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

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

Indicate by check mark whether the registrant has submitted electronically ~~and posted on its corporate Web site, if any,~~ every Interactive Data File required to be submitted ~~and posted~~ pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit ~~and post~~ such files). Yes☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth ~~company~~.company. See the definitions of ‘‘large accelerated filer,’’ ‘‘accelerated filer,’’ ‘‘smaller reporting company,’’ and ‘‘emerging growth company’’ in Rule 12b–2 of the Exchange Act.

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 new or 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 Exchange Act). Yes ☐ No ☒

Number of registrant’s ordinary shares, nominal value $0.0001, outstanding as of ~~October 27, 2017: 163,885,803.~~ August 2, 2023: 228,994,568.


	As of			As of			As of			As of
	September 30,			December 31,			June 30,			December 31,
	2017			2016			2023			2022
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	624,960		$	509,055		$	2,464,623		$	2,352,833
Restricted cash		6,530			7,095			4,791			4,755
Accounts receivable, net		390,683			305,725			717,417			676,347
Inventories, net		86,527			174,788			170,325			169,559
Prepaid expenses and other current assets		52,925			49,619			564,808			449,349
Total current assets		1,161,625			1,046,282			3,921,964			3,652,843
Property and equipment, net		21,700			23,484
Developed technology, net		2,512,412			2,767,184
Other intangible assets, net		5,643			6,251
Property, plant and equipment, net								362,326			340,509
Developed technology and other intangible assets, net								2,486,565			2,664,777
In-process research and development								810,000			810,000
Goodwill		426,441			445,579			1,010,538			1,010,538
Deferred tax assets, net		5,399			911			444,306			431,814
Other assets		36,234			2,368
Other long-term assets								263,042			204,135
Total assets	$	4,169,454		$	4,292,059		$	9,298,741		$	9,114,616
LIABILITIES AND SHAREHOLDERS’ EQUITY
CURRENT LIABILITIES:
Accounts payable							$	85,543		$	155,800
Accrued expenses and other current liabilities								496,669			457,557
Accrued trade discounts and rebates								319,469			319,780
Long-term debt—current portion	$	8,500		$	7,750			16,000			16,000
Accounts payable		32,825			52,479
Accrued expenses		162,701			182,765
Accrued trade discounts and rebates		435,714			297,556
Accrued royalties—current portion		62,273			61,981
Deferred revenues—current portion		5,938			3,321
Total current liabilities		707,951			605,852			917,681			949,137
LONG-TERM LIABILITIES:
Exchangeable notes, net		310,130			298,002
Long-term debt, net, net of current		1,578,947			1,501,741
Accrued royalties, net of current		268,672			272,293
Deferred revenues, net of current		9,842			7,763
Long-term debt, net								2,541,458			2,546,837
Deferred tax liabilities, net		226,113			296,568			264,815			342,017
Other long-term liabilities		67,976			46,061			263,828			204,451
Total long-term liabilities		2,461,680			2,422,428			3,070,101			3,093,305
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS’ EQUITY:
Ordinary shares, $0.0001 nominal value; 300,000,000 shares authorized; 164,242,005 and 162,004,956 shares issued at September 30, 2017 and December 31, 2016, respectively, and 163,857,639 and 161,620,590 shares outstanding at September 30, 2017 and December 31, 2016, respectively		16			16
Treasury stock, 384,366 ordinary shares at September 30, 2017 and December 31, 2016		(4,585	)		(4,585	)
Ordinary shares, $0.0001 nominal value; 600,000,000 shares authorized at June 30, 2023 and December 31, 2022; 229,323,393 and 227,625,913 shares issued at June 30, 2023 and December 31, 2022, respectively; and 228,939,027 and 227,241,547 shares outstanding at June 30, 2023 and December 31, 2022, respectively								23			23
Treasury stock, 384,366 ordinary shares at June 30, 2023 and December 31, 2022								(4,585	)		(4,585	)
Additional paid-in capital		2,212,613			2,119,455			4,522,145			4,474,199
Accumulated other comprehensive loss		(2,341	)		(3,086	)
Accumulated deficit		(1,205,880	)		(848,021	)
Accumulated other comprehensive income								21,612			12,528
Retained earnings								771,764			590,009
Total shareholders’ equity		999,823			1,263,779			5,310,959			5,072,174
Total liabilities and shareholders' equity	$	4,169,454		$	4,292,059
Total liabilities and shareholders’ equity							$	9,298,741		$	9,114,616

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


	For the Three Months Ended September 30,						For the Nine Months Ended September 30,						For the Three Months Ended June 30,						For the Six Months Ended June 30,
	2017			2016			2017			2016			2023			2022			2023			2022
Net sales	$	271,646		$	208,702		$	782,012		$	670,770		$	944,959		$	876,411		$	1,777,018		$	1,761,656
Cost of goods sold		125,517			85,161			394,783			243,520			219,958			230,216			428,521			445,278
Gross profit		146,129			123,541			387,229			427,250			725,001			646,195			1,348,497			1,316,378
OPERATING EXPENSES:
Research and development		17,928			12,814			194,090			36,746			150,035			103,246			284,183			206,378
Selling, general and administrative		153,952			132,049			509,940			407,563			434,125			398,221			887,479			770,955
Impairment of goodwill														—			56,171			—			56,171
Gain on sale of asset														(2,000	)		—			(2,000	)		—
Total operating expenses		171,880			144,863			704,030			444,309			582,160			557,638			1,169,662			1,033,504
Operating loss		(25,751	)		(21,322	)		(316,801	)		(17,059	)
Operating income														142,841			88,557			178,835			282,874
OTHER EXPENSE, NET:
Interest expense, net		(31,706	)		(19,066	)		(95,297	)		(57,752	)		(12,098	)		(21,409	)		(27,638	)		(42,665	)
Foreign exchange gain (loss)		275			(108	)		167			(266	)
Gain on divestiture		112			—			5,968			—
Loss on debt extinguishment		—			—			(533	)		—
Other income, net		280			6,879			280			6,839
Foreign exchange gain														326			28			417			448
Other income (expense), net														4,183			(2,389	)		2,840			(3,131	)
Total other expense, net		(31,039	)		(12,295	)		(89,415	)		(51,179	)		(7,589	)		(23,770	)		(24,381	)		(45,348	)
Loss before expense (benefit) for income taxes		(56,790	)		(33,617	)		(406,216	)		(68,238	)
Income before expense (benefit) for income taxes														135,252			64,787			154,454			237,526
Expense (benefit) for income taxes		7,181			(27,747	)		(42,138	)		(31,946	)		8,181			3,813			(27,301	)		(27,709	)
Net loss	$	(63,971	)	$	(5,870	)	$	(364,078	)	$	(36,292	)
Net loss per ordinary share—basic and diluted	$	(0.39	)	$	(0.04	)	$	(2.24	)	$	(0.23	)
Weighted average shares outstanding—basic and diluted		163,447,208			161,038,827			162,810,551			160,472,530
OTHER COMPREHENSIVE (LOSS) INCOME, NET OF TAX
Net income													$	127,071		$	60,974		$	181,755		$	265,235
Net income per ordinary share—basic													$	0.56		$	0.27		$	0.80		$	1.16
Weighted average ordinary shares outstanding—basic														228,743,143			230,020,004			228,571,356			229,559,715
Net income per ordinary share—diluted													$	0.54		$	0.26		$	0.78		$	1.12
Weighted average ordinary shares outstanding—diluted														233,935,591			236,166,384			233,938,149			236,077,147
OTHER COMPREHENSIVE INCOME (LOSS), NET OF TAX
Foreign currency translation adjustments		(209	)		(110	)		745			(196	)	$	1,409		$	(1,433	)	$	794		$	(1,893	)
Other comprehensive (loss) income		(209	)		(110	)		745			(196	)
Comprehensive loss	$	(64,180	)	$	(5,980	)	$	(363,333	)	$	(36,488	)
Pension and other post-employment benefit plan remeasurements														179			(547	)		2,003			(222	)
Interest rate swap contracts designated as cash flow hedges														13,339			2,011			6,287			2,011
Other comprehensive income (loss)														14,927			31			9,084			(104	)
Comprehensive income													$	141,998		$	61,005		$	190,839		$	265,131

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

For the Nine Months Ended September 30,

2017

2016

CASH FLOWS FROM OPERATING ACTIVITIES:

Net loss

$
(364,078
)

$
(36,292
)
Adjustments to reconcile net loss to net cash provided by
operating activities:

Depreciation and amortization expense

213,155

154,465

Equity-settled share-based compensation

91,391

84,011

Royalty accretion

38,415

28,762

Royalty liability remeasurement

(2,944
)

—

Acquired in-process research and development expense

148,769

—

Impairment of non-current asset

22,270

—

Loss on debt extinguishment

388

—

Payments related to term loan refinancing

(3,940
)

—

Amortization of debt discount and deferred financing costs

15,863

13,469

Gain on divestiture

(2,635
)

—

Deferred income taxes

(62,989
)

(35,158
)
Foreign exchange and other adjustments

(1,521
)

268

Changes in operating assets and liabilities:

Accounts receivable

(85,161
)

(142,448
)
Inventories

83,482

23,842

Prepaid expenses and other current assets

(4,435
)

(20,838
)
Accounts payable

(18,414
)

49,695

Accrued trade discounts and rebates

139,461

83,009

Accrued expenses and accrued royalties

(59,293
)

29,582

Deferred revenues

3,770

(443
)
Other non-current assets and liabilities

(14,559
)

(1,653
)
Net cash provided by operating activities

136,995

230,271

CASH FLOWS FROM INVESTING ACTIVITIES:

Payments for acquisitions, net of cash acquired

(168,818
)

(520,405
)
Proceeds from divestiture, net of cash divested

69,072

—

Change in restricted cash

568

(3,411
)
Purchases of property and equipment

(4,031
)

(14,616
)
Net cash used in investing activities

(103,209
)

(538,432
)
CASH FLOWS FROM FINANCING ACTIVITIES:

Net proceeds from term loans

847,768

—

Repayment of term loans

(770,790
)

(3,000
)
Proceeds from the issuance of ordinary shares in connection with warrant exercises

1,789

—

Proceeds from the issuance of ordinary shares through an employee stock purchase plan

3,856

3,235

Proceeds from the issuance of ordinary shares in connection with stock option exercises

1,762

3,384

Payment of employee withholding taxes related to share-based awards

(5,640
)

(5,309
)
Repurchase of ordinary shares

(992
)

—

Net cash provided by (used in) financing activities

77,753

(1,690
)
Effect of foreign exchange rate changes on cash and cash equivalents

4,366

(462
)
Net increase (decrease) in cash and cash equivalents

115,905

(310,313
)
Cash and cash equivalents, beginning of the period

509,055

859,616

Cash and cash equivalents, end of the period

$
624,960

$
549,303

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

NOTE 1 – BASIS OF PRESENTATION AND BUSINESS OVERVIEW

Basis of Presentation

Unless otherwise indicated or the context otherwise requires, references to “Horizon”, the “Company”, “we”, “us” and “our” refer to Horizon Therapeutics plc and its consolidated subsidiaries.

Transaction Agreement with Amgen Inc.

On December 12, 2022, the Company announced that it had entered into a transaction agreement with Amgen Inc. (“Amgen”) and Pillartree Limited (“Pillartree”), a wholly owned subsidiary of Amgen. Subject to the terms of the transaction agreement, Pillartree will acquire the Company (the “Transaction”), pursuant to a scheme of arrangement under Chapter 1 of Part 9 of the Companies Act 2014 of Ireland (the “Scheme”), or under certain circumstances, subject to the terms of the transaction agreement, a takeover offer (as such term is defined under the Irish Takeover Rules). As a result of the Scheme, the Company would become a wholly owned subsidiary of Amgen.

At the effective time of the Scheme (the “Effective Time”), holders of the Company’s ordinary shares will be entitled to receive $116.50 in cash per ordinary share (the “Consideration”). The Company’s equity awards will be treated as set forth in the transaction agreement, such that:

•

each option to purchase the Company’s ordinary shares that is outstanding as of immediately prior to the Effective Time (whether or not vested) will, contingent upon and effective as of the Effective Time, be canceled and converted into the right to receive cash, without interest, in an amount equal to (a) the total number of the Company’s ordinary shares subject to such option immediately prior to the Effective Time, multiplied by (b) the excess of (i) the Consideration over (ii) the exercise price payable per share under such option;

•

each of the Company’s restricted stock unit (“RSU”) awards, excluding PSUs (as defined below), that is outstanding as of immediately prior to the Effective Time (whether or not vested) will, contingent upon and effective as of the Effective Time, (a) if granted to a non-employee member of the Company’s board of directors or held by a person who, as of the date of the completion of the Transaction, is a former service-provider of the Company, be canceled and converted into the right to receive a cash amount equal to (i) the total number of the Company’s ordinary shares subject to such RSU immediately prior to the Effective Time multiplied by (ii) the Consideration, and (b) if not granted to an individual described in clause (a) above, be canceled and converted into a restricted stock unit (an “Amgen RSU”), denominated in shares of Amgen’s common stock. The number of shares of Amgen common stock subject to each such Amgen RSU will be equal to the product (rounded down to the nearest whole number) of (a) the total number of the Company’s ordinary shares subject to such RSU immediately prior to the Effective Time multiplied by (b) the quotient of (i) the Consideration divided by (ii) the volume weighted average of the per share closing price of Amgen’s common stock on the Nasdaq Global Select Market for five trading days ending on the second business day prior to the completion of the Transaction. Following the Effective Time, each Amgen RSU will continue to be governed by the same terms and conditions (including vesting terms) as were applicable to the applicable RSU immediately prior to the Effective Time; and

•

each of the Company’s RSU awards with performance-based vesting or delivery requirements (“PSU”) that is outstanding as of immediately prior to the Effective Time (whether or not vested) will, contingent upon and effective as of the Effective Time, be canceled and converted into the right to receive cash, without interest, in an amount equal to (i) the total number of the Company’s ordinary shares issuable in settlement of such PSU as determined, in accordance with the terms of such PSU, by the compensation committee of the Company’s board of directors (the “Compensation Committee”) prior to the Effective Time multiplied by (ii) the Consideration.

On February 24, 2023, the Company’s shareholders approved the Scheme and certain scheme approval resolutions and amendments to the memorandum and articles of association of Horizon to enable the Scheme to be effected. The closing of the Transaction remains subject to customary closing conditions, including, among other things, (a) the sanction by the Irish High Court of the Scheme and delivery of the court order to the Irish Registrar of Companies, (b) the absence of an order or law that prevents consummation of the Transaction or imposes a burdensome condition (as defined in the transaction agreement), (c) absence of any Material Adverse Effect (as defined in the transaction agreement) from December 12, 2022 to the Sanction Date (as defined in the transaction agreement) that is continuing as of the Sanction Date, (d) the accuracy of the other party’s representations and warranties subject to certain materiality and material adverse effect exceptions and (e) the performance by each party of all of its covenants and agreements under the transaction agreement in all material respects. In connection with the Transaction, the Company and Amgen have received clearances or confirmation of non-applicability related to foreign direct investment in Denmark, Italy, Germany and France and clearances related to antitrust in Germany and Austria.

On May 16, 2023, the Federal Trade Commission (“FTC”) filed a complaint in the United States District Court for the Northern District of Illinois seeking a temporary restraining order and preliminary injunction enjoining the Transaction. On May 23, 2023, the district court scheduled an evidentiary hearing on the FTC’s request for a preliminary injunction beginning on September 11, 2023. Based on the district court’s schedule, the Company, Amgen and the FTC then submitted a stipulated proposed temporary restraining order to the district court providing that the Company and Amgen would not close the Transaction until the earlier of October 31, 2023 or the second business day after the district court rules on the FTC’s request for a preliminary injunction (the “Stipulated TRO”). On May 31, 2023, the district court entered a case management order, and on June 2, 2023, the district court issued an order granting the Stipulated TRO. On June 22, 2023, the FTC filed a parallel complaint in its administrative court and an amended complaint was filed in the district court adding several states as additional plaintiffs. On June 29, 2023, the Company and Amgen filed an answer to the amended complaint and counterclaims against the FTC. The Company cannot predict with certainty the outcome of the FTC litigation or whether or when the Company will be able to successfully consummate the pending Transaction.

The unaudited condensed consolidated financial statements presented herein have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim financial information and in accordance with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, the financial statements do not include all of the information and notes required by GAAP for complete financial statements. In the opinion of management, all adjustments, including normal recurring adjustments, considered necessary for a fair statement of the financial statements have been included. Operating results for the three and ~~nine~~six months ended ~~September~~June 30, ~~2017~~2023 are not necessarily indicative of the results that may be expected for the year ending December 31, ~~2017.~~2023. The December 31, ~~2016~~2022 condensed consolidated balance sheet was derived from audited financial statements, but does not include all disclosures required by GAAP.

Unless otherwise indicated or the context otherwise requires, references to the “Company”, “we”, “us” and “our” refer to Horizon Pharma plc and its consolidated subsidiaries. The unaudited condensed consolidated financial statements presented herein include the accounts of the Company and its wholly owned subsidiaries. All inter-company transactions and balances have been eliminated.

On ~~January 13, 2016, the Company~~ ~~completed its acquisition of~~ Crealta Holdings LLC (“Crealta”) for approximately $539.7 million, including $24.9 million of cash acquired and $70.9 million paid to settle Crealta’s outstanding debt. Following completion of the acquisition, Crealta became a wholly owned subsidiary of the Company and was renamed as Horizon Pharma Rheumatology LLC.

~~On October 25, 2016, the Company completed its acquisition of Raptor Pharmaceutical Corp. (“Raptor”) in which the Company acquired~~ all of the issued and outstanding shares of Raptor’s common stock for $9.00 per share in cash. The total consideration was $860.8 million, including $24.9 million of cash acquired and $56.0 million paid to settle Raptor’s outstanding debt. Following completion of the acquisition, Raptor became a wholly owned subsidiary of the Company and converted to a limited liability company, changing its name to Horizon Pharmaceutical LLC.

On May 8, 2017, the Company acquired River Vision Development Corp. (“River Vision”) for upfront cash payments totaling $151.9 million, including $6.3 million of cash acquired, and subject to other customary purchase price adjustments for working capital, and potential future milestone and royalty payments contingent on the satisfaction of certain regulatory milestones and sales thresholds. Following completion of the acquisition, River Vision became a wholly owned subsidiary of the Company and was renamed as Horizon Pharma Tepro, Inc.

~~On June 23, 2017, the Company sold its European subsidiary that owned the marketing rights to PROCYSBI~~^® (cysteamine bitartrate) delayed-release capsules and QUINSAIR™ (levofloxacin inhalation solution) in Europe, the Middle East and Africa (“EMEA”) regions (the “Chiesi divestiture”) to Chiesi Farmaceutici S.p.A. (“Chiesi”) for an upfront payment of $72.2 million, which reflects $3.1 million of cash divested, and subject to other customary purchase price adjustments for working capital, with additional potential milestone payments based on sales thresholds.

On June 30, 2017, the Company completed its acquisition of certain rights to interferon gamma-1b from Boehringer Ingelheim International GmbH (“Boehringer Ingelheim International”) in all territories outside of the United States, Canada and Japan, as the Company previously held marketing rights to interferon gamma-1b in these territories. Boehringer Ingelheim International commercialized interferon gamma-1b under the trade names IMUKIN^®~~, IMUKINE~~^®~~, IMMUKIN~~^® ~~and IMMUKINE~~^® (“IMUKIN”) in an estimated thirty countries, primarily in Europe and the Middle East. In May 2016, the Company paid Boehringer Ingelheim International €5.0 million ($5.6 million when converted using a Euro-to-Dollar exchange rate at date of payment of 1.1132) for such rights and upon closing in June 2017, the Company paid Boehringer Ingelheim International an additional €19.5 million ($22.3 million when converted using a Euro-to-Dollar exchange rate at date of payment of 1.1406). The Company markets interferon gamma-1b as ACTIMMUNE^® ~~in the United States.~~

The unaudited condensed consolidated financial statements presented herein include the results of operations of the acquired Crealta and Raptor businesses from the applicable dates of acquisition. See Note 3 for further details of acquisitions and divestitures.

Beginning in the first quarter of 2017, the Company modified its presentation of certain operating expenses. Previously, the Company presented “general and administrative” expenses as one line item in its condensed consolidated statement of comprehensive loss, and “selling and marketing” expenses as another. For current-period presentation and prior-period comparisons, the Company now combines these two line items into one line item, titled “selling, general and administrative” expenses.

Business Overview

~~The Company~~Horizon is a ~~biopharmaceutical~~global biotechnology company focused on ~~improving patients’ lives by identifying, developing, acquiring~~ the discovery, development and ~~commercializing differentiated and accessible~~commercialization of medicines that address ~~unmet medical needs. The Company markets eleven medicines through its orphan, rheumatology~~critical needs for people impacted by rare, autoimmune and ~~primary care~~ ~~business units.~~

severe inflammatory diseases. The Company’s ~~marketed~~pipeline is purposeful: it applies scientific expertise and courage to bring clinically meaningful therapies to patients. Horizon believes science and compassion must work together to transform lives. The Company’s commercial portfolio is currently composed of 12 medicines ~~are:~~in the areas of rare diseases, gout, ophthalmology and inflammation.

As of June 30, 2023, the Company’s commercial portfolio consisted of the following medicines:

~~Orphan Business Unit~~TEPEZZA® (teprotumumab-trbw), for intravenous infusion

~~ACTIMMUNE® (interferon gamma-1b); marketed as IMUKIN® outside the United States~~KRYSTEXXA® (pegloticase injection), for intravenous infusion

~~BUPHENYL® (sodium~~RAVICTI® (glycerol phenylbutyrate) ~~Tablets and Powder; marketed as AMMONAPS® in certain European countries and Japan~~oral liquid

~~PROCYSBI®~~UPLIZNA® (inebilizumab-cdon) injection, for intravenous use

PROCYSBI® (cysteamine bitartrate) delayed-release capsules and granules, for oral use

~~QUINSAIR™ (levofloxacin inhalation solution)~~ACTIMMUNE® (interferon gamma-1b) injection, for subcutaneous use

~~RAVICTI® (glycerol phenylbutyrate) Oral Liquid~~

~~Rheumatology Business Unit~~

~~KRYSTEXXA® (pegloticase)~~

~~RAYOS® (prednisone) delayed-release tablets; marketed as LODOTRA® outside the United States~~

~~Primary Care Business Unit~~

~~DUEXIS® (ibuprofen/famotidine)~~

~~MIGERGOT® (ergotamine tartrate & caffeine suppositories)~~

~~PENNSAID®~~PENNSAID® (diclofenac sodium topical solution) 2% w/w (“PENNSAID 2%”), for topical use

~~VIMOVO®~~RAYOS® (prednisone) delayed-release tablets, for oral use

BUPHENYL® (sodium phenylbutyrate) tablets and powder, for oral use

QUINSAIR™ (levofloxacin) solution for inhalation

DUEXIS® (ibuprofen/famotidine) tablets, for oral use

VIMOVO® (naproxen/esomeprazole magnesium) delayed-release tablets, for oral use

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Recent Accounting Pronouncements

From time to time, the Company adopts new accounting pronouncements issued by the Financial Accounting Standards Board (“FASB”) or other standard-setting bodies.

~~Effective~~In March 2020, the FASB issued a new accounting standard to ease the financial reporting burdens caused by the expected market transition from the London Inter Bank Offered Rate (“LIBOR”) and other interbank offered rates to alternative reference rates, commonly referred to as reference rate reform. The new standard provides temporary optional expedients and exceptions to current GAAP guidance on contract modifications and hedge accounting. Specifically, a modification to transition to an alternative reference rate is treated as an event that does not require contract remeasurement or reassessment of a previous accounting treatment. Moreover, for all types of hedging relationships, an entity is permitted to change the reference rate without having to dedesignate the hedging relationship. In January ~~1, 2017,~~ 2021, the FASB issued a new accounting standard to expand the scope of the original March 2020 standard to include derivative instruments on discounting transactions. In the second quarter of 2022, the Company elected to ~~early adopt ASU No.~~ ~~2017-01,~~ ~~Business Combinations (Topic 805): Clarifying~~apply the ~~Definition~~optional expedients for qualifying modifications to debt agreements under ASC 470 and for the assessment of ~~a Business~~ ~~(“ASU No. 2017-01”). The amendments in~~ ~~ASU No.~~ ~~2017-01 clarify~~hedge effectiveness for cash flow hedges affected by reference rate reform. LIBOR was discontinued as of June 30, 2023, and the ~~definition~~discontinuation of a business with the objective of adding guidance to assist entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. The definition of a business affects many areas of accounting including acquisitions, disposals, goodwill and consolidation. ~~The adoption~~LIBOR did not have a material impact on interest payments incurred under the ~~Company’s condensed consolidated financial statements and related disclosures.~~Credit Agreement (as defined below). Refer to Note 12 for further details.

~~Effective January 1, 2017, the Company adopted ASU No. 2016-09,~~ ~~Improvements to Employee Share-Based Payment Accounting~~ (“ASU No. 2016-09”). The update requires excess tax benefits and tax deficiencies, which arise due to differences between the measure of compensation expense and the amount deductible for tax purposes, to be recorded directly through earnings as a component of income tax expense. Previously, these differences were generally recorded in additional paid-in capital and thus had no impact on net income. The change in treatment of excess tax benefits and tax deficiencies also impacts the computation of diluted earnings per share, and the cash flows associated with those items are classified as operating activities on the condensed consolidated statements of cash flows. Additionally, ASU No. 2016-09 permits entities to make an accounting policy election for the impact of forfeitures on the recognition of expense for share-based payment awards. Forfeitures can be estimated, as allowed under previous standards, or recognized when they occur. As a result of the adoption, $7.2 million of excess tax benefits that had not previously been recognized, as the related tax deduction had not reduced current taxes payable, were recorded on a modified retrospective basis through a cumulative effect adjustment to its accumulated deficit as of January 1, 2017. During the three and nine months ended September 30, 2017, the Company recognized an excess tax deficiency of $0.5 million and $0.9 million, respectively. The Company elected not to change its policy on accounting for forfeitures and continues to estimate a requisite forfeiture rate. Additional amendments to the accounting for income taxes and minimum statutory withholding requirements had no impact on the Company’s results of operations and related disclosures.

~~In May 2017, the FASB issued ASU No. 2017-09,~~ ~~Compensation-Stock Compensation (Topic 718): Scope of Modification Accounting~~ (“ASU No. 2017-09”). The amendment amends the scope of modification accounting for share-based payment arrangements, provides guidance on the types of changes to the terms or conditions of share-based payment awards to which an entity would be required to apply modification accounting under ASC 718. The ASU is effective for annual reporting periods, including interim periods within those annual reporting periods, beginning after December 15, 2017. Early adoption is permitted, including adoption in any interim period. The Company does not expect the adoption of ASU No. 2017-09 to have a material impact on the Company’s condensed consolidated financial statements and related disclosures.

~~In February 2017, the FASB issued ASU No. 2017-05, (“Subtopic 610-20~~”),~~Other Income - Gains and Losses from the Derecognition of Nonfinancial Assets~~ (“ASU No. 2017-05”) which provides clarification regarding the scope of the asset derecognition guidance and accounting for partial sales of nonfinancial assets. The update defines an in-substance nonfinancial asset and clarifies that an entity should identify each distinct nonfinancial asset or in-substance nonfinancial asset promised to a counterparty and derecognize each asset when a counterparty obtains control of it. All businesses and nonprofit activities within the scope of Subtopic 610-20 are excluded from the amendments in this update. This guidance will be effective for annual and interim periods beginning after December 15, 2017 and is required to be applied at the same time as ASU No. 2014-09 (described below) is applied. The guidance can be applied using one of two methods: retrospectively to each prior reporting period presented or modified retrospectively with the cumulative effect of initially applying the guidance recognized against retained earnings as of the beginning of the fiscal year of adoption. ~~The Company does not expect the adoption of ASU No. 2017-05 to have a material impact~~ ~~on the Company’s~~ ~~condensed~~ ~~consolidated financial statements and related disclosures.~~

~~In January 2017, the FASB issued ASU No. 2017-04,~~ ~~Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment~~ (“ASU No. 2017-04”), to eliminate the second step of the goodwill impairment test. ASU No. 2017-04 requires an entity to measure a goodwill impairment loss as the amount by which the carrying value of a reporting unit exceeds its fair value. Additionally, an entity should include the income tax effects from any tax deductible goodwill on the carrying value of the reporting unit when measuring a goodwill impairment loss, if applicable. ASU No. 2017-04 is effective for fiscal years beginning after December 15, 2019 and interim periods within those years. Early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. The Company does not expect the adoption of ASU No. 2017-04 to have a material impact ~~on the Company’s~~ ~~condensed~~ ~~consolidated financial statements and related disclosures.~~

~~In November 2016, the FASB issued ASU No. 2016-18,~~ ~~Statement of Cash Flows (Topic 230): Restricted Cash~~ (“ASU No. 2016-18”), which addresses diversity in practice related to the classification and presentation of changes in restricted cash on the statement of cash flows. ASU No. 2016-18 will require that a statement of cash flows explain the change during the period in the total of cash, cash equivalents and amounts generally described as restricted cash or restricted cash equivalents. Therefore, amounts generally described as restricted cash and restricted cash equivalents should be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows. ASU No. 2016-18 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2017. Early adoption is permitted. ~~The Company does not expect the adoption of~~ ~~ASU No. 2016-18~~ ~~to have a material impact on the Company’s condensed consolidated financial statements and related disclosures~~.

~~In October 2016,~~ ~~the FASB issued ASU No.~~ ~~2016-16,~~ ~~Income Taxes (Topic 740): Intra-Entity Transfers of Assets Other Than Inventory~~ (“ASU No. 2016-16”). ASU No. 2016-16 was issued to improve the accounting for the income tax consequences of intra-entity transfers of assets other than inventory. Current GAAP prohibits the recognition of current and deferred income taxes for an intra-entity asset transfer until the asset has been sold to an outside party which has resulted in diversity in practice and increased complexity within financial reporting. ASU No. 2016-16 would require an entity to recognize the income tax consequences of an intra-entity transfer of an asset other than inventory when the transfer occurs and does not require new disclosures. ASU No. 2016-16 is effective for annual reporting periods beginning after December 15, 2017, and interim periods within those annual periods. Early adoption is permitted and the adoption of ASU No. 2016-16 should be applied on a modified retrospective basis through a cumulative-effect adjustment directly to retained earnings as of the beginning of the period of adoption. The Company is currently in the process of evaluating the impact of adoption of ASU No. 2016-16 on its condensed consolidated financial statements and related disclosures.

~~In August 2016, the FASB issued ASU No. 2016-15,~~ ~~Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments~~ (“ASU No. 2016-15”). The amendments in this ASU provide guidance on the following eight specific cash flow classification issues: (1) debt prepayment or debt extinguishment costs; (2) settlement of zero-coupon debt instruments or other debt instruments with coupon interest rates that are insignificant in relation to the effective interest rate of the borrowing; (3) contingent consideration payments made after a business combination; (4) proceeds from the settlement of insurance claims; (5) proceeds from the settlement of corporate-owned life insurance policies, including bank-owned life insurance policies; (6) distributions received from equity method investees; (7) beneficial interests in securitization transactions; and (8) separately identifiable cash flows and application of the predominance principle. Current GAAP does not include specific guidance on these eight cash flow classification issues. The amendments in ASU No. 2016-15 are effective for reporting periods beginning after December 15, 2017, with early adoption permitted. The Company does not expect the adoption of ASU No. 2016-15 to have a material impact on the Company’s condensed consolidated financial statements and related disclosures.

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

~~In May 2014, the~~ ~~FASB issued ASU~~ ~~No. 2014-09,~~ ~~Revenue from Contracts with Customers~~ (“ASU No. 2014-09”). The new standard aims to achieve a consistent application of revenue recognition within the United States, resulting in a single revenue model to be applied by reporting companies under GAAP. Under the new model, recognition of revenue occurs when a customer obtains control of promised goods or services in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. In addition, the new standard requires that reporting companies disclose the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. The new standard is required to be applied retrospectively to each prior reporting period presented or retrospectively with the cumulative effect of initially applying it recognized at the date of initial application. In March 2016, April 2016, December 2016 and September 2017, the FASB issued ASU No. 2016-08, ~~Revenue From Contracts with Customers (Topic 606): Principal Versus Agent Considerations, ASU No. 2016-10,~~ ~~Revenue From Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing,~~ ~~ASU No. 2016-20, Technical Corrections and Improvements to Topic 606,Revenue From Contracts with Customers, and ASU No. 2017-13,~~ ~~Revenue Recognition (Topic 605), Revenue from Contracts with Customers (Topic 606), Leases (Topic 840) and Leases (Topic 842),~~ respectively, which further clarify the implementation guidance on principal versus agent considerations contained in ASU No. 2014-09. In May 2016, the FASB issued ASU No. 2016-12, narrow-scope improvements and practical expedients which provides clarification on assessing the collectability criterion, presentation of sales taxes, measurement date for non-cash consideration and completed contracts at transition. These standards will be effective for the Company beginning in the first quarter of 2018. The Company expects to elect the modified retrospective method and expects to identify similar performance obligations under ASU No. 2014-09 as compared with deliverables and separate units of account previously identified. The Company has made substantial progress in its review of the new standard and will complete its assessment by December 31, 2017. Based on its review of current customer contracts, the Company does not expect the implementation of this guidance to have a material impact on its consolidated financial statements as the timing of revenue recognition for product sales is not expected to significantly change, which is the Company’s primary revenue stream. Certain of the Company’s contracts for sales outside the United States include contingent amounts of variable consideration that the Company was precluded from recognizing because of the requirement for amounts to be “fixed or determinable”. The company expects that the new standard will require a cumulative-effect adjustment of certain deferred revenues that were originally expected to be recognized in the future. Under the new standard, on January 1, 2018 the Company currently expects to reclassify approximately $10.0 million of deferred revenue directly to retained earnings, resulting in a decrease to the Company’s accumulated deficit.

~~Other recent~~Recent authoritative guidance issued by the FASB (including technical corrections to the Accounting Standards ~~Codification)~~Codification (“ASC”)), the American Institute of Certified Public Accountants and the Securities and Exchange Commission did not, or are not expected to, have a material impact on the Company’s condensed consolidated financial statements and related disclosures.

Significant Accounting Policies

The Company’s significant accounting policies have not changed from those previously described in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022.

NOTE 23 – NET ~~LOSS~~INCOME PER SHARE

The following table presents basic and diluted net ~~loss~~income per share for the three and ~~nine~~six months ended ~~September~~June 30, ~~2017~~2023 and ~~2016~~2022 (in thousands, except share and per share data):

For the Three Months Ended September 30,

For the Nine Months Ended September 30,

2017

2016

2017

2016

Basic and diluted net loss per share calculation:

Net loss

$
(63,971
)

$
(5,870
)

$
(364,078
)

$
(36,292
)
Weighted average ordinary shares outstanding

163,447,208

161,038,827

162,810,551

160,472,530

Basic and diluted net loss per share

$
(0.39
)

$
(0.04
)

$
(2.24
)

$
(0.23
)


	For the Three Months Ended June 30,				For the Six Months Ended June 30,
	2023		2022		2023		2022
Basic net income per share calculation:
Numerator - net income	$	127,071	$	60,974	$	181,755	$	265,235
Denominator - weighted average of ordinary shares outstanding		228,743,143		230,020,004		228,571,356		229,559,715
Basic net income per share	$	0.56	$	0.27	$	0.80	$	1.16


	For the Three Months Ended June 30,				For the Six Months Ended June 30,
	2023		2022		2023		2022
Diluted net income per share calculation:
Numerator - net income	$	127,071	$	60,974	$	181,755	$	265,235
Denominator - weighted average of ordinary shares outstanding		233,935,591		236,166,384		233,938,149		236,077,147
Diluted net income per share	$	0.54	$	0.26	$	0.78	$	1.12

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

During the three and six months ended June 30, 2023 and 2022, the difference between the basic and diluted weighted average ordinary shares outstanding primarily represents the effect of incremental shares from the Company’s share-based compensation programs.

The computation of diluted net ~~loss~~income per share for the three and six months ended June 30, 2023 excluded ~~18.7~~0.4 million and ~~18.2~~1.2 million shares subject to equity awards, and warrants for the three and nine months ended September 30, 2017, respectively, and 11.6 million and 14.2 million shares subject to equity awards for the three and nine months ended September 30, 2016, respectively, because their inclusion would have had an anti-dilutive effect on diluted net ~~loss~~income per share.

The ~~potentially dilutive impact~~computation of the March 2015 private placement of $400.0 million aggregate principal amount of 2.50% Exchangeable Senior Notes due 2022 (the “Exchangeable Senior Notes”) by Horizon Pharma Investment Limited (“Horizon Investment”), a wholly owned subsidiary of the Company, is determined using a method similar to the treasury stock method. Under this method, no numerator or denominator adjustments arise from the principal and interest components of the Exchangeable Senior Notes because the Company has the intent and ability to settle the Exchangeable Senior Notes’ principal and interest in cash. Instead, the Company is required to increase the diluted net ~~(loss)~~ income per share denominator by the variable number of shares that would be issued upon conversion if it settled the conversion spread obligation with shares. For diluted net (loss) income per share purposes, the conversion spread obligation is calculated based on whether the average market price of the Company’s ordinary shares over the reporting period is in excess of the exchange price of the Exchangeable Senior Notes. There was no calculated spread added to the denominator for the three and ~~nine~~six months ended ~~September~~June 30, ~~2017~~2022 excluded 1.2 million and ~~2016.~~

~~NOTE 3 –DIVESTITURES, ACQUISITIONS AND OTHER ARRANGEMENTS~~

~~Divestiture of PROCYSBI and QUINSAIR rights in EMEA Regions~~

~~On June 23, 2017, the Company completed the Chiesi divestiture for an upfront payment of $72.2~~3.6 million ~~which reflects $3.1 million of cash divested, and~~shares subject to ~~other customary purchase price adjustments for working capital, with additional potential milestone payments based on sales thresholds.~~

Pursuant to ASU No. 2017-01, the Company accounted for the Chiesi divestiture as a sale of a business. The Company determined that the sale of the business and its assets in connection with the Chiesi divestiture did not constitute a strategic shift and that it did not and will notequity awards, respectively, because their inclusion would have ~~a major~~had an anti-dilutive effect on ~~its operations and financial results. Accordingly, the operations associated with the Chiesi divestiture are not reported in discontinued operations.~~

~~The gain on divestiture was determined as follows (in thousands):~~

For the Three Months Ended

For the Nine Months Ended

September 30, 2017

September 30, 2017

Cash proceeds

$
—

$
72,163

Add reimbursement of royalties

—

27,101

Less net assets sold:

Developed technology

—

(47,261
)

Goodwill

—

(16,285
)

Other

—

(24,482
)

Transaction and other costs

112

(5,268
)

Gain on divestiture

$
112

$
5,968

Under the terms of its agreement with Chiesi, the Company will continue to pay third parties for the royalties on sales of PROCYSBI and QUINSAIR in EMEA, and Chiesi will reimburse the Company for those royalties. At the date of divestiture, the Company recorded an asset of $27.1 million to “other assets”, which represented the estimated amounts that are expected to be reimbursed from Chiesi for the PROCYSBI and QUINSAIR royalties. These estimated royalties are accrued in “accrued expenses” and “other long-term liabilities”.

~~Transaction and other costs primarily relate to professional and license fees attributable to the divestiture.~~

~~Acquisitions~~

~~Acquisition of River Vision~~

On May 8, 2017, the Company acquired 100% of the equity interests in River Vision for upfront cash payments totaling $151.9 million, including $6.3 million of cash acquired, and subject to other customary purchase price adjustments for working capital, potential future milestone and royalty payments contingent on the satisfaction of certain regulatory milestones and sales thresholds. Pursuant to ASC 805 (as amended by ASU No. 2017-01), the Company accounted for the River Vision acquisition as the purchase of an in-process research and development (“IPR&D”) asset and, pursuant to ASC 730, recorded the purchase price as research and development expense during the nine months ended September 30, 2017. Further, the Company recognized approximately $13.1 million of federaldiluted net operating losses, $2.8 million of state net operating losses and $5.8 million of federal tax credits. The acquired tax attributes were set up as deferred tax assets which were further netted within the net deferred tax liabilities of the U.S. group, offset by a deferred credit recorded in long-term liabilities.

~~Acquisition of Additional Rights to Interferon Gamma-1b~~

On June 30, 2017, the Company completed its acquisition of certain rights to interferon gamma-1b from Boehringer Ingelheim International in all territories outside of the United States, Canada and Japan, as the Company previously held marketing rights to interferon gamma-1b in these territories. Boehringer Ingelheim International commercialized interferon gamma-1b as IMUKIN in an estimated thirty countries, ~~primarily in Europe and the Middle East. In May 2016~~, the Company paid Boehringer Ingelheim International €5.0 million ($5.6 million when converted using a Euro-to-Dollar exchange rate at date of payment of 1.1132) for such rights and upon closing in June 2017, the Company paid Boehringer Ingelheim International an additional €19.5 million ($22.3 million when converted using a Euro-to-Dollar exchange rate at date of payment of 1.1406). The Company currently markets interferon gamma-1b as ACTIMMUNE in the United States. The €5.0 million upfront amount paid in May 2016 had initially been included in “other assets” in the Company’s condensed consolidated balance sheet. Following the discontinuation of the development of ACTIMMUNE in Friedreich’s ataxia (“FA”) in December 2016, the Company recorded an impairment charge of €5.0 million ($5.3 million when converted using a Euro-to-Dollar exchange rate at date of impairment of 1.052) to fully write off the asset in its condensed consolidated statements of comprehensive loss during the year ended December 31, 2016 as projections for future net sales of IMUKIN in these territories did not exceed the related costs. Upon closing, during the nine months ended September 30, 2017, the Company recorded the additional €19.5 million payment ($22.3 million when converted using a Euro-to-Dollar exchange rate at date of payment of 1.1406) as a “selling, general and administrative” expense in its condensed consolidated statement of comprehensive loss.

~~Raptor Acquisition~~

~~On October 25, 2016, the Company completed its acquisition of Raptor in which the Company acquired all of the issued and outstanding shares of Raptor’s common stock for $9.00~~income per share. The acquisition added two medicines, PROCYSBI and QUINSAIR, to the Company’s medicine portfolio. Through the acquisition, the Company leveraged and expanded the infrastructure of its orphan disease business. Following completion of the acquisition, Raptor became a wholly owned subsidiary of the Company and converted to a limited liability company, changing its name to Horizon Pharmaceutical LLC. The Company financed the transaction through $300.0 million of aggregate principal amount of 8.75% Senior Notes due 2024 (the “2024 Senior Notes”), $375.0 million aggregate principal amount of loans pursuant to an amendment to the Company’s existing credit agreement, as described in Note 14, and cash on hand. The total consideration for the acquisition was approximately $860.8 million, including $24.9 million of cash acquired and $56.0 million paid to settle Raptor’s outstanding debt, and was composed of the following (in thousands):

Cash

$
841,494

Net settlements on the exercise of stock options and restricted stock units

19,268

Total consideration

$
860,762

During the three and nine months ended September 30, 2017, the Company incurred $3.1 million and $14.6 million, respectively, in Raptor acquisition-related costs including advisory, legal, accounting, severance, retention bonuses and other professional and consulting fees. During the three and nine months ended September 30, 2017, $3.0 million and $13.8 million, respectively, were accounted for as “selling, general and administrative” expenses, $0.1 million and $0.7 million, respectively, were accounted for as “research and development” expenses, and zero and $0.1 million, were accounted for as “cost of goods sold”, respectively, in the condensed consolidated statements of comprehensive loss. During the three and nine months ended September 30, 2016, the Company incurred $4.2 million in Raptor acquisition-related costs including advisory, legal and other professional and consulting costs which were accounted for as “selling, general and administrative” expenses in the condensed consolidated statements of comprehensive loss.

