF OR RESULTING FROM THIS51  AGREEMENT, REGARDLESS OF WHETHER IT HAS BEEN INFORMED OF THEPOSSIBILITY OR LIKELIHOOD OF SUCH DAMAGES OR THE TYPE OF CLAIM,CONTRACT OR TORT (INCLUDING NEGLIGENCE).11.2.Biogen Indemnification. Biogen will indemnify, defend and hold harmless Alkermesand its Affiliates and their respective directors, officers, employees and agents (each an “AlkermesIndemnified Party”) from and against all costs, losses, liabilities, expenses (including reasonableattorneys’ fees, experts’ fees and other costs of investigation or defense at any stage of the proceedings)and damages (collectively, “Losses”) to the extent relating to a claim, action or demand (“Claim”) by aThird Party or Governmental Authority arising out of or resulting from:11.2.1.any breach of this Agreement by Biogen;11.2.2.the violation of any Applicable Law by or on behalf of Biogen, itsAffiliates or its Sublicensees;11.2.3.Development or Commercialization of any Product in the Field in theTerritory by or on behalf of Biogen, its Affiliates or its Sublicensees, including use of the Products byThird Parties;11.2.4.a trademark infringement action pursuant to Section 7.9.2; or11.2.5.the gross negligence or willful misconduct of any Biogen IndemnifiedParty;except to the extent such Claim is subject to an indemnification, defense or hold harmless obligation ofAlkermes set forth in Section 11.3 or in any Supply Agreement.11.3.Alkermes Indemnification. Alkermes will indemnify, defend and hold harmlessBiogen and its Affiliates and their respective directors, officers, employees and agents (each a “BiogenIndemnified Party”) from and against all Losses relating to a Claim by a Third Party or GovernmentalAuthority to the extent arising out of or resulting from:11.3.1.any breach of this Agreement by Alkermes;11.3.2.the violation of any Applicable Law by or on behalf of Alkermes or itsAffiliates; 11.3.3.Development of any Product in the Field in the Territory by or onbehalf of Alkermes or its Affiliates; 11.3.4.Development or Commercialization of the Alkermes 8700 Product byor on behalf of Alkermes or its Affiliates after the effective date of termination of this Agreement withrespect to the Alkermes 8700 Product or in its entirety; or11.3.5.the gross negligence or willful misconduct of any AlkermesIndemnified Party;52  except to the extent such Claim is subject to an indemnification, defense or hold harmless obligation ofBiogen set forth in Section 11.2 or in any Supply Agreement.11.4.Indemnification Procedures. In the event of any Claim by a Third Party orGovernmental Authority against any Alkermes Indemnified Party or Biogen Indemnified Party(individually, an “Indemnitee”), the indemnified Party shall promptly notify the other Party in writingof the Claim and the indemnifying Party shall manage and control, at its sole expense, the defense ofthe Claim and any settlement thereof. The Indemnitee shall cooperate with the indemnifying Party andmay, at its option and expense, be represented in any such action or proceeding. The indemnifyingParty shall not be liable for any settlements, litigation costs or expenses incurred by any Indemniteewithout the indemnifying Party’s prior written authorization. Notwithstanding the foregoing, if theindemnifying Party believes that any of the exceptions to its obligation of indemnification of theIndemnitees set forth in Sections 11.2 or 11.3, as applicable, may apply, the indemnifying Party shallpromptly notify the Indemnitees, which may be represented in any such action or proceeding byseparate counsel at their expense; provided, however, that the indemnifying Party shall be responsiblefor payment of such expenses if the Indemnitees are ultimately determined to be entitled toindemnification from the indemnifying Party. Notwithstanding any other provision of this Article 11 tothe contrary, no Indemnitee under this Agreement shall be required to waive a conflict of interest underany applicable rules of professional ethics or responsibility if such waiver would be required for asingle law firm to defend both the indemnifying Party and one or more Indemnitees. In such case, theindemnifying Party shall provide a defense of the affected Indemnitees through a separate law firmreasonably acceptable to the affected Indemnitees at the indemnifying Party’s expense. Except withthe approval of an Indemnitee, which approval will not be unreasonably withheld or delayed, theindemnifying Party will not consent to entry of any judgment or enter into any settlement that wouldadmit any wrongdoing by, or result in injunctive or other relief being imposed against, an Indemnitee.11.5.Cooperation. The indemnified Party and each Indemnitee will cooperate in thedefense or prosecution of any action or proceeding with respect to which it is being indemnified andwill furnish such records, information and testimony, provide such witnesses and attend suchconferences, discovery proceedings, hearings, trials and appeals as may be reasonably requested by theindemnifying Party in connection with such action or proceeding. Such cooperation will includeaccess during normal business hours afforded to the indemnifying Party to, and reasonable retention bythe indemnified Party and the Indemnitee of, records and information that are reasonably relevant tosuch action or proceeding, and making Indemnitees and other employees and agents available on amutually convenient basis to provide additional information and explanation of any material providedhereunder, and the indemnifying Party will reimburse the indemnified Party for all its reasonable out-of-pocket expenses incurred in connection with such cooperation.11.6.Insurance. As of the Effective Date each Party shall procure and maintain, at its solecost and expense, commercial general liability insurance and products liability coverage in amounts notless than Ten Million U.S. Dollars (US$10,000,000) per incident and Twenty Million U.S. Dollars(US$20,000,000) annual aggregate. In the event of an indemnification claim pursuant to Sections 11.2or 11.3 above, such insurance will be primary to any insurance owned, secured or put in place by theIndemnitee. All such policies will be written by insurance53  companies with an A.M. Best’s rating (or its equivalent) of A-VII or higher. In the event that any ofthese policies are written on a claims-made basis, then such policies shall be maintained during theTerm and until the later of (i) three (3) years after expiration of Term or (ii) sixty (60) days followingexpiration of all applicable statutes of limitation for any potential Claims that may be indemnifiedLosses pursuant to Sections 11.2 or 11.3, as applicable. Upon written request, each Party will providethe other Party with a certificate of insurance attesting to such coverage. The minimum amounts ofinsurance coverage required under this Section 11.6 shall not be construed to create a limit of eitherParty’s liability with respect to its indemnification obligation under Sections 11.2 or 11.3 above, asapplicable. Notwithstanding the foregoing, Biogen and Alkermes may self-insure to the extent thatsuch Party self-insures for its other products.Article 12DISPUTE RESOLUTION12.1.Disputes. 12.1.1.Objective. The Parties recognize that disputes, controversies or claimsarising out of or relating to this Agreement or any Supply Agreement, or the interpretation, breach,termination or invalidity hereof or thereof (each a “Dispute”), may from time to time occur during theTerm. It is the objective of the Parties to establish procedures to facilitate the resolution of Disputesoccurring with respect to this Agreement or any Supply Agreement, in an expedient manner by mutualcooperation and without resorting to litigation. To accomplish this objective, the Parties agree tofollow the procedures set forth in this Article 12 if and when a Dispute occurs with respect to thisAgreement or any Supply Agreement. Notwithstanding the foregoing or anything to the contrary inthis Agreement, with respect to any matter under this Agreement, (a) if such matter is within the scopeof the JSC’s authority, the dispute resolution provisions of Section 2.1.4 and not this Article 12 shallapply with respect to such matter and (b) if this Agreement expressly provides that such matter issubject to a Party’s sole discretion or to a Party’s sole or final decision-making authority, such mattershall not be subject to dispute resolution under this Article 12, but may be finally determined by suchParty in accordance with the terms of this Agreement.12.1.2.Escalation. With respect to any Dispute under this Agreement, otherthan any Dispute relating to the scope, validity or enforceability of a Licensed Patent or a CollaborationPatent (which may only be determined in accordance with Section 12.3 hereof), either Party (the“Complaining Party”) may present such Dispute for resolution by senior management of each ofAlkermes and Biogen (in the case of Alkermes, its Chief Executive Officer or a designee, and in thecase of Biogen, its Chief Executive Officer or a designee) (collectively, “Senior Management”) byproviding a dispute notice (the “Dispute Notice”) to Senior Management and the other Party. TheDispute Notice will concisely set forth the Dispute, the Parties’ respective positions, and the specificrelief requested. Within ten (10) days after receipt of a Dispute Notice, the Party receiving the DisputeNotice will provide a concise written response (the “Response”) to such Dispute Notice to SeniorManagement and the Complaining Party. Senior Management will attempt to resolve such Disputewithin ten (10) days after receipt by Senior Management of the Response. In the event that SeniorManagement cannot resolve a54  Dispute within the ten (10)-day period, unless otherwise agreed by the Parties, such Dispute may bereferred by either Party to arbitration in accordance with Section 12.1.3 upon written notice to the otherParty. 12.1.3.Arbitration. The Parties agree that any Dispute referred forarbitration by a Party pursuant to Section 12.1 will be resolved through binding arbitration inaccordance with the CPR International Institute for Conflict Prevention and Resolution Rules for Non-Administered Arbitration, as amended from time to time (the “CPR Rules”). If either Party receives aDispute Notice, then any associated time to cure will be stayed pending the resolution of the issuepursuant to this Section 12.1.3. Any Dispute in which either Party seeks in excess of Twenty MillionU.S. Dollars (US$20,000,000) in damages will be resolved by an arbitral tribunal consisting of three(3) arbitrators, one (1) of whom will be designated by each Party in accordance with the CPR Rules,and a third arbitrator who will chair the tribunal and who will be selected as provided in the CPRRules. Any other Dispute, aside from those seeking equitable relief, will be submitted to a solearbitrator, appointed pursuant to the CPR Rules. Any suit seeking equitable relief shall be heard by acourt of competent jurisdiction pursuant to Section 12.2. The arbitrator(s) will render a written opinionsetting forth findings of fact and conclusions of law with the reasons therefor stated. Arbitrationpursuant to this Section 12.1.3 will be governed by the Federal Arbitration Act, 9 U.S.C. §§ 1-16, andjudgment upon the award rendered by the arbitrators may be entered by any court having jurisdictionthereof. The arbitration proceedings for all Disputes will be conducted in New York, New York inEnglish and will be confidential in nature. Each Party will continue to perform its obligations under theAgreement pending final resolution of any Dispute unless to do so would be impossible orimpracticable under the circumstances. The Parties agree that they will share equally the cost of thearbitration filing and hearing fees, and the cost of the arbitrators. Each Party must bear its ownattorneys’ fees and associated costs and expenses. 12.2.Jurisdiction. The Parties agree to the exclusive jurisdiction of the federal courtslocated in the State of New York for the purposes of enforcing awards entered pursuant to this Article12 and for enforcing the agreements reflected in this Article 12. 12.3.Determination of Disputes Relating to Patents. Notwithstanding anything to thecontrary herein, any Dispute relating to the determination of scope, validity or enforceability of aLicensed Patent or Collaboration Patent will be submitted exclusively to the national court or othertribunal having jurisdiction over the disputed patent.12.4.Equitable Relief. The Parties agree that irreparable harm may occur in the event anyof the provisions of Article 6, Article 7, Article 8, in each case, are not performed in accordance withthe terms of this Agreement or are otherwise breached and that money damages may not be a sufficientremedy for such a breach of this Agreement. Therefore, in addition to, and not in limitation of, anyother remedy available to either Party, a Party will be entitled to seek, at its sole expense, injunctiverelief or other equitable relief in the event of any such breach or threatened breach of this Agreementby the other Party from a court of competent jurisdiction, and such an action may be filed andmaintained notwithstanding any ongoing arbitration proceeding. Such remedies, and all other remediesprovided for in this Agreement, shall be cumulative and not exclusive and will be in addition to anyother remedies a Party may have under Applicable Law or in equity or otherwise.55  Article 13TERM AND TERMINATION13.1.Term. This Agreement will commence as of the Effective Date and, unless soonerterminated as provided in this Article 13, will continue in effect until the expiration of the last RoyaltyTerm as set forth in Section 9.5.3 (such period, the “Term”). 13.2.Right to Terminate for Government Prohibition. Either Party will have the right toterminate this Agreement effective immediately upon written notice to the other Party, following theissuance of any order, decree or judgment by any Governmental Authority that makes illegal, enjoinsor prohibits the transactions effected by this Agreement.13.3.Biogen’s Right to Terminate for Convenience. Biogen may terminate thisAgreement, on a Product-by-Product basis or in its entirety, for any reason or for no reason, uponfifteen (15) days’ prior written notice to Alkermes; provided that, from and after the date of the FirstFDA Approval, Biogen may only terminate this Agreement, with respect to the Alkermes 8700Product or in its entirety, upon one hundred and eighty (180) days’ prior written notice to Alkermes. Notwithstanding anything to the contrary set forth in this Agreement, from and after any notice oftermination provided by Biogen to Alkermes under this Section 13.3 that terminates the Agreementwith respect to the Alkermes 8700 Product or in its entirety, Biogen will not be obligated to make anyfurther Minimum Annual Payments.13.4.Right to Terminate Upon Bankruptcy. Either Party may, in addition to any otherremedies available to it under Applicable Law or in equity, terminate this Agreement, effectiveimmediately upon written notice to the other Party in the event (i) the other Party has made anassignment for the benefit of its creditors; (ii) there has been appointed an administrator, trustee orreceiver for the other Party or for all or a substantial part of its property; or (iii) any case or proceedinghas been commenced or other action taken by or against the other Party in bankruptcy or seekingreorganization, liquidation, dissolution, winding-up, arrangement, composition or readjustment of itsdebts or any other relief under any bankruptcy, insolvency, reorganization or other similar act orApplicable Law of any jurisdiction now or hereafter in effect, and any such event has continued forsixty (60) days undismissed.13.5.Effects of Termination. 13.5.1.Termination of License Grants. Upon any termination (but notexpiration) of this Agreement in its entirety, except for the licenses and rights granted under Sections13.5.2 and 13.5.3, all other licenses and rights granted by a Party to the other Party hereunder willterminate. Upon any termination of this Agreement with respect to a Product pursuant to Section 13.3,except for the licenses and rights granted under Sections 13.5.2 and 13.5.3, all other licenses and rightsgranted by a Party to the other Party hereunder with respect to such Product(s) (as applicable) shallterminate.13.5.2.Alkermes 8700 Product Rights. In the event of a termination (but notexpiration) of this Agreement with respect to the Alkermes 8700 Product or in its entirety, so56  long as at such time (1) GI Inferiority does not exist or GI Inferiority exists and Biogen hasCommercialized the Alkermes 8700 Product, and (2) Alkermes is not then in breach of its obligationsunder this Agreement (unless such breach is curable and has been cured no later than sixty (60) daysafter written notice from Biogen to Alkermes requesting cure of such breach), then at Alkermes’written request, Biogen shall:(i)within a reasonable time period, transfer to Alkermes allongoing Clinical Trials being conducted by the Parties for the Alkermes 8700 Product as of theeffective date of such termination of this Agreement, if permitted by Applicable Law and the applicableRegulatory Authorities (or any data monitoring review board or internal safety review board), andprovide cooperation reasonably requested by Alkermes in connection with such transfer;(ii)if such termination occurs after the Transfer CompletionDate, then no later than one (1) Business Day following the effective date of such termination, (a) senda letter to the FDA to transfer and assign to Alkermes all Regulatory Approvals and regulatory filingsrelated to the Alkermes 8700 Product, including the Alkermes 8700 Product 505(b)(2) NDA and (b)transfer to Alkermes a complete copy of the Alkermes 8700 Product 505(b)(2) NDA and any otherapplication for Regulatory Approval of the Alkermes 8700 Product and all regulatory filings,regulatory documentation and other supplements and records related to such NDA and applicationsthat are required to be kept under 21 C.F.R. § 314.81, in each case, in Biogen’s possession and Controlas of the effective date of such termination of this Agreement;(iii)no later than one (1) Business Day following the effectivedate of such termination, transfer to Alkermes a true and complete copy of (a) all data and resultsgenerated from any Development activities conducted by or on behalf of Biogen with respect to theAlkermes 8700 Product prior to the effective date of such termination of this Agreement, (b) all TrialMaster Files (including any Trial Master File plans, tables of contents or indices and any evidence orcertification of related quality checks) or equivalents thereof, for all completed or ongoing ClinicalTrials of the Alkermes 8700 Product conducted by or on behalf of Biogen and (c) all other tangibleembodiments of the Collaboration Know-How, in each case, in Biogen’s possession and Control as ofthe effective date of such termination of this Agreement;(iv)as of the effective date of such termination, grant to Alkermes an exclusive(even as to Biogen and its Affiliates), fully paid-up, perpetual, irrevocable and royalty-free, worldwidelicense, with the right to grant sublicenses through multiple tiers, under Biogen Collaboration Know-How and Biogen Collaboration Patents to Exploit the Alkermes 8700 Product in the Initial Indicationin the Territory; and(v)as of the effective date of such termination, grant to Alkermes a non-exclusive, fully paid-up, perpetual, irrevocable and royalty-free, worldwide license, with the right togrant sublicenses through multiple tiers, under any Know-How and Patent Rights that (a) areControlled by Biogen or its Affiliates as of the effective date of such termination, (b) are invented after the Effective Date and prior to the effective date of such termination in thecourse of performance of activities by Biogen or its Affiliates or Sublicensees under this Agreementand (c) relate to (with respect to Know-How) or Cover (with respect to Patent Rights) the Alkermes8700 Product in the form such product exists as of the effective date of such termination to57  Exploit the Alkermes 8700 Product in the form such product exists as of the effective date of suchtermination in the Initial Indication in the Territory.13.5.3.License to Biogen Know-How and Biogen Patents. In the event of atermination (but not expiration) of this Agreement with respect to the Alkermes 8700 Product or in itsentirety, so long as at such time (i) GI Inferiority does not exist or GI Inferiority exists and Biogen hasCommercialized the applicable Product and (ii) Alkermes is not then in breach of its obligations underthis Agreement (unless such breach is curable and has been cured no later than sixty (60) days afterwritten notice from Biogen to Alkermes requesting cure of such breach), then at Alkermes’ writtenrequest, the Parties will negotiate in good faith the terms and conditions of the grant of a license toAlkermes under Know-How and Patent Rights Controlled by Biogen prior to the Effective Date thatCover the Alkermes 8700 Product and that are not licensed to Alkermes pursuant to Sections 13.5.2(iv)or Section 13.5.2(v). 