127

Pursuant to ASC 805, the Company accounted for the Raptor acquisition as a business combination using the acquisition method of accounting. Identifiable assets and liabilities of Raptor, including identifiable intangible assets, were recorded based on their estimated fair values as of the date of the closing of the acquisition. The excess of the purchase price over the fair value of the net assets acquired was recorded as goodwill. Significant judgment was required in determining the estimated fair values of developed technology intangible assets, inventories and certain other assets and liabilities. Such preliminary valuation required estimates and assumptions including, but not limited to, estimating future cash flows and direct costs in addition to developing the appropriate discount rates and current market profit margins. The Company’s management believes the fair values recognized for the assets acquired and the liabilities assumed are based on reasonable estimates and assumptions. The Company is currently completing its evaluation of information, assumptions and valuation methodologies it used in its preliminary fair value of the purchase price consideration. The purchase price allocation is preliminary pending final determination of the fair values of certain assets and liabilities. During the nine months ended September 30, 2017, the Company recorded measurement period adjustments related to accrued expenses, accrued trade discounts and rebates and deferred tax liabilities as a result of new information regarding facts existing at the acquisition date, which resulted in a net decrease to goodwill of $2.9 million. As of September 30, 2017, certain items related to current and deferred taxes have not been finalized and may be subject to change as additional information is received. The finalization of these matters and any additional information received that existed as of the acquisition date may result in changes to the underlying assets, liabilities and goodwill. These changes may be material. The final determination of these fair values will be completed no later than during the fourth quarter of 2017.

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

(Liabilities assumed) and assets acquired:

Before

Adjustment

After

Accounts payable

$
(4,572
)

$
—

$
(4,572
)
Accrued expenses

(23,773
)

(240
)

(24,013
)
Accrued trade discounts and rebates

(6,377
)

1,350

(5,027
)
Deferred tax liabilities

(237,166
)

1,743

(235,423
)
Contingent royalty liability

(102,000
)

—

(102,000
)
Accrued royalties

(2,705
)

—

(2,705
)
Other non-current liability

(25,500
)

—

(25,500
)
Cash and cash equivalents

24,897

—

24,897

Restricted cash

1,350

—

1,350

Accounts receivable, net

17,767

—

17,767

Inventories

74,463

—

74,463

Prepaid expenses and other current assets

4,194

—

4,194

Property and equipment

3,373

—

3,373

Developed technology

946,000

—

946,000

Other non-current assets

1,765

—

1,765

Goodwill

189,046

(2,853
)

186,193

Fair value of consideration paid

$
860,762

$
—

$
860,762

Inventories acquired included raw materials, work-in-process and finished goods for PROCYSBI and QUINSAIR. Inventories were recorded at their preliminary estimated fair values. The fair value of finished goods has been determined based on the estimated selling price, net of selling costs and a margin on the selling costs. The fair value of work-in-process has been determined based on estimated selling price, net of selling costs and costs to complete the manufacturing, and a margin on the selling and manufacturing costs. The fair value of raw materials was estimated to equal the replacement cost. A step-up in the value of inventory of $67.0 million was recorded in connection with the acquisition. During the three and nine months ended September 30, 2017, the Company recorded inventory step-up expense of zero and $44.0 million, respectively, related to PROCYSBI and QUINSAIR, of which $3.2 million was recorded to “gain on divestiture” in the condensed consolidated statement of comprehensive loss during the nine months ended September 30, 2017.

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

Other non-current liability of $25.5 million represents the fair value of an assumed contingent liability, arising from contingent payments associated with development, regulatory and commercial milestones following Raptor’s acquisition of QUINSAIR.

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

Developed technology intangible assets reflect the estimated fair value of Raptor’s rights to PROCYSBI. The preliminary fair value of developed technology was determined using an income approach. The income approach explicitly recognizes that the fair value of an asset is premised upon the expected receipt of future economic benefits such as earnings and cash inflows based on current sales projections and estimated direct costs for Raptor’s medicines. Indications of value were developed by discounting these benefits to their acquisition-date worth at a discount rate of 12.5%. The fair value of the PROCYSBI developed technology was capitalized as of the Raptor acquisition date and is subsequently being amortized over approximately thirteen years and nine years for the U.S. rights and ex-U.S. rights, respectively, which are the periods in which over 90% of the estimated cash flows are expected to be realized. The Company assigned no preliminary fair value to QUINSAIR developed technology as projections of future net sales do not exceed the related costs. See Note 7 for details of developed technology sold in the Chiesi divestiture.

The Company has assigned a preliminary fair value of $102.0 million to a contingent liability for royalties potentially payable under previously existing agreements related to PROCYSBI. The royalties for PROCYSBI are payable under the terms of an amended and restated license agreement with The Regents of the University of California, San Diego (“UCSD”). See Note 16 for details of the percentages of royalties payable under this agreement. The initial fair value of this liability was determined using a discounted cash flow analysis incorporating the estimated future cash flows of royalty payments resulting from future sales. The discount rate used was the same as for the fair value of the developed technology.

Deferred tax assets and liabilities arise from acquisition accounting adjustments where book values of certain assets and liabilities differ from their tax bases. Deferred tax assets and liabilities are recorded at the currently enacted rates which will be in effect at the time when the temporary differences are expected to reverse in the country where the underlying assets and liabilities are located. Raptor’s developed technology as of the acquisition date was located primarily in the United States where an estimated U.S. tax rate of 36.6% is being utilized and a significant deferred tax liability is recorded. Goodwill represents the excess of the preliminary acquisition consideration over the estimated fair value of net assets acquired and was recorded in the condensed consolidated balance sheet as of the acquisition date. The Company does not expect any portion of this goodwill to be deductible for tax purposes.

~~Crealta Acquisition~~

On January 13, 2016, the Company completed its acquisition of all the membership interests of Crealta. The acquisition added two medicines, KRYSTEXXA and MIGERGOT, to the Company’s medicine portfolio. The Crealta acquisition further diversified the Company’s portfolio of medicines and aligned with its focus of acquiring value-enhancing, clinically differentiated, long-life medicines that treat orphan diseases. The total consideration for the acquisition was approximately $539.7 million, including $24.9 million of cash acquired and $70.9 million paid to settle Crealta’s outstanding debt, and was composed of the following (in thousands):

Cash

$
536,206

Net settlements on the exercise of stock options and restricted stock units

3,526

Total consideration

$
539,732

During the three and nine months ended September 30, 2017, the Company incurred $0.1 million and $0.6 million, respectively, in Crealta acquisition-related costs including legal, retention bonuses and other professional and consulting fees, which were accounted for as “selling, general and administrative” expenses. During the three and nine months ended September 30, 2016, the Company incurred $0.4 million and $12.1 million, respectively, in Crealta acquisition-related costs including advisory, legal, accounting, valuation, severance, retention bonuses and other professional and consulting fees, of which $0.5 million and $11.5 million were accounted for as “selling, general and administrative”, respectively, a net expense reduction of $0.1 million and a net expense of $0.2 million were accounted for as “research and development”, respectively, and zero and $0.4 million were accounted for as “costs of goods sold”, respectively, in the condensed consolidated statements of comprehensive loss.

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

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

(Liabilities assumed) and assets acquired:

Allocation

Accounts payable and accrued expenses

$
(4,543
)
Accrued trade discounts and rebates

(1,424
)
Deferred tax liabilities

(20,141
)
Other non-current liabilities

(6,900
)
Contingent royalty liabilities

(51,300
)
Cash and cash equivalents

24,893

Accounts receivable

10,014

Inventories

149,363

Prepaid expenses and other current assets

1,382

Developed technology

428,200

Other non-current assets

275

Goodwill

9,913

Fair value of consideration paid

$
539,732

Inventories acquired included raw materials, work-in-process and finished goods for KRYSTEXXA and MIGERGOT. Inventories were recorded at their estimated fair values. The fair value of finished goods has been determined based on the estimated selling price, net of selling costs and a margin on the selling costs. The fair value of work-in-process has been determined based on estimated selling price, net of selling costs and costs to complete the manufacturing, and a margin on the selling and manufacturing costs. The fair value of raw materials was estimated to equal the replacement cost. A step-up in the value of inventory of $144.3 million was recorded in connection with the acquisition. During the three and nine months ended September 30, 2017, the Company recorded inventory step-up expense of $21.2 million and $54.9 million, respectively, related to KRYSTEXXA.

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

Other non-current liabilities represented an assumed $6.9 million probable contingent liability which was released to “other income (expense)” in the condensed consolidated statement of comprehensive loss during the year ended December 31, 2016.

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

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

The Company has assigned a fair value of $51.3 million to a contingent liability for royalties potentially payable under previously existing agreements related to KRYSTEXXA and MIGERGOT. The royalties for KRYSTEXXA are payable under the terms of a license agreement with Duke University (“Duke”) and Mountain View Pharmaceuticals (“MVP”). See Note 16 for details of the percentages of royalties payable under such agreements. The initial fair value of this liability was determined using a discounted cash flow analysis incorporating the estimated future cash flows of royalty payments resulting from future sales. The discount rate used was the same as for the fair value of the developed technology.

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

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

~~Other Arrangements~~

~~Collaboration and option agreement~~

On November 8, 2016, the Company entered into a collaboration and option agreement with a privately held life-science entity. Under the terms of the agreement, the privately held life-science entity will conduct certain research and pre-clinical and clinical development activities. Upon execution of the agreement, the Company paid $0.1 million for the option to acquire certain assets of the privately held life-science entity for $25.0 million, which is exercisable on specified key dates. Under the collaboration and option agreement, the Company is required to pay up to $9.8 million upon the attainment of various milestones, primarily to fund clinical development costs for the medicine candidate. The Company paid $0.2 million in the fourth quarter of 2016, $0.9 million in the first quarter of 2017 and $1.5 million in the third quarter of 2017 related to milestones. The initial upfront amount paid of $0.1 million has been included in “other assets” in the Company’s condensed consolidated balance sheet as of December 31, 2016 and September 30, 2017. The aggregate $1.1 million amount paid in the fourth quarter of 2016 and the first quarter of 2017 were recorded as “research and development” expenses in the condensed consolidated statement of comprehensive loss during the year ended December 31, 2016, and the $1.5 million paid in the third quarter of 2017 was recorded as “research and development expense” during the three months ended September 30, 2017. The Company has determined that the privately held life-science entity is a variable interest entity (“VIE”) as it does not have enough equity to finance its activities without additional financial support. As the Company does not have the power to direct the activities of the VIE that most significantly affect its economic performance, it is not the primary beneficiary of, and does not consolidate the financial results of the VIE. The Company will reassess the appropriate accounting treatment for this arrangement throughout the life of the agreement and modify these accounting conclusions accordingly.

~~Pro Forma Information~~

The table below represents the condensed consolidated financial information for the Company for the nine months ended September 30, 2016 on a pro forma basis, assuming that the Crealta and Raptor acquisitions occurred as of January 1, 2016. The historical financial information has been adjusted to give effect to pro forma items that are directly attributable to the Crealta and Raptor acquisitions, and are expected to have a continuing impact on the consolidated results. These items include, among others, adjustments to record the amortization of definite-lived intangible assets, interest expense, debt discount and deferred financing costs associated with the debt in connection with the acquisitions.

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

For the Nine Months Ended September 30, 2016

As reported

Pro forma

Pro forma

adjustments

Net sales

$
670,770

$
99,571

$
770,341

Net loss

(36,292
)

(112,274
)

(148,566
)

The Company’s condensed consolidated statements of comprehensive loss for the nine months ended September 30, 2016 include KRYSTEXXA and MIGERGOT net sales as a result of the acquisition of Crealta of $61.6 million and $3.2 million, respectively.

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

NOTE 4 – INVENTORIES

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

The components of inventories as of ~~September~~June 30, ~~2017~~2023 and December 31, ~~2016~~2022 consisted of the following (in thousands):


	September 30, 2017		December 31, 2016		June 30, 2023		December 31, 2022
Raw materials	$	17,412	$	10,233	$	84,728	$	44,230
Work-in-process		16,230		85,022		24,291		25,232
Finished goods		52,885		79,533		61,306		100,097
Inventories, net	$	86,527	$	174,788	$	170,325	$	169,559

As part of the Viela Bio Inc. (“Viela”) acquisition, a step-up in the value of inventory of $151.6 million was recorded, which was composed of $10.1 million for raw materials, $120.9 million for work-in-process and $20.6 million for finished goods during the year ended December 31, 2021. Inventory step-up expense recorded in cost of goods sold relating to UPLIZNA was $1.6 million and $17.4 million for the three months ended June 30, 2023 and 2022, respectively, and was $31.3 million and $44.6 million for the six months ended June 30, 2023 and 2022, respectively. As of June 30, 2023, the total remaining balance of inventory step-up was $1.0 million.

Because inventory step-up expense is ~~acquisition-related,~~related to an acquisition, will not continue indefinitely and has a significant effect on the Company’s gross profit, gross margin percentage and net income ~~(loss)~~ for all affected periods, the Company discloses balance sheet and income statement amounts related to inventory step-up within the ~~notes~~Notes to ~~the condensed consolidated financial statements.~~Condensed Consolidated Financial Statements.

Finished goods at September 30, 2017 included $40.4 million of stepped-up KRYSTEXXA inventory. Finished goods at December 31, 2016 included $27.7 million of stepped-up KRYSTEXXA inventory. Work-in-process at December 31, 2016 included $67.6 million of stepped-up KRYSTEXXA inventory.

During the three and nine months ended September 30, 2017 the Company recorded $21.2 million and $54.9 million, respectively, of KRYSTEXXA inventory step-up expense. During the three and nine months ended September 30, 2016, the Company recorded $11.3 million and $27.9 million, respectively, of KRYSTEXXA and MIGERGOT inventory step-up expense.

The Company expects that the KRYSTEXXA inventory step-up will be fully expensed by the end of the first quarter of 2018. Following that period, the Company expects the costs of goods sold related to KRYSTEXXA to decrease significantly to levels consistent with the historical cost of goods sold of Crealta.

During the three and nine months ended September 30, 2017, the Company recorded zero and $40.8 million, respectively, of PROCYSBI and QUINSAIR inventory step-up expense. In addition, during the nine months ended September 30, 2017, the Company recorded $3.2 million of inventory step-up expense to “gain on divestiture” relating to PROCYSBI and QUINSAIR in connection with the Chiesi divestiture in June 2017. Finished goods at December 31, 2016 included $38.1 million of stepped-up PROCYSBI and QUINSAIR inventory. Work-in-process at December 31, 2016 included $5.9 million of stepped-up PROCYSBI and QUINSAIR inventory.

NOTE 5-5 – PREPAID EXPENSES AND OTHER CURRENT ASSETS

Prepaid expenses and other current assets as of ~~September~~June 30, ~~2017~~2023 and December 31, ~~2016~~2022 consisted of the following (in thousands):


	June 30, 2023		December 31, 2022
Deferred charge for taxes on intercompany profit	$	206,232	$	164,771
Advance payments for inventory		187,002		156,824
Rabbi trust assets		31,890		28,227
Interest rate swap contracts		20,050		15,520
Other prepaid expenses and other current assets		119,634		84,007
Prepaid expenses and other current assets	$	564,808	$	449,349

Advance payments for inventory as of June 30, 2023 and December 31, 2022, primarily represented payments made to the contract manufacturer of TEPEZZA drug substance.

September 30,
2017

December 31,
2016

Medicine samples inventory

$
13,374

$
10,192

Prepaid income taxes

10,559

9,155

Rabbi trust assets

5,717

3,073

Other prepaid expenses and other current assets

23,275

27,199

Prepaid expenses and other current assets

$
52,925

$
49,619

NOTE 6 – PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment as of ~~September~~June 30, ~~2017~~2023 and December 31, ~~2016~~2022 consisted of the following (in thousands):

	September 30, 2017			December 31, 2016
							June 30, 2023			December 31, 2022
Buildings							$	178,712		$	173,560
Construction in process								105,457			88,825
Land and land improvements								44,346			44,323
Machinery and equipment								30,728			22,865
Leasehold improvements								26,177			24,428
Furniture and fixtures								21,707			20,318
Software	$	14,786		$	10,876			13,186			13,332
Leasehold improvements		9,397			9,184
Machinery and equipment		4,931			4,566
Computer equipment		2,260			3,069
Other		2,689			2,664			12,713			11,966
		34,063			30,359			433,026			399,617
Less accumulated depreciation		(12,458	)		(8,319	)		(70,700	)		(59,108	)
Construction in process		95			17
Software implementation in process		—			1,427
Property and equipment, net	$	21,700		$	23,484
Property, plant and equipment, net							$	362,326		$	340,509

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

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

Depreciation expense was ~~$1.5~~$6.7 million and ~~$1.2~~$6.1 million for the three months ended ~~September~~June 30, ~~2017~~2023 and ~~2016,~~2022, respectively, and was ~~$5.0~~$12.9 million and ~~$3.3~~$11.9 million for the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2023 and ~~2016,~~2022, respectively.

NOTE 7 – GOODWILL AND INTANGIBLE ASSETS

Goodwill

The gross carrying amount of goodwill as of ~~September~~June 30, ~~2017~~2023 and December 31, 2022 was ~~as follows (in thousands):~~

$1,010.5 million.

Balance at December 31, 2016

$
445,579

Divestiture during the period

(16,285
)
Measurement period adjustments

(2,853
)
Balance at September 30, 2017

$
426,441


		Total
Balance at December 31, 2021		$1,066,709
Goodwill impairment during the year		(56,171)
Balance at December 31, 2022		$1,010,538
Goodwill impairment during the period		—
Balance at June 30, 2023		$1,010,538

During the ~~nine~~three and six months ended ~~September~~June 30, ~~2017,~~2023, there were no goodwill impairment losses.

In May 2022, Apotex Corp. and its affiliate, Apotex Inc. (collectively, “Apotex”), initiated an at-risk launch of a generic version of PENNSAID 2% in ~~connection with~~ the ~~Chiesi divestiture,~~United States. The at-risk launch was expected to have an on-going negative impact on PENNSAID 2% net sales. As a result, the Company ~~recorded~~determined the generic product launch and the expected impact on PENNSAID 2% to be a ~~reduction~~triggering event to conduct an interim impairment analysis and an indicator it was more likely than not that the carrying amount of its former inflammation reporting unit exceeded its fair value as of June 30, 2022.

The Company determined the fair value of the former inflammation reporting unit as of June 30, 2022 using the income approach. The cash flow projections were based on a financial forecast developed by management that included net sales projections, which are updated annually, or more frequently based on events that may significantly impact forecasts.

The Company’s interim goodwill impairment test in the second quarter of ~~$16.3 million. In addition,~~2022 indicated an impairment, which represented the ~~Company recorded measurement period adjustments to goodwill~~difference between the estimated fair value of ~~$2.9 million related to~~ the ~~Raptor acquisition during the nine months ended September 30, 2017.~~

~~During the year ended December 31, 2016,~~former inflammation reporting unit and its carrying value. As a result, the Company recognized ~~goodwill~~an impairment charge of ~~$9.9 million and $189.1~~$56.2 million in ~~connection with~~June 2022 representing the ~~Crealta and Raptor acquisitions, respectively.~~full amount of goodwill for the former inflammation reporting unit.

Intangible Assets

As of ~~September~~June 30, ~~2017, there were no accumulated goodwill impairment losses. See Note 3 for further details of goodwill acquired and disposed of in business acquisitions and divestitures.~~

~~Intangible Assets~~

~~As of September 30, 2017,~~2023, the Company’s finite-lived intangible assets primarily consisted of developed technology related to ACTIMMUNE, ~~BUPHENYL,~~ KRYSTEXXA, ~~MIGERGOT, PENNSAID 2%,~~ PROCYSBI, RAVICTI, ~~RAYOS~~TEPEZZA and ~~VIMOVO in the United States,~~UPLIZNA.

Intangible assets as of June 30, 2023 and ~~AMMONAPS, BUPHENYL, LODOTRA and PROCYSBI outside the United States, as well as customer relationships for ACTIMMUNE.~~

~~During the year ended~~ December 31, ~~2016, in connection with~~2022 consisted of the ~~acquisition of Crealta,~~following (in thousands):


	June 30, 2023							December 31, 2022
	Cost Basis		Accumulated Amortization			Net Book Value		Cost Basis		Accumulated Amortization			Net Book Value
Developed technology	$	4,650,292	$	(2,182,864	)	$	2,467,428	$	4,650,292	$	(2,005,327	)	$	2,644,965
In-process research and development (1)		810,000		—			810,000		810,000		—			810,000
Other intangibles		29,894		(10,757	)		19,137		29,894		(10,082	)		19,812
Total intangible assets	$	5,490,186	$	(2,193,621	)	$	3,296,565	$	5,490,186	$	(2,015,409	)	$	3,474,777

(1)

In July 2023, the Company ~~capitalized $402.2 million of developed technology related to KRYSTEXXA and $26.0 million of developed technology related to MIGERGOT.~~

~~During the year ended December 31, 2016, in connection with the acquisition of Raptor, the Company capitalized $946.0 million of developed technology related to PROCYSBI.~~

During the nine months ended September 30, 2017, in connection with the Chiesi divestiture, the Company recorded a reduction in the net book value of developed technology related to PROCYSBI of $47.3 million.

~~See Note 3~~received 48-week data for ~~further details of intangible assets acquired in business acquisitions and disposed of in business divestitures.~~

Prior to the fourth quarter of 2016, the Company had IPR&D of $66.0 million related to one research and development project to evaluate ACTIMMUNE in the treatment of FA. The fair value of the IPR&D was recorded as an indefinite-lived intangible asset and was being tested for impairment at least annually until completion or abandonment of the research and development efforts associated with the project. On December 8, 2016, the Company announced that the Phase 32 clinical trial ~~STEADFAST,~~ evaluating ~~ACTIMMUNE~~daxdilimab for the treatment of FAsystemic lupus erythematous (“SLE”). The trial did not meet its primary endpoint of a statistically significant change from baseline in the modified Friedreich’s Ataxia Rating Scale at twenty-six weeks versus treatment with placebo. In addition, the secondary endpoints did not meet statistical significance. No new safety findings were identified on initial review of data other than those already noted in the ACTIMMUNE prescribing information for approved indications. The Company, in conjunction with the independent Data Safety Monitoring Board, the principal investigator and the Friedreich’s Ataxia Research Alliance Collaborative Clinical Research Network in FA, determined that, based on the trial results, the STEADFAST program would be discontinued, including the twenty-six week extension study and the long-term safety study. The IPR&D had no alternative use or economic value as a result, ~~of the cancellation of the project, and~~ the Company ~~recorded an impairment charge~~will continue to work with investigators to assess the data to determine the next steps for the SLE clinical program, if any. The Company’s total in-process R&D assets of ~~$66.0~~$810.0 million to “impairment of in-process research and development” in its condensed consolidated statements of comprehensive loss during the year ended December 31, 2016 to fully write off the value of the asset on its condensed consolidated balance sheet.

The Company tests its intangible assets for impairment when events or circumstances may indicate that the carrying value of these assets exceeds their fair value. The Company does not believe there have been any circumstances or events that would indicate that the carrying value of any of its intangible assets, except for IPR&D as described above, was impaired at September 30, 2017 or December 31, 2016.

~~Intangible assets~~ as of ~~September~~June 30, ~~2017~~2023 and December 31, ~~2016 consisted of~~2022, included $20.0 million in relation to the ~~following (in thousands):~~

September 30, 2017

December 31, 2016

Cost Basis

Accumulated Amortization

Net Book
Value

Cost Basis

Accumulated
Amortization

Net Book
Value

Developed technology

$
3,115,695

$
(603,283
)

$
2,512,412

$
3,166,695

$
(399,511
)

$
2,767,184

Customer relationships

8,100

(2,457
)

5,643

8,100

(1,849
)

6,251

Total intangible assets

$
3,123,795

$
(605,740
)

$
2,518,055

$
3,174,795

$
(401,360
)

$
2,773,435

SLE clinical program.

Amortization expense for the three months ended ~~September~~June 30, ~~2017~~2023 and ~~2016~~2022 was ~~$68.7~~$89.6 million and ~~$50.8~~$91.3 million, respectively, and was ~~$208.1~~$178.2 million and ~~$151.2~~$180.6 million for the ~~nine~~six months ended ~~September 2017~~June 30, 2023 and ~~2016,~~2022, respectively. In-process research and development is not amortized until successful regulatory approval of a project. As of ~~September~~June 30, ~~2017~~2023, estimated future amortization expense was as follows (in thousands):


2023 (July to December)	$	181,164
2024		359,426
2025		359,426
2026		304,164
2027		253,507
Thereafter		1,028,878
Total	$	2,486,565

2017 (October to December)

$
68,666

2018

274,084

2019

261,092

2020

261,068

2021

253,373

Thereafter

1,399,772

Total

$
2,518,055

NOTE 8 ~~- OTHER ASSETS~~

Included in other assets at September 30, 2017 is $24.8 million which represents the long-term portion of the estimated amounts that are expected to be reimbursed from Chiesi for PROCYSBI and QUINSAIR royalties.

~~NOTE 9~~ – ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES

Accrued expenses and other current liabilities as of ~~September~~June 30, ~~2017~~2023 and December 31, ~~2016~~2022 consisted of the following (in thousands):


	June 30, 2023		December 31, 2022
Payroll-related expenses	$	98,531	$	121,066
Accrued royalties		88,147		106,126
Income taxes payable		82,790		2,829
R&D and manufacturing programs		82,213		66,725
Allowances for returns		25,367		28,347
Consulting and professional services		23,222		28,915
Advertising and marketing		22,682		12,030
Accrued interest		15,679		15,130
Refund liability (1)		14,900		12,218
Accrued upfront and milestone payments		—		15,000
Accrued other		43,138		49,171
Accrued expenses and other current liabilities	$	496,669	$	457,557

September 30,
2017

December 31,
2016

Payroll-related expenses

$
47,730

$
66,417

Consulting and professional services

35,660

33,614

Accrued interest

26,496

18,938

Contingent consideration liability

20,000

—

Accrued other

32,815

31,296

Litigation settlement

—

32,500

Accrued expenses

$
162,701

$
182,765

~~Accrued payroll-related expenses at September 30, 2017 and December 31, 2016 included $2.3 million and $15.0 million, respectively, of severance and employee costs as a result of~~(1)

The refund liability represents the ~~Raptor acquisition. The Company anticipates that a significant~~ amount of consideration that the ~~Raptor acquisition-related cash payments will be complete by~~Company may need to refund to Mitsubishi Tanabe Pharma Corporation (“MTPC”) if it does not sell the ~~fourth quarter of 2017.~~

~~Accrued litigation settlement~~UPLIZNA drug product that was shipped to MTPC. The refund liability is remeasured at ~~December 31, 2016 included $32.5 million in relation to a litigation settlement with Express Scripts, Inc., which was paid in two equal installments in January 2017 and April 2017.~~

The contingent consideration liability as of September 30, 2017 relates to an assumed contingent liability, arising from contingent payments associated with development, regulatory and commercial milestones following Raptor’s acquisition of QUINSAIR. This liability was presented in other long-term liabilities as of December 31, 2016 and was reclassified to accrued expenses as of September 30, 2017each reporting date to reflect changes in the ~~revised expectation that~~estimate of variable consideration, with a corresponding adjustment to revenue. Amounts expected to be settled within the ~~payment would~~12 months following the balance sheet date are classified as current liabilities in the accompanying balance sheets. Amounts not expected to be ~~made during~~settled within the ~~fourth quarter of 2017. The Company subsequently made this payment in November 2017.~~

Accrued other as of September 30, 2017 and December 31, 2016 included $8.5 million and $9.5 million, respectively, related to a loss on inventory purchase commitments. During the year ended December 31, 2016, the Company committed to purchase additional units of ACTIMMUNE from Boehringer Ingelheim RCV GmbH & Co KG (“Boehringer Ingelheim”). These additional units of ACTIMMUNE were intended to cover anticipated demand if the results of the STEADFAST study of ACTIMMUNE for the treatment of FA had been successful. Following the discontinuation of the STEADFAST program during the year ended December 31, 2016, the Company recorded a loss of $14.3 million in “cost of goods sold” in12 months following the condensed consolidated ~~statement of comprehensive loss~~balance sheet date are classified as long-term liabilities. The following represents the changes to the refund liability for ~~firm, non-cancellable and unconditional purchase commitments for quantities in excess of~~ the ~~Company’s current forecasts for future demand. During the nine~~six months ended ~~September~~June 30, 2017, the Company renegotiated its purchase commitments with Boehringer Ingelheim and recorded a reduction of $2.7 million to the loss on inventory purchase commitments in “cost of goods sold”. “Other long-term liabilities” as of September 30, 2017 and December 31, 2016 included $2.7 million and $4.8 million, respectively, related to this loss on inventory purchase commitments. During the year ended December 31, 2016, the Company recorded $4.0 million related to costs to be incurred to discontinue the clinical trial. Accrued other as of September 30, 2017 and December 31, 2016 included $0.2 million and $4.0 million, respectively, related to these costs. During the three and nine months ended September 30, 2017, the Company recorded a reduction of $1.5 million to “research and development” expenses reflecting lower costs to discontinue the clinical trial than previously estimated.2023 (in thousands):


Refund liability at December 31, 2022	$	20,409
Shipments during the six months ended June 30, 2023		16,356
Remeasurement of refund liability recognized as revenue		(5,509	)
Refund liability at June 30, 2023	$	31,256
Less: current portion		14,900
Refund liability, net of current portion	$	16,356

NOTE 10 9 – ACCRUED TRADE DISCOUNTS AND REBATES

Accrued trade discounts and rebates as of ~~September~~ June 30, ~~2017~~2023 and December 31,~~, 2016~~ 2022 consisted of the following ~~(in~~(in thousands):


	June 30, 2023		December 31, 2022
Accrued government rebates and chargebacks	$	272,144	$	235,216
Accrued commercial rebates and wholesaler fees		30,835		39,965
Accrued co-pay and other patient assistance		16,490		44,599
Accrued trade discounts and rebates	$	319,469	$	319,780
Invoiced commercial rebates and wholesaler fees, co-pay and other patient assistance, and government rebates and chargebacks in accounts payable		3,678		77,350
Total customer-related accruals and allowances	$	323,147	$	397,130

September 30,
2017

December 31,
2016

Accrued wholesaler fees and commercial rebates

$
183,133

$
47,460

Accrued co-pay and other patient assistance

175,991

188,504

Accrued government rebates and chargebacks

76,590

61,592

Accrued trade discounts and rebates

435,714

297,556

Invoiced wholesaler fees and commercial rebates, co-pay
and other patient assistance, and government rebates and
chargebacks in accounts payable

13,283

16,830

Total customer-related accruals and allowances

$
448,997

$
314,386

The following table summarizes changes in the Company’s customer-related accruals and allowances from December 31, ~~2016~~2022 to ~~September~~June 30, ~~2017~~2023 (in thousands):


	Government Rebates and Chargebacks			Commercial Rebates and Wholesaler Fees			Co-Pay and Other Patient Assistance			Total
Balance at December 31, 2022	$	295,558		$	46,159		$	55,413		$	397,130
Current provisions relating to sales during the six months ended June 30, 2023		439,339			80,535			51,588			571,462
Adjustments relating to prior-year sales		(20,279	)		(1,400	)		(7,420	)		(29,099	)
Payments relating to sales during the six months ended June 30, 2023		(183,439	)		(47,291	)		(36,312	)		(267,042	)
Payments relating to prior-year sales		(259,035	)		(43,490	)		(46,779	)		(349,304	)
Balance at June 30, 2023	$	272,144		$	34,513		$	16,490		$	323,147

~~During the nine months ended September 30, 2017, changes to the liability for royalties for medicines acquired through business combinations consisted of the following (in thousands):~~

The reclassification to other long-term liabilities in the table above relates to the reclassification of a contingent royalty liability for PROCYSBI to other long-term liabilities as a result of the Chiesi divestiture.

NOTE 12 10– SEGMENT AND OTHER INFORMATION

The Company substantially completed the wind down of its former inflammation business in the fourth quarter of 2022. Effective in the fourth quarter of 2022, management realigned the Company’s reportable segments to reflect changes in the manner in which the chief operating decision maker (“CODM”) assesses financial information for decision-making purposes. The Company transitioned its two reportable segments, the inflammation segment and the orphan segment, to one reportable segment for the year ended December 31, 2022. All prior year amounts have been reclassified to conform to the Company’s current reporting structure.

The Company operates in one reportable segment, which focuses on the discovery, development and commercialization of medicines that address critical needs for people impacted by rare, autoimmune and severe inflammatory diseases. The Company’s operating segment is reported in a manner consistent with the internal reporting provided to the CODM. The Company’s chief executive officer has been identified as its CODM.

The following table reflects net sales by medicine for the Company’s reportable segment for the three and six months ended June 30, 2023 and 2022 (in thousands):


	For the Three Months Ended June 30,				For the Six Months Ended June 30,
	2023		2022		2023		2022
TEPEZZA	$	445,528	$	479,814	$	850,845	$	981,265
KRYSTEXXA		244,296		167,755		431,277		308,459
RAVICTI		88,351		75,722		178,672		153,979
UPLIZNA (1)		68,084		38,598		121,913		69,075
PROCYSBI		53,145		47,706		103,608		97,277
ACTIMMUNE		29,039		29,989		58,160		61,424
PENNSAID 2%		6,913		23,586		16,107		58,954
RAYOS		8,012		11,150		12,989		24,637
BUPHENYL		1,246		1,387		2,659		3,548
QUINSAIR		345		335		641		631
DUEXIS		—		70		139		1,193
VIMOVO		—		299		8		1,214
Total net sales	$	944,959	$	876,411	$	1,777,018	$	1,761,656

(1)

UPLIZNA revenue is affected each reporting period by the changes in the estimate of variable consideration included in the remeasurement of the refund liability for shipments to MTPC. During the three months ended June 30, 2023 and 2022, the Company recognized $1.6 million and $8.6 million, respectively, and $5.5 million and $10.1 million for the six months ended June 30, 2023 and 2022, respectively, of revenue as a result of the change in this estimate. The amount of variable consideration recognized is dependent on MTPC’s sales over which the Company has no direct control.

The following table presents the amount and percentage of gross sales ~~from~~to customers that represented more than ~~10%~~10% of the Company’s gross sales included in its ~~single operating~~reportable segment and all other customers as a group for the three and six months ended June 30, 2023 and 2022 (in thousands, except percentages):


	For the Three Months Ended June 30,
	2023					2022
	Amount		% of Gross			Amount		% of Gross
			Sales					Sales
Customer A	$	339,179		27	%	$	315,484		25	%
Customer B		242,564		20	%		275,528		22	%
Customer C		280,640		23	%		305,531		25	%
Customer D		282,486		23	%		226,459		18	%
Other customers		95,873		7	%		118,272		10	%
Gross sales	$	1,240,742		100	%	$	1,241,274		100	%


	For the Six Months Ended June 30,
	2023					2022
	Amount		% of Gross			Amount		% of Gross
			Sales					Sales
Customer A	$	654,877		28	%	$	648,857		26	%
Customer B		520,387		22	%		576,738		23	%
Customer C		500,369		21	%		553,150		22	%
Customer D		482,536		21	%		460,585		19	%
Other customers		189,575		8	%		233,429		10	%
Gross sales	$	2,347,744		100	%	$	2,472,759		100	%

For the Three Months Ended September 30,

2017

2016

Amount

% of Gross

Amount

% of Gross

Sales

Sales

Customer A

$
314,077

31
%

$
365,807

42
%
Customer B

267,818

27
%

212,392

25
%
Customer C

139,981

14
%

106,360

12
%
Other Customers

280,241

28
%

181,291

21
%
Gross Sales

$
1,002,117

100
%

$
865,850

100
%

Geographic revenues are determined based on the country in which the Company’s customers are located. The following table presents a summary of net sales attributed to geographic sources for the three and six months ended June 30, 2023 and 2022 (in thousands, except percentages):


	For the Three Months Ended June 30, 2023			For the Three Months Ended June 30, 2022
	Amount		% of Total Net Sales	Amount		% of Total Net Sales
United States	$	922,833	98%	$	863,371	99%
Rest of world		22,126	2%		13,040	1%
Net sales	$	944,959		$	876,411


	For the Six Months Ended June 30, 2023			For the Six Months Ended June 30, 2022
	Amount		% of Total Net Sales	Amount		% of Total Net Sales
United States	$	1,743,763	98%	$	1,741,661	99%
Rest of world		33,255	2%		19,995	1%
Net sales	$	1,777,018		$	1,761,656

For the Nine Months Ended September 30,

2017

2016

Amount

% of Gross

Amount

% of Gross

Sales

Sales

Customer A

$
941,268

31
%

$
1,067,720

45
%
Customer B

856,677

29
%

458,951

20
%
Customer C

423,446

14
%

260,514

11
%
Other Customers

780,983

26
%

563,300

24
%
Gross Sales

$
3,002,374

100
%

$
2,350,485

100
%

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

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

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

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

The following tables set forth the Company’s financial assets and liabilities at fair value on a recurring basis as of June 30, 2023 and December 31, 2022 (in thousands):


	June 30, 2023
	Level 1			Level 2		Level 3		Total
Assets:
Money market funds	$	2,268,900		$	—	$	—	$	2,268,900
Bank time deposits		—			109,050		—		109,050
Interest rate swap contracts		—			38,419		—		38,419
Equity securities (1)		9,786			—		—		9,786
Foreign currency contracts		—			226		—		226
Other current assets		31,872			—		—		31,872
Total assets at fair value	$	2,310,558		$	147,695	$	—	$	2,458,253
Liabilities:
Other long-term liabilities		(31,872	)		—		—		(31,872	)
Total liabilities at fair value	$	(31,872	)	$	—	$	—	$	(31,872	)


	December 31, 2022
	Level 1			Level 2		Level 3		Total
Assets:
Money market funds	$	2,151,500		$	—	$	—	$	2,151,500
Interest rate swap contracts		—			30,348		—		30,348
Equity securities (1)		6,997			—		—		6,997
Foreign currency contracts		—			181		—		181
Other current assets		28,227			—		—		28,227
Total assets at fair value	$	2,186,724		$	30,529	$	—	$	2,217,253
Liabilities:
Other long-term liabilities		(28,227	)		—		—		(28,227	)
Total liabilities at fair value	$	(28,227	)	$	—	$	—	$	(28,227	)

(1)

The Company held investments in equity securities with readily determinable fair values of $9.8 million and $7.0 million as of June 30, 2023 and December 31, 2022, respectively, which are included in other long-term assets in the condensed consolidated balance sheets. During the three and six months ended June 30, 2023, the Company recognized net unrealized gains of $2.4 million and $2.8 million, respectively, in the other income (expense), net line item of the Company’s condensed consolidated statement of comprehensive income, due to the change in fair value of these securities. There were no sales of equity securities for the three and six months ended June 30, 2023.

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

As of ~~September~~June 30, ~~2017,~~2023, the Company’s ~~restricted~~ cash and cash equivalents included bank time deposits which were measured at fair value using Level 2 inputs and their carrying values were approximately equal to their fair values. Level 2 inputs, obtained from various third-party data providers, represent quoted prices for similar assets in active markets, or these inputs were derived from observable market data, or if not directly observable, were derived from or corroborated by other observable market data.

The Company’s derivative assets and liabilities include interest rate swaps, which are carried at fair value. Interest rate swaps entered into by the Company are executed over-the-counter and are valued using discounted cash flows along with fair value models that primarily use observable market inputs. These models take into account a variety of factors including, where applicable, maturity, interest rate yield curves, and counterparty credit risks. Refer to Note 13 for further details.

The Company’s derivative assets and liabilities also include foreign currency forward contracts, which all have maturities of one month or less. The Company estimates the fair values of these contracts by using observable market inputs including the forward and spot prices for foreign currencies. Refer to Note 13 for further details.

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

The Company transfers its financial assets and liabilities between the fair value hierarchies at the end of each reporting period. There were no transfers between the different levels of the fair value hierarchy during the three and nine months ended September 30, 2017 and 2016.

~~Assets and liabilities measured at fair value on a recurring basis~~

~~The following tables set forth the Company’s financial assets and liabilities at fair value on a recurring basis as of September 30, 2017 and December 31, 2016 (in thousands):~~

September 30, 2017

Level 1

Level 2

Level 3

Total

Assets:

Bank time deposits

$
—

$
3,000

$
—

$
3,000

Money market funds

552,000

—

—

552,000

Other current assets

5,717

—

—

5,717

Total assets at fair value

$
557,717

$
3,000

$
—

$
560,717

Liabilities:

Other long-term liabilities

(5,717
)

—

—

(5,717
)
Total liabilities at fair value

$
(5,717
)

$
—

$
—

$
(5,717
)

December 31, 2016

Level 1

Level 2

Level 3

Total

Assets:

Bank time deposits

$
—

$
3,000

$
—

$
3,000

Money market funds

170,000

—

—

170,000

Other current assets

3,038

—

—

3,038

Total assets at fair value

$
173,038

$
3,000

$
—

$
176,038

Liabilities:

Other long-term liabilities

(3,038
)

—

—

(3,038
)
Total liabilities at fair value

$
(3,038
)

$
—

$
—

$
(3,038
)

NOTE 1412 – DEBT AGREEMENTS

The Company’s outstanding debt balances as of ~~September~~June 30, ~~2017~~2023 and December 31, ~~2016~~2022 consisted of the following (in thousands):

	September 30, 2017			December 31, 2016
2017 Term Loan Facility	$	847,875			—
2015 Term Loan Facility		—			394,000
2016 Incremental Loan Facility		—			375,000
2023 Senior Notes		475,000			475,000
2024 Senior Notes		300,000			300,000
Exchangeable Senior Notes		400,000			400,000
							June 30, 2023			December 31, 2022
Term Loan Facility due 2028							$	1,564,000		$	1,572,000
Term Loan Facility due 2026								418,026			418,026
Senior Notes due 2027								600,000			600,000
Total face value		2,022,875			1,944,000			2,582,026			2,590,026
Debt discount		(113,508	)		(126,352	)		(8,640	)		(9,627	)
Deferred financing fees		(11,790	)		(10,155	)		(15,928	)		(17,562	)
Total long-term debt		1,897,577			1,807,493			2,557,458			2,562,837
Less: current maturities		8,500			7,750			16,000			16,000
Long-term debt, net of current maturities	$	1,889,077		$	1,799,743		$	2,541,458		$	2,546,837

~~2017~~ Term Loan Facility and Revolving Credit Facility

On March ~~29, 2017, HPI and~~15, 2021, Horizon ~~Pharma~~Therapeutics USA, Inc. ~~(“HPUSA” and, together with HPI, in such capacity, the “Borrowers”~~(the “Borrower” or “HTUSA”), a wholly-owned ~~subsidiaries~~subsidiary of the Company, borrowed ~~$850.0~~ ~~million~~approximately $1.6 billion aggregate principal amount of loans (the ~~“March 2017 Refinancing~~“2028 Term Loans”) pursuant to an amendment (the “March ~~2017 Refinancing~~2021 Amendment”) to the credit agreement, dated as of May 7, 2015, ~~(as amended by the 2016 Amendment described below, the “2016 Credit Agreement” and, the 2016~~ ~~Credit Agreement as amended by the March 2017 Refinancing Amendment, the “March 2017 Credit Agreement”),~~ by and among the ~~Borrowers,~~Borrower, the Company and certain of its subsidiaries as guarantors, the lenders party thereto from time to time and Citibank, N.A., as administrative agent and collateral agent, as amended by Amendment No. 1, dated as of October 25, 2016, Amendment No. 2, dated March 29, 2017, Amendment No. 3, dated October 23, 2017, Amendment No. 4, dated October 19, 2018, Amendment No. 5, dated March 11, 2019, Amendment No. 6, dated May 22, 2019, Amendment No. 7, dated December 18, 2019, the Incremental Amendment and Joinder Agreement, dated August 17, 2020, the March 2021 Amendment and Amendment No. 10, dated June 16, 2023 (the ~~“2017 Term~~“Term Loan Facility”). Pursuant to Amendment No. 7, the Borrower borrowed approximately $418.0 million aggregate principal amount of loans (the “2026 Term Loans”). Pursuant to Amendment No. 5, the Borrower received $200.0 million aggregate principal amount of revolving commitments, which was increased to $275.0 million aggregate amount of revolving commitments (the “Incremental Revolving Commitments”) pursuant to the Incremental Amendment and Joinder Agreement. The Incremental Revolving Commitments were established pursuant to an incremental facility (the “Revolving Credit Facility”) and include a $50.0 million letter of credit sub-facility. The Incremental Revolving Commitments will terminate in March ~~2017~~2024. Borrowings under the Revolving Credit Facility are available for general corporate purposes. As of June 30, 2023, the Revolving Credit Facility was undrawn. As used herein, all references to the “Credit Agreement” are references to the original credit agreement, dated as of May 7, 2015, as amended through Amendment No. 10.