13.5.4.Costs of Product Reversion to Alkermes. Alkermes shall beresponsible for all costs and expenses incurred [**] in connection with the activities set forth in Section13.5.2, and thereafter Biogen shall be responsible for all such costs and expenses incurred. 13.5.5.Surviving Sublicensee. Following the effective date of anytermination of this Agreement, at the request of any Sublicensee with a market capitalization (or otherindependent valuation) of at least Ten Billion U.S. Dollars (US$10,000,000,000), and who is not thenin breach of its Sublicense Agreement and is otherwise in good standing, subject to Alkermes’ receiptof a copy from such Sublicensee of the Sublicense Agreement with such Sublicensee (together with allmodifications or amendments); provided that any such copy may be redacted to remove anyconfidential, proprietary or competitive information of Biogen, Alkermes will enter into, without anyassistance by Biogen, a direct license agreement with such Sublicensee under the Licensed Know-How and Licensed Patents that are sublicensed to such Sublicensee on substantially the same terms,i.e., provides Sublicensee and Alkermes (as a substitute thereunder for Biogen) the same rights andobligations, as set forth in such Sublicense Agreement between Biogen and such Sublicensee effectiveas of the date of termination of the Sublicense Agreement granted to Sublicensee by Biogen; provided, however, that (a) such direct license agreement would not impose on Alkermes any obligations overand above its obligations under this Agreement and would not impose on any such Sublicensee anyobligations over and above its obligations under the applicable Sublicense Agreement, and (b) asconsideration for such direct license, the direct license agreement would require Sublicensee to payAlkermes the same amount as Alkermes would have received from Biogen (had this Agreementsurvived) as a result of the Sublicensee’s performance under such Sublicense Agreement. During thependency of any negotiation of a direct license agreement between Alkermes and the applicableSublicensee in accordance with this Section 13.5.5, so as to ensure no disruption in the rights grantedto such Sublicensee, such Sublicensee is hereby licensed to continue to exercise its rights and willcontinue to perform its obligations, in each case, as set forth under such Sublicense Agreement and theapplicable terms under such Sublicense Agreement will apply mutatis mutandis to Alkermes ratherthan Biogen, except that Alkermes will not have any obligations over and above its obligations underthis Agreement. As provided in this Section 13.5.5, in the event of any termination of this Agreement,Alkermes will not have the right to terminate or otherwise restrict any rights granted to a Sublicenseethat is not also in breach of this Agreement58  or the applicable Sublicense Agreement. For any Sublicensee with a market capitalization (or otherindependent valuation) of less than Ten Billion U.S. Dollars (US$10,000,000,000) and who is not thenin breach of its Sublicense Agreement and is otherwise in good standing, Alkermes agrees to discuss ingood faith with such Sublicensee a direct license agreement with such Sublicensee under the LicensedKnow-How and Licensed Patents that are sublicensed to such Sublicensee.13.6.Bankruptcy. 13.6.1.All rights and licenses granted under or pursuant to this Agreement are,and shall otherwise be deemed to be, for purposes of Section 365(n) of the Bankruptcy Code oranalogous provisions of Applicable Law outside the U.S., licenses of right to “intellectual property” asdefined under Section 101 of the Bankruptcy Code or analogous provisions of Applicable Law outsidethe U.S. (hereinafter “IP”). The Parties agree that the licensee of any such rights under this Agreementshall retain and may fully exercise all of its rights and elections under the Bankruptcy Code or anyother provisions of Applicable Law outside the U.S. that provide similar protection for IP. The license-granting Party shall, during the Term, create and maintain current copies of all IP licensed to the otherParty under this Agreement. Upon the bankruptcy of a Party, the other Party shall further be entitled toa complete duplicate of (or complete access to, as appropriate) any such IP, and such IP, if not alreadyin such other Party’s possession, shall be promptly delivered to such other Party. Each Partyacknowledges and agrees that “embodiments” of such IP within the meaning of Section 365(n)include, without limitation, laboratory notebooks, product samples and inventory, research studies anddata, all Regulatory Approvals and rights of reference therein, and all embodiments of any LicensedKnow-How. If (a) a case under the Bankruptcy Code is commenced by or against a license-grantingParty, (b) this Agreement is rejected as provided in the Bankruptcy Code, and (c) the other Party electsto retain its rights hereunder as provided in Section 365(n) of the Bankruptcy Code, the license-granting Party (in any capacity, including debtor-in-possession) and its successors and assigns(including a trustee) shall:(i)provide to the other Party all such IP (including allembodiments thereof) in such license-granting Party’s possession on terms agreed by the Parties,promptly upon the other Party’s written request; and (ii)not interfere with the other Party’s rights under thisAgreement, or any agreement supplemental hereto, to such IP (including such embodiments), includingany right to obtain such IP (or such embodiments) from another entity, to the extent provided in Section365(n) of the Bankruptcy Code.13.6.2.All rights, powers and remedies provided herein are in addition to andnot in substitution for any and all other rights, powers and remedies now or hereafter existing at law orin equity (including the Bankruptcy Code) in the event of the commencement of a case under theBankruptcy Code with respect to either Party. The Parties agree that they intend the following rights toextend to the maximum extent permitted by law, and to be enforceable under Bankruptcy Code Section365(n) upon any rejection of this Agreement: (a) the right of access to any IP (including allembodiments thereof) of the license-granting Party or any Third Party with whom the license-grantingParty contracts to perform any of its obligations59  under this Agreement; and (b) the right to contract directly with any such Third Party to complete thecontracted work.13.7.Survival of Certain Provisions. Termination of this Agreement for any reason orexpiration of this Agreement will not release either Party from any obligation arising prior to the date ofexpiration or termination. The rights and obligations under Section 3.8.1 and Section 3.8.3 (in eachcase solely with respect to amounts accruing prior to the effective date of termination or expiration ofthis Agreement and record-keeping and audits with respect to such amounts), Section 6.1.3, Section7.1, Section 10.1, Section 13.5 and this Section 13.7 and Article 1 (solely to the extent necessary togive effect to the other surviving provisions), Article 8, Article 9 (solely with respect to amountsaccruing prior to the effective date of termination or expiration of this Agreement, and record-keepingand audits with respect to such amounts), Article 11, Article 12 and Article 14, in each case, only inthe event and to the extent applicable, and subject to the terms and conditions stated therein, willsurvive any expiration or termination of this Agreement. Any right to terminate this Agreement, andany rights a Party has under Section 13.5, as applicable, shall be cumulative and not exclusive and willbe in addition to any other rights or remedies that the Party giving notice of termination may haveunder Applicable Law or in equity or otherwise. Article 14GENERAL PROVISIONS14.1.Notices. All notices, reports, requests or demands required or permitted under thisAgreement will be sent by hand or overnight courier, properly addressed to the respective Parties asfollows:If to Alkermes:Alkermes Pharma Ireland LimitedConnaught House1 Burlington RoadDublin 4, IrelandAttention: PresidentWith a copy to:Alkermes Public Limited CompanyConnaught House1 Burlington RoadDublin 4, IrelandAttention: Chief Legal Officer If to Biogen:Biogen MA Inc.225 Binney StreetCambridge, MA 02142Attention: Executive Vice President, Head of R&D60  With a copy to:Biogen MA Inc.225 Binney StreetCambridge, MA 02142Attention: Chief Legal OfficerandRopes & Gray LLPPrudential Tower, 800 Boylston StreetBoston, MA 02199-3600Attention: Susan Galli, Esq.or to such address or addresses as the Parties hereto may designate for such purposes during theTerm. Notices will be deemed to have been sufficiently given or made: (i) if by hand, when delivered,and (ii) if by overnight courier, upon receipt by the applicable Party.14.2.Governing Law. This Agreement and all questions regarding the existence, validity,interpretation, breach or performance of this Agreement will be governed by and construed inaccordance with the laws of the State of New York (other than its choice of law principles).14.3.Entire Agreement; Amendment. This Agreement, together with the Exhibits hereto,represent the entire agreement between the Parties regarding the subject matter hereof, and supersedesall prior or contemporaneous written or oral promises or representations relating such subject matter notincorporated herein (including the Confidentiality Agreements). The Parties are not relying, and havenot relied, on any representations or warranties whatsoever regarding the subject matter of thisAgreement, express or implied, except for the representations and warranties set forth in thisAgreement. No amendment or modification of the terms and conditions of this Agreement will bebinding on either Party unless reduced to writing referencing this Agreement and signed by a dulyauthorized officer of each Party. 14.4.Binding Effect and Assignment. This Agreement will be binding upon and inure tothe benefit of the Parties hereto and their respective successors and permitted assigns. This Agreementwill not be assignable by either Party without the other Party’s prior written consent; provided,however, that either Party may assign its rights or obligations under this Agreement (in whole or inpart), without the other Party’s written consent but with notice to the other Party, to an Affiliate. If anyAffiliate to which a Party has assigned its rights or obligations under this Agreement thereafter ceasesto be an Affiliate of such Party, then such assignment will be deemed to require the consent of the otherParty pursuant to this Section 14.4. To the extent that the assigning Party survives as a legal entity, theassigning Party shall remain responsible for the performance by its assignee of this Agreement or anyobligations hereunder so assigned to such assignee. Either Party may also assign this Agreement (inwhole or in part) without the other Party’s written consent, but with notice to the other Party, to anysuccessor pursuant to a Change of Control, and Biogen may assign this Agreement (in whole or inpart), without Alkermes’ written consent but with notice to Alkermes in connection with the sale orother61  transfer to a Third Party of all or substantially all of Biogen’s assets to which this Agreement relates(i.e., Tecfidera, Fumaderm and any Product). 14.5.Waiver. No provision of this Agreement shall be waived by any act, omission orknowledge of a Party or its agents or employees except by an instrument in writing expressly waivingsuch provision and signed by a duly authorized officer of the waiving Party. A waiver by either Partyof any of the terms and conditions of this Agreement in any instance will not be deemed or construedto be a waiver of such term or condition for the future, or of any other term or condition hereof. Allrights, remedies, undertakings, obligations and agreements contained in this Agreement will becumulative and none of them will be in limitation of any other remedy, right, undertaking, obligation oragreement of either Party.14.6.Severability. If any part of this Agreement will be found to be invalid, illegal orunenforceable under Applicable Law in any jurisdiction, such part will be ineffective only to the extentof such invalidity, illegality or unenforceability in such jurisdiction, without in any way affecting theremaining parts of this Agreement in that jurisdiction or the validity, legality or enforceability of theAgreement as a whole in any other jurisdiction. In addition, the part that is ineffective will be reformedin a mutually agreeable manner so as to as nearly approximate the intent of the Parties as possible.14.7.Counterparts and Signatures. This Agreement may be executed in two or morecounterparts, each of which will be deemed an original for all purposes, but all of which together willconstitute one and the same instrument. Signatures provided by facsimile transmission or in Adobe™Portable Document Format (PDF) sent by electronic mail shall be deemed to be original signatures.14.8.Force Majeure. Neither Party will be held liable or responsible to the other Party orbe deemed to have breached or defaulted under this Agreement for failure or delay in performing itsobligations hereunder (except for payment of money) to the extent, and as long as, such failure or delayis caused by or results from causes beyond the reasonable control of the affected Party (a “ForceMajeure Delay”), including fire, floods, embargoes, war, civil commotions, terrorism, strikes, lockoutsor other labor disturbances, acts of God, acts of a Governmental Authority or judicial orders ordecrees. In the event of a Force Majeure Delay, the affected Party will give prompt notice thereof tothe other Party (to the extent possible), will use commercially reasonable efforts to mitigate the adverseconsequences thereof and will resume performance hereunder with dispatch whenever theconsequences of the Force Majeure Delay have been mitigated.14.9.Ambiguities. Ambiguities, if any, in this Agreement will not be construed against anyParty, irrespective of which Party may be deemed to have authored the ambiguous provision.14.10.Headings. Headings are for the convenience of reference only and will not controlthe construction or interpretation of any of the provisions of this Agreement.14.11.No Partnership. Nothing in this Agreement is intended or will be deemed toconstitute a partnership, agency, or joint venture relationship between the Parties. 62 ®® Notwithstanding any of the provisions of this Agreement, neither Party will at any time enter into,incur, or hold itself out to Third Parties as having authority to enter into or incur, on behalf of the otherParty, any commitment, expense, or liability whatsoever.14.12.No Third Party Beneficiaries. No Person other than Alkermes, Biogen and theirrespective successors and permitted assigns shall be deemed an intended beneficiary hereunder or haveany right to enforce any provision of this Agreement.14.13.Performance by an Affiliate. Each of Biogen and Alkermes acknowledges thatobligations under this Agreement may be performed by Affiliates of Biogen and Alkermes. Each ofBiogen and Alkermes will remain responsible for any obligations of such Party under this Agreementundertaken by one or more of its Affiliates.14.14.Further Assurances. Each Party agrees to do and perform all such further acts andthings and shall execute and deliver such other agreements, certificates, instruments and documentsnecessary or that the other Party may deem advisable in order to carry out the intent and accomplish thepurposes of this Agreement and to evidence, perfect or otherwise confirm its rights hereunder.[Signature page follows] 63  In Witness Whereof, each of the Parties has caused this Agreement to be executed anddelivered by its duly authorized representatives to be effective as of the Effective Date.ALKERMES PHARMA IRELANDLIMITED BIOGEN SWISS MANUFACTURINGGMBHBy:/s/ Shane Cooke By:/s/ Fred LawsonName:Shane Cooke Name:F. LawsonTitle:Director Title:DirectorDate:November 27, 2017 Date:26/11/2017 Signature Page to License and Collaboration Agreement  EXHIBIT AAlkermes 8700 Chemical StructureThe chemical structure of the active ingredient in the Alkermes 8700 Product: A-1  EXHIBIT BLicensed Patents B-1  B-2  B-3  B-4  EXHIBIT CInitial Development Plan C-1  ALKS 8700 Product High--Level Development Plan * The activities that are allocated to Alkermes, unless otherwise agreed in writing by the Parties, are (1) all activities prior to the Transfer Completion Date and (2) transition of the P3 Long-Term Safety Study (-A301) to Biogen following the Transfer Completion Date. [**] C-2  Detailed ALKS 8700 Product Plan – Multiple Sclerosis (505b2) [**] * The activities that are allocated to Alkermes, unless otherwise agreed in writing by the Parties, are (1) all activities prior to the Transfer Completion Date and (2) transition of the P3 Long C-3  ALKS 8700 Development Plan Budget – Multiple Sclerosis Spend in $MFY'17FY'17FY'17FY'17FY'17FY'18FY'18FY'18FY'18FY'18FY'19FY'19FY'19FY'19FY'19TotalQ1Q2Q3Q4TotalQ1Q2Q3Q4TotalQ1Q2Q3Q4 Base ALKS 8700 Development (FY16 - FY'21)[**][**][**][**][**][**][**][**][**][**][**][**][**][**][**]Clinical Phase 1 PK and Clinical Pharmacology Studies[**][**][**][**][**][**][**][**][**][**][**][**][**][**][**]ALKS 8700 FIH Study (-001)[**] [**] [**] ALKS 8700 MAD / FE Study (-A102)[**] [**] [**] ALKS 8700 Relative BA Study Fasted Condition(-A103)[**] [**] [**] ALKS 8700 RelativeBA Study Fed (HF) Condition (-A104)[**] [**] [**] ALKS 8700 Mass Balance Study (-A105)[**][**][**][**][**][**] [**] ALKS 8700 Alcohol Dose Dumping Study (-A106)[**][**][**][**][**][**] [**] ALKS 8700 DDI Study (-A107)[**][**][**][**][**][**] [**] ALKS 8700 Renal Study (-A108)[**][**][**][**][**][**] [**] ALKS 8700 Additional Food Effect Study (-A109)[**][**][**][**][**][**] ALKS 8700 Potential tQT Study[**][**][**][**][**][**][**][**] [**] Phase 3 Long-term Safety Study (-A301)[**][**][**][**][**][**][**][**][**][**][**][**][**][**][**]Phase 3 Tolerability Study (-A302)[**][**][**][**][**][**][**][**][**][**][**][**] Clinical CRO Credits[**][**][**][**][**][**][**][**][**][**][**][**][**][**][**]Translational Medicine[**][**][**][**][**][**][**][**][**] [**] Non-Clinical 2-Yr Rat Study[**][**] [**][**][**][**] [**] Mouse Carci Studies[**][**][**][**][**][**] [**] Additional Non-Clinical Studies/Activities[**][**][**][**][**][**][**][**][**] [**] CMC API & DrugProduct Development, Manufacturing, and Supply[**][**][**][**][**][**][**][**][**][**][**][**][**][**][**]Medical Affairs PRO Development & Additional Medical AffairsActivities[**][**][**][**][**][**][**][**][**][**][**][**][**][**][**]NDA Submission Fee & supporting preparationspend[**] [**][**][**][**][**][**] Other – All[**] [**][**][**][**][**][**][**][**][**][**][**][**][**]Pediatric Plan Activities[**][**][**][**][**][**][**][**][**][**][**][**][**][**][**]Non-clinical Studies[**] [**][**][**][**][**][**][**][**][**] Adult PK Sprinkling Study[**] [**] [**] Pediatric PK Study[**] [**] [**] Pediatric Extension[**] [**] [**] ALKS 8700 External Spend Projection[**][**][**][**][**][**][**][**][**][**][**][**][**][**][**] ALKS 8700 Internal Spend Projection[**] [**][**][**][**] Total R&D[**] [**] [**] C-4  Phase 3 Long-Term Safety Study (-A301) Name of Sponsor/ Company: Alkermes, Inc.Name of Investigational Product: ALKS 8700Name of Active Ingredient: ALKS 8700Title of study: A Phase 3 Open Label Study to Evaluate the Long-term Safety and Tolerability ofALKS 8700 in Adults with Relapsing Remitting Multiple SclerosisInvestigators: This study will be conducted at approximately 125 sites in North America andEurope.Study Period:Estimated date of first subject’s consent: Q4 2015Estimated date of last subject’s last visit: Q4 2020Phase of Development: 3Objectives:• Evaluate the long-term safety and tolerability of ALKS 8700 for up to 96 weeks oftreatment in adult subjects with relapsing remitting multiple sclerosis (RRMS)• Evaluate treatment effect over time in adult subjects with RRMS treated with ALKS 8700Methodology:[**] C-5  Study Design Schematic[**] Number of Subjects Planned: [**]Main Criteria for Inclusion:[**] Investigational Product, Dosage, Duration and Mode of Administration:[**] Reference Therapy, Dosage, Duration and Mode of