The 2028 Term Loans were incurred as a separate class of term loans under the Credit Agreement ~~provided~~with substantially the same terms of the 2026 Term Loans. The Borrower used the proceeds of the 2028 Term Loans to fund a portion of the consideration payable in the acquisition of Viela. Pursuant to Amendment No. 10, the benchmark rate was amended to replace LIBOR with Secured Overnight Financing Rate (“SOFR”). The 2028 Term Loans bear interest at a rate, at Borrower’s option, equal to SOFR (subject to a 0.00% SOFR floor), plus the SOFR adjustment, plus 2.00% per annum or the adjusted base rate plus 1.00% per annum, with a step-down to SOFR, plus the SOFR adjustment, plus 1.75% per annum or the adjusted base rate plus 0.75% per annum at the time the Company’s leverage ratio is less than or equal to 2.00 to 1.00. The SOFR adjustment is an additional interest amount for either one-month, three-month or six-month interest periods, at our election: (a) 0.11% using a one-month interest period, (b) 0.26% using a three-month interest period, and (c) 0.43% using a six-month interest period. The adjusted base rate is defined as the greatest of (a) SOFR (using one-month interest period) plus 1.00%, (b) the prime rate, (c) the federal funds rate plus 0.50%, and (d) 1.00%.

The 2026 Term Loans were incurred as a separate new class of term loans under the Credit Agreement with substantially the same terms as the previously outstanding senior secured term loans incurred on May 22, 2019 (the “Refinanced Loans”) to effectuate a repricing of the Refinanced Loans. The Borrower used the proceeds of the 2026 Term Loans to repay the Refinanced Loans, which totaled approximately $418.0 million. The 2026 Term Loans bear interest at a rate, at the Borrower’s option, equal to SOFR (subject to a 0.00% SOFR floor), plus the SOFR adjustment, plus 2.25% per annum or the adjusted base rate plus 1.25% per annum, with a step-down to SOFR, plus the SOFR adjustment, plus 2.00% per annum or the adjusted base rate plus 1.00% per annum at the time the Company’s leverage ratio is less than or equal to 2.00 to 1.00.

The loans under the Revolving Credit Facility bear interest, at the Borrower’s option, at a rate equal to either SOFR (subject to a SOFR floor of 0.00%), plus the SOFR adjustment, plus an applicable margin of 2.25% per annum, or the adjusted base rate plus 1.25% per annum, with a step-down to SOFR, plus the SOFR adjustment, plus 2.00% per annum or the adjusted base rate plus 1.00% per annum at the time the Company’s leverage ratio is less than or equal to 2.00 to 1.00. The Credit Agreement provides for (i) the ~~March 2017 Refinancing~~2028 Term Loans, (ii) the 2026 Term Loans, (iii) the Revolving Credit Facility, (iv) one or more uncommitted additional incremental loan facilities subject to the satisfaction of certain financial and other conditions, and ~~(iii)~~(v) one or more uncommitted refinancing loan facilities with respect to loans thereunder. The ~~March 2017~~ Credit Agreement ~~allowed~~allows for the Company and certain of its subsidiaries to become additional borrowers under incremental or refinancing facilities. The March 2017 Credit Agreement was amended pursuant to the October 2017 Refinancing Amendment described in Note 21 below (the March 2017 Credit Agreement as amended by the October 2017 Refinancing Amendment , the “Credit Agreement”).

The March 2017 Refinancing Loans were incurred as a separate new class of term loans under the March 2017 Credit Agreement with substantially the same terms as the previously outstanding senior secured term loans incurred on May 7, 2015 (the “2015 Loans”) and the outstanding senior secured term loans incurred on October 25, 2016 (the “2016 Loans” and, together with the 2015 Loans, the “~~March 2017 Refinanced Loans”), except as described below. The~~ March 2017 Refinancing Loans bore interest, at the Borrowers’ option, at a rate equal to either the London Inter-Bank Offer Rate (“LIBOR”), plus an applicable margin of 3.75% per year (subject to a LIBOR floor of 1.00%), or the adjusted base rate plus 2.75%. The adjusted base rate was defined as the greater of (a) LIBOR (using one-month interest period) plus 1.00%, (b) prime rate, (c) fed funds plus 0.5%, and (d) ~~2.00%. The Borrowers used a portion of the~~ ~~proceeds of the March 2017 Refinancing Loans to repay the March 2017~~ ~~Refinanced Loans, which totaled $769.0~~ ~~million.~~

The Company elected to exercise its reinvestment rights under the mandatory prepayment provisions of the March 2017 Credit Agreement with respect to the net proceeds from the Chiesi divestiture. To the extent the Company did not apply such net proceeds to permitted acquisitions (including the acquisition of rights to products and products lines) and/or the acquisition of capital assets within 365 days of the receipt thereof (or commit to so apply and then apply within 180 days after the end of such 365-day period), the Borrowers under the March 2017 Credit Agreement would have had to make a mandatory prepayment under the March 2017 Credit Agreement in an amount equal to the unapplied net proceeds. Until such time, the net proceeds were not legally restricted for use. As of September 30, 2017, the Company had applied a portion of such net proceeds to the acquisition of additional rights to interferon gamma-1b. See Note 3 for further details of this acquisition.

The obligations under the ~~March 2017~~ Credit Agreement (including obligations in respect of the ~~March 2017 Refinancing Loans)~~2028 Term Loans, 2026 Term Loans and the Revolving Credit Facility) and any swap obligations and cash management obligations owing to a lender (or an affiliate of a lender) ~~thereunder were~~are guaranteed by the Company and each of the Company’s existing and subsequently acquired or formed direct and indirect subsidiaries (other than certain immaterial subsidiaries, subsidiaries whose guarantee would result in material adverse tax consequences and subsidiaries whose guarantee is prohibited by applicable law). The obligations under the ~~March 2017~~ Credit Agreement (including obligations in respect of the ~~March 2017 Refinancing Loans)~~2028 Term Loans, 2026 Term Loans and the Revolving Credit Facility) and any ~~such~~related swap and cash management obligations ~~were~~are secured, subject to customary permitted liens and other agreed upon exceptions, by a perfected security interest in (i) all tangible and intangible assets of the ~~Borrowers~~Borrower and the guarantors, except for certain customary excluded assets, and (ii) all of the capital stock owned by the ~~Borrowers~~Borrower and guarantors thereunder (limited, in the case of the stock of certain non-U.S. subsidiaries of the ~~Borrowers,~~Borrower, to ~~65%~~65% of the capital stock of such subsidiaries). The ~~Borrowers~~Borrower and the guarantors under the ~~March 2017~~ Credit Agreement ~~and/or Credit Agreement, as applicable,~~ are individually and collectively referred to herein as a “Loan Party” and the “Loan Parties,” as applicable.

~~Borrowers under the March 2017 Credit Agreement were~~The Borrower is permitted to make voluntary prepayments of the loans under the ~~March 2017~~ Credit Agreement at any time without payment of a premium, except that with respect to the March 2017 Refinancing Loans, a 1.00% premium would have applied to a repayment of the March 2017 Refinancing Loans in connection with a repricing of, or any amendment to the March 2017 Credit Agreement in a repricing of, such loans effected on or prior to the date thatpremium. The Borrower is ~~six months following March 29, 2017. The Borrowers were~~ required to make mandatory prepayments of loans under the ~~March 2017~~ Credit Agreement (without payment of a premium) with (a) net cash proceeds from certain non-ordinary course asset sales (subject to reinvestment rights and other exceptions), (b) casualty proceeds and condemnation awards (subject to reinvestment rights and other exceptions), (c) net cash proceeds from issuances of debt (other than certain permitted debt), and (d) ~~50%~~50% of the Company’s excess cash flow (subject to a decrease to ~~25%~~25% or 0%0% if the Company’s first lien leverage ratio is less than ~~2.25:~~2.25:1 or ~~1.75:~~1.75:1, respectively). The ~~March 2017 Refinancing~~2028 Term Loans ~~amortized~~ will amortize in equal quarterly installments ~~beginning on June 30, 2017~~ in an aggregate annual amount e~~qual~~equal to ~~1.00%~~1% of the original principal amount thereof, with any remaining balance payable on March ~~29, 2024,~~15, 2028, the final maturity date of the ~~March 2017 Refinancing Loans.~~2028 Term Loans. The principal amount of the 2026 Term Loans is due and payable on May 22, 2026, the final maturity date of the 2026 Term Loans.

The ~~March 2017~~ Credit Agreement ~~contained~~contains customary representations and warranties and customary affirmative and negative covenants, including, among other things, restrictions on indebtedness, liens, investments, mergers, dispositions, prepayment of other indebtedness and dividends and other distributions. The Credit Agreement also contains a springing financial maintenance covenant, which requires that the Company maintain a specified leverage ratio at the end of each fiscal quarter. The covenant is tested if both the outstanding loans and letters of credit under the Revolving Credit Facility, subject to certain exceptions, exceed 25% of the total commitments under the Revolving Credit Facility as of the last day of any fiscal quarter. If the Company fails to meet this covenant, the commitments under the Revolving Credit Facility could be terminated and any outstanding borrowings, together with accrued interest, under the Revolving Credit Facility could be declared immediately due and payable.

~~Events~~

Other events of default under the ~~March 2017~~ Credit Agreement ~~included:~~include: (i) the failure by ~~any~~the Borrower to timely make payments due under the ~~March 2017~~ Credit Agreement; (ii) material misrepresentations or misstatements in any representation or warranty by any Loan Party when made; (iii) failure by any Loan Party to comply with the covenants under the ~~March 2017~~ Credit Agreement and other related agreements; (iv) certain defaults under a specified amount of other indebtedness of the Company or its subsidiaries; (v) insolvency or bankruptcy-related events with respect to the Company or any of its material subsidiaries; (vi) certain undischarged judgments against the Company or any of its restricted subsidiaries; (vii) certain ERISA-related events reasonably expected to have a material adverse effect on the Company and its restricted subsidiaries taken as a whole; (viii) certain security interests or liens under the loan documents ceasing to be, or being asserted by the Company or its restricted subsidiaries not to be, in full force and effect; (ix) any loan document or material provision thereof ceasing to be, or any challenge or assertion by any Loan Party that such loan document or material provision is not, in full force and effect; and (x) the occurrence of a change of control. If one or more events of default ~~occurred~~occurs and ~~continued~~continues beyond any applicable cure period, the administrative agent ~~would have been able to,~~may, with the consent of the lenders holding a majority of the loans and commitments under the facilities, or ~~would have been able to,~~will, at the request of such lenders, terminate the commitments of the lenders to make further loans and declare all of the obligations of the Loan Parties under the ~~March 2017~~ Credit Agreement to be immediately due and payable.

The ~~Company was,~~interest on the 2028 Term Loans is variable and, as of ~~September~~June 30, ~~2017, in compliance with~~2023, the ~~March 2017 Credit Agreement~~interest rate on the 2028 Term Loans was 6.95% and the effective interest rate was 7.19%.

The interest on the 2026 Term Loans is ~~currently in compliance with~~variable and, as of June 30, 2023, the ~~Credit Agreement.~~interest rate on the 2026 Term Loans was 7.20% and the effective interest rate was 7.49%.

As of ~~September~~June 30, ~~2017,~~2023, the fair value of the ~~2017~~amounts outstanding under the 2028 Term ~~Loan Facility~~Loans and the 2026 Term Loans was approximately ~~$847.9~~$1,560.1 million and $417.5 million, respectively, categorized as a Level 2 instrument, as defined in Note ~~13.~~11.

~~2016 Incremental Loan Facility and 2015 Term Loan Facility~~

On ~~May 7, 2015, HPI, as borrower, and~~April 25, 2022, the Company ~~and certain~~entered into two interest rate swap agreements with notional amounts totaling $800.0 million, effective June 24, 2022, to hedge or otherwise protect against interest rate fluctuations on a portion of its ~~subsidiaries, as guarantors, entered into~~variable rate debt. Refer to Note 13 for further details.

2027 Senior Notes

On July 16, 2019, HTUSA completed a ~~credit agreement (the “2015 Credit Agreement”) with Citibank, N.A., as administrative and collateral agent, and the lenders from time to time party thereto providing for (i) a six-year $400.0 million~~ ~~term loan facility (the~~ ~~“2015 Term Loan Facility”); (ii) an uncommitted accordion facility subject to the satisfaction~~private placement of ~~certain financial and other conditions; and (iii) one or more uncommitted refinancing loan facilities with respect to loans thereunder. The 2015~~ ~~Loans under the 2015 Term Loan Facility bore interest, at each borrower’s option, at a rate equal to either the LIBOR, plus~~ ~~an applicable margin of 3.50% per year (subject to a 1.00% LIBOR floor), or the adjusted base rate plus 2.50%. The adjusted base rate was defined as the greater of (a) LIBOR (using one-month interest period) plus 1.00%, (b) prime rate, (c) fed funds plus 0.5%,~~ ~~and (d) 2.00%.~~ ~~HPI borrowed the full $400.0 million available on the 2015 Term Loan Facility on May 7, 2015 as a LIBOR-based borrowing.~~

~~On October 25, 2016 and in connection with the financing for the acquisition of Raptor,~~ ~~HPI and HPUSA (together, in such capacity, the~~ ~~“Incremental Borrowers”) entered into an amendment to the~~ 2015 Credit Agreement (the “2016 Amendment”) with Citibank, N.A., as administrative and collateral agent, and Bank of America, N.A., as the incremental B-1 lender thereunder, pursuant to which the Incremental Borrowers borrowed $375.0$600.0 million aggregate principal amount of ~~loans (the “2016 Incremental Loan Facility”). The 2016 Incremental Loan Facility was incurred as a separate class of term loans under the 2015 Credit Agreement with the same terms as the loans under the 2015 Term Loan Facility, except as described below.~~

~~The 2016 Loans under the 2016 Incremental Loan Facility~~ ~~bore interest, at the Incremental Borrowers’ option, at a rate equal to either LIBOR plus an applicable margin of 4.50% per year (subject to a LIBOR floor of~~ ~~1.00%), or the adjusted base rate plus 3.50%. The terms of the 2015 Loans provided for an amendment such that the effective yield of the 2015 Loans would not be less than the effective yield of the 2016 Loans~~ ~~minus 0.50%. Consequently, the issuance of the 2016 Loans resulted in an increase of the interest rate applicable to the 2015 Loans, as of October 25, 2016, to LIBOR plus 4.00%, subject~~ ~~to a LIBOR floor of 1.00% (an initial interest rate of 5.00%).~~

On ~~March 29, 2017,~~ ~~the Borrowers used the proceeds of the March 2017 Refinancing Loans under the 2017 Term Loan Facility to repay~~ ~~the~~ ~~2015 Loans and 2016 Loans, which collectively totaled $769.0 million.~~

The 2015 Loans and the 2016 Loans were repaid, and a portion of the repayment was accounted for as a debt modification and a portion was accounted for as a debt extinguishment. Under debt extinguishment accounting, the Company recorded a charge of $0.5 million to “loss on debt extinguishment” in the condensed consolidated statements of comprehensive loss, which reflected the write-off of the unamortized portion of debt discount and deferred financing costs previously incurred and a one percent prepayment penalty fee. Under debt modification accounting, the Company capitalized an incremental $5.8 million of debt discount and deferred financing fees.

~~2024 Senior Notes~~

~~On October 25, 2016, HPI and HPUSA~~ ~~(together, in such capacity, the “2024 Issuers”), completed a private placement of $300.0 million aggregate principal amount of the 2024~~5.5% Senior Notes due 2027 (the “2027 Senior Notes”) to ~~certain~~several investment banks acting as initial purchasers, who subsequently resold the ~~2024~~2027 Senior Notes to persons reasonably believed to be qualified institutional ~~buyers as defined in Rule 144A under the Securities Act.~~ ~~The net proceeds from the offering of the 2024 Senior Notes were approximately $291.9 million, after deducting the initial purchasers’ discount and offering expenses payable by the 2024 Issuers.~~buyers.

The obligations under the 2024 Senior Notes are the 2024 Issuers’ general unsecured senior obligations and are fully and unconditionally guaranteed on a senior unsecured basis by the Company and all of the Company’s direct and indirect subsidiaries that are guarantors from time to time under the Credit Agreement.

The Company used the net proceeds from the offering of the ~~2024~~2027 Senior Notes, ~~as well as $375.0~~together with approximately $65.0 million in cash on hand, to redeem or prepay $625.0 million of its outstanding debt, consisting of (i) the outstanding $225.0 million principal amount of ~~2016 Loans~~its 6.625% Senior Notes due 2023, (ii) the outstanding $300.0 million principal amount of its 8.750% Senior Notes due 2024 and (iii) $100.0 million of the outstanding principal amount of senior secured term loans under the ~~2016 Incremental Loan Facility~~Credit Agreement, as well as to ~~fund a portion of~~pay the ~~acquisition of Raptor, repay Raptor’s outstanding debt,~~related premiums and ~~pay any prepayment premiums,~~ fees and expenses, excluding accrued interest, associated with such redemption and prepayment.

The 2027 Senior Notes are HTUSA’s general unsecured senior obligations, rank equally in ~~connection~~right of payment with all existing and future senior debt of HTUSA and rank senior in right of payment to any existing and future subordinated debt of HTUSA. The 2027 Senior Notes are effectively subordinate to all of the ~~foregoing.~~existing and future secured debt of HTUSA to the extent of the value of the collateral securing such debt.

The ~~2024~~2027 Senior Notes are unconditionally guaranteed on a senior basis by the Company and all of the Company’s restricted subsidiaries, other than HTUSA and certain immaterial subsidiaries, that guarantee the Credit Agreement. The guarantees are each guarantor’s senior unsecured obligations and rank equally in right of payment with such guarantor’s existing and future senior debt and senior in right of payment to any existing and future subordinated debt of such guarantor. The guarantees are effectively subordinated to all of the existing and future secured debt of each guarantor, including such guarantor’s guarantee under the Credit Agreement, to the extent of the value of the collateral securing such debt. The guarantees of a guarantor may be released under certain circumstances. The 2027 Senior Notes are structurally subordinated to all of the liabilities of the Company’s subsidiaries that do not guarantee the 2027 Senior Notes.

The 2027 Senior Notes accrue interest at an annual rate of ~~8.750%~~5.5% payable semiannually in arrears on ~~May~~February 1 and ~~November~~August 1 of each year, beginning on ~~May~~February 1, ~~2017.~~2020. The ~~2024~~2027 Senior Notes will mature on ~~November~~August 1, ~~2024,~~2027, unless earlier exchanged, repurchased or redeemed.

~~Except as described below, the 2024 Senior Notes may not be redeemed before November 1, 2019. Thereafter, some~~Some or all of the ~~2024~~2027 Senior Notes may be redeemed at any time at specified redemption prices, plus accrued and unpaid interest to the redemption date. At any time prior to November 1, 2019, some or all of the 2024 Senior Notes may be redeemed at a price equal to 100% of the aggregate principal amount thereof, plus a make-whole premium and accrued and unpaid interest to the redemption date. Also prior to November 1, 2019, up to 35% of the aggregate principal amount of the 2024 Senior Notes may be redeemed at a redemption price of 108.75% of the aggregate principal amount thereof, plus accrued and unpaid interest, with the net proceeds of certain equity offerings. In addition, the ~~2024~~2027 Senior Notes may be redeemed in whole but not in part at a redemption price equal to ~~100%~~100% of the principal amount plus accrued and unpaid interest and additional amounts, if any, to, but excluding, the redemption date, if on the next date on which any amount would be payable in respect of the ~~2024~~2027 Senior Notes, ~~the 2024 Issuers~~HTUSA or any guarantor is or would be required to pay additional amounts as a result of certain ~~tax-related~~tax related events.

If the Company undergoes a change of control, ~~the 2024 Issuers~~HTUSA will be required to make an offer to purchase all of the ~~2024~~2027 Senior Notes at a price in cash equal to ~~101%~~101% of the aggregate principal amount thereof plus accrued and unpaid interest to, but not including, the repurchase ~~date.~~date, subject to certain exceptions. If the Company or certain of its subsidiaries engages in certain asset sales, ~~the 2024 Issuers~~HTUSA will be required under certain circumstances to make an offer to purchase the ~~2024~~2027 Senior Notes at 100% of the principal amount thereof, plus accrued and unpaid interest to the repurchase date.

The indenture governing the ~~2024~~2027 Senior Notes contains covenants that limit the ability of the Company and its restricted subsidiaries to, among other things, pay dividends or distributions, repurchase equity, prepay junior debt and make certain investments, incur additional debt and issue certain preferred stock, incur liens on assets, engage in certain asset sales, merge, consolidate with or merge or sell all or substantially all of their assets, enter into transactions with affiliates, designate subsidiaries as unrestricted subsidiaries, and allow to exist certain restrictions on the ability of restricted subsidiaries to pay dividends or make other payments to the Company. Certain of the covenants will be suspended during any period in which the ~~notes~~2027 Senior Notes receive investment grade ratings. The indenture governing the 2027 Senior Notes also includes customary events of default.

~~The Company was, as of~~ ~~September 30, 2017, and is currently in compliance with the indenture governing the 2024 Senior Notes.~~

As of ~~September~~June 30, ~~2017,~~2023, the interest rate on the 2027 Senior Notes was 5.50% and the effective interest rate was 5.76%.

As of June 30, 2023, the fair value of the ~~2024~~2027 Senior Notes was approximately ~~$313.5~~$600.8 million, categorized as a Level 2 instrument, as defined in Note ~~13.~~11.

~~2023 Senior Notes~~

On April 29, 2015, Horizon Pharma Financing Inc. (“Horizon Financing”), a wholly owned subsidiary of the Company, completed a private placement of $475.0 million aggregate principal amount of 6.625% Senior Notes due18, 2023, ~~(the “2023 Senior Notes”) to certain investment banks acting as initial purchasers who subsequently resold the 2023 Senior Notes to qualified institutional buyers as defined~~ in ~~Rule 144A under the Securities Act, and in offshore transactions to non-U.S. persons in reliance on Regulation S under the Securities Act.~~ ~~The net proceeds from the offering of the 2023 Senior Notes were approximately $462.3 million, after deducting the initial purchasers’ discount and offering expenses payable by Horizon Financing.~~

In connection with the potential closing of the ~~Hyperion acquisition on May 7, 2015, Horizon Financing merged~~Transaction, HTUSA directed U.S. Bank Trust Company, National Association (as successor to U.S. Bank National Association), as trustee (the “Notes Trustee”), to give a notice (the “First Redemption Notice”) of HTUSA’s intent, in accordance with ~~and into HPI and, as a result,~~ the ~~2023~~indenture governing the 2027 Senior Notes ~~became HPI’s general unsecured senior obligations. The obligations under the 2023 Senior~~(the “2027 Notes ~~are fully and unconditionally guaranteed on a senior unsecured basis by~~ ~~the Company and all of the Company’s direct and indirect subsidiaries that are guarantors from time~~Indenture”), to ~~time under the Credit Agreement.~~

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

Except as described below, the 2023 Senior Notes may not be redeemed before May 1, 2018. Thereafter, some or all of the 2023 Senior Notes may be redeemed at any time at specified redemption prices, plus accrued and unpaid interest to the redemption date. At any time prior to May 1, 2018, some or all of the 2023 Senior Notes may be redeemed at a price equal to 100% of the aggregate principal amount thereof, plus a make-whole premium and accrued and unpaid interest to the redemption date. Also prior to May 1, 2018, up to 35% offull the aggregate principal amount of the outstanding 2027 Senior Notes. The redemption as set forth in the First Redemption Notice was conditioned on, among other things, the consummation of the Transaction by not later than June 26, 2023. On May 26, 2023, ~~Senior~~HTUSA revoked the First Redemption Notice and directed the Notes ~~may be redeemed at~~Trustee to give a ~~redemption price~~notice (the “Second Redemption Notice”) of ~~106.625% of~~HTUSA’s intent, in accordance with the 2027 Notes Indenture, to redeem in full the aggregate principal amount ~~thereof, plus accrued~~of the outstanding 2027 Senior Notes. The redemption as set forth in the Second Redemption Notice was conditioned on, among other things, the consummation of the Transaction by not later than July 25, 2023. On July 21, 2023, HTUSA revoked the Second Redemption Notice and ~~unpaid interest,~~directed the Notes Trustee to give a notice (the “Third Redemption Notice”) of HTUSA’s intent, in accordance with the ~~net proceeds of certain equity offerings. In addition, the 2023 Senior~~2027 Notes ~~may be redeemed~~Indenture, to redeem in whole but not in part at a redemption price equal to 100% of the principal amount plus accrued and unpaid interest and additional amounts, if any, to, but excluding, the redemption date, if on the next date on which any amount would be payable in respect of the 2023 Senior Notes, HPI or any guarantor is or would be required to pay additional amounts as a result of certain tax-related events.

~~If the Company undergoes a change of control, HPI will be required to make an offer to purchase all of the 2023 Senior Notes at a price in cash equal to 101% of~~full the aggregate principal amount thereof plus accrued and unpaid interest to, but not including, the repurchase date. If the Company or certain of its subsidiaries engages in certain asset sales, HPI will be required under certain circumstances to make an offer to purchase the 2023 Senior Notes at 100% of the ~~principal amount thereof, plus accrued and unpaid interest to~~outstanding 2027 Senior Notes. The redemption as set forth in the ~~repurchase date.~~

~~The indenture governing the 2023 Senior Notes contains covenants that limit the ability of the Company and its restricted subsidiaries to,~~Third Redemption Notice is conditioned on, among other things, ~~pay dividends~~the consummation of the Transaction by not later than September 19, 2023.

NOTE 13 – DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES

Interest rate risk

The Company is a party to interest rate swap agreements designated as cash flow hedges with notional amounts totaling $800.0 million as of June 30, 2023, which effectively fix SOFR at approximately 2.8% through December 24, 2026. These agreements were designated as cash flow hedges on the exposure of the variability of future cash flows subject to the variable monthly interest rates on $800.0 million of the Company’s 2028 Term Loans and the 2026 Term Loans. The change in fair value is recorded as part of other comprehensive income (loss). Interest expense, net is adjusted to include the payments made or ~~distributions, repurchase equity, prepay junior debt~~received under the swap agreements.

Foreign currency risk

The Company also enters into foreign currency forward contracts with durations of one month or less to mitigate the foreign currency risk related to certain balance sheet positions. The Company has not elected hedge accounting for these transactions and ~~make certain investments, incur additional debt~~they are recorded at fair value. As of June 30, 2023, the Company had outstanding foreign currency forward contracts to sell $10.9 million and ~~issue certain preferred stock, incur liens on assets, engage in certain asset sales, merge, consolidate with or merge or~~purchase €5.0 million and CHF5.0 million, and to purchase $1.8 million and sell ~~all or substantially~~JPY250 million, all of ~~their assets, enter into transactions with affiliates, designate subsidiaries as unrestricted subsidiaries, and allow~~which had settlement dates of less than one month.

No amounts are excluded from the assessment of effectiveness for cash flow hedges. Refer to ~~exist certain restrictions~~Note 11 for further details on the ~~ability of restricted subsidiaries to pay dividends or make other payments to~~valuation methodologies for the ~~Company. Certain~~Company’s derivative instruments.

The following tables summarize the amounts and locations of the ~~covenants will be suspended during any period in which~~Company’s derivative instruments on the ~~notes receive investment grade ratings. The indenture~~ ~~governing the 2023 Senior Notes~~ ~~also includes customary events of default.~~

~~The Company was,~~condensed consolidated balance sheet as of ~~September~~June 30, ~~2017, and is currently in compliance with the indenture governing the~~ 2023 ~~Senior Notes.~~

~~As of September 30, 2017, the fair value of the 2023 Senior Notes was approximately $464.3 million, categorized as a Level 2 instrument, as defined in Note 13.~~

~~Exchangeable Senior Notes~~

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

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

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

~~Issuer Redemptions:~~

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

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

~~Holder Exchange Rights:~~

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

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

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

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

~~As of September 30, 2017, none of the above conditions had been satisfied and no exchange of Exchangeable Senior Notes had been triggered.~~

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

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

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

~~As of September 30, 2017, the fair value of the Exchangeable Senior Notes was approximately $361.0 million, categorized as a Level 2 instrument, as defined in Note 13.~~

~~NOTE 15 – OTHER LONG-TERM LIABILITIES~~

~~Included in other long-term liabilities at September 30, 2017~~ and December 31, ~~2016,~~2022 (in thousands):


	Fair value - Derivatives in asset position			Fair value - Derivatives in liability position
	Balance sheet location	June 30, 2023		Balance sheet location	June 30, 2023
Interest rate swap contracts
Designated as cash flow hedges	Prepaid expenses and other current assets	$	20,050	Accrued expenses and other current liabilities	$	—
Designated as cash flow hedges	Other long-term assets		18,369	Other long-term liabilities		—
Foreign currency forward contracts
Not designated as hedges	Prepaid expenses and other current assets		226	Accrued expenses and other current liabilities		—
Total derivatives		$	38,645		$	—


	Fair value - Derivatives in asset position			Fair value - Derivatives in liability position
	Balance sheet location	December 31, 2022		Balance sheet location	December 31, 2022
Interest rate swap contracts
Designated as cash flow hedges	Prepaid expenses and other current assets	$	15,520	Accrued expenses and other current liabilities	$	—
Designated as cash flow hedges	Other long-term assets		14,828	Other long-term liabilities		—
Foreign currency forward contracts
Not designated as hedges	Prepaid expenses and other current assets		181	Accrued expenses and other current liabilities		—
Total derivatives		$	30,529		$	—

While foreign currency forward contracts are subject to a master netting arrangement, the Company does not offset derivative assets and liabilities within the condensed consolidated balance sheet.

The following table summarizes the pre-tax amount and locations of derivative instrument net gains (losses) recognized in the condensed consolidated statement of comprehensive income (in thousands):


		For the Three Months Ended June 30,
	Location	2023		2022
Interest rate swap contracts designated as cash flow hedges	Interest expense, net	$	4,430	$	157
Foreign currency forward contracts not designated as cash flow hedges	Foreign exchange gain		523		(3,248	)


		For the Six Months Ended June 30,
	Location	2023		2022
Interest rate swap contracts designated as cash flow hedges	Interest expense, net	$	7,868	$	157
Foreign currency forward contracts not designated as cash flow hedges	Foreign exchange gain		471		(3,248	)

The following table presents the pre-tax amount of gains from derivative instruments recognized in other comprehensive income (loss) (in thousands):


	For the Three Months Ended June 30,				For the Six Months Ended June 30,
	2023		2022		2023		2022
Interest rate swap contracts designated as cash flow hedges	$	17,125	$	2,615	$	8,071	$	2,615

Assuming market rates remain constant through contract maturities, the Company expects to reclassify pre-tax net gains of $20.1 million into interest expense, net for interest rate swap cash flow hedges within the next 12 months.

The cash flow effects of the Company’s derivative contracts in the condensed consolidated statement of cash flows are included in operating activities.

NOTE 14 – LEASE OBLIGATIONS

As of June 30, 2023, the Company had the following office space lease agreements in place for real properties:


Location	Approximate Square Feet		Lease Expiry Date
Dublin, Ireland		80,000	July 1, 2032 to May 4, 2041
Rockville, Maryland (1)		242,000	August 31, 2024 to April 30, 2040
Lake Forest, Illinois		160,000	March 31, 2031
South San Francisco, California		40,000	December 31, 2031
Chicago, Illinois		9,200	December 31, 2028
Washington, D.C.		6,000	September 30, 2024
Mannheim, Germany		4,800	December 31, 2023

(1)

In November 2021, the Company entered into a lease agreement relating to approximately 192,000 square feet of office and laboratory space under construction in Rockville, Maryland. During the second quarter of 2023, the construction of the office was completed by the lessor and the lease became effective. As a result, the Company recognized an initial $46.0 million as a right-of-use asset and a $46.9 million lease liability on the condensed consolidated balance sheet. The lease is ~~$26.6~~due to expire in April 2040. The Company expects to incur leasehold improvement costs through 2024 and 2025 in order to prepare the building for occupancy.

As of June 30, 2023 and December 31, 2022, the Company had right-of-use lease assets included in other long-term assets of $141.9 million and ~~$25.5~~$99.5 million, respectively; current lease liabilities included in accrued expenses and other current liabilities of $9.2 million and $7.8 million, respectively; and non-current lease liabilities included in other long-term liabilities of $159.1 million and $114.3 million, respectively, ~~representing~~in its condensed consolidated balance sheets.

The Company recognizes rent expense on a monthly basis over the ~~fair value~~lease term based on a straight-line method. Rent expense was $5.3 million and $3.1 million for the three months ended June 30, 2023 and 2022, respectively, and was $8.9 million and $6.1 million for six months ended June 30, 2023 and 2022, respectively.

The table below reconciles the undiscounted cash flows for each of the ~~long-term portion~~first five years and total of the ~~contingent liability~~remaining years to the lease liabilities recorded on the Company’s condensed consolidated balance sheet as of June 30, 2023 (in thousands):


2023 (July to December)	$	6,652
2024		14,566
2025		19,958
2026		21,482
2027		21,745
Thereafter		213,155
Total lease payments		297,558
Imputed interest		(129,172	)
Total lease liabilities	$	168,386

The weighted-average discount rate and remaining lease term for ~~royalties potentially payable under agreements related to PROCYSBI~~leases as of June 30, 2023 was 5.75% and ~~QUINSAIR.~~13.44 years, respectively.

NOTE 1615 – COMMITMENTS AND CONTINGENCIES

~~Lease Obligations~~

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

~~Location~~	~~Approximate Square Feet~~		~~Lease Expiry Date~~
~~Dublin, Ireland~~		~~18,900~~	~~November 3, 2029~~
~~Lake Forest, Illinois (1)~~		~~160,000~~	~~March 31, 2024~~
~~Novato, California (2)~~		~~61,000~~	~~August 31, 2021~~
~~Deerfield, Illinois (3)~~		~~32,300~~	~~June 30, 2018~~
~~Brisbane, California~~		~~20,100~~	~~November 30, 2019~~
~~Mannheim, Germany~~		~~14,300~~	~~December 31, 2018~~
~~Chicago, Illinois~~		~~6,500~~	~~December 31, 2018~~
~~Reinach, Switzerland~~		~~3,500~~	~~May 31, 2020~~
~~Washington, D.C.~~		~~1,000~~	~~December 31, 2018~~

~~(1)~~

~~In connection with the Lake Forest, Illinois lease, the Company has provided a $2.0 million letter of credit to the landlord, through a commercial bank.~~

~~(2)~~

~~During March 2017, the Company vacated an area of the office space in Novato, California. During March and April 2017, the Company entered into sublease arrangements for this space with third parties.~~

~~(3)~~

During January 2016, the Company vacated the premises in Deerfield, Illinois and began occupying the premises in Lake Forest, Illinois. During April 2017, the Company entered into a sublease arrangement for a portion of this space with a third party. During June 2017, the Company terminated a portion of the lease, resulting in 32,300 square feet remaining.

~~Following the Chiesi divestiture in June 2017, the Company ceased to hold a lease obligation in Utrecht in the Netherlands.~~

Purchase Commitments

~~In August 2007,~~Under the ~~Company entered into a manufacturing and~~Company’s supply agreement with ~~Jagotec AG~~AGC Biologics A/S (formerly known as CMC Biologics A/S) (“~~Jagotec”~~AGC Biologics”), ~~which was amended in March 2011 and in January 2017. Under the agreement, Jagotec or its affiliates are required to manufacture and supply RAYOS/LODOTRA exclusively to~~ the Company in bulk. The earliest the agreement can expire is December 31, 2023, and the minimum purchase commitment is in force until December 2023. At September 30, 2017, the minimum purchase commitment based on tablet pricing in effect under the agreement was $6.7 million through December 2023. Additionally, purchase orders relating to the manufacture of RAYOS/LODOTRA of $1.2 million were outstanding at September 30, 2017.

In May 2011, the Company entered into a manufacturing and supply agreement with Sanofi-Aventis U.S. LLC (“Sanofi-Aventis U.S.”), and amended the agreement effective as of September 25, 2013. Pursuant to the agreement, as amended, Sanofi-Aventis U.S. is obligated to manufacture and supply DUEXIS to the Company in final, packaged form, and the Company is obligated to purchase DUEXIS exclusively from Sanofi-Aventis U.S. for the commercial requirements of DUEXIS in North America, South America and certain countries and territories in Europe, including the European Union (“EU”) member states and Scandinavia. The agreement term extends until May 2019, and automatically renews for successive two-year terms unless terminated by either party upon two years prior written notice. At September 30, 2017, the Company had a binding purchase commitment to Sanofi-Aventis U.S. for DUEXIS of $6.3 million, which is to be delivered through March 2018.

In July 2013, Vidara Therapeutics International Public Limited Company (“Vidara”) and Boehringer Ingelheim entered into an exclusive supply agreement, which the Company assumed in September 2014 and amended effective as of September 5, 2014 and June 1, 2015. That supply agreement was replaced with an exclusive global supply agreement between the Company and Boehringer Ingelheim Biopharmaceuticals GmbH (“Boehringer Ingelheim Biopharmaceuticals”) effective June 30, 2017. Under the agreement, Boehringer Ingelheim Biopharmaceuticals is required to manufacture and supply ACTIMMUNE and IMUKIN to the Company. The Company is required to purchase minimum quantities of finished medicine per annum through July 2024. During the year ended December 31, 2016, the Company committed to purchase additional amounts of ACTIMMUNE from Boehringer Ingelheim. These additional amounts were intended to cover anticipated demand if the results of the STEADFAST study of ACTIMMUNE for the treatment of FA had been successful. As of September 30, 2017, the minimum binding purchase commitment to Boehringer Ingelheim Biopharmaceuticals was $22.5 million (converted using a Dollar-to-Euro exchange rate of 1.1814) through July 2024. Following the discontinuation of the STEADFAST program, the Company recorded a loss of $14.3 million in “cost of goods sold” in the condensed consolidated statement of comprehensive loss during the year ended December 31, 2016 for a portion of this commitment which represented firm, non-cancellable and unconditional purchase commitments for quantities in excess of the Company’s current forecasts for future demand. During the nine months ended September 30, 2017, the Company renegotiated the purchase commitment due to Boehringer Ingelheim and recorded $2.7 million as a reduction to “cost of goods sold”. During the year ended December 31, 2016, the Company also committed to incur an additional $14.9 million for the harmonization of the drug substance manufacturing process with Boehringer Ingelheim. These additional costs will be incurred during the years 2017 through 2021. During the three and nine months ended September 30, 2017, the Company recorded $5.7 million and $12.2 million, respectively, in its condensed consolidated statement of comprehensive loss related to the harmonization of the drug substance manufacturing process.

In November 2013, the Company entered into a long-term master manufacturing services and product agreement with Patheon Pharmaceuticals Inc. (“Patheon”) pursuant to which Patheon is obligated to manufacture VIMOVO for the Company through December 31, 2019. The Companyhas agreed to purchase ~~a specified percentage~~certain minimum annual order quantities of ~~VIMOVO requirements for~~TEPEZZA drug substance. In addition, the United States from Patheon. The Company must pay an agreed price for final, packaged VIMOVO supplied by Patheon as set forth in the Patheon manufacturing agreement, subject to adjustments, including certain unilateral adjustments by Patheon, such as annual adjustments for inflation and adjustments to account for certain increases in the cost of components of VIMOVO other than active materials. The Company issues twelve-month forecasts of the volume of VIMOVO that the Company expects to order. The first six months of the forecast are considered binding firm orders. At September 30, 2017, the Company had a binding purchase commitment with Patheon for VIMOVO of $1.5 million which is to be delivered through December 2017.

In October 2014, in connection with the acquisition of the U.S. rights to PENNSAID 2% from Nuvo Research Inc., (“Nuvo”), the Company and Nuvo entered into an exclusive supply agreement. Under the supply agreement, which was amended in February 2016, Nuvo is obligated to manufacture and supply PENNSAID 2% to the Company. The term of the supply agreement is through December 31, 2029, but the agreement may be terminated earlier by either party for any uncured material breach by the other party of its obligations under the supply agreement or upon the bankruptcy or similar proceeding of the other party. At least ninety days prior to the first day of each calendar month during the term of the supply agreement, the Company submits a binding written purchase order to Nuvo for PENNSAID 2% in minimum batch quantities. At September 30, 2017, the Company had a binding purchase commitment with Nuvo for PENNSAID 2% of $4.3 million through January 2018.