Administration:[**] Duration of Study:[**] C-6  Criteria for Evaluation:Safety and Tolerability:[**] Efficacy:[**] Pharmacokinetics:[**] Statistical Methods: [**] Study Populations: [**] C-7  Safety: [**] Efficacy: [**] Pharmacokinetics: [**] Sample Size Considerations: [**] C-8  Phase 3 Tolerability Study (-A302) Name of Sponsor/ Company: Alkermes, Inc.Name of Investigational Product: ALKS 8700Name of Active Ingredient: ALKS 8700Title of study: A Phase 3 Study in Subjects with Relapsing Remitting Multiple Sclerosis to Evaluatethe Tolerability of ALKS 8700 and Dimethyl FumarateInvestigators: This study will be a multicenter study.Study Period:Estimated date of first subject’s consent: Q1 2017Estimated date of last subject’s last visit: [**]Phase of Development: 3Objectives:• Evaluate the utility of two GI symptom scales (IGISIS and GGISIS) and endpointsderived from the scales in assessing GI tolerability in adult subjects with relapsingremitting multiple sclerosis (RRMS) (after administration of ALKS 8700 or DMF in PartA• Compare the GI tolerability of ALKS 8700 and DMF in adult subjects with RRMS usingtwo GI symptom scales (IGISIS and GGISIS) in Part B with endpoints informed fromPart A• Evaluate the safety and tolerability of ALKS 8700 in adult subjects with RRMS in Parts Aand BMethodology (Part A and Part B): [**] C-9  Number of Subjects Planned (Part A and Part B): [**] Main Criteria for Inclusion (Part A and Part B): [**] Investigational Product, Dosage, Duration and Mode of Administration (Part A and PartB): [**] Reference Therapy, Dosage, Duration and Mode of Administration (Part A and Part B): [**] C-10  Duration of Study (Part A and Part B): [**] Criteria for Evaluation (Part A and Part B): Endpoints: Primary Endpoint: [**] Secondary Endpoints: [**] Safety and Tolerability (Part A and Part B): [**] Exploratory Efficacy (Part A and Part B): [**] Pharmacokinetics (Part A): [**] C-11  Statistical Methods (Part A and Part B): Sample Size Considerations (Part A and Part B): [**] Study Populations (Part A and Part B): [**] Safety Analyses (Part A and Part B): [**] GI Tolerability Analyses (Part A and Part B): [**] Exploratory Efficacy Analyses (Part A and Part B): [**] Pharmacokinetics Analyses (Part A): [**] C-12  [**] C-13  ALKS 8700 Renal Study (-A108) Name of Sponsor/ Company: Alkermes, Inc.Name of Investigational Product: ALKS 8700Name of Active Ingredient: ALKS 8700Title of study: A Phase 1 Study of the Pharmacokinetics, Safety and Tolerability of ALKS 8700in Subjects with Renal ImpairmentInvestigators: This study will be conducted at multiple centers study in the United States.Study Period:Estimated date of first subject’s consent: Q4 2016Estimated date of last subject’s last visit: Q2 2017Phase of Development: 1Objectives: The objective of this study is to compare the pharmacokinetics (PK), safety andtolerability of ALKS 8700 in subjects with mild, moderate and severe renal impairment versushealthy control subjects following single dose administration.Methodology: [**] C-14  Study Design Schematic [**] Number of Subjects Planned: [**] Main Criteria for Inclusion: [**] Investigational Product, Dosage, Duration and Mode of Administration: [**] Reference Therapy, Dosage, Duration and Mode of administration: [**] C-15  Duration of Study: [**] Criteria for Evaluation:Pharmacokinetics: [**] Safety: [**] Statistical Methods: [**] Analyses Populations: [**] Pharmacokinetic Analysis: [**] C-16  Safety Analysis: [**] Sample Size Considerations: [**] C-17  ALKS 8700 tQT Study (-A110) Name of Sponsor/ Company: Alkermes, Inc.Name of Investigational Product: ALKS 8700Name of Active Ingredient: Monomethyl fumarateTitle of study: A Phase 1 Study to Evaluate the Effect of Multiple Doses of ALKS 8700 on QTcInterval in Healthy VolunteersInvestigator(s): Single center study in the USStudy Period (years):Estimated date of first patient visit: Q4 2017Estimated date of last patient completed: Q1 2018Phase of Development: 1Objectives:Primary:To evaluate the effects of multiple doses of therapeutic and supratherapeutic oral dose strengths ofALKS 8700 on the heart rate-corrected QT interval using Fridericia’s formula (QTcF)Secondary:• To evaluate the effect of ALKS 8700 on other electrocardiogram (ECG) parameters: heartrate, PR and QRS intervals, and T-wave morphology and U-wave presence• To demonstrate sensitivity of the study to detect a small QT effect using moxifloxacin as apositive control• To evaluate the safety and tolerability of ALKS 8700• To evaluate the pharmacokinetic/pharmacodynamic relationship between the effect ofALKS 8700 on ECG and plasma concentrations of the metabolites monomethyl fumarate(MMF) and RDC-6567Methodology:[**] C-18  Number of Subjects Planned: [**] Main Criteria for Inclusion: [**] Investigational Product, Dosage, Duration, and Mode of Administration: [**] Reference Therapy, Dosage, Duration, and Mode of Administration:[**] Duration of Study: [**] Criteria for Evaluation:Primary Endpoint: [**]Secondary Endpoints:[**] C-19  Pharmacokinetics/Pharmacodynamics:[**] Safety: [**] C-20  Statistical Methods: [**] Analyses Populations:[**] Baseline: [**] Safety Analyses: [**] Concentration-Response Analysis: [**] C-21  Criteria for Negative QT Assessment: [**] Investigation of Hysteresis: [**] Assessment of Appropriateness of Model: [**] C-22  Assay Sensitivity: [**] By-Time Point Analysis: [**] Categorical Analyses: [**] Safety: [**] Sample Size Considerations: [**] C-23  [**] C-24  ALKS 8700 Juvenile Animal Toxicity Study [**] C-25  EXHIBIT DClinical Supply Agreement Terms Clinical Supply Agreement and Quality Agreement -The Parties will negotiate and execute a Clinical Supply Agreement and an associatedTechnical and Quality Agreement (“Clinical Supply Quality Agreement”) in accordancewith Section 5.1.1 of the Agreement. Program of Manufacturing, Forecasts and Delivery of Products-A detailed program of Manufacture with a rolling Calendar Quarter forecast and order anddelivery mechanisms will be outlined in the Clinical Supply Agreement.-Biogen to supply Tecfidera [**]. -Alkermes shall have no liability as a result of any failure or delay in Manufacturing ClinicalSupplies. Quality Assurance-Alkermes will Manufacture the Products in accordance with Applicable Law and cGMPs,the specifications for the Products and the terms and conditions of the Clinical SupplyAgreement and the Clinical Supply Quality Agreement.-Alkermes will perform and document those tests and checks required to assure the qualityof the Product that are established by the Clinical Supply Quality Agreement.-The Clinical Supply Agreement will contain terms establishing standards for the release,acceptance and rejection of the Products and will establish a minimum shelf life for theProducts.-In accordance with the terms of the Clinical Supply Agreement and the Clinical SupplyQuality Agreement, Biogen will be entitled to inspect or have inspected those portions ofthe facilities that are used by Alkermes in the Manufacture of the Products as well as therelevant Manufacturing records.-Validation batches will be treated as Clinical Supplies until such time as they are utilized inthe Commercialization of Product, at which time Biogen will pay Alkermes the differencebetween the clinical and commercial supply prices. Supply Price for Clinical Supplies of Products[**] D-1 ® EXHIBIT ECommercial Supply Agreement TermsClinical Supply Agreement and Quality Agreement-The Parties will negotiate and execute a Commercial Supply Agreement and an associatedTechnical and Quality Agreement (“Commercial Supply Quality Agreement”) in accordancewith Section 5.1 of the Agreement. Program of Manufacturing, Forecasts and Delivery of Products-A detailed program of Manufacture with a rolling Calendar Quarter forecast and order anddelivery mechanisms will be outlined in the Commercial Supply Agreement.-Product in the form of “finished goods” to be delivered Ex Works (Incoterms 2010)Athlone, Ireland.-Biogen to provide (A) 3-year rolling forecasts and (B) 4-quarter rolling forecasts, theproximate two quarters of which shall be binding and the subsequent two quarters ofwhich may be increased or decreased by 20% prior to becoming binding. Quality Assurance-Alkermes will Manufacture the Products in accordance with Applicable Law and cGMPs, thespecifications for the Products and the terms and conditions of the Commercial SupplyAgreement and the Commercial Supply Quality Agreement.-Alkermes will perform and document those tests and checks required to assure the quality of theProducts that are established by the Commercial Supply Quality Agreement.-The Commercial Supply Agreement will contain terms establishing standards for the release,acceptance and rejection of the Products and will establish a minimum shelf life for theProducts.-In accordance with the terms of the Commercial Supply Agreement and the Commercial SupplyQuality Agreement, Biogen will be entitled to inspect or have inspected those portions of thefacilities that are used by Alkermes in the Manufacture of the Products as well as the relevantManufacturing records. Supply Price for Commercial Supplies of Products[**]Products in Process upon Termination-For any Product that Alkermes has commenced the Manufacture of, but for which Manufactureis incomplete on the Commercial Supply Agreement termination date, Biogen shall eitherrequest that Alkermes (i) complete the Manufacture of such incomplete Product, in which caseBiogen shall pay Alkermes [**] or (ii) cease theE-1  Manufacture of such incomplete Product, in which case Biogen shall pay Alkermes the costsincurred by Alkermes for such incomplete Product, as calculated in accordance with GAAP. Indemnification and Liability for Manufacture of Commercial Supplies of Products-Customary toll manufacturer indemnification provisions.-Limitation of liability equal to one year of amounts paid to Alkermes under the CommercialSupply Agreement.-In the event of a Serious Failure to Supply, Alkermes shall transfer to Biogen or its designee, atBiogen’s cost and expense, the Manufacturing technology to enable Biogen or its designee toManufacture Commercial Supplies. E-2  EXHIBIT FPress Release F-1  Biogen Contacts: For Investors: Matt Calistri +1 781 464 2442 For Media: Matt Fearer +1 781 464 3260 Alkermes Contacts: For Investors: Sandy Coombs +1 781 609 6377 Eva Stroynowski +1 781 609 6823 For Media: Jennifer Snyder +1 781 609 6166 BIOGEN AND ALKERMES ANNOUNCE LICENSE AND COLLABORATIONAGREEMENT TO DEVELOP AND COMMERCIALIZE ALKS 8700 FOR THETREATMENT OF MULTIPLE SCLEROSIS –– Novel, Oral, Fumarate Therapy Intended to Provide a Differentiated Gastrointestinal TolerabilityProfile –––– Biogen Brings Multiple Sclerosis Expertise to Commercialization of ALKS 8700 –––– New Drug Application Anticipated for Submission in 2018 –– Cambridge, Mass and Dublin, Ireland., Nov. 27, 2017 — Biogen (Nasdaq: BIIB) and Alkermesplc (Nasdaq: ALKS) today announced that they have entered into a global license and collaborationagreement to develop and commercialize ALKS 8700, a novel, oral, monomethyl fumarate (MMF)small drug molecule in Phase 3 development for the treatment of relapsing forms of multiple sclerosis(MS). “This partnership is further evidence of Biogen’s ongoing commitment to multiple sclerosis and buildsupon our deep experience in neuroscience and particularly in MS,” stated Michel Vounatsos, ChiefExecutive Officer at Biogen. “We aim to provide patients with a new oral therapy which may bringdifferentiated benefits.” “This collaboration has the potential to provide important benefits to patients with multiple sclerosisand immediately increases the value of ALKS 8700 to Alkermes,” said Richard Pops, Chief ExecutiveOfficer at Alkermes. “Biogen has a broad product portfolio and a highly experienced commercial team.In Biogen’s hands, we believe that patients will have broader and more rapid access to this importantmedicine. Meanwhile, we will focus our growing commercial capabilities on our expanding portfolioof medicines in psychiatry, including addiction, schizophrenia and depression.” Under the terms of the agreement, Biogen will receive an exclusive, worldwide license tocommercialize ALKS 8700 and will pay Alkermes a mid-teens royalty on worldwide net sales ofALKS 8700. This collaboration aligns the interests of Alkermes and Biogen in the successful development andcommercialization of ALKS 8700 as an important potential treatment option for patientsF – Press Release  suffering from MS. Biogen will reimburse Alkermes for fifty percent (50%) of the 2017 ALKS 8700development costs, with Alkermes receiving an upfront payment of $28 million representing Biogen’sshare of development expenses already incurred in 2017. Beginning Jan. 1, 2018, Biogen will beresponsible for all development expenses related to ALKS 8700. Alkermes may also receive milestonepayments for ALKS 8700 with a maximum aggregate value of $200 million upon certain clinical andregulatory achievements. Biogen anticipates the initial milestone payment of $50 million will berecorded as an expense in 2017. Alkermes will maintain responsibility for regulatory interactions with the U.S. Food and DrugAdministration (FDA) through the potential approval of the New Drug Application (NDA) for ALKS8700 for the treatment of MS. Biogen shall be responsible for all commercialization activities forALKS 8700. ALKS 8700 is currently in Phase 3 development for MS. Alkermes plans to seek approval of ALKS8700 under the 505(b)(2) regulatory pathway referencing Biogen’s TECFIDERA (dimethylfumarate). The registration package for ALKS 8700 will include pharmacokinetic bridging studies thatestablish bioequivalence to TECFIDERA and data from a two-year safety study known as EVOLVE-MS-1. Initial safety data from EVOLVE-MS-1 were recently presented at MSParis2017, the 7 JointMeeting of the European Committee for Treatment and Research in Multiple Sclerosis (ECTRIMS)and the Americas Committee for Treatment and Research in Multiple Sclerosis (ACTRIMS) inOctober. Safety data from the first month of the EVOLVE-MS-1 study (N=580) showed that treatmentwith ALKS 8700 was associated with low rates of gastrointestinal (GI) adverse events (AEs) leadingto discontinuation and no occurrence of serious GI AEs. The most common AEs during the first monthof treatment with ALKS 8700 were flushing, pruritus and diarrhea. Also, currently underway is a head-to-head study (EVOLVE-MS-2) evaluating the GI tolerability ofALKS 8700 compared to TECFIDERA. Initial data from EVOLVE-MS-2 are expected in the firsthalf of 2018. About the EVOLVE-MS Clinical Development ProgramThe key components of the EVOLVE-MS (Endeavoring to Advance Treatment for Patients Livingwith Multiple Sclerosis) clinical development program of ALKS 8700 include a two-year safety studyand pharmacokinetic bridging studies comparing ALKS 8700 and TECFIDERA. In addition, theprogram includes an elective head-to-head study comparing the GI tolerability of ALKS 8700 andTECFIDERA. About ALKS 8700ALKS 8700 is an oral, novel and proprietary monomethyl fumarate (MMF) prodrug candidate indevelopment for the treatment of relapsing forms of multiple sclerosis (MS). ALKS 8700 is designed torapidly and efficiently convert to MMF in the body and to offer differentiated features as compared tothe currently marketed dimethyl fumarate, TECFIDERA. About Multiple SclerosisMultiple sclerosis (MS) is an unpredictable, often disabling disease of the central nervous system(CNS), which interrupts the flow of information within the brain, and between the brain andF – Press Release ®th® body. MS symptoms can vary over time and from person to person. Symptoms may include extremefatigue, impaired vision, problems with balance and walking, numbness or pain and other sensorychanges, bladder and bowel symptoms, tremors, problems with memory and concentration and moodchanges, among others.Approximately 400,000 individuals in the U.S. and 2.5 million peopleworldwide have MS, and most are diagnosed between the ages of 15 and 50. About Alkermes plcAlkermes plc is a fully integrated, global biopharmaceutical company developing innovative medicinesfor the treatment of central nervous system (CNS) diseases. The company has a diversified commercialproduct portfolio and a substantial clinical pipeline of product candidates for chronic diseases thatinclude schizophrenia, depression, addiction and multiple sclerosis. Headquartered in Dublin, Ireland,Alkermes plc has an R&D center in Waltham, Massachusetts; a research and manufacturing facility inAthlone, Ireland; and a manufacturing facility in Wilmington, Ohio. For more information, please visitAlkermes’ website at www.alkermes.com. About BiogenAt Biogen, our mission is clear: we are pioneers in neuroscience. Biogen discovers, develops anddelivers worldwide innovative therapies for people living with serious neurological andneurodegenerative diseases. Founded in 1978 as one of the world’s first global biotechnologycompanies by Charles Weissman, Heinz Schaller, Kenneth Murray and Nobel Prize winners WalterGilbert and Phillip Sharp, today Biogen has the leading portfolio of medicines to treat multiplesclerosis; has introduced the first and only approved treatment for spinal muscular atrophy; and isfocused on advancing neuroscience research programs in Alzheimer’s disease and dementia,neuroimmunology, movement disorders, neuromuscular disorders, pain, ophthalmology,neuropsychiatry, and acute neurology. Biogen also manufactures and commercializes biosimilars ofadvanced biologics. We routinely post information that may be important to investors on our website at www.biogen.com. To learn more, please visit www.biogen.com and follow us on social mediaTwitter, LinkedIn, Facebook, YouTube. Biogen Safe HarborThis press release contains forward-looking statements, made pursuant to the safe harbor provisions ofthe Private Securities Litigation Reform Act of 1995, including statements relating to the potentialbenefits and results, including financial and operating results, that may be achieved through Biogen’slicense agreement with Alkermes, risks and uncertainties associated with drug development andcommercialization, the potential benefits, safety, efficacy and clinical effects of ALKS 8700, the timingand status of regulatory filings, and the potential of Biogen’s commercial business and pipelineprograms, including ALKS 8700. These forward-looking statements may be accompanied by suchwords as “aim,” “anticipate,” “believe,” “could,” “estimate,” “expect,” “forecast,” “intend,” “may,”“plan,” “potential,” “project,” “target,” “will,” and other words and terms of similar meaning. Drugdevelopment and commercialization involve a high degree of risk, and only a small number of researchand development programs result in commercialization of a product. Results in early stage clinical trialsmay not be indicative of full results or results from later stage or larger scale clinical trials and do notensureF – Press Release 112 regulatory approval. You should not place undue reliance on these statements or the scientific datapresented. These statements involve risks and uncertainties that could cause actual results to differ materially fromthose reflected in such statements, including, without limitation: uncertainty as to whether theanticipated benefits and potential of Biogen’s license agreement with Alkermes can be achieved; risksthat Biogen and/or Alkermes may not fully enroll the clinical trials for ALKS 8700 or will take longerthan expected; risks of unexpected costs or delays; uncertainty of success in the development andpotential commercialization of ALKS 8700, which may be impacted by, among other things,unexpected concerns that may arise from additional data or analysis, the occurrence of adverse safetyevents, failure to obtain regulatory approvals in certain jurisdictions, failure to protect and enforceBiogen’s data, intellectual property, and other proprietary rights and uncertainties relating to intellectualproperty claims and challenges; third party collaboration risks; and uncertainty of Biogen’s success indeveloping, licensing, or acquiring other product candidates or additional indications for existingproducts. The foregoing sets forth many, but not all, of the factors that could cause actual results todiffer from Biogen’s expectations in any forward-looking statement. Investors should consider thiscautionary statement, as well as the risk factors identified in Biogen’s most recent annual or quarterlyreport and in other reports Biogen has filed with the U.S. Securities and Exchange Commission. Thesestatements are based on Biogen’s current beliefs and expectations and speak only as of the date of thispress release. Biogen does not undertake any obligation to publicly update any