In November 2010, Raptor and Patheon entered into a manufacturing services agreement, which the Company assumed as a result of its acquisition of Raptor. Under the agreement, which was amended in April 2012 and June 2013, Patheon is obligated to manufacture PROCYSBI for the Company through December 31, 2019. The Company must provide ~~Patheon~~AGC Biologics with rolling ~~non-binding~~ forecasts of ~~PROCYSBI,~~TEPEZZA drug substance requirements, with a portion of the forecast being a firm ~~written~~and binding order. ~~In November 2010, Raptor and Cambrex Profarmaco Milano (“Cambrex”~~As of June 30, 2023, the Company had binding purchase commitments with AGC Biologics for TEPEZZA drug substance of €89.3 million ($97.4 million converted at a Euro-to-Dollar exchange rate as of June 30, 2023 of 1.0905) ~~entered into an active pharmaceutical ingredient (“API”)~~, to be delivered through June 2025. Under the Company’s supply agreement ~~which~~with Catalent Indiana, LLC (“Catalent”), the Company assumed as a result of its acquisition of Raptor. Under the agreement, which was amended in April 2013 and August 2016, Cambrex is obligated to manufacture PROCYSBI API for the Company through November 30, 2020. The Company must provide ~~Cambrex~~Catalent with rolling ~~non-binding~~ forecasts of TEPEZZA drug product requirements, with a portion of the forecast being ~~the minimum floor~~a firm and binding order. As of ~~the firm order that must be placed. At September~~June 30, ~~2017,~~2023, the Company had a binding purchase ~~commitment~~commitments with Catalent for TEPEZZA drug product of $6.2 million, to be delivered through December 2024. Under the Company’s supply agreement with Patheon Pharmaceuticals Inc. (“Patheon”) (the contract development and manufacturing services organization of Thermo Fisher Scientific), the Company must provide Patheon with rolling forecasts of TEPEZZA drug product requirements, with a portion of the forecast being a firm and binding order. As of June 30, 2023, the Company had binding purchase commitments with Patheon for ~~PROCYSBI~~TEPEZZA drug product of ~~$1.4~~€6.8 million ~~through January 2018 and with Cambrex for PROCYSBI API~~($7.4 million converted at a Euro-to-Dollar exchange rate as of ~~$2.8 million~~June 30, 2023 of 1.0905), to be delivered through December ~~2020.~~2024.

~~In March 2007, Savient Pharmaceuticals, Inc. (as predecessor in interest to Crealta), entered into a commercial supply~~Under the Company’s agreement with Bio-Technology General (Israel) Ltd (“BTG Israel”) for the production of the bulk KRYSTEXXA medicine (“bulk product”). The Company assumed this agreement as part of the Crealta acquisition and amended the agreement in September 2016. Under this agreement,, the Company has agreed to purchase certain minimum annual order quantities and is obligated to purchase at least ~~eighty percent~~80% of its annual ~~world-wide~~worldwide bulk product requirements for KRYSTEXXA from BTG Israel. The term of the agreement runs until December 31, 2030, and will automatically renew for successive three year periods unless earlier terminated by either party upon three years prior written notice. The agreement may be terminated earlier by either party in the event of a force majeure, liquidation, dissolution, bankruptcy or insolvency of the other party, uncured material breach by the other party or after January 1, 2024, upon three years prior written notice. Under the agreement, ifif the manufacture of the bulk product is moved out of Israel, the Company may be required to obtain the approval of the Israel Innovation Authority (formerly known as Israeli Office of the Chief ~~Scientist~~Scientist) (“~~OCS”~~IIA”) because certain KRYSTEXXA intellectual property was initially developed with a grant funded by the ~~OCS.~~ IIA. The Company issues eighteen-month forecasts of the volume of KRYSTEXXA that the Company expects to order. The first ~~six~~nine months of ~~the~~each forecast ~~are~~is considered a binding firm ~~orders. At September~~order. As of June 30, ~~2017,~~2023, the Company had a ~~binding~~total purchase commitment, including the minimum annual order quantities and binding firm orders, with BTG Israel for KRYSTEXXA of ~~$52.0~~$22.8 million, to be delivered through December ~~31,~~ 2026. ~~Additionally, other binding commitments relating~~

Under an agreement with Boehringer Ingelheim Biopharmaceuticals GmbH (“Boehringer Ingelheim Biopharmaceuticals”), Boehringer Ingelheim Biopharmaceuticals is required to manufacture and supply ACTIMMUNE to the ~~manufacture~~Company. The Company is required to purchase minimum quantities of ~~KRYSTEXXA~~finished medicine during the term of ~~$1.8 million were outstanding~~the agreement, which term extends to at least September 30, ~~2017.~~2024. As of June 30, 2023, the minimum purchase commitment to Boehringer Ingelheim Biopharmaceuticals was €5.9 million ($6.5 million converted using a Euro-to-Dollar exchange rate of 1.0905 as of June 30, 2023) through September 2024.

Excluding the above, additional purchase orders and other commitments relating to the manufacture of RAVICTI, PROCYSBI, KRYSTEXXA, BUPHENYL, ~~MIGERGOT,~~UPLIZNA, RAYOS and QUINSAIR ~~and RAVICTI and VIMOVO~~ of ~~$9.6~~$15.6 million were outstanding ~~at September~~as of June 30, ~~2017.~~2023.

~~Royalty Agreements~~Contingencies

~~RAYOS/LODOTRA~~

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

~~VIMOVO~~

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

In November 2013, the Company, AstraZeneca AB (“AstraZeneca”) and Aralez entered into a letter agreement. Under the letter agreement, the Company and AstraZeneca agreed to pay Aralez milestone payments upon the achievement by the Company and AstraZeneca, collectively, of certain annual aggregate global net sales thresholds ranging from $550.0 million to $1.25 billion with respect to VIMOVO. The aggregate milestone payment amount that may be owed by AstraZeneca and the Company, collectively, under the letter agreement is $260.0 million, with the amount payable by each of the Company and AstraZeneca with respect to each milestone to be based upon the proportional sales achieved by each of the Company and AstraZeneca, respectively, in the applicable year.

~~ACTIMMUNE~~

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

For the period from November 26, 2014 through May 5, 2018, a royalty in the 20% to 30% range for the first $3.7 million in net sales achieved in any calendar year and in the 1% to 9% range for all additional net sales in any year; and

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

Under the terms of an assignment and option agreement with Connetics Corporation (which was the predecessor parent company to InterMune Pharmaceuticals Inc. and is now part of GlaxoSmithKline), (“Connetics”), the Company is obligated to pay low single-digit royalties to Connetics on the Company’s net sales of ACTIMMUNE in the United States.

~~RAVICTI~~

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

~~BUPHENYL~~

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

~~KRYSTEXXA~~

Under the terms of a license agreement with Duke and MVP, the Company is obligated to pay Duke a mid single-digit royalty on its global net sales of KRYSTEXXA and a royalty of between 5% and 15% on any global sublicense revenue. The Company is also obligated to pay MVP a mid single-digit royalty on its net sales of KRYSTEXXA outside of the United States and a royalty of between 5% and 15% on any sublicense revenue outside of the United States.

~~PROCYSBI~~

~~Under the terms of an amended and restated license agreement with UCSD, the Company is obligated to pay to UCSD tiered low to mid single-digit royalties on its net sales of PROCYSBI.~~

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

For all of the royalty agreements entered into by the Company, a total expense of $15.0 million and $42.1 million was recorded during the three and nine months ended September 30, 2017, respectively, of which $14.9 million and $42.0 million was recorded in cost of goods sold, respectively, and $0.1 million and $0.1 million was recorded in selling, general and administrative expenses, respectively, in the condensed consolidated statements of comprehensive loss. During the three and nine months ended September 30, 2016, $11.2 million and $32.6 million was recorded in cost of goods sold, respectively, in the condensed consolidated statements of comprehensive loss.

~~Other Agreements~~

On May 8, 2017, the Company acquired River Vision for upfront cash payments totaling $151.9 million, including $6.3 million of cash acquired, and subject to other customary purchase price adjustments for working capital, and potential future milestone and royalty payments contingent on the satisfaction of certain regulatory milestones and sales thresholds. Under the agreement, the Company is required to pay up to $325.0 million upon the attainment of various milestones related to FDA approval and net sales thresholds. The agreement also includes a royalty payment of three percent of the portion of annual worldwide net sales exceeding $300.0 million (if any). Under a separate agreement, the Company is also required to pay up to CHF103.0 million upon the attainment of various milestones related to approval, filing and net sales thresholds. The agreement also includes a royalty payment of between nine percent and twelve percent of the portion of annual worldwide net sales.

~~Contingencies~~

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

~~In November 2015,~~Disclosure of ongoing matters is considered at the time of each filing and matters may be removed if the statute of limitations has lapsed or circumstances have changed that reduce the risk of exposure.

On August 3, 2022, the Company received a ~~subpoena~~civil investigative demand from the ~~U.S. Attorney’s Office for~~United States Department of Justice (“DOJ”) pursuant to the ~~Southern District of New York requesting~~Federal False Claims Act regarding an investigation concerning potentially false information in prior authorization forms. A prior authorization form is a managed care practice whereby the payer (either a commercial insurer or a government health program) requires that the prescribing physician provide additional justification or information supporting the physician’s decision to prescribe a particular medicine. The civil investigative demand requests certain documents and information related to ~~its patient access programs~~DUEXIS, PENNSAID 2%, VIMOVO and ~~other aspects of its marketing and commercialization activities.~~RAYOS. The Company is ~~unable~~cooperating with the investigation and the DOJ has not indicated to ~~predict how long this~~the Company whether it believes the Company engaged in any wrongdoing or if the Company is the subject of the investigation. While the Company is not aware of any fraudulent scheme to provide false information in prior authorization forms for its medicines that resulted in improper payments from government healthcare programs, no assurance can be given as to the timing or outcome of the DOJ’s investigation, ~~will continue~~ or ~~its outcome, but it anticipates~~ that it will ~~continue~~not result in a material adverse effect on the Company’s business.

Beginning in the third quarter of 2022, the Company has been served with multiple complaints from plaintiffs alleging to ~~incur significant costs~~have taken TEPEZZA and suffered hearing impairment. Although hearing impairment, including deafness, was identified as a potential adverse event in ~~connection~~the pivotal clinical trials for TEPEZZA, addressed at the U.S. Food and Drug Administration (“FDA”) advisory committee meeting that considered the safety and efficacy of TEPEZZA, and listed as a potential adverse event in the initial FDA-approved TEPEZZA product label, the plaintiffs allege that the Company failed to adequately inform them about the risk of hearing impairment before taking the medicine. In March 2023, one of the plaintiffs filed a motion with the ~~investigation, regardless~~United States Judicial Panel on Multidistrict Litigation (“MDL Panel”) to transfer current and future product liability cases involving TEPEZZA and hearing impairment to the United States District Court for the Northern District of California. On June 2, 2023, the MDL Panel ordered the centralization of current and future federal cases to the United States District Court for the Northern District of Illinois, Eastern Division. On June 28, 2023, the court vacated the prior deadlines in the individual cases and instructed the parties to confer on a consolidated procedure to resolve the Company’s motions to dismiss the cases on federal preemption grounds. The Company intends to vigorously defend itself in the lawsuits and maintains insurance coverage for product liability claims. Nevertheless, no assurance can be given as to the outcome of the ~~outcome.~~litigation, whether additional similar lawsuits will be initiated or whether the Company’s insurance coverage will be adequate to cover the costs of the litigation or any resulting settlements or judgments.

Other Agreements

Arrowhead Pharmaceuticals, Inc.

On June 18, 2021, the Company entered into a global agreement with Arrowhead Pharmaceuticals, Inc. (“Arrowhead”) for HZN 457, a discovery-stage investigational RNAi therapeutic being developed by Arrowhead as a potential treatment for uncontrolled gout. Arrowhead granted the Company a worldwide exclusive license to develop, manufacture and commercialize medicines based on the RNAi therapeutic. Arrowhead is required to use commercially reasonable efforts to conduct research and preclinical development activities for the RNAi therapeutic products. The Company ~~may also become subject~~must use commercially reasonable efforts in, and will be responsible for, clinical development and commercialization of the RNAi therapeutic products. Under the terms of the agreement, the Company paid Arrowhead an upfront cash payment of $40.0 million in July 2021 and agreed to ~~similar investigations by other governmental agencies.~~pay additional potential future milestone payments of up to $660.0 million contingent on the achievement of certain development, regulatory and commercial milestones, and low to mid-teens royalties on worldwide calendar year net sales of licensed medicines. In addition, a $15.0 million development milestone was recognized in the fourth quarter of 2022. The ~~investigation by~~$15.0 million development milestone was subsequently paid in the ~~U.S. Attorney’s Office~~first quarter of 2023.

Venture capital funds

The Company is committed to invest as a strategic limited partner in four venture capital funds: Forbion Growth Opportunities Fund I C.V., Forbion Capital Fund V C.V., Aisling Capital V, L.P. and ~~any additional investigations~~RiverVest Venture Fund V, L.P. As of June 30, 2023, the total carrying amount of the Company’s ~~patient access programs~~investments in these funds was $31.9 million, which is included in other long-term assets in the condensed consolidated balance sheet and ~~sales~~includes $4.2 million in net cash payments for investments made during the first half of 2023. As of June 30, 2023, the Company’s total future commitments to these funds were $35.4 million. During the six months ended June 30, 2023 and ~~marketing activities may result~~2022, the Company recorded a loss under the equity method of $0.6 million and investment income under the equity method of $2.4 million, respectively, in ~~damages, fines, penalties or~~the other ~~administrative sanctions against~~income (expense), net line item of the ~~Company.~~Company’s condensed consolidated statement of comprehensive income related to these funds.

~~Indemnification~~Non-cancellable advertising commitments

As of June 30, 2023, the Company had $28.4 million of non-cancellable advertising commitments due within one year, primarily related to its U.S. commercial business.

Indemnification

In the normal course of business, the Company enters into contracts and agreements that contain a variety of representations and warranties and provide for general indemnifications. The Company’s exposure under these agreements is unknown because it involves claims that may be made against the Company in the future, but have not yet been made. In connection with the federal securities class action litigation (described in Note 17 below), the Company has received notice from the Underwriter Defendants (as defined below) of their intention to seek indemnification and has received and paid several invoices from the Underwriter Defendants. The Company may record charges in the future as a result of these indemnification obligations.

In accordance with its memorandum and articles of association, the Company has indemnification obligations to its officers and directors for certain events or occurrences, subject to certain limits, while they are serving at the Company’s request in such capacity. Additionally, the Company has entered into, and intends to continue to enter into, separate indemnification agreements with its directors and executive officers. These agreements, among other things, require the Company to indemnify its directors and executive officers for certain expenses, including attorneys’ fees, judgments, fines and settlement amounts incurred by a director or executive officer in any action or proceeding arising out of their services as one of the Company’s directors or executive officers, or any of the Company’s subsidiaries or any other company or enterprise to which the person provides services at the Company’s request. In connection with the federal securities class action litigation (described in Note 17 below), the Company has paid legal fees and costs on behalf of itself and the current and former officers and directors of the Company who are named as defendants in that litigation. The Company also has a director and officer insurance policy that enables it to recover a portion of any amounts paid for current and future potential claims. ~~All of~~

The Company also has indemnification obligations to the ~~Company’s~~former officers and directors ~~have also entered into separate indemnification agreements~~of Viela for certain events or occurrences related to their former roles at Viela, subject to certain limits. Several individual directors and officers of Viela were named as defendants in a lawsuit, Sciannella v. Astrazeneca UK Limited et.al., Case No. 2023-0125, filed in the Court of Chancery of the State of Delaware, which alleges various breaches of fiduciary duties in connection with ~~Horizon Pharma, Inc. (“HPI”).~~Viela’s decision to be acquired by the Company. The Company has a director and officer insurance policy that enables it to recover a portion of certain amounts that may be paid by (and for which the Company may be obligated to indemnity) the former Viela officers and directors as a result of the lawsuit.

NOTE 1716 - LEGAL PROCEEDINGS

~~RAYOS~~Transaction Agreement with Amgen

On ~~July 15, 2013,~~May 16, 2023, the FTC filed a complaint in the United States District Court for the Northern District of Illinois seeking a temporary restraining order and preliminary injunction enjoining the Transaction. Refer to Note 1 for further details.

TEPEZZA

Beginning in the third quarter of 2022, the Company has been served with multiple complaints from plaintiffs alleging to have taken TEPEZZA and suffered hearing impairment. Although hearing impairment, including deafness, was identified as a potential adverse event in the pivotal clinical trials for TEPEZZA, addressed at the FDA advisory committee meeting that considered the safety and efficacy of TEPEZZA, and listed as a potential adverse event in the initial FDA-approved TEPEZZA product label, the plaintiffs allege that the Company failed to adequately inform them about the risk of hearing impairment before taking the medicine. In these lawsuits, the plaintiffs are seeking unspecified monetary damages. In March 2023, one of the plaintiffs filed a motion with the MDL Panel to transfer current and future product liability cases involving TEPEZZA and hearing impairment to the United States District Court for the Northern District of California. On June 2, 2023, the MDL Panel ordered the centralization of current and future federal cases to the United States District Court for the Northern District of Illinois, Eastern Division. On June 28, 2023, the court vacated the prior deadlines in the individual cases and instructed the parties to confer on a consolidated procedure to resolve the Company’s motions to dismiss the cases on federal preemption grounds.

PROCYSBI

On February 2, 2022 and February 16, 2022, the Company received ~~a Paragraph IV Patent Certification~~notice from ~~Watson Laboratories, Inc.—Florida, known as Actavis Laboratories FL,~~Teva Pharmaceuticals, Inc. (“~~Actavis FL”~~Teva”)~~, advising~~ that ~~Actavis FL~~it had filed an Abbreviated New Drug ~~Application~~Applications (“ANDA”) with the FDA seeking approval of generic versions of PROCYSBI granules and capsules, respectively. The ANDAs contained Paragraph IV Patent Certifications alleging that the patents covering PROCYSBI granules and capsules are invalid and/or will not be infringed by Teva’s manufacture, use or sale of the medicines for ~~a generic version of RAYOS, containing up to 5 mg of prednisone.~~which the ANDAs were submitted. On ~~August 26, 2013,~~March 15, 2022, the Company ~~together with Jagotec,~~ filed suit against Teva in the United States District Court for the District of New Jersey ~~against Actavis FL, Actavis Pharma, Inc., Andrx Corp., and Actavis, Inc.~~for patent infringement, seeking ~~an injunction~~ to prevent ~~the approval of the ANDA.~~

On October 1, 2015, the Company’s subsidiary Horizon Pharma Switzerland GmbH, as well as Jagotec, entered into a license and settlement agreement (the “Actavis settlement agreement”) with Actavis FL relating to the Company’s and Jagotec’s patent infringement litigation against Actavis FL. The court entered the stipulation of dismissal and closed the case on December 4, 2015. The Actavis settlement agreement provides for a full settlement and release by each party of all claims that relate to the litigation or under the patents with respect to Actavis FL’s generic version of RAYOS tablets.

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

Under the Actavis settlement agreement, the generic entry date is December 23, 2022; however, Actavis FL may be able to enter the market earlier under certain circumstances. Such events relate to the resolution of any other third-party RAYOS patent litigation, the entry of otherTeva from selling its generic versions of ~~RAYOS tablets or certain substantial reductions in RAYOS prescriptions over specified periods~~PROCYSBI granules and capsules. On March 24, 2023, the parties stipulated to a stay of ~~time.~~all proceedings.

PENNSAID 2%

On ~~November 13, 2014, the Company~~May 6, 2022, Apotex received ~~a Paragraph IV Patent Certification from Watson Laboratories, Inc. (“Watson Laboratories”) advising that Watson Laboratories had filed an ANDA with the~~ FDA ~~for~~approval to market a generic ~~version~~diclofenac sodium topical solution 2% (“Apotex ANDA Product”), following the apparent forfeiture by Actavis Laboratories UT, Inc. (“Actavis”) of ~~PENNSAID 2%.~~its first-filer exclusivity. On ~~December 23, 2014,~~May 13, 2022, the Company filed ~~suit~~a complaint against Apotex asserting that the manufacture, use, offer for sale, or sale of the Apotex ANDA Product would infringe U.S. Patent No. 9,066,913 (the “‘913 patent”) in the United States District Court for the District of New Jersey against Actavis Laboratories UT, Inc., and Actavis plc (collectively “Actavis”) seeking an injunction to prevent the approval of the ANDA. Since then, Watson Laboratories, Inc. changed its name to Actavis Laboratories UT, Inc., and is the current owner of the ANDA.Delaware. The lawsuit alleged that Actavis has infringed U.S. Patents 8,217,078, 8,252,838, 8,546,450, 8,563,613, 8,618,164, and 8,871,809 by filing an ANDA seeking approval from the FDA to market a generic version of PENNSAID 2% prior to the expiration of certain of the Company’s patents listed in the FDA’s Orange Book (“Orange Book”).

~~On June 30, 2015, the~~ Company filed suit in the United States District Court for the District of New Jersey against Actavis for patent infringement of U.S. Patent 9,066,913. On August 11, 2015, the Company filed suit in the United States District Court for the District of New Jersey against Actavis for patent infringement of U.S. Patent 9,101,591. On September 17, 2015, the Company filed suit in the United States District Court for the District of New Jersey against Actavis for patent infringement of U.S. Patent 9,132,110. All three patents, U.S. Patents 9,066,913, 9,101,591 and 9,132,110 are listed in the Orange Book and have claims that cover PENNSAID 2%. These three cases were consolidated with the case filed against Actavis on December 23, 2014.

On August 17, 2016, the district court issued a Markman opinion holding certain of the asserted claims of U.S. Patents 8,252,838, 8,563,613, 9,066,913 and 9,101,591 invalid as indefinite. On March 16, 2017, the court granted Actavis’ motion for summary judgment of non-infringement of the asserted claims of U.S. Patents 8,546,450, 8,217,078 and 9,132,110. In view of the ~~Markman~~ and summary judgment decisions, a bench trial was held on March 21-30, 2017, regarding claim 12 of U.S. Patent 9,066,913. On May 14, 2017, the court issued its opinion upholding the validity of claim 12 ofpreviously successfully enforced the ‘913 patent which Actavis had previously admitted its proposed generic diclofenac sodium topical solution product would infringe. Actavis filed its Notice of Appeal on June 16, 2017. The Company filed its Notice of Appeal of the district court’s rulings on certain claims of the ‘450, ‘078, ‘838, ‘613, ‘591, ‘304, ‘784, ‘913, and ‘110 patents on June 9, 2017. The Company’s opening brief was filed on August 14, 2017. Actavis’s opening brief, challenging the district court’s judgment on the ‘913 patent, was filed on October 10, 2017. The Company’s brief defending the judgment on the ‘913 patent is due on November 20, 2017.

~~On October 27, 2015, the Company filed suit in the United States District Court for the District of New Jersey~~ against Actavis ~~for patent infringement of U.S. Patents 9,168,304 and 9,168,305. On February 5, 2016, the Company filed suit~~ in the United States District Court for the District of New Jersey against Actavis for patent infringement of U.S. Patent No. 9,220,784. All three patents, U.S. Patent Nos. 9,168,304, 9,168,305, and 9,220,784, are listed in the Orange Book and have claims that cover PENNSAID 2%. All claims from U.S. Patents 9,168,304, 9,168,305 and 9,220,784 asserted against Actavis were held invalid as indefinite by way of the court’s August 17, 2016 Markman opinion. The court’s rulings are currently on appeal to the Federal Circuit.

On August 18, 2016, the Company filed suit in the United States District Court for the District of New Jersey against Actavis for patent infringement of U.S. Patents 9,339,551, 9,339,552, 9,370,501 and 9,375,412. All four patents, U.S. Patents 9,339,551, 9,339,552, 9,370,501 and 9,375,412, are listed in the Orange Book and have claims that cover PENNSAID 2%.

The Company received from Actavis a Paragraph IV Patent Certification Notice Letter dated September 27, 2016, against Orange Book listed U.S. Patent No. 9,415,029, advising that Actavis had filed an ANDA with the FDA for a generic version of PENNSAID 2%.

On December 2, 2014, the Company received a Paragraph IV Patent Certification against Orange Book listed U.S. Patents. 8,217,078, 8,252,838, 8,546,450, 8,563,613, 8,618,164 and 8,741,956 from Paddock Laboratories, LLC (“Paddock”) advising that Paddock had filed an ANDA with the FDA for a generic version of PENNSAID 2%. On January 9, 2015, the Company received from Paddock another Paragraph IV Patent Certification against newly Orange Book listed U.S. Patent No. 8,871,809. On January 13, 2015 and January 14, 2015, the Company filed suits in the United States District Court for the District of New Jersey and the ~~United States District Court for~~Federal Circuit subsequently affirmed the ~~District of Delaware, respectively, against Paddock seeking an injunction to prevent the approval of the ANDA.~~ district court’s ruling.

The ~~lawsuits~~Company purchased PENNSAID 2% from Nuvo Pharmaceuticals Inc. (“Nuvo”) in 2014. Apotex alleged that ~~Paddock has infringed U.S. Patents 8,217,078, 8,252,838, 8,546,450, 8,563,613, 8,618,164~~a settlement agreement entered into in January 2013 with Nuvo (“Nuvo Settlement”) provides it with a license to the ‘913 patent. The Company disputed the scope of Apotex’s settlement and ~~8,871,809 by filing an ANDA seeking approval from~~license with Nuvo, contending that it does not provide Apotex with a license to the ~~FDA~~‘913 patent, which was issued to ~~market generic versions~~the Company after the Company’s purchase of PENNSAID 2% ~~prior~~from Nuvo.

On May 17, 2022, the Company moved for a preliminary injunction enjoining Apotex from engaging in the commercial manufacture, use, offer to ~~the expiration of certain~~sell, or sale of the ~~Company’s patents listed in the Orange Book.~~

Apotex ANDA Product. On May ~~6, 2015,~~27, 2022, the ~~Company entered into~~parties filed a ~~settlement~~stipulated preliminary injunction and a proposed expedited briefing schedule to present the underlying license ~~agreement (the “Perrigo settlement agreement”) with Perrigo Company plc and its subsidiary Paddock (collectively, “Perrigo”), relating~~dispute to the Company’s patent infringement litigation against Perrigo. The Perrigo settlement agreement provides for a full settlement and release by both the Company and Perrigo of all claims that were or could have been asserted in the litigation and that arise out of the issues that were the subject of the litigation or Perrigo’s generic version of PENNSAID 2%. A stipulation of dismissal was entered by the district court ~~on May 13, 2015.~~

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

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

In certain circumstances following the entry of other third-party generic versions of PENNSAID 2%, the Company may be required to supply Perrigo PENNSAID 2% as its authorized distributor of generic PENNSAID 2%, with the Company receiving specified percentages of any net sales by Perrigo.

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

On September 9, 2015, certain subsidiaries of the Company (the “Horizon Subsidiaries”) entered into a settlement and license agreement with Taro (the “Taro settlement agreement”) relating to the Horizon Subsidiaries’ patent infringement litigation against Taro. The Taro settlement agreement provides for a full settlement and release by the Horizon Subsidiaries and Taro of all claims that were or could have been asserted in the litigation and that arise out of the issues that were subject of the litigation or Taro’s generic version of PENNSAID 2%. A stipulation of dismissal was entered by the district court on November 3, 2015.

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

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

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

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

On October 27, 2015, the Company filed suit in the United States District Court for the District of New Jersey against Lupin for patent infringement of U.S. Patents 9,168,304 and 9,168,305. On February 5, 2016, the Company filed suit in the United States District Court for the District of New Jersey against Lupin for patent infringement of U.S. Patent No. 9,220,784. On August 18, 2016, the Company filed suit in the United States District Court for the District of New Jersey against Lupin for patent infringement of U.S. Patents 9,339,551, 9,339,552, 9,370,501 and 9,375,412. All seven patents, U.S. Patents 9,168,304, 9,168,305, 9,220,784, 9,339,551, 9,339,552, 9,370,501 and 9,375,412, are listed in the Orange Book and have claims that cover PENNSAID 2%. All of the infringement actions brought against Lupin remain pending, with certain claims of the ’809, ’913, ’450, ’110, ’551, ’552, ’412 and ’501 patents being asserted. The decisions reached by the court in the related Actavis actions regarding the ‘809, ‘913, ‘450, ‘110, ‘551, ‘552, ‘412 and ‘501 patents as described above, are expected to apply to the same claims asserted against Lupin in these actions. The court has not yet set a trial date for the Lupin actions.

The Company received from Teligent, Inc., formerly known as IGI Laboratories, Inc. (“Teligent”), a Paragraph IV Patent Certification dated March 24, 2015 against Orange Book listed U.S. Patents 8,217,078, 8,252,838, 8,546,450, 8,563,613, 8,618,164, 8,741,956 and 8,871,809 advising that Teligent had filed an ANDA with the FDA for a generic version of PENNSAID 2%. On May 21, 2015, the Company filed suit in the United States District Court for the District of New Jersey against Teligent seeking an injunction to prevent the approval of the ANDA. The lawsuit alleged that Teligent has infringed U.S. Patents 8,217,078, 8,252,838, 8,546,450, 8,563,613, 8,618,164 and 8,871,809 by filing an ANDA seeking approval from the FDA to market generic versions of PENNSAID 2% prior to the expiration of certain of the Company’s patents listed in the Orange Book.

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

On October 27, 2015, the Company filed suit in the United States District Court for the District of New Jersey against Teligent for patent infringement of U.S. Patents 9,168,304 and 9,168,305. On February 5, 2016, the Company filed suit in the United States District Court for the District of New Jersey against Teligent for patent infringement of U.S. Patent 9,220,784. All three patents, U.S. Patents 9,168,304, 9,168,305 and 9,220,784 are listed in the Orange Book and have claims that cover PENNSAID 2%.

The Company entered into a settlement and license agreement with Teligent (the “Teligent settlement agreement”), effective May 9, 2016, relating to the patent infringement litigation against Teligent. The Teligent settlement agreement provides for a full settlement and release by both the Company and Teligent of all claims that were or could have been asserted in the litigation and that arise out of the issues that were subject of the litigation or Teligent’s generic version of PENNSAID 2%. A stipulation of dismissal was entered by the district court on May 2, 2016.

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

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

The Company received from Amneal Pharmaceuticals LLC (“Amneal”) a Paragraph IV Patent Certification dated April 2, 2015 against Orange Book listed U.S. Patents 8,217,078, 8,252,838, 8,546,450, 8,563,613, 8,618,164, 8,741,956 and 8,871,809 advising that Amneal had filed an ANDA with the FDA for a generic version of PENNSAID 2%. On May 15, 2015, the Company filed suit in the United States District Court for the District of New Jersey against Amneal seeking an injunction to prevent the approval of the ANDA. The lawsuit alleged that Amneal has infringed U.S. Patents 8,217,078, 8,252,838, 8,546,450, 8,563,613, 8,618,164 and 8,871,809 by filing an ANDA seeking approval from the FDA to market generic versions of PENNSAID 2% prior to the expiration of certain of the Company’s patents listed in the Orange Book.

On June 30, 2015, the Company filed suit in the United States District Court for the District of New Jersey against Amneal for patent infringement of U.S. Patent 9,066,913. On August 11, 2015, the Company filed suit in the United States District Court for the District of New Jersey against Amneal for patent infringement of U.S. Patent 9,101,591. On September 17, 2015, the Company filed suit in the United States District Court for the District of New Jersey against Amneal for patent infringement of U.S. Patent 9,132,110. All three patents, U.S. Patents 9,066,913, 9,101,591 and 9,132,110, are listed in the Orange Book and have claims that cover PENNSAID 2%.

On October 27, 2015, the Company filed suit in the United States District Court for the District of New Jersey against Amneal for patent infringement of U.S. Patents 9,168,304 and 9,168,305. On February 5, 2016, the Company filed suit in the United States District Court for the District of New Jersey against Amneal for patent infringement of U.S. Patent 9,220,784. All three patents, U.S. Patents 9,168,304, 9,168,305, and 9,220,784, are listed in the Orange Book and have claims that cover PENNSAID 2%.

On April 18, 2016, the Company entered into a settlement and license agreement (the “Amneal settlement agreement”) with Amneal relating to the Company’s patent infringement litigation against Amneal. The Amneal settlement agreement provides for a full settlement and release by both the Company and Amneal of all claims that were or could have been asserted in the litigation and that arise out of the issues that were the subject of the litigation or Amneal’s generic version of PENNSAID 2%. A stipulation of dismissal was entered by the district court.

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

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

In certain circumstances following the entry of other third-party generic versions of PENNSAID 2%, the Company may be required to supply Amneal with PENNSAID 2% as a non-exclusive, authorized distributor of generic PENNSAID 2%, with the Company receiving specified percentages of any net sales by Amneal.

The Company received from Apotex Inc. (“Apotex”) a Paragraph IV Patent Certification Notice Letter dated April 1, 2016, against Orange Book listed U.S. Patents 8,217,078, 8,252,838, 8,546,450, 8,563,613, 8,618,164, 8,741,956, 8,871,809, 9,066,913, 9,101,591, 9,132,110, 9,168,304, 9,168,305 and 9,220,784 advising that Apotex had filed an ANDA with the FDA for a generic version of PENNSAID 2%. The Company also received from Apotex a second Paragraph IV Patent Certification Notice Letter dated June 30, 2016, against Orange Book listed U.S. Patents 9,339,551 and 9,339,552, advising that Apotex had filed an ANDA with the FDA for a generic version of PENNSAID 2%. The Company also received from Apotex a third Paragraph IV Patent Certification Notice Letter dated September 21, 2016, against Orange Book listed U.S. Patent 9,415,029, advising that Apotex had filed an ANDA with the FDA for a generic version of PENNSAID 2%. The Company also received from Apotex additional Paragraph IV Patent Certification Notice Letters dated April 20, 2017 and April 27, 2017 against Orange Book listed U.S. Patent 9,539,335 and 9,370,501.

~~VIMOVO~~

Currently, patent litigation is pending in the United States District Court for the District of New Jersey and the Court of Appeals for the Federal Circuit against three generic companies intending to market VIMOVO prior to the expiration of certain of the Company’s patents listed in the Orange Book. These cases are in the United States District Court for the District of New Jersey. They are collectively known as the VIMOVO cases, and involve the following sets of defendants: (i) Dr. Reddy’s Laboratories Inc. and Dr. Reddy’s Laboratories Ltd. (collectively, “Dr. Reddy’s”); (ii) Lupin Ltd. and Lupin Pharmaceuticals Inc. (collectively, “Lupin”); and (iii) Mylan Pharmaceuticals Inc., Mylan Laboratories Limited, and Mylan Inc. (collectively, “Mylan”). Patent litigation in the United States District Court for the District of New Jersey against a fourth generic company, Actavis Laboratories FL., Inc. and Actavis Pharma, Inc. (collectively, “Actavis Pharma”), was dismissed on January 10, 2017 after the court granted Actavis’ motion to compel enforcement of a settlement agreement. On February 3, 2017, the Company appealed this dismissal decision to the Court of Appeals for the Federal Circuit. Patent litigation in the United States District Court for the District of New Jersey against a fifth generic company, Anchen Pharmaceuticals Inc. (“Anchen”), was dismissed on June 9, 2014 after Anchen recertified under Paragraph III. The Company understands that Dr. Reddy’s has entered into a settlement with AstraZeneca with respect to patent rights directed to Nexium for the commercialization of VIMOVO. The settlement agreement, however, has no effect on the Aralez VIMOVO patents, which are still the subject of patent litigations. As part of the Company’s acquisition of the U.S. rights to VIMOVO, the Company has taken over and is responsible for the patent litigation that includes the Aralez patents licensed to the Company under the amended and restated collaboration and license agreement for the United States with Aralez.

The VIMOVO cases were filed on April 21, 2011, July 25, 2011, October 28, 2011, January 4, 2013, May 10, 2013, June 28, 2013, October 23, 2013, May 13, 2015 and November 24, 2015 and collectively include allegations of infringement of U.S. Patent Nos. 6,926,907, 8,557,285, 8,852,636, and 8,858,996 (the “’996 patent”). On June 18, 2015, the Company amended the complaints to add a charge of infringement of U.S. Patent No. 8,865,190 (the “’190 patent”). On January 7, 2016, Actavis Pharma asserted a counterclaim for declaratory judgment of invalidity and non-infringement of U.S. Patent No. 8,945,621 (the “’621 patent”). On January 25, 2016, the Company filed a new case against Actavis Pharma including allegations of infringement of U.S. Patent Nos. 9,161,920 and 9,198,888. This case was subsequently consolidated with the Actavis Pharma case involving the ’996 patent, the ’190 patent and U.S. Patent No. 8,852,636. On February 10, 2016, the Company amended the complaints against Dr. Reddy’s, Lupin, and Mylan to add charges of infringement of U.S. Patent Nos. 9,161,920 and 9,198,888. On February 19, 2016, Mylan asserted a counterclaim for declaratory judgment of invalidity and non-infringement of U.S. Patent No. 9,220,698. On August 11, 2016, the Company filed new complaints asserting the ’621 patent and U.S. Patent Nos. 9,220,698, and 9,345,695 against the defendants. On December 6, 2016, the Company asserted U.S. Patent No. 9,393,208 (the “’208 patent”) against Lupin, Mylan, and Actavis in amended complaints, and against Dr. Reddy’s in a new complaint.

“Case I” consists of the cases asserting U.S. Patent Nos. 8,557,285 and 6,926,907. “Case II” consists of the cases asserting the ’996 patent, the ’190 patent and U.S. Patent Nos. 8,852,636, 9,161,920, and 9,198,888. “Case III” consists of the cases asserting U.S. Patent Nos. 8,945,621, 9,220,698, 9,345,695, and the ’208 patent against Lupin and Mylan, and the case asserting U.S. Patent Nos. 8,945,621, 9,220,698, and 9,345,695 against Dr. Reddy’s. “Case IV” consisted of the case asserting the ’208 patent against Dr. Reddy’s, but has been consolidated with Case III.

The Case I cases were consolidated for discovery. The court issued a claim construction order for Case I and conducted trial beginning on January 12, 2017. On May 12, 2016, the court granted Dr. Reddy’s motion for summary judgment, which the district court entered on May 31, 2022. On August 23, 2022, the district court held a hearing on the motion for summary judgment and the parties subsequently provided supplemental briefing on certain legal matters requested by the district court. On November 7, 2022, the district court ruled in Apotex’s favor, finding that the Nuvo Settlement provided Apotex a license to the ‘913 patent and that Apotex’s ANDA Product consequently does not infringe the ‘913 patent. Apotex subsequently alleged that the preliminary injunction was wrongfully entered and caused Apotex to suffer monetary losses. Apotex also sought an award of ~~non-infringement of U.S. Patent No. 6,926,907 with respect to one of Dr. Reddy’s two ANDAs.~~

On December 19, 2016, defendant Actavis filed a motion to compel enforcement of settlement agreement related to Cases I, II, and III. On December 22, 2016, Magistrate Judge Arpert entered a report and recommendation that Actavis’ motion to compel the enforcement of settlement be granted. On December 30, 2016, the Honorable Judge Mary Cooper ordered the adoption of the report and recommendation. On January 10, 2017, an order of dismissal was entered for all claims in Cases I, II and III.its attorney fees. The Company ~~appealed~~disputed Apotex’s allegations that it incurred monetary losses or that it was entitled to an award of attorney fees. On April 25, 2023, the ~~district court’s order enforcing the settlement with Actavis to the Court of Appeals for the Federal Circuit. Briefing before the Federal Circuit has been completed.~~

On January 12, 2017, a six-day bench trial commenced against defendants Dr. Reddy’s and Mylan before Honorable Judge Mary Cooper in the District of New Jersey for Case I. The patents at issue in this trial included two Orange Book listed patents: U.S. Patent Nos. 6,926,907 and 8,557,285. Defendant Lupin formerlyparties entered into a ~~stay pending~~confidential settlement of all claims. On April 28, 2023, the ~~entry of judgment in Case I. On~~district court litigation was dismissed with prejudice.

NOTE 17 – SHARE-BASED AND LONG-TERM INCENTIVE PLANS

The Company’s equity incentive plans at June ~~26, 2017, the court issued~~30, 2023 included its ~~opinion upholding the validity of the ‘285~~2011 Equity Incentive Plan, as amended, Amended and ~~‘907 patents~~Restated 2014 Equity Incentive Plan (“2014 EIP”), 2014 Non-Employee Equity Plan, as amended (“2014 Non-Employee Plan”), 2020 Employee Share Purchase Plan (“2020 ESPP”), Amended and finding that Dr. Reddy’s, Mylan’s, and Lupin’s proposed generic naproxen/esomeprazole magnesium products would all infringe at least one of the two patents. The court entered the final judgment on July 21, 2017. Dr. Reddy’s, Mylan and Lupin have appealed the District Court’s judgment to the Court of Appeals for the Federal Circuit.

The Case II and Case III cases have been consolidated for discovery. On January 19, 2017, the court entered a scheduling order for Case II and Case III, which was subsequently updated. The court’s scheduling order requires, ~~inter alia~~, filing and serving of the opening claim construction submissions by May 26, 2017. The court has not issued a claim construction order in Case II. A trial date for Cases II and III has not yet been set. On December 20, 2016, Mylan filed a motion to dismiss the Company’s firstRestated 2020 Equity Incentive Plan, as amended ~~complaint for patent infringement in Case III. On August 18, 2017, the District Court granted Dr. Reddy’s and Mylan’s motions to dismiss the Company’s claims relating to the ‘621 patent.~~

The Company understands the cases arise from Paragraph IV Patent Certification notice letters providing notice of the filing of ANDAs with the FDA seeking regulatory approval to market generic versions of VIMOVO before the expiration of the patents-in-suit. The Company understands the Dr. Reddy’s notice letters were dated March 11, 2011, November 20, 2012 and April 20, 2015; the Lupin notice letters were dated June 10, 2011, March 12, 2014 and July 26, 2016; the Mylan notice letters were dated May 16, 2013, February 9, 2015, January 26, 2016, February 26, 2016, July 19, 2016 and September 22, 2016; the Actavis Pharma notice letters were dated March 29, 2013, November 5, 2013, May 29, 2015, October 9, 2015, December 10, 2015, March 1, 2016, April 6, 2016, July 22, 2016 and September 8, 2016; and the Anchen notice letter was dated September 16, 2011.

~~On June 5, 2015, the Coalition for Affordable Drugs VII LLC~~ (“Coalition for Affordable Drugs”) filed a Petition for inter partes review (“IPR”) of the ’996 patent, one of the patents in litigation in the above referenced VIMOVO cases. On December 17, 2015, the United States Patent and Trademark Office (the “U.S. PTO”) denied such Petition for IPR.

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

On August 12, 2015, the Coalition for Affordable Drugs filed another Petition for IPR of the ’621 patent, one of the patents in litigation in the above referenced VIMOVO cases. On February 22, 2016, the Patent Trial and Appeal Board (the “PTAB”) issued a decision to institute the IPR. The PTAB hearing for the ‘621 patent was held on November 16, 2016. The PTAB issued a final written decision finding the ’621 patent valid on February 21, 2017.

On August 19, 2015, Lupin filed Petitions for IPR of the ’996 patent, the ’190 patent and U.S. Patent No. 8,852,636, all patents in litigation in the above referenced VIMOVO cases. On March 1, 2016, the PTAB issued decisions to institute the IPRs for the ’996 patent” and the ’190 patent. On March 1, 2016, the PTAB denied the Petition for IPR for U.S. Patent No. 8,852,636. The PTAB hearings for the ‘996 patent and ‘190 patent were both held on November 29, 2016. On February 28, 2017, the PTAB issued final written decisions on the IPRs of the ‘996 and ‘190 patents, upholding the validity of both patents.

~~RAVICTI~~

On March 17, 2014, Hyperion Therapeutics, Inc. (“Hyperion”) received notice from Par Pharmaceutical, Inc. (“Par Pharmaceutical”) that it had filed an ANDA with the FDA seeking approval for a generic version of the Company’s medicine RAVICTI. The ANDA contained a Paragraph IV Patent Certification alleging that two of the patents covering RAVICTI, U.S. Patent No. 8,404,215, titled “Methods of therapeutic monitoring of nitrogen scavenging drugs,” which expires in March 2032 (the “’215 patent”2020 EIP”), and ~~U.S. Patent No. 8,642,012, titled “Methods~~Amended and Restated 2018 Equity Incentive Plan (“2018 EIP”).

As of treatment using ammonia scavenging drugs,” which expires in September 2030 (the “’012 patent”), are invalid and/or will not be infringed by Par Pharmaceutical’s manufacture, use or sale of the medicine for which the ANDA was submitted. Par Pharmaceutical did not challenge the validity, enforceability, or infringement of the Company’s primary composition of matter patent for RAVICTI, U.S. Patent No. 5,968,979 titled “Triglycerides and ethyl esters of phenylalkanoic acid and phenylalkanoic acid useful in treatment of various disorders,” which would have expired on February 7, 2015, but as to which Hyperion was granted an interim term of extension until February 7, 2016 and to which the U.S. PTO has granted a final term extension of 1,267 days, which extends the expiration date to July 28, 2018. Hyperion filed suit in the United States District Court for the Eastern District of Texas, Marshall Division, against Par Pharmaceutical on April 23, 2014 seeking an injunction to prevent the approval of Par Pharmaceutical’s ANDA and/or to prevent Par Pharmaceutical from selling a generic version of RAVICTI, and the Company has taken over and is responsible for this patent litigation. On September 15, 2015, the Company received notice from Par Pharmaceutical that it had filed a Paragraph IV Patent Certification alleging that U.S. Patent No. 9,095,559 (the “’559 patent”) is invalid and/or will not be infringed by Par Pharmaceutical’s manufacture, use or sale of the medicine for which the ANDA was submitted. On March 14, 2016, the Company received notice from Par Pharmaceutical that it had filed a Paragraph IV Patent Certification alleging that U.S. Patent No. 9,254,278 (the “’278 patent”) is invalid and/or will not be infringed by Par Pharmaceutical’s manufacture, use or sale of the medicine for which the ANDA was submitted. On June 3, 2016, the Company received notice from Par Pharmaceutical that it had filed a Paragraph IV Patent Certification alleging that U.S. Patent No. 9,326,966 (the “’966 patent”) is invalid and/or will not be infringed by Par Pharmaceutical’s manufacture, use or sale of the medicine for which the ANDA was submitted. The Company filed suit in the United States District Court for the District of New Jersey against Par Pharmaceutical on June 30, 2016 (the “Par New Jersey action”), seeking an injunction to prevent the approval of Par Pharmaceutical’s ANDA and/or to prevent Par Pharmaceutical from selling a generic version of RAVICTI. The lawsuit alleges that Par Pharmaceutical has infringed the ’559 patent, the ’278 patent and the ’966 patent by filing an ANDA seeking approval from the FDA to market generic versions of RAVICTI prior to the expiration of the patents. The subject patents are listed in the Orange Book. The Par New Jersey action has been stayed pending the resolution of the PTAB’s IPR of the ’559 patent.

On April 29, 2015, Par Pharmaceutical filed Petitions for IPR of U.S. Patent 8,404,215 and U.S. Patent 8,642,012, two of the patents involved in the above mentioned RAVICTI cases. On November 4, 2015, the PTAB issued decisions instituting such IPRs. On September 29, 2016, the PTAB found all of the claims in U.S. Patent 8,404,215 to be unpatentable. The Company did not appeal the PTAB’s final written decision with respect to U.S. Patent 8,404,215. On November 3, 2016, the PTAB issued a final written decision holding all of the claims of U.S. Patent 8,642,012 patentable. ~~On December 29, 2016, Par Pharmaceutical filed a notice of appeal with the Federal Circuit to appeal the final written decision of the PTAB concerning the patentability of~~ ~~U.S. Patent 8,642,012.~~ On September 4, 2015, the Company received notice from Lupin of Lupin’s Paragraph IV Patent Certification against the ’215 patent and the ’012 patent, advising that Lupin had filed an ANDA with the FDA for a generic version of RAVICTI. On November 6, 2015, the Company also received Notice of Lupin’s Paragraph IV Patent Certification against the ’559 patent. Lupin has not advised the Company as to the timing or status of the FDA’s review of its filing. On October 19, 2015 the Company filed suit in the United States District Court for the District of New Jersey against Lupin seeking an injunction to prevent the approval of the ANDA. The lawsuit alleges that Lupin has infringed the ’215 patent, the ’012 patent and the ’559 patent by filing an ANDA seeking approval from the FDA to market generic versions of RAVICTI prior to the expiration of the patents. The subject patents are listed in the Orange Book. On April 6, 2016, the Company filed an amended complaint in the United States District Court for the District of New Jersey against Lupin alleging that Lupin has infringed the ’559 patent by filing an ANDA seeking approval from the FDA to market generic versions of RAVICTI prior to expiration of the ’559 patent. The commencement of the patent infringement lawsuit stays, or bars, FDA approval of Lupin’s ANDA for 30 months or until an earlier district court decision that the subject patents are not infringed or are invalid. On April 18, 2016, the Company received notice from Lupin of Lupin’s Paragraph IV Patent Certification against the ’278 patent. On July 6, 2016, the Company received notice from Lupin of Lupin’s Paragraph IV Patent Certification against the ’966 patent. The Company filed suit in the United States District Court for the District of New Jersey against Lupin on July 21, 2016, seeking an injunction to prevent the approval of Lupin’s ANDA and/or to prevent Lupin from selling a generic version of RAVICTI. The lawsuit alleges that Lupin has infringed the ’278 patent and the ’966 patent by filing an ANDA seeking approval from the FDA to market generic versions of RAVICTI prior to the expiration of the patents. The subject patents are listed in the Orange Book. The Lupin New Jersey actions have been stayed pending the resolution of the PTAB’s IPR of the ’559 patent.

On April 1, 2016, Lupin filed a Petition for IPR of U.S. Patent 9,095,559, a patent currently at issue in the Lupin RAVICTI case. On September 30, 2016, the PTAB issued a decision instituting the IPR. On September 26, 2017, the PTAB issued its final written decision, ruling that the challenged claims of the ‘559 patent are unpatentable. The Company’s Notice of Appeal is due by November 28, 2017. On March 27, 2017, Lupin filed a Petition to request an IPR of the ‘278 patent and a Petition to request an IPR of the ‘966 patent. The Company filed its response on the ‘966 patent on July 6, 2017. The Company’s preliminary patent owner response for the ‘278 patent was filed on July 24, 2017. On September 28, 2017, the PTAB issued its orders granting Lupin’s petitions to institute an IPR of the ‘278 and the ‘966 patents. The PTAB must issue a final written decision on the IPRs no later than September 28, 2018.

On July 13, 2017, Par Pharmaceutical filed Petitions for IPR of the ‘559, ‘278, and ‘966 patents. The Company’s opposition to Par Pharmaceutical’s requested IPRs is due by November 6, 2017.

On August 8, 2017, the Company filed suit against Par Pharmaceutical and Lupin in the United States District Court for New Jersey. Par Pharmaceutical and Lupin have answered and counterclaimed. The district court has not yet issued a scheduling order for either action.

~~Other~~

Beginning on March 8, 2016, two federal securities class action lawsuits (captioned Schaffer v. Horizon Pharma plc, et al., Case No. 16-cv-01763-JMF and Banie v. Horizon Pharma plc, et al., Case No. 16-cv-01789-JMF) were filed in the United States District Court for the Southern District of New York against the Company and certain of the Company’s current and former officers (the “Officer Defendants”). On March 24, 2016, the court consolidated the two actions under Schaffer v. Horizon Pharma plc, et al. On June 3, 2016, the court appointed Locals 302 and 612 of the International Union of Operating Engineers-Employers Construction Industry Retirement Trust and the Carpenters Pension Trust Fund for Northern California as lead plaintiffs and Labaton Sucharow LLP as lead counsel. On July 25, 2016, lead plaintiffs and additional named plaintiff Automotive Industries Pension Trust Fund filed their consolidated complaint, which they subsequently amended on October 7, 2016, including additional current and former officers, the Company’s Board of Directors (the “Director Defendants”), and underwriters involved with the Company’s April 2015 public offering (the “Underwriter Defendants”) as defendants. The plaintiffs allege that certain of the Company and the Officer Defendants violated sections 10(b) and 20(a) of the Securities Exchange Act of 1934, as amended, by making false and/or misleading statements about, among other things: (a) the Company’s financial performance, (b) the Company’s business prospects and drug-pricing practices, (c) the Company’s sales and promotional practices, and (d) the Company’s design, implementation, performance, and risks associated with the Company’s Prescriptions-Made-Easy program. The plaintiffs allege that certain of the Company, the Director Defendants and the Underwriter Defendants violated sections 11, 12(a)(2) and 15 of the Securities Act of 1933, as amended (the “Securities Act”), in connection with the Company’s April 2015 public offering. The plaintiffs seek, among other things, an award of damages allegedly sustained by plaintiffs and the putative class, including a reasonable allowance for costs and attorneys’ fees. On November 14, 2016, all defendants moved to dismiss the plaintiffs’ amended complaint. Plaintiffs’ filed their opposition to the motion to dismiss on December 21, 2016. Briefing on the motion to dismiss was completed on January 27, 2017 and the parties are awaiting the court’s ruling.

~~NOTE 18 – SHAREHOLDERS’ EQUITY~~

~~During the nine months ended September 30, 2017, the Company issued an aggregate of:~~

~~270,427 ordinary shares in connection with the exercise of stock options and received $1.8 million in proceeds;~~

~~660,092 ordinary shares in net settlement of vested restricted stock units;~~

~~25,000 ordinary shares in net settlement of vested performance stock units; and~~

~~462,472 ordinary shares pursuant to employee stock purchase plans and received $3.9 million in proceeds.~~

~~During the nine months ended September 30, 2017, warrants to purchase~~2023, an aggregate of 391,500 ordinary shares of the Company were exercised and proceeds of $1.8 million were received. In addition, warrants to purchase an aggregate of 704,285 ordinary shares of the Company were exercised in cashless exercises, resulting in the issuance of 523,520 ordinary shares. As of September 30, 2017, there were no outstanding warrants to purchase ordinary shares of the Company.

~~During the nine months ended~~ ~~September 30, 2017, the Company made payments of $5.6~~ ~~million for employee withholding taxes relating to share-based awards.~~

On January 1, 2017, the Company adopted ASU No. 2016-09. As a result of the adoption, $7.2 million of excess tax benefits that had not previously been recognized, as the related tax deduction had not reduced current taxes payable, were recorded on a modified retrospective basis through a cumulative effect adjustment to its accumulated deficit as of January 1, 2017.

In May 2016, the Company’s board of directors authorized a share repurchase program pursuant to which the Company may repurchase up to 5,000,000 of its ordinary shares. In May 2017, the Company’s board of directors reauthorized a share repurchase program pursuant to which the Company may repurchase up to 16,000,000 of its ordinary shares. As of September 30, 2017, the Company had repurchased 100,000 of its ordinary shares under this repurchase program, for total consideration of $1.0 million. The timing and amount of future repurchases, if any, will depend on a variety of factors, including the price of the Company’s ordinary shares, alternative investment opportunities, the Company’s cash resources, restrictions under the Credit Agreement and market conditions.

~~NOTE 19 – SHARE-BASED INCENTIVE PLANS~~

~~Employee Stock Purchase Plan~~

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

~~As of September 30, 2017, an aggregate of 3,361,928~~1,852,854 ordinary shares were authorized and available for future issuance under the ~~2014 ESPP.~~

~~Share-Based Compensation Plans~~

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

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

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

The 2014 EIP provides for the grant of incentive and nonstatutory stock options, stock appreciation rights, restricted stock awards, restricted stock unit awards, performance awards and other stock awards that may be settled in cash, shares or other property to the employees of the Company (or a subsidiary company). The number of ordinary shares of the Company that were initially authorized for issuance under the 2014 EIP was no more than 22,052,130, which number consisted of (i) 15,500,000 ordinary shares of the Company; plus (ii) the number of shares available for issuance pursuant to the grant of future awards under the 2011 EIP; plus (iii) any shares subject to outstanding stock awards granted under the 2011 EIP and the 2005 Plan that expire or terminate for any reason prior to exercise or settlement or are forfeited, redeemed or repurchased because of the failure to meet a contingency or condition required to vest such shares; less (iv) 10,000,000 shares, which is the additional number of shares which were previously approved as an increase to the share reserve of the 2011 EIP. On March 23, 2015, the compensation committee of the Company’s board of directors approved amending the 2014 EIP subject to shareholder approval to, among other things, increase the aggregate number of shares authorized for issuance under the 2014 EIP by an additional 14,000,000 shares. On May 6, 2015, the shareholders of the Company approved such amendment to the 2014 EIP. On February 25, 2016, the compensation committee of the Company’s board of directors approved, subject to shareholder approval, amending the 2014 EIP to, among other things, increase the aggregate number of shares authorized for issuance under the 2014 EIP beyond those remaining available for future grant under the 2014 EIP by an additional 6,000,000 shares and also approved a reduction in the number of shares authorized under our 2014 Non-Employee Equity Plan and 20142020 ESPP, by 1,000,000 shares and 5,000,000 shares, respectively, contingent on shareholder approval of the amendment to the 2014 EIP. On May 3, 2016, the shareholders of the Company approved the amendment to the 2014 EIP. On August 29, 2017, the compensation committee of the Company’s board of directors approved an amendment to the 2014 EIP, to reserve an additional 1,200,000 shares to be used exclusively for grants of awards to individuals who were not previously employees or non-employee directors of the Company (or following a bona fide period of non-employment with the Company) (the “2017 Inducement Pool”), as an inducement material to the individual’s entry into employment with the Company within the meaning of Rule 5635(c)(4) of the NASDAQ Listing Rules, (“Rule 5635(c)(4)”). The 2014 EIP was amended by the compensation committee of the Company’s board of directors without shareholder approval pursuant to Rule 5635(c)(4).

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

~~As of September 30, 2017,~~ an aggregate of ~~3,819,449~~15,303,445 ordinary shares were authorized and available for future grants under the ~~2014~~2020 EIP, an aggregate of ~~which 726,041 shares relate to the 2017 Inducement Pool. As of September 30, 2017, 499,913~~483,069 ordinary shares were authorized and available for future grants under the 2014 Non-Employee ~~Equity Plan.~~Plan and an aggregate of 1,547,592 ordinary shares were authorized and available for future grants under the 2018 EIP.

Stock Options

The following table summarizes stock option activity during the ~~nine~~six months ended ~~September~~June 30, ~~2017:~~2023:

Options

Weighted
Average
Exercise Price

Weighted
Average
Contractual
Term
Remaining
(in years)

Aggregate
Intrinsic Value
(in thousands)

Outstanding as of December 31, 2016

13,627,519

$
18.17

7.60

$
35,157

Granted

2,020,017

16.46

Exercised

(270,427
)

6.35

Forfeited

(550,871
)

18.54

Expired

(255,653
)

20.70

Outstanding as of September 30, 2017

14,570,585

18.10

7.14

18,333

Exercisable as of September 30, 2017

8,885,001

$
16.84

6.39

$
17,699


	Options			Weighted Average Exercise Price		Weighted Average Contractual Term Remaining (in years)		Aggregate Intrinsic Value (in thousands)
Outstanding as of December 31, 2022		4,830,232		$	24.04		2.91	$	433,552
Exercised		(235,970	)		25.67		—		—
Forfeited		(2,627	)		53.46		—		—
Outstanding as of June 30, 2023		4,591,635		$	23.94		2.36	$	362,319
Exercisable as of June 30, 2023		4,535,201		$	23.53		2.31	$	359,716

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

The fair value of each stock option award is estimated on the date of grant using the Black-Scholes option pricing model. The determination of the fair value of each stock option is affected by the Company’s share price on the date of grant, as well as assumptions regarding a number of highly complex and subjective variables. These variables include, but are not limited to, the Company’s expected share price volatility over the expected life of the awards and actual and projected stock option exercise behavior. The weighted average fair value per share of stock option awards granted during the nine months ended September 30, 2017 and 2016, and assumptions used to value stock options, are as follows:

For the Nine Months Ended September 30,

2017

2016

Dividend yield

—

—

Risk-free interest rate

1.8% - 2.0%

1.3% - 1.8%

Weighted average expected volatility

49.1%

73.8%

Expected life (in years)

6.0

6.1

Weighted average grant-date fair value per share of options granted

$
7.99

$
11.78

~~Dividend yield~~

The Company has never paid dividends and does not anticipate paying any dividends in the near future. Additionally, the Credit Agreement (described in Note 14 above and Note 21 below), as well as the indentures governing the 2024 Senior Notes and the 2023 Senior Notes (each as described in Note 14 above), contain covenants that restrict the Company from issuing dividends.

~~Risk-Free Interest Rate~~

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

~~Volatility~~

~~The Company used an average historical share price volatility of comparable companies to be representative of future share price volatility.~~

~~Expected Term~~

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

~~Forfeitures~~

As share-based compensation expense recognized in the condensed consolidated statements of comprehensive loss is based on awards ultimately expected to vest, it has been reduced for estimated forfeitures based on actual forfeiture experience, analysis of employee turnover and other factors. The Company adopted ASU No. 2016-09 on January 1, 2017 and has elected to retain a forfeiture rate after adoption.

Restricted Stock Units

The following table summarizes ~~restricted stock unit~~RSU activity for the ~~nine~~six months ended ~~September~~June 30, ~~2017:~~2023:

	Number of Units			Weighted Average Grant-Date Fair Value Per Unit
Outstanding as of December 31, 2016		3,367,871		$	18.45
						Number of Units			Weighted Average Grant-Date Fair Value Per Unit
Outstanding as of December 31, 2022							3,466,272		$	80.84
Granted		3,454,579			12.34		2,299,107			112.33
Vested		(1,040,529	)		16.86		(1,496,049	)		68.61
Forfeited		(440,874	)		17.46		(151,375	)		100.62
Outstanding as of September 30, 2017		5,341,047		$	14.89
Outstanding as of June 30, 2023							4,117,955		$	102.14

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

Performance Stock ~~Units~~Unit Awards

The following table summarizes ~~performance stock unit awards (“PSUs”)~~PSU activity for the ~~nine~~six months ended ~~September~~June 30, ~~2017:~~2023:


	Number of Units			Weighted Average Grant-Date Fair Value Per Unit		Average Illiquidity Discount			Recorded Weighted Average Fair Value Per Unit
Outstanding as of December 31, 2022		1,233,584
Granted		319,658		$	159.52		5.54	%	$	150.68
Forfeited		(31,111	)		112.02		52.13	%		53.62
Vested		(587,075	)		57.22		8.72	%		52.23
Outstanding as of June 30, 2023		935,056

On January 4, 2023, the Company awarded PSUs to key executive participants (“2023 PSUs”). The 2023 PSUs are subject to both performance-based and service-based vesting provisions. The 2023 PSUs utilize three long-term performance metrics, as follows:

Number
of Units

Weighted
Average
Grant-Date
Fair Value
Per Unit

Average
Illiquidity
Discount

Recorded
Weighted
Average
Fair Value
Per Unit

Outstanding as of December 31, 2016

12,045,656

Vested

(25,000
)

$
12.36

0.0%

$
13.30

Forfeited

(238,336
)

10.86

7.5
%

10.04

Outstanding as of September 30, 2017

11,782,320

~~All outstanding~~•

50% of the 2023 PSUs ~~were granted in 2015 and 2016 and~~that may vest if(such portion of the PSU award, the “2023 Relative TSR PSUs”) are determined by reference to the Company’s total ~~compounded annual~~ shareholder ~~rate of~~ return (“TSR”) over ~~three~~the three-year period ending December 31, 2025, as measured relative to the TSR of each company included in the Nasdaq Biotechnology Index (“NBI”) during such three-year period (except with respect to the Company only, the period is measured from November 28, 2022, which is the last trading day prior to the public announcement that the Company was in preliminary discussions related to a possible acquisition transaction, through December 31, 2025). Generally, in order to vest in any portion of the 2023 Relative TSR PSUs, the participant must also remain in continuous service with the Company through the earlier of January 5, 2026 or the date immediately prior to a change in control.

•

25% of the 2023 PSUs that may vest (such portion of the PSU award, the “2023 Strategic PSUs”) are determined by reference to the Company’s achievement of certain performance ~~measurement periods summarized below equals~~objectives related to research and development and technical operations during the two-year period ending December 31, 2024. Generally, in order to vest in any portion of the 2023 Strategic PSUs, the participant must also remain in continuous service with the Company through the earlier of (i) January 5, 2025 (with respect to 2/3rds of the 2023 Strategic PSUs) and January 5, 2026 (with respect to 1/3rd of the 2023 Strategic PSUs) or ~~exceeds~~(ii) the date immediately prior to a ~~minimum~~change in control.

•

25% of ~~15%.~~

the 2023 PSUs that may vest (such portion of the PSU award, the “2023 Financial PSUs”) are determined by reference to the Company’s achievement of certain financial milestones. The 2023 Financial PSUs that may vest will be determined by reference to the Company’s combined net sales of TEPEZZA and KRYSTEXXA during the two-year period ending December 31, 2024. Generally, in order to vest in any portion of the 2023 Financial PSUs, the participant must also remain in continuous service with the Company through the earlier of (i) January 5, 2025 (with respect to 2/3rds of the 2023 Financial PSUs) and January 5, 2026 (with respect to 1/3rd of the 2023 Financial PSUs) or (ii) the date immediately prior to a change in control.

If a change in control occurs prior to the completion of the defined performance period, a portion of any PSUs for which performance has not previously been determined will vest as measured through the date of the change in control (with respect to PSUs based on TSR) or based on an estimated level of performance through the end of the performance period as if the change in control had not occurred, which will be determined by the Compensation Committee.

Vesting Tranche

Percent of
Total PSU
Award

Beginning of Performance
Measurement Period

End of Performance
Measurement Period

Length of
Performance
Measurement
Period (Years)

Tranche One

33.3
%

March 23, 2015

December 22, 2017

2.75

Tranche Two

33.3
%

March 23, 2015

March 22, 2018

3.00

Tranche Three

33.3
%

March 23, 2015

June 22, 2018

3.25

~~These~~All PSUs outstanding on June 30, 2023 may vest in a range of between 0% and 200%, with the exception of certain modified PSUs granted in ~~2015~~2020 and ~~2016 will vest in amounts ranging from 25% to 100%~~ based on net sales which were capped at 150% and the ~~achievement of the following TSR over the three performance periods:~~

TSR Achieved

Vesting Amount

15%

25
%
30%

50
%
45%

75
%
60%

100
%

~~The TSR~~2023 PSUs, which will be ~~based on~~capped at 100% to the ~~volume weighted average trading price (“VWAP”) of~~extent the ~~Company’s ordinary shares over~~pending Transaction with Amgen closes prior to the ~~20 trading days ending on the last day of each of the three~~defined performance measurement periods versus the VWAP of the Company’s ordinary shares over the twenty trading days ended March 23, 2015 of $21.50. These PSUs are subject to a post vesting holding period of one year for 50% of the PSUs and two years for 50% of the PSUs for those who were members of the executive committee at the date of grant, and one year for 50% of the PSUs for all others who were not executive committee members at the date of grant.

period. The Company accounts for ~~the~~all PSUs as equity-settled awards in accordance with ASC ~~718.~~718, Compensation-Stock Compensation. Because the value of the ~~outstanding~~2023 Relative TSR PSUs ~~granted in 2015 and 2016~~ is dependent upon the attainment of a level of TSR, it requires the impact of the market condition to be considered when estimating the fair value ofon the ~~PSUs.~~grant date. As a result, the Monte Carlo model is applied and the most significant valuation assumptions used ~~include:~~related to the 2023 Relative TSR PSUs during the six months ended June 30, 2023, included:

The ~~average estimated fair~~ value of ~~each~~ outstanding ~~PSU is as follows (allocated between groupings~~PSUs based on ~~grant-date classification):~~

~~During~~strategic or financial goals that have not yet been determined are calculated at the ~~nine months ended September 30, 2017 and 2016, the Company recorded an expense~~end of ~~$37.0 million and $36.1 million, respectively, related to PSUs.~~

On November 5, 2014, the compensation committee of the Company’s board of directors approved a performance cash long-term incentive program for the members of the Company’s executive committee and executive leadership team, including its executive officers (the “Cash Bonus Program”). Participants in the Cash Bonus Program were eligible for a specified cash bonus. The Cash Bonus Program pool funding of approximately $15.8 million was determinedeach quarter based on the ~~Company’s actual TSR over the period from November 5, 2014 to May 6, 2015,~~expected payout percentage based on estimated full-period performance against targets, and the bonus could be earned and payable only if the TSR for the period from November 5, 2014 to November 4, 2017 was greater than 15%. The portion of the total bonus pool payable to individual participants was based on allocations established by the Company’s compensation committee. Participants must have remained employed by the Company through November 4, 2017 unless a participant’s earlier departure from employment was due to death, disability, termination without cause or a change in control transaction. Bonus payments under the Cash Bonus Program, if any, were to be made after November 4, 2017. Subsequent to September 30, 2017, the TSR did not exceed the minimum target requirement of 15% and the Cash Bonus Program expired without payment.

The Company accounted for the Cash Bonus Program under the liability method in accordance with ASC 718. Because vesting of the bonus pool was dependent upon the attainment of a VWAP of $18.37 or higher over the twenty trading days ending November 4, 2017, the Cash Bonus Program was considered to be subject to a “market condition” for the purposes of ASC 718. ASC 718 required the impact of the market condition to be considered when estimating the fair value of the bonus pool. As a result, the Monte Carlo simulation model was applied and the fair value was revalued at each reporting period. As of September 30, 2017 and December 31, 2016, the estimated fair value was zero and $4.8 million, respectively. For the nine months ended September 30, 2017, the Company recorded a reduction inadjusts the expense of $3.5 million to the condensed consolidated statement of comprehensive loss as a result of the valuation of the Cash Bonus Program. The most significant valuation assumptions used as of September 30, 2017 include:quarterly.

The following table summarizes share-based compensation expense included in the Company’s condensed consolidated statements of operations for the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2023 and ~~2016~~2022 (in thousands):

	For the Nine Months Ended September 30,
	2017		2016		For the Six Months Ended June 30,
					2023		2022
Share-based compensation expense
Cost of goods sold	$	1,696	$	—	$	5,803	$	4,471
Research and development		6,613		6,845		18,561		15,720
Selling, general and administrative		79,626		78,076		94,027		72,258
Total share-based compensation expense	$	87,935	$	84,921	$	118,391	$	92,449

During the ~~year~~six months ended ~~December 31, 2016, no material income~~June 30, 2023 and 2022, the Company recognized $24.5 million and $53.9 million of tax benefit, was recognized relating to share-based compensation expense and no tax benefits were realized from exercised stock options and vested restricted stock units, due to the Company’s net loss position prior to the adoption of ASU No. 2016-09. After the adoption of ASU No. 2016-09, during the three and nine months ended September 30, 2017, no material income tax benefit or detriment was recognizedrespectively, related to share-based compensation resulting primarily from the ~~current share prices in effect~~fair value of equity awards at the time of the exercise of stock options and vesting of ~~restricted stock units.~~RSUs and PSUs. As of ~~September~~June 30, ~~2017,~~2023, the Company ~~estimates~~estimated that pre-tax unrecognized compensation expense of ~~$156.5~~$422.7 million for all unvested share-based awards, including stock options, ~~restricted stock units~~RSUs and PSUs, will be recognized through the ~~third~~first quarter of ~~2021.~~2026. The Company expects to satisfy the exercise of stock options and future distribution of shares for ~~restricted stock units~~RSUs and PSUs by issuing new ordinary shares which have been reserved under the 2020 EIP, the 2018 EIP and 2014 ~~EIP.~~Non-Employee Plan.

NOTE 2018 – INCOME TAXES

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

~~The following table presents the expense (benefit) for income taxes for the three and nine months ended September 30, 2017 and 2016 (in thousands):~~

For the Three Months Ended September 30,

For the Nine Months Ended September 30,

2017

2016

2017

2016

Loss before expense (benefit) for income taxes

$
(56,790
)

$
(33,617
)

$
(406,216
)

$
(68,238
)
Expense (benefit) for income taxes

7,181

(27,747
)

(42,138
)

(31,946
)
Net loss

$
(63,971
)

$
(5,870
)

$
(364,078
)

$
(36,292
)

During the three and nine months ended September 30, 2017, the Company recorded an expense of $7.2 million and a benefit for income taxes of $42.1 million, respectively, compared to a benefit of $27.7 million and $31.9 million during the three and nine months ended September 30, 2016, respectively. The expense for income taxes during the three months ended September 30, 2017 resulted from a change in the mix of pre-tax losses being incurred between high and low tax rate jurisdictions, which decreased the Company’s expected benefit for the full-year 2017, and resulted in a tax expense being recorded during the three months ended September 30, 2017. The increase in benefit for income taxes for the nine months ended September 30, 2017 compared to the nine months ended September 30, 2016 resulted from an increase in pre-tax losses.

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

~~NOTE 21 – SUBSEQUENT EVENTS~~

~~Amendment to March 2017 Credit Agreement~~

~~On October 23, 2017,~~ The impact of tax rate changes on deferred tax assets and liabilities is recognized in the Borrowers borrowed approximately $845.8 million aggregate principal amount of loans (the “October 2017 Refinancing Loans”) pursuant to an amendment (the “October 2017 Refinancing Amendment”) toperiod in which the ~~March 2017 Credit Agreement.~~ change is enacted.

The ~~Credit Agreement provides~~following table presents the expense (benefit) for (i) the October 2017 Refinancing Loans, (ii) one or more uncommitted additional incremental loan facilities subject to the satisfaction of certain financial and other conditions, and (iii) one or more uncommitted refinancing loan facilities with respect to loans thereunder. The Credit Agreement allowsincome taxes for the ~~Company~~three months ended June 30, 2023 and ~~certain of its subsidiaries to become borrowers under incremental or refinancing facilities.~~ 2022 (in thousands):


	For the Three Months Ended June 30,				For the Six Months Ended June 30,
	2023		2022		2023			2022
Income before expense (benefit) for income taxes	$	135,252	$	64,787	$	154,454		$	237,526
Expense (benefit) for income taxes		8,181		3,813		(27,301	)		(27,709	)
Net income	$	127,071	$	60,974	$	181,755		$	265,235

~~The October 2017 Refinancing Loans were incurred as a separate new class of term loans under~~During the Credit Agreement with substantially the same terms as the March 2017 Refinancing Loans to effectuate a repricing of the March 2017 Refinancing Loans. The October 2017 Refinancing Loans bear interest, at the Borrowers’ option, at a rate equal to either LIBOR plus an applicable margin of 3.25% per year (subject to a LIBOR floor of 1.00%), or the adjusted base rate plus 2.25%. The adjusted base rate is defined as the greater of (a) LIBOR (using one-month interest period) plus 1.00%, (b) prime rate, (c) fed funds plus 0.5%,three and ~~(d) 2.00%. The Borrowers used the proceeds of the October 2017 Refinancing Loans to repay the March 2017 Refinancing Loans, which totaled approximately $845.8 million.~~

The obligations under the Credit Agreement (including obligations in respect of the October 2017 Refinancing Loans) and any swap obligations and cash management obligations owing to a lender (or an affiliate of a lender) thereunder are guaranteed bysix months ended June 30, 2023, the Company recorded an expense for income taxes of $8.2 million and ~~each~~a benefit for income taxes of $27.3 million, respectively. During the ~~Company’s existing~~three and ~~subsequently acquired or formed direct~~six months ended June 30, 2022, the Company recorded an expense for income taxes of $3.8 million and ~~indirect subsidiaries (other than certain immaterial subsidiaries, subsidiaries whose guarantee would result in material adverse~~a benefit for income taxes of $27.7 million, respectively. The benefit for income taxes recorded during the six months ended June 30, 2023 is primarily attributable to tax consequences and subsidiaries whose guarantee is prohibited by applicable law). The obligations under the Credit Agreement (including obligations in respect of the October 2017 Refinancing Loans) and any such swap and cash management obligations are secured, subject to customary permitted liens and other agreed upon exceptions, by a perfected security interest in (i) all tangible and intangible assets of the Borrowersbenefits recognized on share-based compensation and the ~~guarantors, except for certain customary excluded assets,~~mix of pre-tax income and ~~(ii) all of the capital stock owned by the Borrowers and guarantors thereunder (limited,~~losses incurred in ~~the case of the stock of certain non-U.S. subsidiaries of the Borrowers, to 65% of the capital stock of such subsidiaries).~~various tax jurisdictions.

Borrowers under the Credit Agreement are permitted to make voluntary prepayments of the loans under the Credit Agreement at any time without payment of a premium, except that with respect to the October 2017 Refinancing Loans, a 1.00% premium will apply to a repayment of the October 2017 Refinancing Loans in connection with a repricing of, or any amendment to the Credit Agreement in a repricing of, such loans effected on or prior to the date that is six months following October 23, 2017. The Borrowers are required to make mandatory prepayments of loans under the Credit Agreement (without payment of a premium) with (a) net cash proceeds from certain non-ordinary course asset sales (subject to reinvestment rights and other exceptions), (b) casualty proceeds and condemnation awards (subject to reinvestment rights and other exceptions), (c) net cash proceeds from issuances of debt (other than certain permitted debt), and (d) 50% of the Company’s excess cash flow (subject to decrease to 25% or 0% if the Company’s first lien leverage ratio is less than 2.25:1 or 1.75:1, respectively). The October 2017 Refinancing Loans will amortize in equal quarterly installments beginning on December 31, 2017 in an aggregate annual amount equal to 1.00% of the original principal amount of the March 2017 Refinancing Loans (i.e. $850.0 million), with any remaining balance payable on March 29, 2024, the final maturity date of the October 2017 Refinancing Loans.

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

Events of default under the Credit Agreement include: (i) the failure by any Borrower to timely make payments due under the Credit Agreement; (ii) material misrepresentations or misstatements in any representation or warranty by any Loan Party when made; (iii) failure by any Loan Party to comply with the covenants under the Credit Agreement and other related agreements; (iv) certain defaults under a specified amount of other indebtedness of the Company or its subsidiaries; (v) insolvency or bankruptcy-related events with respect to the Company or any of its material subsidiaries; (vi) certain undischarged judgments against the Company or any of its restricted subsidiaries; (vii) certain ERISA-related events reasonably expected to have a material adverse effect on the Company and its restricted subsidiaries taken as a whole; (viii) certain security interests or liens under the loan documents ceasing to be, or being asserted by the Company or its restricted subsidiaries not to be, in full force and effect; (ix) any loan document or material provision thereof ceasing to be, or any challenge or assertion by any Loan Party that such loan document or material provision is not, in full force and effect; and (x) the occurrence of a change of control. If one or more events of default occurs and continues beyond any applicable cure period, the administrative agent may, with the consent of the lenders holding a majority of the loans and commitments under the facilities, or will, at the request of such lenders, terminate the commitments of the lenders to make further loans and declare all of the obligations of the Loan Parties under the Credit Agreement to be immediately due and payable.

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

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

Unless otherwise indicated or the context otherwise requires, references to “Horizon”, “we”, “us” and “our” refer to Horizon ~~Pharma~~Therapeutics plc and its consolidated subsidiaries.

Beginning in the first quarter of 2017, we modified our presentation of certain operating expenses. Previously, we presented “general and administrative” expenses as one line item in our condensed consolidated statement of comprehensive loss, and “selling and marketing” expenses as another. For current-period presentation and prior-period comparisons, we now combine these two line items into one line item, titled “selling, general and administrative” expenses.

We are a ~~biopharmaceutical~~global biotechnology company focused on ~~improving patients’ lives by identifying, developing, acquiring~~the discovery, development and ~~commercializing differentiated and accessible~~commercialization of medicines that address ~~unmet medical needs.~~critical needs for people impacted by rare, autoimmune and severe inflammatory diseases. Our pipeline is purposeful: we apply scientific expertise and courage to bring clinically meaningful therapies to patients. We ~~market eleven~~believe science and compassion must work together to transform lives.

Effective in the fourth quarter of 2022, management realigned our reportable segments to reflect changes in the manner in which the chief operating decision maker, or CODM, assesses financial information for decision-making purposes. We transitioned our two reportable segments, the inflammation segment and the orphan segment, to one reportable segment for the year ended December 31, 2022. All prior year amounts have been reclassified to conform to our current reporting structure. Our commercial portfolio is currently composed of 12 medicines ~~through~~in the areas of rare diseases, gout, ophthalmology and inflammation.

On December 12, 2022, we announced we had entered into a transaction agreement with Amgen Inc., or Amgen, and Pillartree Limited, or Pillartree, a wholly owned subsidiary of Amgen. Subject to the terms of the transaction agreement, Pillartree will acquire our ~~orphan, rheumatology~~company, or the Transaction, pursuant to a scheme of arrangement under Chapter 1 of Part 9 of the Companies Act 2014 of Ireland, or the Scheme. As a result of the Scheme, we would become a wholly owned subsidiary of Amgen.

At the effective time of the Scheme, or the Effective Time, holders of our ordinary shares will be entitled to receive $116.50 in cash per ordinary share, or the Consideration. Our equity awards will be treated as set forth in the transaction agreement, such that:

On February 24, 2023, our shareholders approved the Scheme and certain scheme approval resolutions and amendments to the memorandum and articles of association of Horizon to enable the Scheme to be effected. The closing of the Transaction remains subject to customary closing conditions, including, among other things, (a) the sanction by the Irish High Court of the Scheme and delivery of the court order to the Irish Registrar of Companies, (b) the absence of an order or law that prevents consummation of the Transaction or imposes a burdensome condition (as defined in the transaction agreement), (c) absence of any Material Adverse Effect (as defined in the transaction agreement) from December 12, 2022 to the Sanction Date (as defined in the transaction agreement) that is continuing as of the Sanction Date, (d) the accuracy of the other party’s representations and warranties subject to certain materiality and material adverse effect exceptions and (e) the performance by each party of all of its covenants and agreements under the transaction agreement in all material respects. In connection with the Transaction, we and Amgen have received clearances or confirmation of non-applicability related to foreign direct investment in Denmark, Italy, Germany and France and clearances related to antitrust in Germany and Austria.

~~Our marketed medicines are:~~On May 16, 2023, the Federal Trade Commission, or FTC, filed a complaint in the United States District Court for the Northern District of Illinois seeking a temporary restraining order and preliminary injunction enjoining the Transaction. On May 23, 2023, the district court scheduled an evidentiary hearing on the FTC’s request for a preliminary injunction beginning on September 11, 2023. Based on the district court’s schedule, we, Amgen and the FTC then submitted a stipulated proposed temporary restraining order to the district court providing that we and Amgen would not close the Transaction until the earlier of October 31, 2023 or the second business day after the district court rules on the FTC’s request for a preliminary injunction, or the Stipulated TRO. On May 31, 2023, the district court entered a case management order, and on June 2, 2023, the district court issued an order granting the Stipulated TRO. On June 22, 2023, the FTC filed a parallel complaint in its administrative court and an amended complaint was filed in the district court adding several states as additional plaintiffs. On June 29, 2023, we and Amgen filed an answer to the amended complaint and counterclaims against the FTC. We expect that the schedule set by the district court would allow the Transaction to close by mid-December 2023 if the district court denies the request for a preliminary injunction. We cannot predict with certainty whether and when any of the required closing conditions, including the termination of the Stipulated TRO and absence of any other order preventing consummation of the Transaction, will be satisfied or if additional uncertainties may arise and cannot guarantee that we will be able to successfully consummate the pending Transaction as currently contemplated under the transaction agreement or at all. In particular, there can be no guarantee that the district court will deny the FTC’s request for a preliminary injunction or when, if ever, such a ruling would be issued. If the FTC’s request for a preliminary injunction is granted, it is highly unlikely that the Transaction could close before the December 12, 2023 end date specified in the transaction agreement. In the event that the Transaction does not close before the December 12, 2023 end date specified in the transaction agreement, each party would then have the right, in its sole discretion, to terminate the transaction agreement and abandon the Transaction, which Amgen may determine to do, particularly if the FTC’s request for a preliminary injunction is granted. If the transaction agreement is terminated and the Transaction is abandoned, whether due to the failure to satisfy applicable closing conditions related to obtaining antitrust clearance for the Transaction or otherwise, our business, results of operations, financial condition and our share price would be materially and adversely affected.

As of June 30, 2023, our commercial portfolio consisted of the following medicines:

Horizon is a leading high-growth, innovation-driven, profitable global biotechnology company. We are focused on the discovery, development and commercialization of medicines that address critical needs for people impacted by rare, autoimmune and severe inflammatory diseases. Our three strategic goals are to: (i) maximize the value of our ~~acquisition of~~ ~~Crealta Holdings LLC,~~on-market rare disease medicines through commercial execution and clinical investment; (ii) expand our research and development, or ~~Crealta,~~R&D, pipeline through significant internal investment and external business development; and (iii) build a global presence in targeted international markets. Our vision is to build healthier communities, urgently and responsibly, supported by our philosophy to make a meaningful difference for ~~approximately $539.7 million,~~patients and communities in need. We believe this generates value for our multiple stakeholders, including ~~$24.9 million of cash acquired~~our shareholders.

Our commercialization strategy for our on-market rare disease medicines, including our key growth drivers TEPEZZA, KRYSTEXXA and ~~$70.9 million paid~~UPLIZNA, includes initiatives to ~~settle Crealta’s outstanding debt. Following completion~~increase awareness of the ~~acquisition, Crealta became~~conditions each medicine is designed to treat, enhancing efforts to identify target patients and in certain cases pursue opportunities for international commercialization and more effective uses through clinical trials. For TEPEZZA and KRYSTEXXA, initiatives include promoting earlier treatment by driving awareness of the benefits of the medicines, and for UPLIZNA, initiatives include increasing awareness of what differentiates our ~~wholly owned subsidiary~~medicines from other available therapies. Additional strategies for our on-market rare disease medicines include optimizing timely access for patients to the medicines and ~~was renamed as Horizon Pharma Rheumatology LLC.~~

~~On October 25, 2016,~~maximizing the value of the medicines through investment in clinical trials. Specifically, with respect to TEPEZZA, we ~~completed~~expanded our ~~acquisition of Raptor Pharmaceutical Corp., or Raptor,~~commercial team, continued to invest in our direct-to-consumer marketing activities, refined our marketing and physician education strategies, and conducted extensive market analysis to identify further opportunities to accelerate growth, which we ~~acquired~~are implementing. These growth opportunities involve our efforts to increase adoption by ocular specialists and driving an urgency among ophthalmologists and endocrinologists to diagnose and refer thyroid eye disease, or TED, patients. In April 2023, we announced positive topline results from the randomized, double-masked, placebo-controlled Phase 4 clinical trial evaluating TEPEZZA in patients with chronic/low clinical activity score, or CAS, TED. In addition, we received U.S. Food and Drug Administration, or FDA, approval to update the TEPEZZA label to specify its use for the treatment of TED “regardless of Thyroid Eye Disease activity or duration,” which we believe reinforces the importance of unrestricted access for all eligible patients across the full spectrum of TED and creates an opportunity to ease the access burden for patients and physicians with the goal of decreasing time to therapy for patients who may benefit from TEPEZZA. As part of our strategy to maximize the value of TEPEZZA, we are educating key stakeholders, including physicians, patients and payers on the trial results and updated label indication. As a result of this process, large national and regional payers are beginning the process of updating their access requirements. To date, we have obtained favorable policy changes for greater than 20% of U.S. covered lives, which are expected to take effect in the second half of 2023. With respect to KRYSTEXXA, after receiving FDA approval of our supplemental biologics license application, or sBLA, in July 2022 to expand the label to include co-treatment of KRYSTEXXA with the immunomodulator methotrexate, we launched a successful commercial campaign related to the use of KRYSTEXXA with methotrexate, expanded our commercial team and are focused on promoting the expanded label with physicians and patients. This campaign has helped drive an increase in the usage of an immunomodulator with KRYSTEXXA to more than 70 percent of new patient starts in the second quarter of 2023 from the initial low-single digits in 2018.