forward-lookingstatements, whether as a result of new information, future developments or otherwise. Alkermes Note Regarding Forward-Looking StatementsCertain statements set forth in this press release constitute “forward-looking statements” within themeaning of the Private Securities Litigation Reform Act of 1995, as amended, including, but notlimited to, statements concerning: the continued expansion of Alkermes’ portfolio of medicines inpsychiatry, the continued clinical development and the potential therapeutic and commercial value ofALKS 8700 for the treatment of relapsing forms of MS, the number of patients enrolled in the ALKS8700 Phase 3 studies, the timing of expected initial data from EVOLVE-MS-2, the regulatory strategyfor filing of an NDA for ALKS 8700 and the adequacy of the EVOLVE-MS development programfor ALKS 8700 to serve as the basis for an NDA, the timing of the submission of an NDA to the FDAfor ALKS 8700 and the potential financial, commercial and therapeutic benefits that may be achievedthrough collaboration with Biogen under the license and collaboration agreement between Alkermesand Biogen. Alkermes cautions that forward-looking statements are inherently uncertain. AlthoughAlkermes believes that such statements are based on reasonable assumptions within the bounds of itsknowledge of its business and operations, the forward-looking statements are neither promises norguarantees and they are necessarily subject to a high degree of uncertainty and risk. Actualperformance and results may differ materially from those expressed or implied in the forward-lookingstatements due to various risks and uncertainties. These risks and uncertainties include, among others:whether the results from the head-to-head study to evaluate the GI tolerability of ALKS 8700compared to TECFIDERA will show that ALKS 8700 has more favorable GI tolerability; whetherpreclinical and early clinical results for ALKS 8700 will be predictive of future clinical study results orreal-world results; whether clinical trials for ALKS 8700 will be completed on time or at all; changes inthe cost, scope and duration of the ALKS 8700 clinical trials; whetherF – Press Release  ALKS 8700 could be shown ineffective or unsafe during clinical studies, and whether, in suchinstances, Alkermes may not be permitted by regulatory authorities to undertake new or additionalclinical studies of ALKS 8700; whether regulatory submissions for ALKS 8700 will be submitted ontime or at all; whether adverse decisions by regulatory authorities will occur; whether thepharmacokinetic, Phase 3 and other studies conducted for ALKS 8700 will meet the FDA’srequirements for approval; whether the potential financial, commercial and therapeutic benefits ofcollaboration with Biogen under the license and collaboration agreement between Alkermes andBiogen will be achieved; and those risks described in the Alkermes Annual Report on Form 10-K forthe fiscal year ended December 31, 2016, and Quarterly Reports on Form 10-Q for the quarters endedMarch 31, 2017 and September 30, 2017 and in subsequent filings made by Alkermes with the U.S.Securities and Exchange Commission (SEC), which are available on the SEC’s website atwww.sec.gov. Existing and prospective investors are cautioned not to place undue reliance on theseforward-looking statements, which speak only as of the date hereof. Except as required by law, thecompany disclaims any intention or responsibility for updating or revising any forward-lookingstatements contained in this press release. TECFIDERA is a registered trademark of Biogen Inc. National Multiple Sclerosis Society. Multiple Sclerosis: Just the Facts. Accessedfrom http://www.nationalmssociety.org/NationalMSSociety/media/MSNationalFiles/Brochures/Brochure-Just-the-Facts.pdf on Nov. 27, 2017. Multiple Sclerosis Association of America. MS Overview. Accessed from http://mymsaa.org/ms-information/overview/who-gets-ms/ on Nov. 27, 2017. ### F – Press Release ®12 Schedule 1.1.26GI Tolerability Data Package[**] Schedule 1.1.26  Schedule 5.1Change of Control - Competitors[**] Schedule 5.1  Schedule 10.3.3Amended and Restated Credit Agreement, dated as of September 16, 2011, as amended and restatedon September 25, 2012, as further amended by that certain Amendment No. 2 to Amended andRestated Credit Agreement dated as of February 14, 2013, and as amended by that certain AmendmentNo. 3 and Waiver to Amended and Restated Credit Agreement dated as of May 22, 2013 and by thatcertain Amendment No. 4 to Amended and Restated Credit Agreement dated as of October 12, 2016,among ALKERMES, INC., a corporation organized under the laws of the Commonwealth ofPennsylvania, ALKERMES PLC, a company incorporated under the laws of the Republic of Ireland(registered number 498284) (“Holdings”), ALKERMES PHARMA IRELAND LIMITED, a privatelimited company organized under the laws of the Republic of Ireland (registered number 448848) and awholly owned indirect subsidiary of Holdings (the “Intermediate Holdco”), ALKERMES USHOLDINGS, INC., a Delaware corporation and a wholly owned subsidiary of Intermediate Holdco,certain other subsidiaries of Holdings, the several banks and other financial institutions or entities fromtime to time parties to the Credit Agreement as lenders, MORGAN STANLEY SENIOR FUNDING,INC., as administrative agent, MORGAN STANLEY SENIOR FUNDING, INC., Citigroup GlobalMarkets, Inc. and JPMorgan Chase Bank, N.A. as co-syndication agents, and MORGAN STANLEYSENIOR FUNDING, INC., as collateral agent. Schedule 10.3.3Exhibit 10.17.1 April 24, 2017 Dear Craig, On behalf of Alkermes Inc., I am pleased to offer you the position of Senior Vice President, Clinical Development andMedical Affairs, Chief Medical Officer, reporting to Elliot Ehrich, Executive Vice President, Research andDevelopment. This is a full-time exempt position and will be located in Waltham, MA. This letter, and its accompanying documents, confirms the terms of the offer. Base Pay:Your starting annual salary will be $550,000, subject to applicable taxes andwithholdings. You will be paid bi-weekly.Annual Bonus:You will be eligible to participate in the 2017 Performance Pay Plan. Your annualPerformance Pay target will be 50% and will not be prorated. Your actual PerformancePay will be based on individual and company performance. You must be activelyemployed by Alkermes on the date the bonus is paid to receive a Performance Paybonus.Sign-On Bonus:You will receive a sign-on bonus of $250,000. This is a one-time payment that isconsidered wages and is therefore subject to supplemental income tax rates. Your sign-on bonus should be paid within thirty (30) days of your start date.If you voluntarily separate your employment with Alkermes prior to the firstanniversary of your start date, you will be expected to return to Alkermes a proratedamount of your sign-on bonus. The prorated amount shall be calculated by multiplying1/12th of your sign-on bonus amount ($250,000) by the total number of uncompletedmonths of service in the one year period from your start date. Repayment of theprorated amount will be due to Alkermes within thirty (30) days of your last day ofemployment with Alkermes.Equity Participation:Subject to approval by the Compensation Committee of the Board of Directors ofAlkermes plc, you will be granted the following equity grant;- A stock option grant of 80,000 stock options of Alkermes plc ordinary shareswhich will ratably vest over four (4) years on the anniversary of the grant date,provided that you remain employed by an Alkermes plc affiliated company. The options shall expire on the earlier to occur of: the 10th anniversary of thedate of grant or three months after termination of your service relationship withthe Company.- A restricted stock unit award for 5,000 shares of Alkermes plc ordinary shareswhich will ratably vest over four (4) years on the anniversary of the grant date,provided that you remain employed by an Alkermes plc affiliated company. Inthe event you cease to be employed by an Alkermes plc affiliated company,vesting shall cease.  In addition, Alkermes currently has a Performance Share Grant which all employees whobegin working at Alkermes before December 31, 2017 are eligible for. Subject toapproval by the Compensation Committee of the Board of Directors of Alkermes plc,you will be granted a target grant of 8,000 Alkermes plc Performance Share Units thatvest based on the company’s performance against stated milestones. The number ofshares is based on your anticipated start date with Alkermes. If your start date changes,the number of Performance Share Units may be adjusted. In the event you cease to beemployed by an Alkermes plc affiliated company, vesting shall cease. Please see theattached information sheet for further information about this grant. The above equity grants will be made from the Alkermes plc 2011 Stock Option andIncentive Plan, as amended (the “Plan”) and will be subject to the terms and conditionsof that Plan. The Compensation Committee generally meets once per month to approvegrants for employees who began employment at the company during the previousmonth.. The price of the stock option grant will be the closing price of the stock on thedate of grant. You will receive notice of your equity award grant via Alkermes/MerrillLynch’s Benefits Online system. Information regarding your equity grant including thegrant award certificate(s) can also be found in the Alkermes/Merrill Lynch’s BenefitsOnline system and in the Plan. We will provide you with a copy of the Plan forcomplete details.Vacation:In addition to location specific paid holidays, you are entitled to 3 weeks of annualvacation. During this year, your vacation allotment will be prorated in accordance withAlkermes policy.Benefits:You will also be eligible to participate in the Alkermes benefits program as described inthe accompanying Decision Guide. Medical, Dental, and Vision coverage will begin onyour start date. Complete details and enrollment information will be included withyour New Employee Welcome Packet.Offer Contingencies:This employment offer is contingent upon successful completion of all aspects of theAlkermes pre-employment screening process. This process includes the verification ofinformation you will provide to us for a background check. BackgroundVerification Process:This process will verify the information you have provided concerning your prioremployment and education. As Alkermes is concerned with the security of ourcustomers, employees, business partners and the general public, we will perform acriminal history check to determine whether you have criminal convictions of recordand to verify your identity. For positions within our Finance department, a credit checkwill also be performed.EmploymentEligibilityVerification:Please note that all persons in the United States are required to complete anEmployment Eligibility Verification Form on the first day of employment and submitan original document or documents that establish identity and employment eligibilitywithin three (3) business days of employment. For your convenience, we are enclosingForm I-9 for your review. You will need to complete Section 1 and present originaldocument(s) of your choice as listed on the reverse side of the form once you beginwork.Alkermes participates in the E-Verify program. E-Verify is a Social SecurityAdministration/Department of Homeland Security program which allows employers toelectronically verify each new employee’s work authorization using informationprovided on Form I-9. The verification process will occur within three (3) businessdays of employment. If you would like further information regarding E-Verify, pleasecontact Alkermes Human Resources department.  