Our R&D strategy is to expand our pipeline of preclinical and clinical development programs to drive sustainable growth, as well as maximizing the benefit and value of our existing medicines through development programs. Subject to the terms of the ~~issued~~transaction agreement with Amgen and ~~outstanding shares~~Pillartree, we are (i) acquiring, licensing and developing medicines for indications that address unmet needs in rare, autoimmune and severe inflammatory diseases, particularly those in our therapeutic areas of ~~Raptor’s common stock~~focus; (ii) maximizing our pipeline candidates through internal R&D; (iii) expanding our early-stage pipeline through partnerships and collaborations; and (iv) continuing to build out our research capabilities to generate discovery-stage candidates internally. Our R&D pipeline includes more than 20 programs. We expect to initiate several clinical trials in the second half of 2023, including a planned Phase 3 program for ~~$9.00 per share~~dazodalibep in ~~cash.~~ Sjögren’s syndrome. This follows the announcement of our Phase 2 results where we achieved the primary endpoint in Sjögren’s syndrome patients with both moderate-to-severe systemic disease activity and moderate-to-severe symptomatology. This Phase 2 trial was the first to meet the primary endpoint in both patient populations. In the first half of 2023, we announced the initiation of two daxdilimab Phase 2 trials in discoid lupus erythematosus and lupus nephritis. In May 2023, we announced initiation of our TEPEZZA chronic/low CAS TED Phase 3 trial in Japan, which follows impressive topline results in patients with high CAS announced in June 2023.

The ~~total consideration was $860.8 million, including $24.9 million~~aim of ~~cash acquired~~our global expansion strategy is to build a global presence in targeted international markets to support the (i) continued launch of UPLIZNA in certain European markets and ~~$56.0 million paid~~Brazil this year; (ii) potential approvals and commercial launches of UPLIZNA in additional markets in the coming years; and (iii) the pending commercial launch of TEPEZZA in Brazil; and (iv) potential approvals and commercial launches of TEPEZZA in Japan, Europe and other international markets over the next several years. We plan to ~~settle Raptor’s outstanding debt. Following completion~~use a combination of direct marketing and partnerships for our global expansion efforts and are establishing the ~~acquisition, Raptor became our wholly owned subsidiary and converted~~infrastructure needed to ~~a limited liability company, changing its name to Horizon Pharmaceutical LLC.~~

~~On May 8, 2017,~~support these activities. In June 2023, we ~~acquired River Vision Development Corp., or River Vision,~~announced approval by the Brazilian Health Regulatory Agency for ~~upfront cash payments totaling $151.9 million, including $6.3 million~~TEPEZZA for the treatment of ~~cash acquired, and subject to other customary purchase price adjustments for working capital, and potential future milestone and royalty payments contingent on~~TED, making Brazil the satisfaction of certain regulatory milestones and sales thresholds. Following completion of the acquisition, River Vision became our wholly owned subsidiary and was renamed as Horizon Pharma Tepro, Inc.

On June 23, 2017, we sold our European subsidiary which owned the marketing rights to PROCYSBI and QUINSAIR in Europe, the Middle East and Africa, or EMEA, regions, or the Chiesi divestiture, to Chiesi Farmaceutici S.p.A., or Chiesi, for an upfront payment of $72.2 million, which reflects $3.1 million of cash divested, and subject to other customary purchase price adjustments for working capital, with additional potential milestone payments based on sales thresholds.

~~On June 30, 2017, we completed the acquisition of certain rights to interferon gamma-1b from Boehringer Ingelheim International GmbH, or Boehringer Ingelheim International,~~ ~~in all territories~~first country outside of the United States ~~Canada and Japan, as we previously held marketing rights~~ to ~~interferon gamma-1b in these territories. Boehringer Ingelheim International commercialized interferon gamma-1b under the trade names IMUKIN~~^®~~, IMUKINE~~^®~~, IMMUKIN~~^® ~~and IMMUKINE~~^®~~, or IMUKIN, in an estimated thirty countries, primarily in Europe and the Middle East.~~approve TEPEZZA. In ~~May 2016, we paid Boehringer Ingelheim International €5.0 million ($5.6 million when converted using a Euro-to-Dollar exchange rate at date of payment~~ of 1.1132) for such rights and upon closing in June 2017, we paid Boehringer Ingelheim International an additional €19.5 million ($22.3 million when converted using a Euro-to-Dollar exchange rate at date of payment of 1.1406). We market interferon gamma-1b as ACTIMMUNE^® ~~in the United States.~~

~~On December 8, 2016,~~July 2023, we announced ~~that~~positive topline results from the ~~Phase 3 trial, Safety, Tolerability and Efficacy of ACTIMMUNE Dose Escalation in Friedreich’s Ataxia study, or STEADFAST, evaluating ACTIMMUNE~~for the treatment of Friedreich’s ataxia, or FA, did not meet its primary endpoint of a statistically significant change from baseline in the modified Friedreich’s Ataxia Rating Scale at twenty-six weeks versus treatment with placebo and that the secondary endpoints did not meet statistical significance. No new safety findings were identified on initial review of data other than those already noted in the ACTIMMUNE prescribing information for approved indications. We, in conjunction with the independent Data Safety Monitoring Board, the principal investigator and the Friedreich’s Ataxia Research Alliance Collaborative Clinical Research Network in FA, determined that, based on the trial results, the STEADFAST program would be discontinued, including the twenty-six week extension study and the long-term safety study.

Our strategy is to continue the transformation of Horizon Pharma plc into a balanced, diversified, sustainable-growth biopharmaceutical company predominantly focused on rare disease medicines. We are executing on our strategy by accelerating the growth of our rare disease medicine portfolio through differentiated commercial strategies, business development efforts, and the expansion of our pipeline with post-marketing and development-stage programs. We are strongly committed to helping ensure patient access to their medicines and support services, and by investing in the further development of medicines for patients with rare or underserved diseases.

Our marketed rare disease medicines in our orphan business unit are ACTIMMUNE, BUPHENYL, PROCYSBI, QUINSAIR and RAVICTI. Our strategy for RAVICTI is to drive growth through increased awareness and diagnosis of urea cycle disorders and to drive conversion from older-generation nitrogen scavengers to RAVICTI, based on the medicine’s differentiated benefits. With respect to PROCYSBI, our strategy is to drive conversion of patients from older-generation immediate-release capsules of cysteamine bitartrate, increase the uptake of diagnosed but untreated patients and to identify previously undiagnosed patients who are suitable for treatment. Although we no longer have EMEA marketing rights to PROCYSBI and QUINSAIR after the Chiesi divestiture, we retain marketing rights for both medicines in the United States, Canada, Latin America and Asia. Our strategy with respect to ACTIMMUNE includes driving growth by increasing awareness and diagnosis of chronic granulomatous disease, increasing the length of treatment, establishing ACTIMMUNE as a cornerstone for treatment for a broader range of patients and evaluating opportunities for combination therapy with PD-1 and PD-L1 inhibitors in treatment of certain cancers through investigator-initiated studies.

With our May 2017 acquisition of River Vision, we added the late-stage rare disease biologic medicine candidate teprotumumab to our pipeline. Teprotumumab, which successfully completed a Phase 2 clinical trial, targets the treatment of moderate-to-severe thyroid eye disease, a debilitating autoimmune condition that presents in patients with Graves’ disease. Our strategy for teprotumumab is to support its continued clinical development and pursue regulatory approval. The River Vision acquisition further demonstrates our commitment to rare disease medicines and expands and diversifies our rare disease medicine pipeline to support sustainable longer-term growth. Ourrandomized, double-masked, placebo-controlled Phase 3 clinical trial evaluating ~~teprotumumab~~TEPEZZA for the treatment of ~~moderate-to-severe active thyroid eye disease was initiated during~~TED in Japanese patients with high CAS. There are no other medicines approved for the ~~fourth quarter of 2017.~~

Our marketed rare disease rheumatology medicine is KRYSTEXXA. We are focused on optimizing and maximizing KRYSTEXXA’s peak sales potential by expanding our commercialization efforts, as well as investing in education, patient and physician outreach, and investigation programs that demonstrate KRYSTEXXA as an effective treatment of ~~refractory chronic gout. In May 2017, we announced increased investment~~TED in ~~KRYSTEXXA as part of the program to optimize its sales potential, with the goal of nearly doubling the commercial organization by the end of 2017. We believe that KRYSTEXXA represents~~Brazil or Japan, representing a significant ~~opportunity and potential~~ ~~growth driver for our rheumatology business unit. The rheumatology business unit also includes RAYOS.~~ unmet need in both markets.

Our strategy for the primary care business unit, which includes DUEXIS, VIMOVO and PENNSAID 2%, is to educate physicians about these clinically differentiated medicines and the benefits they offer. Patients are able to fill prescriptions for these medicines through pharmacies participating in our HorizonCares patient access program, as well as other pharmacies. In addition, we have evolved our commercial strategy to enter into business arrangements with pharmacy benefit managers, or PBMs, and other payers to secure formulary status and reimbursement of our medicines. The business arrangements with the PBMs generally require us to pay administrative fees and rebates to the PBMs and other payers for qualifying prescriptions. The primary care business unit also includes MIGERGOT.

~~We market our medicines in the United States through our field sales force, which numbered approximately 420 representatives across our three business units as of September 30, 2017.~~

Comparison of Three Months Ended ~~September~~June 30, ~~2017~~2023 and ~~2016~~2022

The table below should be referenced in connection with a review of the following discussion of our results of operations for the three months ended ~~September~~June 30, ~~2017,~~2023, compared to the three months ended ~~September~~June 30, ~~2016.~~2022.

Beginning with the third quarter of 2022, we separately present upfront, milestone, and similar payments pursuant to collaborations, licenses of third-party technologies, and asset acquisitions as “Acquired in-process research and development and milestones” expenses in the condensed consolidated statement of comprehensive income. Amounts recorded in this line item would have historically been recorded to R&D expenses. We believe the new classification assists users of the financial statements in better understanding the payments incurred to acquire in-process research and development, or IPR&D. Prior period consolidated statements of comprehensive income have been reclassified to conform with the new classification. There were no acquired IPR&D and milestones expenses during the three months ended June 30, 2023 and 2022.

Net sales. Net sales increased ~~$62.9~~$68.5 million, or ~~30%~~8%, to ~~$271.6~~$944.9 million during the three months ended ~~September~~June 30, ~~2017,~~2023, from ~~$208.7~~$876.4 million during the three months ended ~~September~~June 30, ~~2016.~~

2022. The ~~following table presents a summary of net sales attributed to geographic sources for~~increase during the three months ended ~~September~~June 30, ~~2017~~2023 was primarily due to an increase in KRYSTEXXA net sales of $76.5 million and ~~2016 (in thousands):~~an increase in UPLIZNA net sales of $29.5 million, partially offset by a decrease in TEPEZZA net sales of $34.3 million.

The following table reflects net sales by medicine for the three months ended ~~September~~June 30, ~~2017~~2023 and ~~2016:~~2022 (in thousands, except percentages):

Net sales were higher during the three months ended September 30, 2017 compared to the three months ended September 30, 2016, primarily due to the $65.0 million litigation settlement with Express Scripts, Inc., or Express Scripts, recorded during the three months ended September 30, 2016, the recognition of PROCYSBI sales following the acquisition of Raptor in October 2016 and higher net sales of KRYSTEXXA and RAVICTI, offset by lower net sales of PENNSAID 2%, VIMOVO and DUEXIS.

~~RAVICTI~~TEPEZZA. Net sales ~~increased $8.8~~decreased $34.3 million, or ~~21%~~7%, to ~~$51.0~~$445.5 million during the three months ended ~~September~~June 30, ~~2017,~~2023, from ~~$42.2~~$479.8 million during the three months ended ~~September~~June 30, ~~2016.~~2022. Net sales decreased by approximately $34.0 million due to lower sales volume and $0.3 million due to lower net pricing. In the second half of 2022, we were impacted by certain challenges, including the often-burdensome reimbursement process, that we believe contributed to the decline in TEPEZZA net sales in the first half of 2023, compared to the 2022 period. These challenges, as well as challenges related to a lower rate of adherence to the full course of TEPEZZA therapy, have continued to moderate TEPEZZA net sales. We continue to execute on several opportunities designed to address these challenges and resume growth, including significantly expanding the size of our TEPEZZA sales force in late 2022 to allow our representatives more time with core TEPEZZA prescribers while educating other key physicians, including ophthalmologists and endocrinologists, about TED and TEPEZZA. As a result of the field-force expansion, through the first half of 2023, there was a 50% year-over-year increase in the number of ophthalmologists and endocrinologists prescribing TEPEZZA. In line with our expansion strategy, prescriber growth has largely come from ophthalmologists, with continued strong referral volume from endocrinologists. We are also spending additional time and focus on the reimbursement process to more effectively support the patient access journey, which includes beginning to obtain favorable policy changes to improve patient access following the update to the indication language on the TEPEZZA label and Phase 4 data release. We also continue to invest significantly in direct-to-consumer advertising based on the returns we have seen to date. In April 2023, we announced positive topline results from our Phase 4 clinical trial in chronic/low CAS TED and received FDA approval of an update to TEPEZZA’s label specifying the use of TEPEZZA regardless of TED disease activity or duration, which we believe reinforces the importance of unrestricted access for all eligible patients across the full spectrum of TED. As part of our strategy to maximize the value of TEPEZZA, we are educating key stakeholders, including physicians, patients and payers on the trial results and updated label indication. As a result of this process, large national and regional payers are beginning to update their access requirements. To date, we have obtained favorable policy changes for more than 20% of U.S. covered lives, which are expected to take effect in the second half of 2023. We have seen improving trends in patient enrollment forms and patient starts as a result of our strategies and our expansion; however, it is taking longer than initially anticipated for our strategies and our expansion to contribute meaningfully to TEPEZZA net sales growth.

KRYSTEXXA. Net sales increased $76.5 million, or 46%, to $244.3 million during the three months ended June 30, 2023, from $167.8 million during the three months ended June 30, 2022. Net sales increased by approximately $54.6 million due to volume growth and $21.9 million due to higher net pricing. We expect net sales for KRYSTEXXA to continue to increase in future periods primarily due to the use of KRYSTEXXA with an immunomodulator following the approval of our sBLA in July 2022, which expanded KRYSTEXXA’s labeling to include co-administration with methotrexate.

RAVICTI. Net sales increased $12.6 million, or 17%, to $88.4 million during the three months ended June 30, 2023, from $75.7 million during the three months ended June 30, 2022. Net sales increased by approximately $8.4 million due to higher net pricing and $4.2 million due to volume growth.

UPLIZNA. Net sales increased $29.5 million, or 76%, to $68.1 million during the three months ended June 30, 2023, from $38.6 million during the three months ended June 30, 2022. Net sales in the United States increased by ~~approximately $7.8~~$22.7 million, which was composed of ~~$5.0 million resulting from prescription volume growth and $2.8~~an increase of $22.9 million due to higher sales volume, partially offset by a decrease of $0.2 million due to lower net pricing. ~~Net~~The remaining $6.8 million increase in net sales ~~outside the United States increased by approximately $1.0 million primarily due~~related to higher international net sales ~~volume.~~recognized during the three months ended June 30, 2023.

PENNSAID 2%. Net sales decreased ~~$31.9~~$16.7 million, or ~~40%~~71%, to ~~$48.3~~$6.9 million during the three months ended ~~September~~June 30, ~~2017,~~2023, from ~~$80.2~~$23.6 million during the three months ended ~~September~~June 30, ~~2016.~~2022. Net sales decreased by approximately ~~$27.5~~$15.3 million due to lower ~~net pricing~~sales volume and ~~approximately $4.4 million resulting from lower prescription volume.~~

~~KRYSTEXXA~~. Net sales increased $17.2 million, or 67%, to $42.8 million during the three months ended September 30, 2017, from $25.6 million during the three months ended September 30, 2016. Net sales increased by approximately $11.3 million resulting from prescription volume growth and approximately $5.9 million due to higher net pricing.

~~PROCYSBI. Net sales were $33.6 million during the three months ended September 30, 2017. We began recognizing PROCYSBI sales following our acquisition of Raptor in October 2016.~~

~~DUEXIS~~. Net sales decreased $16.0 million, or 34%, to $31.6 million during the three months ended September 30, 2017, from $47.6 million during the three months ended September 30, 2016. Net sales decreased by approximately $14.8 million due to lower net pricing and approximately $1.2 million resulting from lower prescription volume.

~~ACTIMMUNE~~. Net sales increased $4.3 million, or 17%, to $29.2 million during the three months ended September 30, 2017, from $24.9 million during the three months ended September 30, 2016. Net sales increased by approximately $3.7 million due to higher net pricing and approximately $0.6 million resulting from prescription volume growth.

~~VIMOVO~~. Net sales decreased $17.8 million, or 54%, to $15.1 million during the three months ended September 30, 2017, from $32.9 million during the three months ended September 30, 2016. Net sales decreased by approximately $11.9 million due to lower net pricing and approximately $5.9 million resulting from lower prescription volume.

~~RAYOS~~. Net sales increased $1.2 million, or 9%, to $14.6 million during the three months ended September 30, 2017, from $13.4 million during the three months ended September 30, 2016. Net sales increased by approximately $3.4 million resulting from prescription volume growth, offset by a decrease of approximately $2.2 million due to lower net pricing.

~~BUPHENYL. Net sales decreased $0.7 million, or 16%, to $3.7 million during the three months ended September 30, 2017, from $4.4 million during the three months ended September 30, 2016. Net sales decreased~~ by approximately $1.4 million resulting from lower ~~prescription volume, offset by an increase~~net pricing, as a result of ~~$0.7 million due~~generic competition.

~~MIGERGOT. Net sales were $1.1 million~~the impact of the at-risk launch of generic PENNSAID 2% during the ~~three months~~year ended ~~September 30, 2017~~December 31, 2022, we redeployed a portion of our inflammation commercial team to support our TEPEZZA and ~~during~~KRYSTEXXA expansions. In the ~~three months ended September 30, 2016. Net~~fourth quarter of 2022, we substantially completed a wind down of our former inflammation business, including active promotion efforts and associated HorizonCares support, for our inflammation medicines. As a result, sales ~~decreased by approximately $0.1 million resulting from lower prescription volume, offset by an increase~~volumes for PENNSAID 2%, RAYOS and DUEXIS declined significantly since the second quarter of ~~approximately $0.1 million due to higher net pricing.~~

~~LODOTRA~~. Net sales decreased $0.8 million, or 50%, to $0.7 million during the three months ended September 30, 2017, from $1.5 million during the three months ended September 30, 2016. The decrease was the result of decreased medicine shipments to our European distribution partner, Mundipharma International Corporation Limited, or Mundipharma. LODOTRA shipments to Mundipharma are not linear or directly tied to Mundipharma’s in-market sales and can therefore fluctuate significantly from quarter to quarter.

~~QUINSAIR~~. Net sales were $0.1 million during the three months ended September 30, 2017. We began recognizing QUINSAIR sales following our acquisition of Raptor in October 2016. Net sales during the three months ended September 30, 2017 relate to sales in Canada and Latin America, as our QUINSAIR sales in EMEA ceased following the Chiesi divestiture in June 2017.

In September 2016, we entered into a settlement agreement and mutual release with Express Scripts pursuant to which we and Express Scripts were released from any and all claims relating to our then ongoing litigation without admitting any fault or wrongdoing2022 and we ~~agreed to pay Express Scripts $65.0 million. This settlement was accounted for as a reduction of~~expect net sales ~~in the condensed consolidated statement~~ of ~~comprehensive loss for the three months ended September 30, 2016.~~our inflammation medicines to be immaterial going forward.

The table below reconciles our gross to net sales for the three months ended ~~September~~June 30, ~~2017~~2023 and ~~2016~~2022 (in ~~millions)~~millions, except percentages):

During the three months ended ~~September~~June 30, 2017, wholesaler fees and commercial rebates, as a percentage of gross sales, increased to 16.8% from 3.5% during the three months ended September 30, 2016, and co-pay and other patient assistance, as a percentage of gross sales, decreased to 44.8% from 52.9% during the three months ended September 30, 2016. During the second half of 2016, we entered into business arrangements with PBMs and other payers in an effort to secure formulary status and reimbursement of our medicines, such as our arrangements with Express Scripts, CVS Caremark and Prime Therapeutics LLC, which resulted in lower2023, co-pay and other patient assistance costs, as a percentage of gross sales, decreased to 0.9% from 8.0% during the three months ended ~~September~~June 30, ~~2017. The mix~~2022, primarily due to a decreased proportion of ~~PBM healthcare plans that adopted our primary care medicines onto their formulary during 2017 was more heavily weighted towards those plans for which we pay~~PENNSAID 2% sold. We expect co-pay and other patient assistance costs to continue to decrease as a ~~higher commercial rebate. In addition, we also experienced a higher rate~~percentage of ~~managed care control in our non-contracted business, which resulted in significantly lower net pricing~~total gross sales.

Cost of Goods Sold. Cost of goods sold decreased $10.3 million, or 4%, to $219.9 million during the three months ended ~~September~~June 30, ~~2017 when~~2023, from $230.2 million during the three months ended June 30, 2022. The decrease during the three months ended June 30, 2023 was primarily due to a decrease in inventory step-up expense. Inventory step-up expense decreased by $15.8 million related to acquired units of UPLIZNA inventory sold during the three months ended June 30, 2023 compared to the three months ended ~~September~~June 30, ~~2016.~~

~~Cost~~2022. As of ~~Goods Sold.~~ ~~Cost~~June 30, 2023, the total remaining balance of ~~goods sold increased $40.4 million to $125.5 million during the three months ended September 30, 2017, from $85.1 million during the three months ended September 30, 2016.~~inventory step-up was $1.0 million. As a percentage of net sales, cost of goods sold was 46.2% during the three months ended September 30, 2017, compared to 40.8% during the three months ended September 30, 2016. The increase in cost of goods sold was primarily attributable to a $17.9 million increase in(excluding intangible amortization expense a $9.9 million increase in inventory step-up expense, a $5.7 million increase in drug substance harmonization costs, a $2.9 million increase in royalty accretion and a $2.6 million increase in employee costs.

~~The increase in intangible amortization~~ of ~~$17.9~~$89.3 million during the three months ended ~~September~~June 30, ~~2017 compared to the prior year period was primarily due to the amortization of developed technology of $17.7 million related to PROCYSBI, which was acquired in October 2016.~~

~~Because inventory step-up expense is acquisition-related, will not continue indefinitely~~2023 and has a significant effect on our gross profit, gross margin percentage and net income (loss) for all affected periods, we disclose balance sheet and income statement amounts related to inventory step-up within the notes to the condensed consolidated financial statements. The increase in inventory step-up expense of $9.9 million recorded to cost of goods sold during the three months ended September 30, 2017 compared to the prior year period was due to KRYSTEXXA inventory step-up expense of $21.2 million (acquired in January 2016) recorded during the three months ended September 30, 2017, compared to KRYSTEXXA and MIGERGOT inventory step-up expense of $11.3 million, recorded during the three months ended September 30, 2016.

~~Research and Development Expenses. Research and development expenses increased $5.1 million to $17.9~~$90.4 million during the three months ended ~~September~~June 30, ~~2017, from $12.8~~2022) was 16% during each of the three months ended June 30, 2023 and 2022.

Research and Development Expenses. R&D expenses increased $46.8 million, or 45%, to $150.0 million during the three months ended ~~September~~June 30, ~~2016.~~2023, from $103.2 million during the three months ended June 30, 2022. The increase during the three months ended June 30, 2023 was primarily ~~attributable~~due to a $29.7 million increase in clinical trial and manufacturing development costs and an increase of $14.9 million in ~~costs relating to our research and development projects, including teprotumumab which we acquired with River Vision~~employee-related expenses during the ~~second quarter of 2017.~~ three months ended June 30, 2023 compared to the three months ended June 30, 2022, reflecting increased activity in our R&D pipeline.

We expect our ~~research and development~~R&D expenses to ~~increase~~continue increasing significantly in future periods as ~~we execute our business strategy of building~~ a ~~pipeline of rare disease medicine candidates and develop those medicine candidates, including the recent initiation~~result of our ~~Phase 3~~on-going and planned clinical ~~trial evaluating teprotumumab~~trials for ~~the treatment of moderate-to-severe active thyroid eye disease.~~our pipeline.

Selling, General and Administrative Expenses. Selling, general and administrative expenses increased ~~$21.9~~$35.9 million, or 9%, to ~~$154.0~~$434.1 million during the three months ended ~~September~~June 30, ~~2017,~~2023, from ~~$132.1~~$398.2 million during the three months ended ~~September~~June 30, ~~2016.~~2022. The increase was primarily attributable to a $14.8 million increase in employee costs related to our growth in headcount and costs following the Raptor acquisition during October 2016, a $5.3 million increase in marketing program costs and a $2.5 million increase in consulting expense.

~~Interest Expense, Net. Interest expense, net, increased $12.6 million to $31.7 million~~ during the three months ended ~~September~~June 30, ~~2017, from $19.1 million during the three months ended September 30, 2016. The increase~~2023 was primarily due to ~~higher borrowings,~~costs associated with the commercialization of our medicines and global expansion initiatives, including ~~our $300.0~~an increase of $34.3 million ~~aggregate principal amount of 8.75% Senior Notes due 2024, or the 2024 Senior Notes,~~in employee-related expenses. In addition, there was a $7.2 million increase in legal costs primarily relating to costs incurred in connection with ~~our acquisition of Raptor, and our $850.0 million principal amount of secured loans under our 2017 term loan facility, of which $375.0 million was in connection~~the Transaction with ~~our acquisition of Raptor, compared~~Amgen, including responding to the ~~$397.0~~FTC’s second request and subsequent lawsuit seeking to enjoin the Transaction. This was partially offset by a decrease of $12.1 million ~~principal amount~~in marketing program costs.

We expect our selling, general and administrative expenses to increase in future periods primarily due to continued support for our U.S. commercial and global expansion activities.

Impairment of ~~secured loans from previous borrowings under our senior secured loan facility.~~

~~Expense (Benefit) for Income Taxes~~goodwill. During the three months ended ~~September~~June 30, ~~2017,~~2022, we recorded an ~~expense for income taxes~~impairment charge of ~~$7.2~~$56.2 million ~~compared to a benefit of $27.7 million during the three months ended September 30, 2016. The expense for income taxes during the three months ended September 30, 2017 resulted from a change~~ in the mix of pre-tax losses being incurred between high and low tax rate jurisdictions, which decreased our expected benefit for the full-year 2017 and resulted in a tax expense being recorded during the three months ended September 30, 2017.

In relation to ~~all outstanding performance stock unit awards, or PSUs, if~~ our ~~share price is lower than $31.58, $32.70~~former inflammation reporting unit. Refer to Note 7, Goodwill and ~~$33.86~~Intangible Assets, of the Notes to Condensed Consolidated Financial Statements, included in Item 1 of this Quarterly Report on Form 10-Q for the twenty trading days ending December 23, 2017, March 22, 2018 and June 22, 2018, respectively, approximately $16.4 million, $14.9 million and $13.4 million, respectively, of deferred tax assets related to previously recognized share-based compensation expense related to these PSUs will be charged to income tax expense. further details.

Comparison of ~~Nine~~Six Months Ended ~~September~~June 30, ~~2017~~2023 and ~~2016~~2022

The table below should be referenced in connection with a review of the following discussion of our results of operations for the ~~nine~~six months ended ~~September~~June 30, ~~2017,~~2023, compared to the ~~nine~~six months ended ~~September~~June 30, ~~2016.~~2022.

Beginning with the third quarter of 2022, we separately present upfront, milestone, and similar payments pursuant to collaborations, licenses of third-party technologies, and asset acquisitions as “Acquired in-process research and development and milestones” expenses in the condensed consolidated statement of comprehensive income. Amounts recorded in this line item would have historically been recorded to R&D expenses. We believe the new classification assists users of the financial statements in better understanding the payments incurred to acquire IPR&D. Prior period consolidated statements of comprehensive income have been reclassified to conform with the new classification. There were no acquired IPR&D and milestones expenses during the six months ended June 30, 2023 and 2022.

Net sales. Net sales increased ~~$111.2~~$15.4 million, or ~~17%~~1%, to ~~$782.0~~$1,777.0 million during the ~~nine~~six months ended ~~September~~June 30, ~~2017,~~2023, from ~~$670.8~~$1,761.6 million during the ~~nine~~six months ended ~~September~~June 30, ~~2016.~~

2022. The ~~following table presents a summary of~~increase during the six months ended June 30, 2023 was primarily due to an increase in KRYSTEXXA net sales ~~attributed to geographic sources for nine months ended September 30, 2017~~of $122.8 million and ~~2016 (in thousands):~~an increase in UPLIZNA net sales of $52.8 million, partially offset by a decrease in TEPEZZA net sales of $130.4 million and a decrease in PENNSAID 2% net sales of $42.8 million.

The following table reflects net sales by medicine for the ~~components~~six months ended June 30, 2023 and 2022 (in thousands, except percentages):

KRYSTEXXA. Net sales increased $122.8 million, or 40%, to $431.3 million during the six months ended June 30, 2023, from $308.5 million during the six months ended June 30, 2022. Net sales increased by approximately $85.9 million due to volume growth and $36.9 million due to higher net pricing. We expect net sales for ~~the nine months ended September 30, 2017 and 2016:~~

~~Net sales were higher during the nine months ended September 30, 2017 compared~~KRYSTEXXA to ~~the nine months ended September 30, 2016,~~continue to increase in future periods primarily due to the ~~$65.0~~use of KRYSTEXXA with an immunomodulator following the approval of our sBLA in July 2022, which expanded KRYSTEXXA’s labeling to include co-administration with methotrexate.

RAVICTI. Net sales increased $24.7 million, ~~litigation settlement with Express Scripts recorded~~or 16%, to $178.7 million during the ~~nine~~six months ended ~~September~~June 30, ~~2016,~~2023, from $154.0 million during the ~~recognition of PROCYSBI~~six months ended June 30, 2022. Net sales ~~following the acquisition of Raptor in October 2016 and~~increased by approximately $17.1 million due to higher net ~~sales of KRYSTEXXA~~pricing and ~~RAVICTI, offset by lower net sales of PENNSAID 2%, VIMOVO and DUEXIS.~~$7.6 million due to volume growth.

~~RAVICTI~~UPLIZNA. Net sales increased ~~$23.5~~$52.8 million, or ~~20%~~76%, to ~~$142.1~~$121.9 million during the ~~nine~~six months ended ~~September~~June 30, ~~2017,~~2023, from ~~$118.6~~$69.1 million during the ~~nine~~six months ended ~~September~~June 30, ~~2016.~~2022. Net sales in the United States increased by ~~approximately $21.3~~$44.6 million, which was composed of ~~$16.6~~an increase of $42.1 million ~~resulting from prescription~~due to higher sales volume ~~growth~~ and ~~$4.7~~$2.5 million due to higher net pricing. ~~Net~~The remaining $8.2 million increase in net sales ~~outside the United States increased by approximately $2.2 million primarily due~~related to higher international net sales ~~volume.~~recognized during the six months ended June 30, 2023.

PENNSAID 2%. Net sales decreased ~~$66.8~~$42.8 million, or ~~32%~~73%, to ~~$141.1~~$16.1 million during the ~~nine~~six months ended ~~September~~June 30, ~~2017,~~2023, from ~~$207.9~~$58.9 million during the ~~nine~~six months ended ~~September~~June 30, ~~2016.~~2022. Net sales decreased by approximately ~~$54.3~~$37.1 million due to lower ~~net pricing~~sales volume and by approximately ~~$12.5~~$5.7 million resulting from lower ~~prescription volume.~~net pricing, as a result of generic competition.

~~KRYSTEXXA~~RAYOS. Net sales ~~increased $51.1~~decreased $11.6 million, or ~~83%~~47%, to ~~$112.7~~$13.0 million during the ~~nine~~six months ended ~~September~~June 30, ~~2017,~~2023, from ~~$61.6~~$24.6 million during the ~~nine~~six months ended ~~September~~June 30, ~~2016.~~2022. Net sales ~~increased~~decreased by approximately ~~$28.0~~$12.2 million due to ~~prescription~~lower sales volume, ~~growth and~~partially offset by an increase of approximately ~~$23.1~~$0.6 million due to higher net pricing.

~~PROCYSBI. Net~~Under our settlement agreement with Teva Pharmaceuticals Industries Limited (formerly known as Actavis Laboratories FL, Inc., which itself was formerly known as Watson Laboratories, Inc. – Florida), or Teva, we expect Teva to enter the market with a generic version of RAYOS in second half of 2023. As a result, we expect our net sales ~~were $104.5 million~~for RAYOS to continue declining in future periods.

Due to the impact of the at-risk launch of generic PENNSAID 2% during the ~~nine months~~year ended ~~September 30, 2017. We began recognizing PROCYSBI~~December 31, 2022, we redeployed a portion of our inflammation commercial team to support our TEPEZZA and KRYSTEXXA expansions. In the fourth quarter of 2022, we substantially completed a wind down of our former inflammation business, including active promotion efforts and associated HorizonCares support, for our inflammation medicines. As a result, sales ~~following our acquisition~~volumes for PENNSAID 2%, RAYOS and DUEXIS declined significantly since the second quarter of ~~Raptor in October 2016.~~

~~DUEXIS~~. Net sales decreased $29.8 million, or 24%, to $93.0 million during the nine months ended September 30, 2017, from $122.8 million during the nine months ended September 30, 2016. Net sales decreased by approximately $29.3 million due to lower2022 and we expect net ~~pricing and approximately $0.5 million resulting from lower prescription volume.~~

~~ACTIMMUNE~~. Net sales increased $3.7 million, or 5%, to $84.2 million during the nine months ended September 30, 2017, from $80.5 million during the nine months ended September 30, 2016. Net sales increased by approximately $7.9 million due to higher net pricing, offset by a decrease of approximately $4.2 million resulting from lower prescription volume.

~~VIMOVO~~. Net sales decreased $48.6 million, or 54%, to $41.1 million during the nine months ended September 30, 2017, from $89.7 million during the nine months ended September 30, 2016. Net sales decreased by approximately $32.4 million due to lower net pricing and approximately $16.2 million resulting from lower prescription volume.

~~RAYOS~~. Net sales increased $0.4 million, or 1%, to $36.5 million during the nine months ended September 30, 2017, from $36.1 million during the nine months ended September 30, 2016. Net sales increased by approximately $11.3 million resulting from prescription volume growth, offset by a decrease of approximately $10.9 million due to lower net pricing.

~~BUPHENYL~~. Net sales increased $4.1 million, or 34%, to $16.2 million during the nine months ended September 30, 2017, from $12.1 million during the nine months ended September 30, 2016. Net sales increased by approximately $6.1 million due to higher net pricing, offset by a decrease of approximately $2.0 million resulting from lower prescription volume.

~~MIGERGOT~~. Net sales increased $0.8 million, or 25%, to $4.0 million during the nine months ended September 30, 2017, from $3.2 million during the nine months ended September 30, 2016. Net sales increased by approximately $1.0 million due to higher net pricing, offset by a decrease of approximately $0.2 million resulting from lower prescription volume.

~~LODOTRA. Net sales were $3.4 million during each of the nine months ended September 30, 2017 and 2016.~~

~~QUINSAIR. Net sales were $3.3 million during the nine months ended September 30, 2017. We began recognizing QUINSAIR sales following our acquisition of Raptor in October 2016.Our~~ sales of ~~QUINSAIR in EMEA ceased following the Chiesi divestiture in June 2017.~~our inflammation medicines to be immaterial going forward.

In September 2016, we entered into a settlement agreement and mutual release with Express Scripts pursuant to which we and Express Scripts were released from any and all claims relating to our then ongoing litigation without admitting any fault or wrongdoing and we agreed to pay Express Scripts $65.0 million. This settlement was accounted for as a reduction of net sales in the condensed consolidated statement of comprehensive loss for the nine months ended September 30, 2016.

The table below reconciles our gross to net sales for the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2023 and ~~2016~~2022 (in ~~millions)~~millions, except percentages):

During the ~~nine~~six months ended ~~September~~June 30, 2017, wholesaler fees and commercial rebates, as a percentage of gross sales, increased to 15.9% from 3.6% during the nine months ended September 30, 2016, and co-pay and other patient assistance, as a percentage of gross sales, decreased to 46.9% from 54.3% during the nine months ended September 30, 2016. During the second half of 2016, we entered into business arrangements with PBMs and other payers in an effort to secure formulary status and reimbursement of our medicines, such as our arrangements with Express Scripts, CVS Caremark and Prime Therapeutics LLC, which resulted in lower2023, co-pay and other patient assistance costs, as a percentage of gross sales, decreased to 1.9% from 7.4% during the ~~nine~~six months ended ~~September~~June 30, ~~2017. The mix~~2022, primarily due to a decreased proportion of ~~PBM healthcare plans that adopted our primary care medicines onto their formulary during 2017 was more heavily weighted towards those plans for which we pay~~PENNSAID 2% sold. We expect co-pay and other patient assistance costs to continue to decrease as a ~~higher commercial rebate. In addition, we also experienced a higher rate~~percentage of managed care control in our non-contracted business, which resulted in significantly lower net pricing during the nine months ended September 30, 2017 when compared to the nine months ended September 30, 2016.total gross sales.

Cost of Goods ~~Sold~~.Sold. Cost of goods sold ~~increased $151.3~~decreased $16.8 million, or 4%, to ~~$394.8~~$428.5 million during the ~~nine~~six months ended ~~September~~June 30, ~~2017,~~2023, from ~~$243.5~~$445.3 million during the ~~nine~~six months ended ~~September~~June 30, ~~2016.~~2022. The decrease during the six months ended June 30, 2023 was primarily due to a decrease in inventory step-up expense. Inventory step-up expense decreased by $13.2 million related to acquired units of UPLIZNA inventory sold during the six months ended June 30, 2023 compared to the six months ended June 30, 2022. As of June 30, 2023, the total remaining balance of inventory step-up was $1.0 million. As a percentage of net sales, cost of goods sold ~~was 50.5%~~(excluding amortization expense of $177.5 million during the ~~nine~~first half of 2023 and $179.2 million during first half of 2022) was 14% during the six months ended ~~September~~June 30, ~~2017~~2023, compared to ~~36.3%~~15% during the ~~nine~~six months ended ~~September~~June 30, ~~2016.~~2022. The ~~increase~~decrease in cost of goods sold as a percentage of net sales was primarily ~~attributable~~due to a ~~$67.8 million increase~~decrease in inventory step-up expense an increase in intangible amortization expense of $56.9 million, a $10.7 million increase in drug substance harmonization costs, a higher royalty accretion expense of $9.6 million and a $7.0 million increase in employee costs, partially offset by a reduction of $2.7 million in cost of goods sold following a reduction in our excess inventory purchase commitments with Boehringer Ingelheim.

Because inventory step-up expense is acquisition-related, will not continue indefinitely and has a significant effect on our gross profit, gross margin percentage and net income (loss) for all affected periods, we disclose balance sheet and income statement amounts related to ~~inventory step-up within the notes~~UPLIZNA as noted above.

Research and Development Expenses. R&D expenses increased $77.8 million, or 38%, to the condensed consolidated financial statements. The increase in inventory step-up expense of $67.8 million recorded to cost of goods sold during the nine months ended September 30, 2017 compared to the prior year period was due to KRYSTEXXA inventory step-up expense of $54.9 million (acquired in January 2016) and PROCYSBI and QUINSAIR inventory step-up expense of $40.8 million (acquired in October 2016) recorded during the nine months ended September 30, 2017 compared to KRYSTEXXA and MIGERGOT inventory step-up expense of $27.9 million recorded during the nine months ended September 30, 2016.

~~The increase in intangible amortization of $56.9~~$284.2 million during the ~~nine~~six months ended ~~September~~June 30, ~~2017 compared to~~2023, from $206.4 million during the ~~prior year period~~six months ended June 30, 2022. The increase during the six months ended June 30, 2023 was primarily due to ~~the amortization~~a $54.0 million increase in clinical trial and manufacturing development costs and an increase of ~~developed technology of $55.3~~$21.9 million ~~related to PROCYSBI (acquired~~ in ~~October 2016).~~

~~Research and Development Expenses. Research and development~~employee-related expenses ~~increased $157.3 million to $194.1 million~~ during the ~~nine~~six months ended ~~September~~June 30, ~~2017, from $36.8 million during~~2023 compared to the ~~nine~~six months ended ~~September~~June 30, ~~2016. The increase was primarily attributable~~2022, reflecting increased activity in our R&D pipeline.

We expect our R&D expenses to $147.7 million related to the acquisition of River Vision during the nine months ended September 30, 2017. Pursuant to ASC 805 (as amended by ASU No. 2017-01), we accounted for the River Vision acquisition as the purchase of an in-process research and development asset and, pursuant to ASC 730, recorded the purchase pricecontinue increasing significantly in future periods as a ~~research~~result of our on-going and ~~development expense during the nine months ended September 30, 2017.~~planned clinical trials for our pipeline.

Selling, General and Administrative ~~Expenses.~~ Expenses. Selling, general and administrative expenses increased ~~$102.4~~$116.5 million, or 15%, to ~~$509.9~~$887.5 million during the ~~nine~~six months ended ~~September~~June 30, ~~2017,~~2023, from ~~$407.5~~$771.0 million during the ~~nine~~six months ended ~~September~~June 30, ~~2016.~~2022. The increase during the six months ended June 30, 2023 was primarily ~~attributable~~due to ~~an increase~~costs associated with the commercialization of ~~$30.2~~our medicines and global expansion initiatives, including increases of $64.3 million in ~~employee costs related to our growth in headcount~~employee-related expenses and ~~costs following the Raptor acquisition during October 2016, an increase of $24.0~~$12.5 million in marketing program costs. In addition, there was a $16.5 million increase in legal costs ~~$22.3 million paid~~primarily relating to ~~Boehringer Ingelheim~~ ~~International~~ ~~upon closing of~~costs incurred in connection with the ~~acquisition of certain rights~~Transaction with Amgen, including responding to ~~interferon gamma-1b during~~ the ~~nine months ended September 30, 2017~~FTC’s second request and ansubsequent lawsuit seeking to enjoin the Transaction.

We expect our selling, general and administrative expenses to increase ~~of $15.2 million~~ in ~~consulting costs.~~

~~Interest Expense, Net. Interest expense, net, increased $37.5 million to $95.3 million during the nine months ended September 30, 2017, from $57.8 million during the nine months ended September 30, 2016. The increase was~~future periods primarily due to ~~higher borrowings, including~~continued support for our ~~$300.0 million aggregate principal amount~~U.S. commercial and global expansion activities.

Impairment of 2024 Senior Notes, in connection with our acquisition of Raptor, and our $850.0 million principal amount of secured loans under our 2017 term loan facility, of which $375.0 million was in connection with our acquisition of Raptor, compared to the $397.0 million principal amount of secured loans from previous borrowings under our senior secured loan facility.

~~Gain on divestiture~~goodwill. During the ~~nine~~six months ended ~~September~~June 30, 2017, we completed the Chiesi divestiture for an upfront payment of $72.2 million, which reflects $3.1 million of cash divested, and subject to other customary purchase price adjustments for working capital, with additional potential milestone payments based on sales thresholds, and2022, we recorded ~~a gain~~an impairment charge of ~~$6.0~~$56.2 million ~~on the divestiture.~~

~~Loss on Debt Extinguishment. During the nine months ended September 30, 2017, we entered into a refinancing amendment for~~in relation to our ~~term loans. We accounted for a portion~~former inflammation reporting unit. Refer to Note 7, Goodwill and Intangible Assets, of the ~~repayment as a debt extinguishment and recorded a loss~~Notes to Condensed Consolidated Financial Statements, included in Item 1 of this Quarterly Report on debt extinguishment of $0.5 million in the condensed consolidated statements of comprehensive loss, which reflected the write-off of the unamortized portion of debt discount and deferred financing costs previously incurred and a one percent prepayment penalty fee.Form 10-Q for further details.

~~Benefit for Income Taxes~~. During the nine months ended September 30, 2017, we recorded a benefit for income taxes of $42.1 million compared to $31.9 million during the nine months ended September 30, 2016. The increase in benefit for income taxes during the nine months ended September 30, 2017 compared to the nine months ended September 30, 2016 primarily resulted from an increase in pre-tax losses.

In relation to all outstanding PSUs, if our share price is lower than $31.58, $32.70 and $33.86 for the twenty trading days ending December 23, 2017, March 22, 2018 and June 22, 2018, respectively, approximately $16.4 million, $14.9 million and $13.4 million, respectively, of deferred tax assets related to previously recognized share-based compensation expense related to these PSUs will be charged to income tax expense.

~~Non-GAAP adjusted net sales,~~We provide certain non-GAAP financial measures, including EBITDA, or earnings before interest, taxes, depreciation and amortization, adjusted EBITDA, non-GAAP net income and non-GAAP earnings per ~~share are used and provided by us as non-GAAP financial measures.~~share. These non-GAAP financial measures are intended to provide additional information on our performance, operations and profitability. Adjustments to our GAAP figures as well as EBITDA exclude acquisition/divestiture-related costs, ~~an upfront fee for a license of a patent, drug substance harmonization~~transaction-related costs, ~~fees related to term loan refinancing, Primary Care business unit~~manufacturing facility start-up costs, restructuring and realignment costs and ~~the Express Scripts litigation settlement amount,~~gain on sale of asset, as well as non-cash items such as share-based compensation, inventory step-up expense, depreciation and amortization, ~~remeasurement of royalties for medicines acquired through business combinations, royalty accretion,~~ non-cash interest expense, ~~non-current asset impairment charges, gain~~(gain) loss on ~~divestiture~~equity security investments and other non-cash adjustments. Certain other special items or substantive events may also be included in the non-GAAP adjustments periodically when their magnitude is significant within the periods incurred. We maintain an established non-GAAP cost policy that guides the determination of what costs will be excluded in non-GAAP measures. We believe that these non-GAAP financial measures, when considered together with the GAAP figures, can enhance an overall understanding of our financial and operating performance. The non-GAAP financial measures are included with the intent of providing investors with a more complete understanding of our historical ~~and expected 2017~~ financial results and trends and to facilitate comparisons between ~~periods and with respect to projected information.~~periods. In addition, these non-GAAP financial measures are among the indicators our management uses for planning and forecasting purposes and measuring our performance. ~~For example, adjusted EBITDA is used by us as one measure of management performance under certain incentive compensation arrangements.~~ These non-GAAP financial measures should be considered in addition to, and not as a substitute for, or superior to, financial measures calculated in accordance with GAAP. The non-GAAP financial measures used by us may be calculated differently from, and therefore may not be comparable to, non-GAAP financial measures used by other companies.

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

For the Three Months Ended September 30,

For the Nine Months Ended September 30,

2017

2016

2017

2016

GAAP Net Loss

$
(63,971
)

$
(5,870
)

$
(364,078
)

$
(36,292
)
Depreciation

1,476

1,183

5,037

3,266

Amortization, accretion and step-up:

Intangible amortization expense

68,666

50,757

208,118

151,199

Accretion of royalty liabilities

12,720

9,734

38,415

28,762

Amortization of deferred revenue

(225
)

(212
)

(636
)

(631
)
Inventory step-up expense

21,170

11,305

95,659

27,853

Interest expense, net (including amortization of debt discount and deferred financing costs)

31,706

19,066

95,297

57,752

Expense (benefit) for income taxes

7,181

(27,747
)

(42,138
)

(31,946
)
EBITDA

78,723

58,216

35,674

199,963

Other non-GAAP adjustments:

Remeasurement of royalties for medicines acquired through business combinations

—

—

(2,944
)

—

Acquisition/divestiture-related costs

5,561

5,159

168,985

16,456

Upfront fee for license of global patent

—

—

—

2,000

Primary Care business unit realignment costs

(290
)

—

4,903

—

Gain on divestiture

(112
)

—

(5,968
)

—

Loss on debt extinguishment

—

—

533

—

Fees related to term loan refinancing

16

—

4,114

—

Share-based compensation

31,698

29,312

87,935

84,921

Charges relating to discontinuation of Friedreich's ataxia program (1)

(1,116
)

—

18,051

—

Drug substance harmonization costs (2)

5,654

—

10,698

—

Royalties for medicines acquired through business combinations

(12,031
)

(9,564
)

(34,970
)

(27,159
)
Reversal of pre-acquisition reserve upon signing of contract

—

(6,900
)

—

(6,900
)
Litigation settlement

—

65,000

—

65,000

Total of other non-GAAP adjustments

29,380

83,007

251,337

134,318

Adjusted EBITDA

$
108,103

$
141,223

$
287,011

$
334,281

For the Three Months Ended September 30,

For the Nine Months Ended September 30,

2017

2016

2017

2016

GAAP Net Loss

$
(63,971
)

$
(5,870
)

$
(364,078
)

$
(36,292
)
Non-GAAP Adjustments:

Remeasurement of royalties for medicines acquired through business combinations

—

—

(2,944
)

—

Acquisition/divestiture-related costs

5,561

5,159

168,985

16,456

Upfront fee for license of global patent

—

—

—

2,000

Fees related to term loan refinancing

16

—

4,114

—

Primary Care business unit realignment costs

(290
)

—

4,903

—

Gain on divestiture

(112
)

—

(5,968
)

—

Loss on debt extinguishment

—

—

533

—

Amortization, accretion and step-up:

Intangible amortization expense

68,666

50,757

208,118

151,199

Amortization of debt discount and deferred financing costs

5,234

4,537

15,863

13,469

Accretion of royalty liabilities

12,720

9,734

38,415

28,762

Inventory step-up expense

21,170

11,305

95,659

27,853

Share-based compensation

31,698

29,312

87,935

84,921

Depreciation expense

1,476

1,183

5,037

3,266

Charges relating to discontinuation of Friedreich's ataxia program (1)

(1,116
)

—

18,051

—

Drug substance harmonization costs (2)

5,654

—

10,698

—

Litigation settlement

—

65,000

—

65,000

Royalties for medicines acquired through business combinations

(12,031
)

(9,564
)

(34,970
)

(27,159
)
Reversal of pre-acquisition reserve upon signing of contract

—

(6,900
)

—

(6,900
)
Total pre-tax non-GAAP adjustments

138,646

160,523

614,429

358,867

Income tax effect of pre-tax non-GAAP adjustments (3)

(31,548
)

(39,180
)

(103,923
)

(74,518
)
Total non-GAAP adjustments

107,098

121,343

510,506

284,349

Non-GAAP Net Income

$
43,127

$
115,473

$
146,428

$
248,057

Non-GAAP Earnings Per Share:

Weighted average ordinary shares – Basic

163,447,208

161,038,827

162,810,551

160,472,530

Non-GAAP Earnings Per Share – Basic

GAAP loss per share – Basic

$
(0.39
)

$
(0.04
)

$
(2.24
)

$
(0.23
)
Non-GAAP adjustments

0.65

0.76

3.14

1.78

Non-GAAP earnings per share – Basic

$
0.26

$
0.72

$
0.90

$
1.55

Weighted average ordinary shares – Diluted

Weighted average ordinary shares – Basic

163,447,208

161,038,827

162,810,551

160,472,530

Ordinary share equivalents

2,346,684

3,868,212

2,510,909

3,763,984

Weighted average ordinary shares – Diluted

165,793,892

164,907,039

165,321,460

164,236,514

Non-GAAP Earnings Per Share – Diluted

GAAP loss per share – Diluted

$
(0.39
)

$
(0.04
)

$
(2.24
)

$
(0.23
)
Non-GAAP adjustments

0.65

0.75

3.14

1.77

Diluted earnings per share effect of ordinary share equivalents

—

(0.01
)

(0.01
)

(0.03
)
Non-GAAP earnings per share – Diluted

$
0.26

$
0.70

$
0.89

$
1.51

On December 12, 2022, we announced that we had entered into a transaction agreement with Amgen and Pillartree. We have ~~incurred losses since~~agreed to various covenants and agreements, including, among others, agreements to conduct our ~~inception~~business in ~~June 2005~~the ordinary course during the period between the execution of the transaction agreement and asthe Effective Time. Outside of ~~September 30, 2017,~~certain limited exceptions, we ~~had an accumulated deficit~~may not take, authorize, commit, resolve, or agree to do certain actions without Amgen’s consent, including: (i) acquiring businesses and disposing of ~~$1,205.9 million.~~significant assets; (ii) incurring capital expenditures above specified thresholds; (iii) issuing equity; (iv) incurring indebtedness; and (v) repurchasing outstanding ordinary shares. We do not ~~expect our current operations to achieve operating profitability in 2017 and expect~~believe these restrictions will prevent us from being able to fund our operations, ~~for~~working capital needs or capital expenditure requirements. The following discussion assumes that the ~~remainder~~Transaction is not consummated and we continue to operate as an independent entity.

As of ~~2017 primarily through~~June 30, 2023, we had retained earnings of $771.8 million. We expect that our sales and marketing expenses will continue to increase as a result of the commercialization of our medicines and global expansion initiatives, but we believe these cost increases will be offset by higher net sales and ~~available~~gross profits in future periods. Additionally, we expect that our R&D and IPR&D and milestones expenses will continue to increase as we advance our candidates through the clinical development and regulatory approval processes. In particular, we expect to incur substantial costs in connection with advancing our pipeline of medicine candidates and development programs in on-going and planned clinical trials.

We are in the process of expanding our production capacity to meet anticipated future demand for TEPEZZA, primarily for 2023 and beyond. As of June 30, 2023, we had total purchase commitments, including the minimum annual order quantities and binding firm orders, with AGC Biologics A/S (formerly known as CMC Biologics A/S) for TEPEZZA drug substance of €89.3 million ($97.4 million converted at a Euro-to-Dollar exchange rate as of June 30, 2023 of 1.0905).

We also expect to incur additional costs and to enter into additional purchase commitments in connection with our efforts to expand TEPEZZA production capacity in order to meet anticipated future demand.

Under our license agreement with F. Hoffmann-La Roche Ltd and Hoffmann-La Roche Inc., or together referred to as Roche, our remaining obligation to Roche relating to the attainment of various TEPEZZA development and regulatory milestones is CHF43.0 million ($47.9 million when converted using a CHF-to-Dollar exchange rate at June 30, 2023 of 1.1150).

In July 2021, we completed the purchase of a drug product biologics manufacturing facility from EirGen Pharma Limited for $67.9 million. We expect to incur approximately $15.0 million in capital expenditures during the second half of 2023 in order to prepare the drug product facility to manufacture the first medicine for commercial use, which, assuming the timely receipt of regulatory approvals, we anticipate to occur in the fourth quarter of 2023. In August 2022, we submitted a planning application to build a drug substance biologics manufacturing facility adjacent to our existing drug product biologics manufacturing facility in Waterford, Ireland. Based on our current operating plan, we do not anticipate making significant investments in building a drug substance biologics manufacturing facility during 2023.

On June 18, 2021, we entered into a global agreement with Arrowhead Pharmaceuticals, Inc., or Arrowhead, for HZN-457, a discovery-stage investigational RNA interference therapeutic being developed by Arrowhead as a potential treatment for uncontrolled gout. Under the terms of the agreement, we paid Arrowhead an upfront cash ~~resources.~~payment of $40.0 million in July 2021 and agreed to pay additional potential future milestone payments of up to $660.0 million contingent on the achievement of certain development, regulatory and commercial milestones, and low to mid-teens royalties on worldwide calendar year net sales of licensed medicines. In addition, we recognized a $15.0 million development milestone in the fourth quarter of 2022. The $15.0 million development milestone was subsequently paid in the first quarter of 2023.

We are committed to invest as a strategic limited partner in four venture capital funds: Forbion Growth Opportunities Fund I C.V., Forbion Capital Fund V C.V., Aisling Capital V, L.P. and RiverVest Venture Fund V, L.P. As of June 30, 2023, the total carrying amount of our investments in these funds was $31.9 million, which is included in other long-term assets in the condensed consolidated balance sheet, and our total future commitments to these funds are $35.4 million.

We have financed our operations to date through equity financings, debt financings and the issuance of convertible notes, along with cash flows from operations during the last several ~~quarters.~~years. As of ~~September~~June 30, ~~2017,~~2023, we had ~~$625.0 million~~$2.5 billion in cash and cash equivalents and total debt with a book value of ~~$1,897.6 million~~$2.6 billion and face value of $2,022.9 million. Cash at September 30, 2017 reflects our use of cash on hand of approximately $145.6 million, net of $6.3 million of cash acquired, to fund our acquisition of River Vision on May 8, 2017 and $32.5 million paid during the nine months ended September 30, 2017 in relation to the litigation settlement with Express Scripts, and includes $69.1 million received following the Chiesi divestiture in June 2017, net of cash divested.$2.6 billion. We believe our existing cash and cash equivalents and our expected cash flows from our operations will be sufficient to fund our business needs for at least the next ~~twelve~~12 months from the issuance of ~~these~~the financial ~~statements. Part~~statements in this Quarterly Report on Form 10-Q. Because of the short-term maturities of our strategy is to expand and leverage our commercial capabilities and to develop a pipeline of rare disease medicine candidates by identifying, developing, acquiring and commercializing differentiated and accessible medicines that address unmet medical needs. To the extent we enter into transactions to acquire medicines or businesses in the future, we will most likely need to finance a significant portion of those acquisitions through additional debt, equity or convertible debt financings.

On October 23, 2017, Horizon Pharma, Inc., or HPI, our wholly owned subsidiary, and Horizon Pharma USA, Inc., our wholly owned subsidiary, or HPUSA, and together with HPI in such capacity, the Borrowers, borrowed approximately $845.8 million aggregate principal amount of loans, or the October 2017 Ref inancing Loans, pursuant to an amendment, or the October 2017 Refinancing Amendment, to the Credit Agreement, dated as of May 7, 2015, by and among the Borrowers, us and certain of our subsidiaries as guarantors, the lenders party thereto from time to time and Citibank, N.A., as administrative agent and collateral agent , as amended by Amendment No. 1, dated as of October 25, 2016 , or the 2016 Credit Agreement, and Amendment No. 2, dated March 29, 2017, or the March 2017 Credit Agreement. As used herein, all references to the “Credit Agreement” are references to the March 2017 Credit Agreement, as amended by the October 2017 Refinancing Amendment.

The October 2017 Refinancing Loans were incurred as a separate new class of term loans under the Credit Agreement with substantially the same terms as the previously outstanding senior secured term loans incurred on March 29 ~~, 2017 under the March 2017 Credit Agreement, or the October 2017 Refinanced Loans, to effectuate a repricing of the October 2017 Refinanced Loans. The~~ ~~Borrowers used the proceeds of the October 2017~~ Refinancing Loans to repay the October 2017 Refinanced Loans, which totaled approximately $845.8 million. The October 2017 Refinancing Loans bear interest, at the Borrowers’ option, at a rate equal to either the London Inter-Bank Offer Rate, or LIBOR, plus an applicable margin of 3.25% per year (subject to a LIBOR floor of 1.0%), or the adjusted base rate plus 2.25%. The adjusted base rate is defined as the greater of (a) LIBOR (using one-month interest period) plus 1%, (b) prime rate, (c) fed funds plus 0.5%, and (d) 2%. The Credit Agreement provides for (i) the October 2017 Refinancing Loans, (ii) one or more uncommitted additional incremental loan facilities subject to the satisfaction of certain financial and other conditions, and (iii) one or more uncommitted refinancing loan facilities with respect to loans thereunder. The Credit Agreement allows for us and certain of our subsidiaries to become borrowers under incremental or refinancing facilities.

~~The obligations under the Credit Agreement (including obligations in respect of the October 2017 Refinancing Loans) and any swap obligations and~~ cash management obligations owing to a lender (or an affiliate of a lender) thereunder are guaranteed by us and each of our existing and subsequently acquired or formed direct and indirect subsidiaries (other than certain immaterial subsidiaries, subsidiaries whose guarantee would result in material adverse tax consequences and subsidiaries whose guarantee is prohibited by applicable law). The obligations under the Credit Agreement (including obligations in respect of the October 2017 Refinancing Loans) and any such swap and cash management obligations are secured, subject to customary permitted liens and other agreed upon exceptions, by a perfected security interest in (i) all tangible and intangible assets of the Borrowers and the guarantors, except for certain customary excluded assets, and (ii) all of the capital stock owned by the Borrowers and guarantors thereunder (limited, in the case of the stock of certain non-U.S. subsidiaries of the Borrowers, to 65% of the capital stock of such subsidiaries). The Borrowers and the guarantors under the Credit Agreement are individually and collectively referred to herein as a “Loan Party” and the “Loan Parties,” as applicable.

Borrowers under the Credit Agreement are permitted to make voluntary prepayments of the loans under the Credit Agreement at any time without payment of a premium, except that with respect to the October 2017 Refinancing Loans, a 1% premium will apply to a ~~repayment of the~~ ~~October 2017~~ ~~Refinancing Loans in connection with a repricing of, or any amendment to the Credit Agreement in a repricing of, such loans effected on or prior to the date that is six months following~~ October 23, 2017. The Borrowers are required to make mandatory prepayments of loans under the Credit Agreement (without payment of a premium) with (a) net cash proceeds from certain non-ordinary course asset sales (subject to reinvestment rights and other exceptions), (b) casualty proceeds and condemnation awards (subject to reinvestment rights and other exceptions), (c) net cash proceeds from issuances of debt (other than certain permitted debt), and (d) 50% of our excess cash flow (subject to decrease to 25% or 0% if our first lien leverage ratio is less than 2.25:1 or 1.75:1, respectively). The October 2017 Refinancing Loans will amortize in equal quarterly installments beginning on December 31, 2017 in an aggregate annual amount equal to 1% of the original principal amount of the October 2017 ~~Refinanced Loans (i.e. $850.0 million), with any remaining balance payable on March 29, 2024, the final maturity date of the~~ ~~October 2017 Refinancing Loans.~~

~~We elected to exercise our reinvestment rights under the mandatory prepayment provisions of the March 2017 Credit Agreement with respect to the net proceeds from the Chiesi divestiture. To the extent~~equivalents, we do not ~~apply such net proceeds to permitted acquisitions (including the acquisition of rights to products and products lines) and/~~believe that a change in interest rates or the ~~acquisition of capital assets within 365 days of the receipt thereof (or commit~~risk relating to ~~so apply and then apply within 180 days after the end of such 365-day period), we~~recent bank failures would be required to make a mandatory prepayment under the March 2017 Credit Agreement in an amount equal to the unapplied net proceeds. Until such time, the net proceeds are not legally restricted for use. As of September 30, 2017, we had applied a portion of such net proceeds to the acquisition of additional rights to interferon gamma-1b.

On October 25, 2016, HPI and HPUSA, or the 2024 Issuers, completed a private placement of $300.0 million aggregate principal amount of 2024 Senior Notes to certain investment banks acting as initial purchasers who subsequently resold the 2024 Senior Notes to qualified institutional buyers as defined in Rule 144A under the Securities Act.

~~The obligations under the 2024 Senior Notes are the 2024 Issuers’ general unsecured senior obligations and are fully and unconditionally guaranteed on a senior unsecured basis by us and all of our direct and indirect subsidiaries that are guarantors from time to time under the Credit Agreement.~~

We used the net proceeds from the offering of the 2024 Senior Notes as well as $375.0 million principal amount of senior secured term loans incurred in October 2016 under the 2016 Credit Agreement to fund a portion of the acquisition of Raptor, repay Raptor’s outstanding debt, and payhave any ~~prepayment premiums, fees and expenses in connection with the foregoing.~~

The 2024 Senior Notes accrue interest at an annual rate of 8.75% payable semiannually in arrears on May 1 and November 1 of each year, beginning on May 1, 2017. The 2024 Senior Notes will mature on November 1, 2024, unless earlier repurchased or redeemed.

Except as described below, the 2024 Senior Notes may not be redeemed before November 1, 2019. Thereafter, some or all of the 2024 Senior Notes may be redeemed at any time at specified redemption prices, plus accrued and unpaid interest to the redemption date. At any time prior to November 1, 2019, some or all of the 2024 Senior Notes may be redeemed at a price equal to 100% of the aggregate principal amount thereof, plus a make-whole premium and accrued and unpaid interest to the redemption date. Also prior to November 1, 2019, up to 35% of the aggregate principal amount of the 2024 Senior Notes may be redeemed at a redemption price of 108.75% of the aggregate principal amount thereof, plus accrued and unpaid interest, with the net proceeds of certain equity offerings. In addition, the 2024 Senior Notes may be redeemed in whole but not in part at a redemption price equal to 100% of the principal amount plus accrued and unpaid interest and additional amounts, if any, to, but excluding, the redemption date, ifmaterial negative impact on the next date on which any amount would be payable in respect of the 2024 Senior Notes, the 2024 Issuers or any guarantor is or would be required to pay additional amounts as a result of certain tax-related events.

If we undergo a change of control, the 2024 Issuers will be required to make an offer to purchase all of the 2024 Senior Notes at a price in cash equal to 101% of the aggregate principal amount thereof plus accrued and unpaid interest to, but not including, the repurchase date. If we or certainfair value of our ~~subsidiaries engage in certain asset sales,~~cash equivalents. We do not have any financial covenants or non-financial covenants that we expect to be affected by the ~~2024 Issuers will be required under certain circumstances to make an offer to purchase the 2024 Senior Notes at 100%~~economic disruptions and negative effects of ~~the principal amount thereof, plus accrued and unpaid interest to the repurchase date.~~recent bank failures, global macro-economic issues or inflationary pressures.

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

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

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

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

On March 13, 2015, Horizon Pharma Investment Limited, our wholly owned subsidiary, or Horizon Investment, completed a private placement of $400.0 million aggregate principal amount of 2.50% Exchangeable Senior Notes due 2022, or the Exchangeable Senior Notes, to several investment banks acting as initial purchasers who subsequently resold the Exchangeable Senior Notes to qualified institutional buyers as defined in Rule 144A under the Securities Act. The net proceeds from the offering of the Exchangeable Senior Notes were approximately $387.2 million, after deducting the initial purchasers’ discount and offering expenses payable by Horizon Investment.

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

We have a significant amount of debt outstanding on a consolidated basis. For a description of our debt agreements, refer to Note 12, Debt Agreements, of the Notes to Condensed Consolidated Financial Statements, included in Item 1 of this Quarterly Report on Form 10-Q. This substantial level of debt could have important consequences to our business, including, but not limited to: making it more difficult for us to satisfy our obligations; requiring a substantial portion of our cash flows from operations to be dedicated to the payment of principal and interest on our indebtedness, therefore reducing our ability to use our cash flows to fund acquisitions, capital expenditures, R&D and future business opportunities; limiting our ability to obtain additional financing, including borrowing additional funds; increasing our vulnerability to, and reducing our flexibility to respond to, general adverse economic and industry ~~conditions;~~conditions, including rising interest rates and recent bank failures; limiting our flexibility in planning for, or reacting to, changes in our business and the industry in which we operate; and placing us at a disadvantage as compared to our competitors, to the extent that they are not as highly leveraged. We may not be able to generate sufficient cash to service all of our indebtedness and may be forced to take other actions to satisfy our obligations under our indebtedness.

In addition, the ~~indentures~~indenture governing ~~the 2024~~our 5.5% Senior Notes due 2027, or 2027 Senior Notes, and ~~2023 Senior Notes and the~~our Credit Agreement impose various covenants that limit our ability and/or our restricted subsidiaries’ ability to, among other things, pay dividends or distributions, repurchase equity, prepay junior debt and make certain investments, incur additional debt and issue certain preferred stock, incur liens on assets, engage in certain asset sales or merger transactions, enter into transactions with affiliates, designate subsidiaries as unrestricted subsidiaries; and allow to exist certain restrictions on the ability of restricted subsidiaries to pay dividends or make other payments to us.

On April 18, 2023, in connection with the potential closing of the Transaction, Horizon Therapeutics USA, Inc., our wholly owned subsidiary, or the Issuer, directed U.S. Bank Trust Company, National Association (as successor to U.S. Bank National Association), as trustee, or Notes Trustee, to give a notice, or First Redemption Notice, of the Issuer’s intent, in accordance with the indenture governing the 2027 Senior Notes, or 2027 Notes Indenture, to redeem in full the aggregate principal amount of our outstanding 2027 Senior Notes. The redemption as set forth in the First Redemption Notice was conditioned on, among other things, the consummation of the Transaction by not later than June 26, 2023. On May 26, 2023, HTUSA revoked the First Redemption Notice and directed the Notes Trustee to give a notice, or Second Redemption Notice, of HTUSA’s intent, in accordance with the 2027 Notes Indenture, to redeem in full the aggregate principal amount of the outstanding 2027 Senior Notes. The redemption as set forth in the Second Redemption Notice was conditioned on, among other things, the consummation of the Transaction by not later than July 25, 2023. On July 21, 2023, HTUSA revoked the Second Redemption Notice and directed the Notes Trustee to give a notice, or the Third Redemption Notice, of HTUSA’s intent, in accordance with the 2027 Notes Indenture, to redeem in full the aggregate principal amount of the outstanding 2027 Senior Notes. The redemption as set forth in the Third Redemption Notice is conditioned on, among other things, the consummation of the Transaction by not later than September 19, 2023.

On April 25, 2022, we entered into two interest rate swap agreements with notional amounts totaling $800.0 million, effective June 24, 2022, to hedge or otherwise protect against interest rate fluctuations on a portion of our variable rate debt. The agreements effectively fix the Secured Overnight Financing Rate, or SOFR, at approximately 2.8% through December 24, 2026. These agreements were designated as cash flow hedges of the variability of future cash flows subject to the variable monthly interest rates on $800.0 million of our senior secured term loans borrowed under our Credit Agreement in December 2019 and March 2021. Refer to Note 13, Derivative Instruments and Hedging Activities,of the Notes to Condensed Consolidated Financial Statements, included in Item 1 of this Quarterly Report on Form 10-Q for further details.

During the ~~nine~~six months ended ~~September~~June 30, ~~2017,~~2023, we issued an aggregate ~~of:~~

connection with such issuances. During the ~~nine~~six months ended ~~September~~June 30, 2017, warrants to purchase an aggregate of 391,500 ordinary shares were exercised and proceeds of $1.8 million were received. In addition, warrants to purchase an aggregate of 704,285 ordinary shares were exercised in cashless exercises, resulting in the issuance of 523,520 ordinary shares. As of September 30, 2017, there were no outstanding warrants to purchase ordinary shares.

~~During the nine months ended~~ ~~September 30, 2017~~,2023, we made payments of $~~5.6~~$92.1 million for employee withholding taxes relating to vesting of share-based awards.

~~In May 2016,~~Since our ~~board of directors authorized a share repurchase program pursuant to which~~inception, we may repurchase up to 5,000,000 of our ordinary shares. In May 2017, our board of directors reauthorized a share repurchase program pursuant to which we may repurchase up to 16,000,000 of our ordinary shares. As of September ~~30, 2017, we had repurchased 100,000 of our~~ ~~ordinary shares under this repurchase program for total consideration of $1.0 million. The timing and amount of future repurchases, if~~have not engaged in any ~~will depend on a variety of factors,~~off-balance sheet arrangements, including the ~~price~~use of ~~our~~ ~~ordinary shares, alternative investment opportunities, our cash resources, restrictions under~~structured finance, special purpose entities or variable interest entities, other than the ~~Credit Agreement~~indemnification agreements discussed in Note 15, Commitments and ~~market conditions.~~Contingencies, of the Notes to Condensed Consolidated Financial Statements, included in Item 1 of this Quarterly Report on Form 10-Q.

The following table provides a summary of our cash position and cash flows ~~as of and~~ for the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2023 and ~~2016~~2022 (in thousands):

Net cash provided by operating activities during the six months ended June 30, 2023 of $247.8 million was primarily attributable to cash collections from gross sales, partially offset by payments made related to government rebates and patient assistance costs for our medicines, payments for inventory, payments related to selling, general and administrative expenses and payments related to R&D expenses.

During the ~~nine~~six months ended ~~September~~June 30, ~~2017,~~2022, net cash provided by operating activities ~~was $137.0~~of $465.0 million ~~compared to $230.3 million during the nine months ended September 30, 2016. The decrease in net cash provided by operating activities~~ was primarily attributable to cash payments of $74.4 million for interest during the nine months ended September 30, 2017 compared to $39.5 million during the nine months ended September 30, 2016, and $32.5 million paid during the nine months ended September 30, 2017 in relation to the litigation settlement with Express Scripts.

During the nine months ended September 30, 2017, net cash used in investing activities was $103.2 million compared to $538.4 million during the nine months ended September 30, 2016. The net cash used in investing activities during the nine months ended September 30, 2017 was primarily associated with $146.5 million of payments for the acquisition of River Vision, net of cash acquired, and $22.3 million relating to the payment for certain rights for interferon gamma-1b. This wascollections from gross sales, partially offset by ~~$69.1 million of proceeds received from the Chiesi divestiture, net of cash divested.~~payments made related to patient assistance costs for our former inflammation segment medicines and government rebates for our orphan segment medicines, payments related to selling, general and administrative expenses and payments related to R&D expenses.

Net cash used in investing activities during the ~~nine~~six months ended ~~September~~June 30, ~~2016~~2023 of $61.8 million was primarily ~~associated with $514.8 million of~~attributable to payments ~~for the acquisition of Crealta, net of cash acquired, a $5.6 million (€5.0 million) initial payment for rights~~related to ~~interferon gamma-1b and $14.6 million of payments for~~ purchases of property, plant and ~~equipment.~~equipment of $42.6 million and milestone-based development funding of $15.0 million paid to Arrowhead in the first quarter of 2023. Refer to Note 15, Commitments and Contingencies, of the Notes to Condensed Consolidated Financial Statements, included in Item 1 of this Quarterly Report on Form 10-Q.

During the six months ended June 30, 2022, net cash used in investing activities of $52.9 million was primarily attributable to an upfront payment of $25.0 million paid to Alpine Immune Sciences, Inc. in the first quarter of 2022 relating to an exclusive license agreement entered into in December 2021 and payments related to purchases of property, plant and equipment of $24.4 million.

Net cash used in financing activities during the six months ended June 30, 2023 of $79.1 million was primarily attributable to $92.1 million in payments of employee withholding taxes relating to share-based awards, partially offset by $21.0 million in proceeds from the issuance of ordinary shares in connection with stock option exercises and employee share purchase plan purchases.

During the ~~nine~~six months ended ~~September~~June 30, ~~2017, net cash provided by financing activities was $77.8 million compared to~~2022, net cash used in financing activities of ~~$1.7~~$92.6 million ~~during the nine months ended September 30, 2016. Net cash provided by financing activities during the nine months ended September 30, 2017~~ was primarily attributable to $120.5 million in payments of employee withholding taxes relating to share-based awards, partially offset by $35.9 million in proceeds from the ~~net proceeds~~issuance of ~~$847.8 million from term loans, offset~~ordinary shares in ~~part by repayment of term loans of $770.8 million.~~connection with stock option exercises and employee share purchase plan purchases.

Financial Condition as of ~~September~~June 30, ~~2017 compared~~2023 Compared to December 31, ~~2016~~2022

~~Accounts receivable, net.~~ ~~Accounts receivable, net,~~Prepaid expenses and other current assets. Prepaid expenses and other current assets increased ~~$85.0~~$115.5 million, from ~~$305.7~~$449.3 million as of December 31, ~~2016~~2022 to ~~$390.7~~$564.8 million as of ~~September~~June 30, ~~2017.~~2023. The increase was primarily due to ~~growth~~an increase of $41.5 million in ~~gross sales~~deferred charges for taxes on intercompany profits, an increase of ~~our medicines.~~$30.2 million in advance payments for inventory and an increase of $14.9 million in prepaid clinical study costs.

~~Inventories, net.~~ ~~Inventories,~~Developed technology and other intangible assets, net. Developed technology and other intangible assets, net decreased ~~$88.3~~$178.2 million, from ~~$174.8~~$2,664.8 million as of December 31, ~~2016~~2022 to ~~$86.5~~$2,486.6 million as of ~~September~~June 30, ~~2017.~~2023, primarily related to $178.2 million of amortization of developed technology recorded during the six months ended June 30, 2023.

Other long-term assets. Other long-term assets increased $58.9 million, from $204.1 million as of December 31, 2022 to $263.0 million as of June 30, 2023. The increase was primarily due to the recognition of a $46.0 million right-of-use asset relating to a new lease entered into in Rockville, Maryland. Refer to Note 14, Lease Obligations, of the Notes to Condensed Consolidated Financial Statements, included in Item 1 of this Quarterly Report on Form 10-Q, for further details.

Accounts Payable. Accounts payable decreased $70.3 million, from $155.8 million as of December 31, 2022 to $85.5 million as of June 30, 2023. The decrease was primarily due to ~~$95.7~~the timing of payments, including a decrease of $73.7 million ~~of inventory step-up expense recorded during the nine months ended September 30, 2017 ($54.9 million~~in accounts payable related to ~~KRYSTEXXA~~government rebates, co-pay and ~~$40.8 million related to PROCYSBI~~patient assistance costs and QUINSAIR). Additionally, during the nine months ended September 30, 2017, we recorded $3.2 million of inventory step-up expense to gain on divestiture following the sale of inventory to Chiesi in connection with the Chiesi divestiture.commercial rebates and wholesaler fees.

~~Developed technology,~~Deferred tax liabilities, net.~~Developed technology,~~ Deferred tax liabilities, net, decreased ~~$254.8~~$77.2 million from ~~$2,767.2~~$342.0 million as of December 31, ~~2016~~2022 to ~~$2,512.4~~$264.8 million as of ~~September~~June 30, ~~2017. The decrease was~~2023, primarily due to ~~the amortization of developed technology of $207.5 million~~a benefit for income taxes recognized during the ~~nine~~six months ended ~~September~~June 30, ~~2017 and developed technology with a net book value of $47.3 million disposed of in the Chiesi divestiture.~~2023.

~~Goodwill.~~ ~~Goodwill decreased $19.2~~Other long-term liabilities. Other long-term liabilities increased $59.3 million, from ~~$445.6~~$204.5 million as of December 31, ~~2016~~2022 to ~~$426.4~~$263.8 million as of ~~September~~June 30, 2017. The decrease was due to $16.3 million written off in connection with the Chiesi divestiture and $2.9 million in measurement period adjustments related to the Raptor acquisition, which were recorded during the nine months ended September 30, 2017.

~~Other assets.~~ ~~Other assets increased $33.9 million from $2.4 million as of December 31, 2016 to $36.2 million as of September 30, 2017.~~2023. The increase was primarily due to the recognition of a royalty reimbursement asset recorded in connection with the Chiesi divestiture during the nine months ended September 30, 2017, which represents the future estimated amount receivable from Chiesi in respect of PROCYSBI and QUINSAIR contingent royalty liabilities.

In relation to all outstanding PSUs, if our share price is lower than $31.58, $32.70 and $33.86 for the twenty trading days ending December 23, 2017, March 22, 2018 and June 22, 2018, respectively, approximately $16.4$46.9 million ~~$14.9 million and $13.4 million, respectively, of deferred tax assets related to previously recognized share-based compensation expense related to these PSUs will be charged to income tax expense.~~

~~Accounts payable.~~ ~~Accounts payable decreased $19.7 million, from $52.5 million as of December 31, 2016 to $32.8 million as of September 30, 2017. This decrease was primarily due to timing of invoices.~~

~~Accrued expenses.~~ Accrued expenses decreased $20.1 million, from $182.8 million as of December 31, 2016 to $162.7 million as of September 30, 2017. This was primarily due to the payment of $32.5 million during the nine months ended September 30, 2017 pursuant to our settlement agreement with Express Scripts and a decrease of $18.7 million in payroll-related expenses, partially offset by an increase of $20.0 millionlease liability relating to a ~~contingent consideration liability that was reclassified from other long-term liabilities and an increase of $7.6 million~~new lease entered into in ~~accrued interest.~~

~~Accrued trade discounts and rebates.~~ ~~Accrued trade discounts and rebates increased $138.2 million, from $297.5 million as of December 31, 2016~~Rockville, Maryland. Refer to $435.7 million as of September 30, 2017. This was primarily due to a $135.7 million increase in accrued wholesaler fees and commercial rebates and a $15.0 million increase in accrued government rebates and chargebacks, partially offset by a $12.5 million decrease in co-pay and other patient assistance costs.

~~Deferred tax liabilities, net.~~ Deferred tax liabilities, net, decreased $70.5 million, from $296.6 million as of December 31, 2016 to $226.1 million as of September 30, 2017. This was primarily due to the benefit for income taxes of $42.1 million recorded during the nine months ended September 30, 2017 and deferred tax assets of $21.6 million acquired in the River Vision acquisition. Additionally, we prospectively adopted ASU No. 2016-09 on January 1, 2017 and recorded a decrease of $7.2 million in net deferred tax liabilities and a corresponding decrease in accumulated deficit during the nine months ended September 30, 2017.

~~Other long-term liabilities.~~ Other long-term liabilities increased $21.9 million, from $46.1 million as of December 31, 2016 to $68.0 million as of September 30, 2017. This was primarily due to $26.6 million recorded during the nine months ended September 30, 2017 which represents the fair valueNote 14, Lease Obligations, of the ~~long-term portion~~Notes to Condensed Consolidated Financial Statements, included in Item 1 of ~~the contingent liability~~this Quarterly Report on Form 10-Q, for ~~royalties potentially payable under previously existing agreements related to PROCYSBI and QUINSAIR on EMEA sales and $21.6 million recorded during the nine months ended September~~further details.

As of June 30, 2017 which represents a deferred credit offsetting the deferred tax assets recorded following the River Vision acquisition, partially offset by a decrease of $20.0 million in relation to a contingent consideration liability that was reclassified to accrued expenses during the nine months ended September 30, 2017.

~~Long-term debt, net, net of current.~~ Long-term debt, net, net of current increased $77.2 million from $1,501.7 million as of December 31, 2016 to $1,578.9 million as of September 30, 2017. The increase was primarily related to the $850.0 million ~~aggregate principal amount of refinancing loans incurred in March 2017, which replaced the $394.0 million 2015 term loan facility and the $375.0 million 2016 incremental loan facility, resulting in an increase of $81.0 million of principal amount of our outstanding debt. This increase was offset in part by certain charges related to the refinancing loans and amortization of debt discount and deferred financing fees and a repayment of $2.1 million during the nine months ended September 30, 2017.~~

~~During the three months ended September 30, 2017,~~2023, there were no material changes ~~outside of the ordinary course of business~~ to our contractual obligations as previously disclosed in Part II, Item 7 of our Annual Report on Form 10-K for the fiscal year ended December 31, ~~2016,~~2022, except as ~~disclosed below.~~

~~On October 23, 2017, the Borrowers borrowed approximately $845.8~~ ~~million aggregate principal amount of loans pursuant to the October 2017 Refinancing Amendment. The October 2017 Refinancing Loans were incurred as a separate new class of term loans under the Credit Agreement with substantially the same terms as the October 2017 Refinanced Loans to effectuate a repricing~~described in Note 15, Commitments and Contingencies, of the ~~October 2017 Refinanced Loans. The~~ ~~Borrowers used the proceeds~~Notes to Condensed Consolidated Financial Statements, included in Item 1 of ~~the October 2017~~ Refinancing Loans to repay the October 2017 Refinanced Loans, which totaled approximately $845.8 million. The October 2017 Refinancing Loans bear interest, at the Borrowers’ option, at a rate equal to either LIBOR plus an applicable margin of 3.25% per year (subject to a LIBOR floor of 1.0%), or the adjusted base rate plus 2.25%. The adjusted base rate is defined as the greater of (a) LIBOR (using one-month interest period) plus 1%, (b) prime rate, (c) fed funds plus 0.5%, and (d) 2%. The Credit Agreement provides for (i) the October 2017 Refinancing Loans, (ii) one or more uncommitted additional incremental loan facilities subject to the satisfaction of certain financial and other conditions, and (iii) one or more uncommitted refinancing loan facilities with respect to loans thereunder. The Credit Agreement allows for us and certain of our subsidiaries to become borrowers under incremental or refinancing facilities.this Quarterly Report on Form 10-Q.

The obligations under the Credit Agreement (including obligations in respect of the October 2017 Refinancing Loans) and any swap obligations and cash management obligations owing to a lender (or an affiliate of a lender) thereunder are guaranteed by us and each of our existing and subsequently acquired or formed direct and indirect subsidiaries (other than certain immaterial subsidiaries, subsidiaries whose guarantee would result in material adverse tax consequences and subsidiaries whose guarantee is prohibited by applicable law). The obligations under the Credit Agreement (including obligations in respect of the October 2017 Refinancing Loans) and any such swap and cash management obligations are secured, subject to customary permitted liens and other agreed upon exceptions, by a perfected security interest in (i) all tangible and intangible assets of the Borrowers and the guarantors, except for certain customary excluded assets, and (ii) all of the capital stock owned by the Borrowers and guarantors thereunder (limited, in the case of the stock of certain non-U.S. subsidiaries of the Borrowers, to 65% of the capital stock of such subsidiaries).