ProprietaryInformation,No Conflicts:You agree to execute the Company’s standard Employee Agreement With Respect toInventions and Proprietary Information and Non-Solicitation and to be bound by all ofthe provisions thereof. A copy is enclosed with this letter. You hereby represent thatyou are not presently bound by any employment agreement, confidential or proprietaryinformation agreement or similar agreement with any current or previous employer thatwould impose any restriction on your acceptance of this offer or that would interferewith your ability to fulfill the responsibilities of your position with the Company.Employment Period:This letter, and its accompanying documents, set out the complete terms of our offer ofemployment but are not intended as, and should not be considered, a contract ofemployment for a fixed period of time. If you accept this offer of employment with theCompany, you accept that your employment is at-will, which means that you orAlkermes are free to end the employment relationship at any time, with or withoutcause. Craig, all of us here at Alkermes are very enthusiastic about the prospect of you joining the Company and have thehighest expectation of your future contributions. Please indicate your acceptance of the foregoing with your signature, and return all completed documents to theCompany no later than April 28, 2017. After that date, the offer will lapse. The other duplicate original is for yourrecords. Best Regards, Madeline CoffinSenior Vice President, Human ResourcesAlkermes Inc. The foregoing is signed and accepted as of the date first above written by: /s/ Craig Hopkinson 25 April 2017Craig Hopkinson Date EXHIBIT 21.1SUBSIDIARIESName Jurisdiction Alkermes Ireland Holdings Limited Ireland Alkermes Pharma Ireland Limited Ireland Alkermes Finance Ireland Limited Ireland Daravita Pharma Ireland Limited Ireland Alkermes Finance Ireland (No. 3) Limited Ireland Alkermes Science Four Limited Ireland Alkermes Science Five Limited Ireland Alkermes Science Six Limited Bermuda Daravita Limited Ireland Alkermes Finance S.à r.l. Luxembourg Alkermes Finance Ireland (No. 2) Limited Ireland Alkermes US Holdings, Inc. Delaware Alkermes, Inc. Pennsylvania Alkermes Controlled Therapeutics, Inc. Pennsylvania Alkermes Europe, Ltd. United Kingdom EXHIBIT 23.1CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRMWe hereby consent to the incorporation by reference in the Registration Statements on Form S‑8 (Nos. 333‑179545,333‑184621, 333‑200777 and 333-214952) of Alkermes plc of our report dated February 16, 2018 relating to the financialstatements and the effectiveness of internal control over financial reporting, which appears in this Form 10‑K./s/ PricewaterhouseCoopers LLPBoston, MassachusettsFebruary 16, 2018 EXHIBIT 31.1CERTIFICATIONSI, 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 amaterial fact necessary to make the statements made, in light of the circumstances under which such statements weremade, not misleading with respect to the period covered by this report;3.Based on my knowledge, the financial statements, and other financial information included in this report, fairlypresent in all material respects the financial condition, results of operations and cash flows of the registrant as of,and for, the periods presented in this report;4.The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controlsand procedures (as defined in Exchange Act Rules 13a‑15(e) and 15d‑15(e)) and internal control over financialreporting (as defined in Exchange Act Rules 13a‑15(f) and 15d‑15(f)) for the registrant and have:a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to bedesigned under our supervision, to ensure that material information relating to the registrant, including itsconsolidated subsidiaries, is made known to us by others within those entities, particularly during theperiod in which this report is being prepared;b)Designed such internal control over financial reporting, or caused such internal control over financialreporting to be designed under our supervision, to provide reasonable assurance regarding the reliability offinancial reporting and the preparation of financial statements for external purposes in accordance withgenerally accepted accounting principles;c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in thisreport our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of theperiod covered by this report based on such evaluation; andd)Disclosed in this report any change in the registrant’s internal control over financial reporting thatoccurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case ofan annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’sinternal control over financial reporting; and5.The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internalcontrol over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board ofdirectors (or persons performing the equivalent functions):a)All significant deficiencies and material weaknesses in the design or operation of internal control overfinancial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process,summarize and report financial information; andb)Any fraud, whether or not material, that involves management or other employees who have a significantrole in the registrant’s internal control over financial reporting./s/ Richard F. PopsRichard F. PopsChairman and Chief Executive Officer(Principal Executive Officer) February 16, 2018EXHIBIT 31.2 CERTIFICATIONSI, 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 amaterial fact necessary to make the statements made, in light of the circumstances under which such statements weremade, not misleading with respect to the period covered by this report;3.Based on my knowledge, the financial statements, and other financial information included in this report, fairlypresent in all material respects the financial condition, results of operations and cash flows of the registrant as of,and for, the periods presented in this report;4.The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controlsand procedures (as defined in Exchange Act Rules 13a‑15(e) and 15d‑15(e)) and internal control over financialreporting (as defined in Exchange Act Rules 13a‑15(f) and 15d‑15(f)) for the registrant and have:a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to bedesigned under our supervision, to ensure that material information relating to the registrant, including itsconsolidated subsidiaries, is made known to us by others within those entities, particularly during theperiod in which this report is being prepared;b)Designed such internal control over financial reporting, or caused such internal control over financialreporting to be designed under our supervision, to provide reasonable assurance regarding the reliability offinancial reporting and the preparation of financial statements for external purposes in accordance withgenerally accepted accounting principles;c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in thisreport our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of theperiod covered by this report based on such evaluation; andd)Disclosed in this report any change in the registrant’s internal control over financial reporting thatoccurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case ofan annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’sinternal control over financial reporting; and5.The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internalcontrol over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board ofdirectors (or persons performing the equivalent functions):a)All significant deficiencies and material weaknesses in the design or operation of internal control overfinancial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process,summarize and report financial information; andb)Any fraud, whether or not material, that involves management or other employees who have a significantrole in the registrant’s internal control over financial reporting. Senior Vice President and Chief Financial Officer(Principal Financial Officer)/s/ James M. FratesJames M. FratesSenior Vice President and Chief Financial Officer(Principal Financial Officer) February 16, 2018EXHIBIT 32.1CERTIFICATION PURSUANT TO18 U.S.C. SECTION 1350,AS ADOPTED PURSUANT TOSECTION 906 OF THE SARBANES‑OXLEY ACT OF 2002In connection with the Annual Report on Form 10-K of Alkermes plc (the “Company”) for the period endedDecember 31, 2017 as filed with the Securities 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 FinancialOfficer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of theSarbanes‑Oxley Act of 2002, that to our knowledge:(1)The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Actof 1934, as amended; and(2)The information contained in the Report fairly presents, in all material respects, the financial conditionand results of operations of the Company. Chairman and Chief Executive Officer(Principal Executive Officer)/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 Officer) February 16, 2018

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