Borrowers under the Credit Agreement are permitted to make voluntary prepayments of the loans under the Credit Agreement at any time without payment of a premium, except that with respect to the October 2017 Refinancing Loans, a 1% premium will apply to a repayment of the October 2017 Refinancing Loans in connection with a repricing of, or any amendment to the Credit Agreement in a repricing of, such loans effe cted on or prior to the date that is six months following October 23, 2017. The Borrowers are required to make mandatory prepayments of loans under the Credit Agreement (without payment of a premium) with (a) net cash proceeds from certain non-ordinary course asset sales (subject to reinvestment rights and other exceptions), (b) casualty proceeds and condemnation awards (subject to reinvestment rights and other exceptions), (c) net cash proceeds from issuances of debt (other than certain permitted debt), and (d) 50% of our excess cash flow (subject to decrease to 25% or 0% if our first lien leverage ratio is less than 2.25:1 or 1.75:1, respectively). The October 2017 Refinancing Loans will amortize in equal quarterly installments beginning on December 31, 2017 in an aggregate annual amount equal to 1% of the original principal amount of the October 2017 Refinanced Loans (i.e. $850.0 million), with any remaining balance payable on March 29, 2024, the final maturity date of the October 2017 Refinancing Loans.

The preparation of financial statements in accordance with U.S. GAAP principles requires the use of estimates and assumptions that affect the reported amounts of assets and liabilities and the reported amounts of revenue and expenses. Certain of these policies are considered critical as these most significantly impact a company’s financial condition and results of operations and require the most difficult, subjective or complex judgments, often as a result of the need to make estimates about the effect of matters that are inherently uncertain. Actual results may vary from these estimates.

During the six months ended June 30, 2023, there were no significant changes in our application of our critical accounting policies. A summary of our ~~significant~~critical accounting policies is included in ~~Note 2~~Item 7 to our Annual Report on Form 10-K for the year ended December 31, ~~2016. There have been no significant changes in our application of our critical accounting policies during the nine months ended September 30, 2017.~~2022.

Since our inception, we have not engaged in any off-balance sheet arrangements, including the use of structured finance, special purpose entities or variable interest entities, other than the indemnification agreements discussed in Note 16, “Commitments and Contingencies” in the notes to our condensed consolidated financial statements included in this report.

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

Interest Rate Risk.We are subject to interest rate fluctuation exposure through our borrowings under ~~the~~our Credit Agreement and our investment in money market accounts which bear a variable interest rate. ~~Loans~~Our approximately $418.0 million aggregate principal amount of senior secured term loans borrowed under ~~the~~our Credit Agreement in December 2019, or the 2026 Term Loans, and loans under our incremental revolving credit facility, or Revolving Credit Facility, bear interest, at our option, at a rate equal to ~~either the LIBOR rate, plus an applicable margin of 3.25% per annum~~SOFR (subject to a ~~1.00% LIBOR~~0.00% SOFR floor), plus the SOFR adjustment, plus 2.25% per annum, or the adjusted base rate plus ~~2.25%.~~1.25% per annum with a step-down to SOFR, plus the SOFR adjustment, plus 2.00% per annum or the adjusted base rate plus 1.00% per annum at the time our leverage ratio is less than or equal to 2.00 to 1.00. The SOFR adjustment is an additional interest amount for either one-month, three-month or six-month interest periods, at our election: (a) 0.11% using a one-month interest period, (b) 0.26% using a three-month interest period, and (c) 0.43% using a six-month interest period. The adjusted base rate is defined as the ~~greater~~greatest of (a) ~~LIBOR~~SOFR (using one-month interest period) plus 1%1.00%, (b) the prime rate, (c) ~~fed~~the federal funds rate plus ~~0.5%~~ 0.50%, and (d) 2%1.00%. Our ~~approximately $845.8~~ ~~million~~2026 Term Loans are borrowed in SOFR. The one-month SOFR rate as of ~~October 2017 Refinancing Loans are based~~July 24, 2023, which was the most recent date the interest rate on ~~LIBOR. The current LIBOR rate is 1.25%~~the 2026 Term Loans was fixed, was 5.29%, and as a result, the interest rate on our ~~borrowings~~2026 Term Loans is currently 7.41% per annum. Our $1.6 billion aggregate principal amount of senior secured term loans borrowed under our Credit Agreement in March 2021, or the 2028 Term Loans, bear interest, at our option, at a rate equal to SOFR (subject to a 0.00% SOFR floor), plus the SOFR adjustment, plus 2.00% per annum, or the adjusted base rate plus 1.00% per annum with a step-down to SOFR, plus the SOFR adjustment, plus 1.75% per annum or the adjusted base rate plus 0.75% per annum at the time our leverage ratio is less than or equal to 2.00 to 1.00. Our 2028 Term Loans are based on SOFR. The one-month SOFR rate as of July 24, 2023, which was the most recent date the interest rate on the 2028 Term Loans was fixed, was 5.29%, and as a result, the interest rate on our 2028 Term Loans is currently ~~4.50%~~7.16% per annum. As of June 30, 2023, the Revolving Credit Facility was undrawn.

AnAs of June 30, 2023, an increase in the ~~LIBOR~~SOFR of 100 basis points above the current ~~LIBOR~~SOFR rate, which includes the effect of the two interest rate swaps entered into in the second quarter of 2022, would increase our interest expense related to the Credit Agreement by ~~$8.5~~$12.0 million per year.

The goals of our investment policy are ~~associated with the preservation of~~to preserve capital, ~~fulfillment of~~fulfill liquidity needs and maintain fiduciary control of cash. To achieve our goal of maximizing income without assuming significant market risk, we maintain our excess cash and cash equivalents in money market ~~funds.~~funds, time deposits and U.S. federal government securities. Because of the short-term maturities of our cash equivalents, we do not believe that a ~~decrease~~change in interest rates or risk relating to recent bank failures would have any material negative impact on the fair value of our cash equivalents.

Foreign Currency Risk. Our purchase ~~cost~~costs of TEPEZZA drug substance, TEPEZZA drug product with our second drug product manufacturer, Patheon Pharmaceuticals Inc. (the contract development and manufacturing services organization of Thermo Fisher Scientific), and ACTIMMUNE ~~under our contract with Boehringer Ingelheim Biopharmaceuticals GmbH and our sales contracts relating to LODOTRA~~inventory are principally denominated in Euros and are subject to foreign currency risk. In addition, we are obligated to pay certain milestones and a royalty on sales of TEPEZZA to Roche in Swiss Francs, which obligations are subject to foreign currency risk. We also incur certain operating expenses and earn certain revenues in currencies other than the U.S. dollar in relation to our Irish operations and foreign ~~subsidiaries, including Horizon Pharma Switzerland GmbH; therefore,~~subsidiaries. Therefore, we are subject to volatility in cash flows due to fluctuations in foreign currency exchange rates, particularly changes in the ~~Euro.~~Euro and the Swiss Franc. In addition, we enter into forward currency contracts to hedge our foreign currency risk exposure.

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

Credit Risk.Historically, our accounts receivable balances have been highly concentrated with a select number of customers, consisting primarily of large wholesale ~~pharmaceutical~~biopharmaceutical distributors who, in turn, sell the medicines to pharmacies, hospitals and other customers. As of ~~September~~June 30, ~~2017~~2023 and December 31, ~~2016,~~2022, our top ~~three~~four customers accounted for approximately ~~79%~~89% and ~~78%, respectively,~~94% of our total outstanding accounts receivable ~~balances.~~balances, respectively. Given the size and creditworthiness of the customers, we have not experienced and do not expect to experience material credit related losses with such customers.

Evaluation of Disclosure Controls and Procedures.As required by paragraph (b) of Rules 13a-15 and 15d-15 promulgated under the Exchange Act, our management, including our Chief Executive Officer and Chief Financial Officer, conducted an evaluation as of the end of the period covered by this report of the effectiveness of our disclosure controls and procedures as defined in Exchange Act Rules 13a-15(e) and 15d-15(e). Based on that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective as of ~~September~~June 30, ~~2017,~~2023, the end of the period covered by this report.

Changes in Internal Control Over Financial Reporting.During the ~~three months~~quarter ended ~~September~~June 30, ~~2017, as part of the ongoing implementation of our new enterprise resource planning software, we implemented the order-to-cash function~~. As the implementation occurs, we are changing certain processes and procedures which result in material changes to our internal controls over financial reporting. While we expect the order-to-cash function and these changes to strengthen our internal controls, management will continue to evaluate and monitor our internal controls as processes and procedures in the affected areas evolve.

~~During the three months ended September 30, 2017, other than continuing changes to our new enterprise resource planning software, as discussed above,~~2023, there have been no ~~material~~ changes to our internal control over financial reporting, as defined in ~~Exchange Act~~ Rules 13a-15(f) and 15d-15(f), that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

For a description of our legal proceedings, see Note ~~17,~~ 16, Legal Proceedings, of the Notes to Condensed Consolidated Financial Statements, included in Item 1 of this Quarterly Report on Form 10-Q.

We face many risks and uncertainties, as more fully described in this section under the heading “Risk Factors.” Some of these risks and uncertainties are summarized below. The summary below does not contain all of the information that may be important to you, and you should read this summary together with the more detailed discussion of these risks and uncertainties contained in “Risk Factors.”

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

The risk factors set forth below with an asterisk (*) next to the title are new risk factors or risk factors containing changes, including any material changes, from the risk factors previously disclosed in Item 1A of our ~~annual report~~Annual Report on Form 10-K for the year ended December 31, ~~2016,~~2022, as filed with the SEC.

Failure to complete, or further delays in completing, the pending transaction with Amgen announced on December 12, 2022 could materially and adversely affect our results of operations and our share price.*

On December 12, 2022, we announced that we entered into a transaction agreement with Amgen and Pillartree Limited, or Pillartree, a wholly owned subsidiary of Amgen. Subject to the terms of the transaction agreement, Pillartree will acquire our company, or the Transaction, pursuant to a scheme of arrangement under Chapter 1 of Part 9 of the Companies Act 2014 of Ireland, or the Scheme, or under certain circumstances, subject to the terms of the transaction agreement, a takeover offer (as such term is defined in the Irish Takeover Rules) rather than the Scheme. As a result of the Scheme, we would become a wholly owned subsidiary of Amgen. Consummation of the Transaction is subject to certain closing conditions, some of which are not within our control, and may prevent, delay, or otherwise materially adversely affect the completion of the Transaction. On May 16, 2023, the Federal Trade Commission, or FTC, filed a complaint in the United States District Court for the Northern District of Illinois seeking a temporary restraining order and preliminary injunction enjoining the Transaction. On May 23, 2023, the court scheduled an evidentiary hearing on the FTC’s request for a preliminary injunction beginning on September 11, 2023. Based on the court’s schedule, we, Amgen and the FTC then submitted a stipulated proposed temporary restraining order to the court providing that we and Amgen would not close the Transaction until the earlier of October 31, 2023 or the second business day after the court rules on the FTC’s request for a preliminary injunction, or Stipulated TRO. On May 31, 2023, the court entered a case management order, and on June 2, 2023, the court issued an order granting the Stipulated TRO. On June 22, 2023, the FTC filed a parallel complaint in its administrative court and an amended complaint was filed in the federal district court adding several states as additional plaintiffs. On June 29, 2023, we and Amgen filed an answer to the amended complaint and counterclaims against the FTC. We expect that the schedule set by the federal district court would allow the Transaction to close by mid-December 2023, but only if the court denies the request for a preliminary injunction. We cannot predict with certainty whether and when any of the required closing conditions, including the termination of the Stipulated TRO and absence of any other order preventing consummation of the Transaction, will be satisfied or if additional uncertainties may arise and cannot guarantee that we will be able to successfully consummate the pending Transaction as currently contemplated under the transaction agreement or at all. In particular, there can be no guarantee that the federal district court will deny the FTC’s request for a preliminary injunction or when, if ever, such a ruling would be issued. If the FTC’s request for a preliminary injunction is granted, it is highly unlikely that the Transaction could close before the December 12, 2023 end date specified in the transaction agreement. In the event that the Transaction does not close before the December 12, 2023 end date specified in the transaction agreement, each party would then have the right, in its sole discretion, to terminate the transaction agreement and abandon the Transaction, which Amgen may determine to do, particularly if the FTC’s request for a preliminary injunction is granted. If the transaction agreement is terminated and the Transaction is abandoned, whether due to the failure to satisfy applicable closing conditions related to obtaining antitrust clearance for the Transaction or otherwise, our business, results of operations, financial condition, and our share price would be materially and adversely affected. Risks related to the failure of the pending Transaction to be consummated include, but are not limited to, the following:

Additionally, the retention of our employees, hiring of new qualified employees and the performance of our employees have been negatively affected during the pendency of the Transaction as employees or prospective employees face uncertainty about their future roles following completion of the Transaction.

Further, under the transaction agreement, we are generally required to conduct our business in the ordinary course, consistent with past practice and are restricted from taking certain specified actions absent Amgen’s prior written consent.

The occurrence of any of these events individually or in combination could materially and adversely affect our business, results of operations, financial condition, and our share price.

The ability to complete the Transaction is subject to the receipt of consents and clearances from government entities, which may impose conditions that could have an adverse effect or could cause either party to abandon the Transaction.*

The Transaction remains subject to customary closing conditions, including, among other things, (a) the sanction by the Irish High Court of the Scheme and delivery of the court order to the Irish Registrar of Companies, (b) the absence of an order or law that prevents consummation of the Transaction or imposes a burdensome condition (as defined in the transaction agreement), (c) absence of any Material Adverse Effect (as defined in the transaction agreement) from December 12, 2022 to the Sanction Date (as defined in the transaction agreement) that is continuing as of the Sanction Date, (d) the accuracy of each party’s representations and warranties subject to certain materiality and material adverse effect exceptions and (e) the performance by each party of all of its covenants and agreements under the transaction agreement in all material respects. As a result of the FTC’s lawsuit and the Stipulated TRO, we expect that the closing of the Transaction will continue to be delayed. In addition, if the FTC’s request for a preliminary injunction is granted, it is highly unlikely that the Transaction could close before the December 12, 2023 end date specified in the transaction agreement. In the event that the Transaction does not close before the December 12, 2023 end date specified in the transaction agreement, each party would then have the right, in its sole discretion, to terminate the transaction agreement and abandon the Transaction, which Amgen may determine to do, particularly if the FTC’s request for a preliminary injunction is granted. If the transaction agreement is terminated and the Transaction is abandoned, whether due to the failure to satisfy applicable closing conditions related to obtaining antitrust clearance for the Transaction or otherwise, our business, results of operations, financial condition, and our share price would be materially and adversely affected.

The transaction agreement limits our ability to pursue alternative transactions which could deter a third party from proposing an alternative transaction.

The transaction agreement contains provisions that, subject to certain exceptions, limit our ability to solicit or knowingly encourage discussions or negotiations with any third party regarding alternative acquisition proposals. It is possible that these or other provisions in the transaction agreement might discourage a potential competing acquirer that might have an interest in acquiring all or a significant part of our outstanding ordinary shares from considering or proposing an acquisition or that the price at which Amgen has proposed to acquire Horizon might result in a potential competing acquirer proposing to pay a lower per share price to acquire our ordinary shares than it might otherwise have proposed to pay.

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

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

With respect to ~~DUEXIS~~TEPEZZA, sales will depend on market acceptance and ~~VIMOVO, studies indicate that~~adoption by physicians, healthcare payers and patients, as well as the ability and willingness of physicians who do not ~~commonly co-prescribe gastrointestinal,~~have in-house infusion capability to refer patients to infusion sites of care and of certain physicians to refer patients to ocular specialists familiar with thyroid eye disease, or ~~GI, protective agents to high-risk patients taking nonsteroidal anti-inflammatory drugs, or NSAIDs. We believe this is due in part to a lack~~TED, and the use of awareness among physicians prescribing NSAIDs regarding the risk of NSAID-induced upper GI ulcers, in addition to the inconvenience of prescribing two separate medications and patient compliance issues associated with multiple prescriptions. If physicians remain unaware of, or do not otherwise believe in, the benefits of combining GI protective agents with NSAIDs, our market opportunity for DUEXIS and VIMOVO will be limited. Some physicians may also be reluctant to prescribe DUEXIS or VIMOVO due to the inability to vary the dose of ibuprofen and naproxen, respectively, or if they believe treatment with NSAIDs or GI protective agents other than those contained in DUEXIS and VIMOVO, including those of its competitors, would be more effective for their patients.TEPEZZA. With respect to each of DUEXIS, PENNSAID 2% w/w, or PENNSAID 2%, RAYOS/LODOTRA, VIMOVO and BUPHENYL, their higher cost compared to the generic or branded forms of their active ingredients alone may limit adoption by physicians, patients and healthcare payers. With respect to ACTIMMUNE, while it is the only FDA-approved treatment for chronic granulomatous disease, or CGD, and severe, malignant osteopetrosis, or SMO, they are very rare conditions and, as a result,KRYSTEXXA, our ability to grow ~~ACTIMMUNE~~ sales will ~~depend on~~be affected by the success of our ~~ability~~sales, marketing and clinical strategies, which are intended to expand the patient population and usage of KRYSTEXXA. This includes our marketing efforts in nephrology and our studies designed to further ~~penetrate this limited market, obtain marketing approval for additional indications~~evaluate uses and ~~encourage patients and physicians to continue treatment once initiated.~~ways of enhancing the patient experience of KRYSTEXXA. With respect to RAVICTI, which is ~~also~~ approved to treat a very limited patient population, our ability to grow sales will depend in large part on our ability to transition urea cycle disorder, or UCD, patients from BUPHENYL or generic equivalents, which are comparatively much less expensive, to RAVICTI and to ~~encourage~~educate patients and physicians ~~to continue~~on the benefits of continuing RAVICTI therapy once initiated. With respect to KRYSTEXXA, our ability to grow sales will be affected by the success of our sales and marketing strategies and life cycle management, including studies designed to test reduction of immunogenicity in KRYSTEXXA, our proposed label update submission to the FDA relating to additional data based on post-marketing studies and our investigator-initiated trial evaluating new approaches to the clinical use of KRYSTEXXA that is expected to begin enrolling patients by the end of 2017, which could expand the patient population and usage of KRYSTEXXA. With respect to MIGERGOT, our ability to sustain sales will depend on the management of inventory levels and the continued awareness of its benefits among physicians. With respect to PROCYSBI, which is also approved to treat a very limited patient population, our ability to grow sales will depend in large part on our ability to transition patients from the first-generation immediate-release cysteamine therapy to PROCYSBI, to identify additional patients with nephropathic cystinosis and to ~~encourage~~educate patients and physicians ~~to continue~~on the benefits of continuing therapy once initiated. ~~Unless QUINSAIR~~With respect to UPLIZNA, sales will depend on market acceptance and adoption by physicians and healthcare payers, as well as the ability and willingness of physicians who do not have in-house infusion capability to refer patients to infusion sites of care. With respect to ACTIMMUNE, while it is ~~approved~~the only FDA-approved treatment for ~~marketing in additional countries,~~chronic granulomatous disease, or CGD, and severe, malignant osteopetrosis, or SMO, which are very rare conditions and, as a result, our ability to ~~drive growth of this medicine~~grow ACTIMMUNE sales will ~~largely~~ depend on ~~expanding its use in Canada.~~our ability to identify additional patients with such conditions and educate patients and physicians on the benefits of continuing treatment once initiated. If our current medicines or any other medicine that we may seek approval for, or acquire, fail to attain market acceptance, we may not be able to generate significant revenue to ~~achieve or~~ sustain profitability, which would have a material adverse effect on our business, results of operations, financial condition and prospects (including, possibly, the value of our ordinary shares).

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

A substantial majority of our resources are focused on the commercialization of our current medicines. Our ability to generate significant medicine revenues and to achieve commercial success in the near-term will initially depend almost entirely on our ability to successfully commercialize these medicines in the United States.

~~With respect to our orphan business unit medicines, ACTIMMUNE, BUPHENYL, PROCYSBI, QUINSAIR and RAVICTI, and with respect to our rheumatology business unit medicine, KRYSTEXXA, our~~ Our commercialization strategy includes efforts to increase awareness of the rare conditions that each medicine is designed to treat, enhancing efforts to identify target patients and in certain cases pursue opportunities for ~~label expansion and~~ more effective use through clinical ~~trials. In addition,~~trials, as well as opportunities for commercialization outside of the United States. Our comprehensive commercial strategy for TEPEZZA aims to enable more TED patients to benefit from TEPEZZA. We are doing this by: (i) facilitating continued TEPEZZA uptake in the treatment of TED through continued promotion of TEPEZZA to treating physicians; (ii) continuing to develop the TED market by increasing physician awareness of the disease severity and the urgency to diagnose and treat it, as well as the benefits of treatment with TEPEZZA, including through the expansion of our TEPEZZA commercial team and targeting ophthalmologists and endocrinologists; (iii) driving accelerated disease identification and time to treatment through our digital and broadcast marketing campaigns; (iv) enhancing the patient journey with our high-touch, patient-centric model as well as support for the patient and site-of-care referral processes; (v) pursuing more timely access to TEPEZZA for TED patients; (vi) educating physicians and payers on the effectiveness of TEPEZZA in patients with chronic/low clinical activity score, or CAS, TED, including through the results of our recently-completed Phase 4 clinical trial in this patient population and FDA approval of an update to TEPEZZA’s label specifying the use of TEPEZZA regardless of TED disease activity or duration; and (vii) pursuing a global expansion strategy, which includes bringing TEPEZZA to patients with TED outside of the United States. Our strategy with respect to ~~ACTIMMUNE~~KRYSTEXXA includes ~~pursuing label expansion for additional indications, such~~existing rheumatology account growth, new rheumatology account growth and accelerating nephrology growth, the use of KRYSTEXXA with methotrexate following the approval of our supplemental biologics license application, in July 2022, as ~~for~~ ~~advanced urothelial carcinoma~~well as development efforts to further evaluate uses and ~~renal cell carcinoma~~, and price increases but we cannot be certain that our pricing strategy will not result in downward pressure on sales or that we or others will be able to successfully complete clinical trials and obtain regulatory approvals in additional indications. ways of enhancing the patient experience of KRYSTEXXA.

With respect to ~~PROCYSBI~~RAVICTI and ~~RAVICTI,~~PROCYSBI, our strategy includes accelerating the transition of patients from first-generation therapies, ~~and~~ increasing the diagnosis of the associated rare conditions through patient and physician ~~outreach.~~outreach; and increasing compliance rates. With respect to our strategy for UPLIZNA, which leverages the successful strategies we have employed with TEPEZZA and KRYSTEXXA, our aim is to (i) increase physician awareness of the benefits of UPLIZNA for the treatment of neuromyelitis optica spectrum disorder, or NMOSD, and what differentiates UPLIZNA from other medicines by generating additional trial data analyses and clinical evidence; (ii) drive patient initiation and adherence, and cultivate a positive patient experience; and (iii) maximize the potential of UPLIZNA through additional indications and global expansion. Our strategy with respect to ~~KRYSTEXXA~~ACTIMMUNE, includes ~~the continued enhancement~~increasing awareness and diagnosis of CGD, driving utilization of ACTIMMUNE prophylaxis in newly diagnosed CGD patients as recommended in current treatment guidelines, encouraging use of ACTIMMUNE in CGD patients prior to bone marrow transplant and in symptomatic carriers of x-linked CGD and increasing compliance rates overall.

We are focusing a significant portion of our commercial activities and resources on TEPEZZA, and we believe our ability to grow our long-term revenues, and a significant portion of the ~~marketing campaign with improved immunogenicity data, continued volume growth and pricing optimization.~~

~~With respect~~value of our company, relates to our ~~primary care medicines DUEXIS, PENNSAID 2% and VIMOVO, our strategy has more recently included entering into rebate agreements with pharmacy benefit managers, or PBMs,~~ability to successfully commercialize TEPEZZA in the United States. As a medicine launched for ~~certain~~a disease that had no previously approved treatments, successful commercialization of ~~our primary care medicines where~~TEPEZZA is subject to many risks. While we believe the ~~rebates~~launch of TEPEZZA was one of the most successful launches to date for a rare disease treatment, there are numerous examples of failures to meet high expectations of market potential, including by biopharmaceutical companies with more experience and ~~costs justify expanded formulary~~resources than us. We will need to continue training and developing our U.S. commercial team in order to successfully commercialize TEPEZZA. There are many factors that could cause commercialization of TEPEZZA to be unsuccessful, including a number of factors that are outside our control. Because no medicine has previously been approved by the FDA for the treatment of TED, it is especially difficult to estimate TEPEZZA’s market potential or the time it will take to increase patient and physician awareness of TED and change current treatment paradigms. In addition, some physicians that are potential prescribers of TEPEZZA do not have the necessary infusion capabilities to administer the medicine or may not have significant experience managing patients on medications like TEPEZZA and may not otherwise be able or willing to refer their patients to third-party infusion centers or other healthcare providers, which may discourage them from treating their patients with TEPEZZA. In the second half of 2022, we were impacted by certain challenges, including the often-burdensome reimbursement process, that we believe contributed to the decline in TEPEZZA net sales in the first half of 2023, compared to the 2022 period. These challenges, as well as challenges related to a lower rate of adherence to the full course of TEPEZZA therapy, have continued to moderate TEPEZZA net sales. We continue to execute on several opportunities designed to address these challenges and resume growth, including significantly expanding the size of our TEPEZZA sales force in late 2022 to allow our representatives more time with core TEPEZZA prescribers while educating other key physicians, including ophthalmologists and endocrinologists, about TED and TEPEZZA. We are also spending additional time and focus on the reimbursement process to more effectively support the patient access journey, which includes beginning to obtain favorable policy changes to improve patient access following the update to the indication language on the TEPEZZA label and Phase 4 data release. We also continue to invest significantly in direct-to-consumer advertising based on the returns we have seen to date. In April 2023, we announced positive topline results from our Phase 4 clinical trial in chronic/low CAS TED and received FDA approval of an update to TEPEZZA’s label specifying the use of TEPEZZA regardless of TED disease activity or duration, which we believe reinforces the importance of unrestricted access for ~~patients. However, we cannot guarantee that we will be able to secure additional rebate agreements on commercially reasonable terms or that expected volume growth will sufficiently offset~~all eligible patients across the ~~rebates~~full spectrum of TED. We have seen improving trends in patient enrollment forms and fees paid to PBMs or that our existing agreements with PBMs will have the intended impact on formulary access. Net pricing for DUEXIS, VIMOVO and PENNSAID 2% was significantly below expectations during the nine months ended September 30, 2017patient starts as a result of ~~higher~~our strategies and our expansion; however, it is taking longer than initially anticipated for our strategies and our expansion to contribute meaningfully to TEPEZZA net sales growth and we cannot otherwise be certain that our strategies will be successful in overcoming these challenges or that new challenges to TEPEZZA adoption will not arise. In addition, if the patient ~~assistance costs, which were due~~population suffering from TED or that is appropriate for treatment with TEPEZZA is smaller than we estimate, if it proves difficult to ~~lower-than-anticipated adoption rates~~identify TED patients or educate physicians as to the availability and potential benefits of TEPEZZA, or if physicians are unwilling to prescribe or patients are unwilling to take TEPEZZA for the full course of therapy, the commercial potential of TEPEZZA will be limited. Our ability to continue TEPEZZA supply could be impacted by additional government-mandated vaccine production orders and other risks associated with our reliance on our third-party manufacturers discussed below. We also have limited information regarding how physicians, patients and payers will respond to the pricing of TEPEZZA. Physicians may not prescribe TEPEZZA and patients may be unwilling to use TEPEZZA if coverage is not provided or reimbursement is inadequate to cover a significant portion of the cost. Thus, significant uncertainty remains regarding the commercial potential of TEPEZZA. If the continued commercialization of TEPEZZA becomes unsuccessful or perceived as disappointing, the price of our ~~primary care medicines onto certain healthcare plan formularies,~~ordinary shares could decline significantly and ~~higher commercial rebate levels compared to our expectations.~~ In addition, the mix of PBM healthcare plans that adopted our primary care medicines onto their formulary was more heavily weighted towards those plans for which we pay a higher commercial rebate, which resulted in higher commercial rebate costs to us than we anticipated. If we are unable to realize the expected benefits of our contractual arrangements with the PBMs we may continue to experience reductions in net sales from our primary care business unit. Also, we experienced a higher rate of managed care control in our non-contracted business during the nine months ended September 30, 2017, which resulted in significantly lower net pricing. For each of our primary care medicines, we expect that our commerciallong-term success ~~will depend on our sales and marketing efforts in the United States.~~

~~Our strategy for RAYOS in the United States is to focus on the rheumatology indications approved for RAYOS, including~~ ~~our collaboration with the~~ ~~Alliance for Lupus Research, or~~ ~~ALR, to study the effect of RAYOS on the fatigue experienced by~~ ~~systemic lupus erythematosus, or~~ ~~SLE, patients~~.

Our overall commercialization strategy also includes plans to expand sales in Europe and other countries outside the United States directly or through distributors for certain of our orphan and rheumatology medicines. In November 2015, we received approval of the ~~Committee for Medicinal Products for Human Use of the European Medicines Agency, or EMA, for RAVICTI for use as an adjunctive therapy for chronic management of adult~~medicine and pediatric UCD patients greater than two months of age. This authorizes us to market RAVICTI in all 28 Member States of the European Union, or EU, and will form the basis for recognition by the Member States of the European Economic Area, or EEA, namely Norway, Iceland and Liechtenstein, for the medicine toour company could be placed on the market. While we expect RAVICTI to be available in Europe in the fourth quarter of 2017 through an exclusive distribution agreement with Swedish Orphan Biovitrum AB, or SOBI, we cannot guarantee we will be able to successfully implement our commercial plans for RAVICTI in Europe. Although LODOTRA is approved for marketing in countries outside the United States, to date it has only been marketed in a limited number of countries.harmed.

If any of our commercial strategies are unsuccessful or we fail to successfully modify our strategies over time due to changing market conditions, our ability to increase market share for our medicines, grow revenues and to ~~achieve and~~ sustain profitability will be harmed.

We are dependent on wholesale distributors for distribution of our medicines in the United States and, accordingly, our results of operations could be adversely affected if they encounter financial difficulties.*

During the six months ended June 30, 2023, four wholesale distributors accounted for substantially all of our sales in the United States. If one of our significant wholesale distributors encounters financial or other difficulties, such distributor may decrease the amount of business that it does with us, and we may be unable to collect all the amounts that the distributor owes on a timely basis or at all, which could negatively impact our business and results of operations. In addition, net sales of our medicines may be affected by end customer buying patterns and fluctuations in wholesaler inventory levels.

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

Part of our strategy is to continue to build a ~~biopharmaceutical~~global biotechnology company to successfully execute the commercialization of our medicines in the U.S. market, and in selected markets outside the United States where we have commercial rights. We may not be able to successfully commercialize our medicines in the United States or in any other territories where we have commercial rights. In order to commercialize any approved medicines, we must continue to build our sales, marketing, distribution, managerial and other non-technical capabilities. ~~During the second quarter of 2017, we effected a workforce reduction in the primary care business unit.~~ As of ~~September~~June 30, ~~2017,~~2023, we had approximately ~~420~~370 sales representatives and sales management in the ~~field, consisting~~field. Due to the impact of ~~approximately 25 orphan disease~~the at-risk launch of generic PENNSAID 2% and wind down of our former inflammation business during 2022, we redeployed a portion of our inflammation commercial team to support our TEPEZZA and KRYSTEXXA expansions. We may encounter difficulties transitioning sales representatives ~~135 rheumatology sales specialists~~from promoting our inflammation medicines to promoting TEPEZZA and ~~260 primary care~~KRYSTEXXA, or in hiring additional qualified sales representatives. ~~We cannot be certain that we~~The pending Transaction with Amgen has also made it more difficult to attract and retain qualified employees due to the uncertainty about whether or when the Transaction will ~~be able to adequately market~~close and impact of the Transaction on our ~~primary care medicines following the reduction in our sales force or that we will be able to continue retaining the current members of our primary care sales force.~~employees. We currently have limited resources compared to some of our competitors, and the continued development of our own commercial organization to market our medicines and any additional medicines we may acquire if the Transaction is not completed will be expensive and time-consuming. We also cannot be certain that we will be able to continue to successfully ~~develop~~expand this capability.

As we continue to add medicines through development efforts and acquisition transactions (assuming the Transaction is not completed) and execute on our international expansion initiatives, the members of our sales force may have limited experience promoting certain of our medicines. To the extent we employ an acquired entity’s sales forces to promote acquired medicines, we may not be successful in continuing to retain these employees and we otherwise will have limited experience marketing these medicines under our commercial organization. We are required to expend significant time and resources to train our sales force to be credible and able to educate physicians on the benefits of prescribing and pharmacists dispensing our medicines. In addition, we must train our sales force to ensure that a ~~result~~consistent and appropriate message about our medicines is being delivered to our potential customers. Our sales representatives may also experience challenges promoting multiple medicines when we call on physicians and their office staff. We have experienced, and may continue to experience, turnover of the ~~evolving role of various constituents in the prescription decision making process, we focus on hiring~~ sales representatives ~~for our primary care~~that we hired or will hire, requiring us to train new sales representatives. If we are unable to recruit and ~~rheumatology business units with successful business to business experience. For example,~~retain qualified personnel outside of the United States, we have faced challenges due to pharmacists increasingly switching a patient’s intended prescription from DUEXIS and VIMOVO to a generic or over-the-counter brand of their active ingredients. We have faced similar challenges for RAYOS, BUPHENYL and PENNSAID 2% with respect to generic brands. While we believe the profile of our representatives is better suited for this evolving environment, we cannot be certain that our representatives willmay not be able to execute our global expansion strategy successfully. If we are unable to effectively train our sales force and equip them with effective materials, including medical and sales literature to help them inform and educate physicians about the benefits of our medicines and their proper administration and label indication, as well as our patient assistance programs, our efforts to successfully ~~protect~~commercialize our ~~market for DUEXIS, PENNSAID 2%, RAYOS, BUPHENYL~~medicines could be put in jeopardy, which could have a material adverse effect on our financial condition, share price and ~~VIMOVO or that we will be able to continue attracting and retaining sales representatives with our desired profile and skills.~~ operations.

We will also have to compete with other ~~pharmaceutical and biotechnology~~biopharmaceutical companies to recruit, hire, train and retain commercial personnel. To the extent we rely on additional third parties to commercialize any approved medicines, we may receive less revenue than if we commercialized these medicines ourselves. In addition, we may have little or no control over the sales efforts of any third parties involved in our commercialization efforts. In the event we are unable to successfully develop and maintain our own commercial organization or collaborate with a third-party sales and marketing organization, we may not be able to commercialize our medicines and medicine candidates and execute on our business plan.

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

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

We expect to experience pricing pressures in connection with the sale of our medicines due to the trend toward managed healthcare, the increasing influence of health maintenance organizations and additional legislative proposals relating to outcomes and quality. For example, the Patient Protection and Affordable Care Act, as amended by the Health Care and Education Reconciliation Act, or collectively the ACA, increased the mandated Medicaid rebate from 15.1% to 23.1%, expanded the rebate to Medicaid managed care utilization and increased the types of entities eligible for the federal 340B drug discount program. As concerns continue to grow over the need for tighter oversight, there remains the possibility that the Health Resources and Services Administration or another agency under the U.S. Department of Health and Human Services, or HHS, will propose a similar regulation or that Congress will explore changes to the 340B program through legislation. For example, a bill was introduced in 2018 that would require hospitals to report their low-income utilization of the program. Further, the Centers for Medicare & Medicaid Services, or CMS, issued a final rule in 2018 that implemented civil monetary penalties for manufacturers who exceeded the ceiling price methodology for a covered outpatient drug when selling to a 340B covered entity. Pursuant to the final rule, after January 1, 2019, manufacturers must calculate 340B program ceiling prices on a quarterly basis. Moreover, manufacturers could be subject to a $5,000 penalty for each instance where they knowingly and intentionally overcharge a covered entity under the 340B program. With respect to KRYSTEXXA, the “additional rebate” methodology of the 340B pricing rules, as applied to the historical pricing of KRYSTEXXA both before and after we acquired the medicine, have resulted in a 340B ceiling price of one penny. A material portion of KRYSTEXXA prescriptions (currently in the range of high-single digits to low-teens percent) are written by healthcare providers that are eligible for 340B drug pricing and therefore the reduction in 340B pricing to a penny has negatively impacted our net sales of KRYSTEXXA. CMS previously revised the Medicare hospital outpatient prospective payment system by creating a new, significantly reduced reimbursement methodology for drugs purchased under the 340B program for Medicare patients at hospital and other settings. However, on June 15, 2022, the Supreme Court ruled that CMS was not authorized to set the rates in the previous final rules because it did not conduct the requisite survey of acquisition data. Therefore, it was required to utilize the average price for the drug in the given year and not vary rates by hospital group. It is unclear whether CMS will attempt to implement the same rate changes by other means.

Patients are unlikely to use our medicines unless coverage is provided and reimbursement is adequate to cover a significant portion of the cost of our medicines. Third-party payers may limit coverage to specific medicines on an approved list, also known as a formulary, which might not include all of the FDA-approved medicines for a particular indication. Moreover, a third-party payer’s decision to provide coverage for a medicine does not imply that an adequate reimbursement rate will be approved. Additionally, one third-party payer’s decision to cover a particular medicine does not ensure that other payers will also provide coverage for the medicine, or will provide coverage at an adequate reimbursement rate. Even though we have contracts with some pharmacy benefit managers, or PBMs, in the United States for some of our non-infused medicines, that does not guarantee that they will perform in accordance with the contracts, nor does that preclude them from taking adverse actions against us, which could materially adversely affect our operating results. In addition, the existence of such PBM contracts does not guarantee coverage by such PBM’s contracted health plans or adequate reimbursement to their respective providers for our medicines. For example, some PBMs have placed some of our medicines on their exclusion lists from time to time, which has resulted in a loss of coverage for patients whose healthcare plans have adopted these PBM lists. Additional healthcare plan formularies may also exclude our medicines from coverage due to the actions of certain PBMs, future price increases we may implement, our use of our patient assistance programs or other programs whereby we assist qualified patients with certain out-of-pocket expenditures for our medicines, including donations to patient assistance programs offered by charitable foundations, or any other co-pay programs, or other reasons. If our strategies to mitigate formulary exclusions are not effective, these events may reduce the likelihood that physicians prescribe our medicines and increase the likelihood that prescriptions for our medicines are not filled.

Many EU Member States periodically review their reimbursement procedures for medicinal products, which could have an adverse impact on reimbursement status. We expect that legislators, policymakers and healthcare insurance funds in the EU Member States will continue to propose and implement cost-containing measures, such as lower maximum prices, lower or lack of reimbursement coverage and incentives to use cheaper, usually generic, products as an alternative to branded products, and/or branded products available through parallel import to keep healthcare costs down. Moreover, in order to obtain reimbursement for our products in some European countries, including some EU Member States, we may be required to compile additional data comparing the cost-effectiveness of our products to other available therapies. Health Technology Assessment, or HTA, of medicinal products is becoming an increasingly common part of the pricing and reimbursement procedures in some EU Member States, including those representing the larger markets. The HTA process is the procedure to assess therapeutic, economic and societal impact of a given medicinal product in the national healthcare systems of the individual country. The outcome of an HTA will often influence the pricing and reimbursement status granted to these medicinal products by the competent authorities of individual EU Member States. The extent to which pricing and reimbursement decisions are influenced by the HTA of the specific medicinal product currently varies between EU Member States.

In December 2021, Regulation No 2021/2282 on HTA, amending Directive 2011/24/EU, was adopted in the EU. This Regulation, which entered into force in January 2022 and will apply as of January 2025, is intended to boost cooperation among EU Member States in assessing health technologies, including new medicinal products, and providing the basis for cooperation at EU level for joint clinical assessments in these areas. The Regulation foresees a three-year transitional period and will permit EU Member States to use common HTA tools, methodologies, and procedures across the EU, working together in four main areas, including joint clinical assessment of the innovative health technologies with the most potential impact for patients, joint scientific consultations whereby developers can seek advice from HTA authorities, identification of emerging health technologies to identify promising technologies early, and continuing voluntary cooperation in other areas. Individual EU Member States will continue to be responsible for assessing non-clinical (e.g., economic, social, ethical) aspects of health technologies, and making decisions on pricing and reimbursement. If we are unable to ~~effectively train~~maintain favorable pricing and ~~equip~~reimbursement status in EU Member States for medicine candidates that we may successfully develop and for which we may obtain regulatory approval, any anticipated revenue from and growth prospects for those products in the EU could be negatively affected.

Legislators, policymakers and healthcare insurance funds in the EU may continue to propose and implement cost-containing measures to keep healthcare costs down. These measures could include limitations on the prices we would be able to charge for medicine candidates that we may successfully develop and for which we may obtain regulatory approval or the level of reimbursement available for these products from governmental authorities or third-party payers. Further, an increasing number of EU and other foreign countries use prices for medicinal products established in other countries as “reference prices” to help determine the price of the product in their own territory. Consequently, a downward trend in prices of medicinal products in some countries could contribute to similar downward trends elsewhere.

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

There may be additional pressure by payers, healthcare providers, state or foreign governments, federal regulators and Congress, to use generic drugs that contain the active ingredients found in our medicines ~~will be harmed.~~

As we continue to acquire additional medicines through acquisition transactions, the members of our sales force may have limited experience promoting certain of our medicines. To the extent we employ an acquired entity’s original sales forces to promote acquired medicines,or any other medicine candidates that we may ~~not be successful~~develop or acquire. If we fail to successfully secure and maintain coverage and adequate reimbursement for our medicines or are significantly delayed in ~~continuing to retain these employees and~~doing so, we ~~otherwise~~ will have limited experience marketing these medicines under our commercial organization. As a result, we are required to expend significant time and resources to train our sales force to be credible and persuasive in convincing physicians to prescribe and pharmacists to dispense our medicines. In addition, we must train our sales force to ensure that a consistent and appropriate message about our medicines is being delivered to our potential customers. Our sales representatives may also experience challenges promoting multiple medicines when we call on physicians and their office staff. We have experienced, and may continue to experience, turnover of the sales representatives that we hired or will hire, requiring us to train new sales representatives. If we are unable to effectively train our sales force and equip them with effective materials, including medical and sales literature to help them inform and educate physicians about the benefitsdifficulty achieving market acceptance of our medicines and ~~their proper administration~~expected revenue and ~~label indication, as well as our patient access programs, our efforts to successfully commercialize our medicines could be put in jeopardy,~~profitability which ~~could have a material adverse effect on our financial condition, share price and operations.~~

If we cannot successfully implement our patient access programs or increase formulary access and reimbursement for our medicines in the face of increasing pressure to reduce the price of medications, the adoption of our medicines by physicians, patients and payers may decline.*

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

Part of our commercial strategy to increase adoption and access to our medicines in the face of these incentives to use generic alternatives is to offer physicians the opportunity to have patients fill prescriptions through independent pharmacies participating in our HorizonCares patient access program. Through HorizonCares, financial assistance may be available to reduce eligible patients’ out-of-pocket costs for prescriptions filled. Because of this assistance, eligible patients’ out-of-pocket cost for our medicines when dispensed through HorizonCares may be significantly lower than such costs when our medicines are dispensed outside of the HorizonCares program. However, to the extent physicians do not direct prescriptions currently filled through traditional pharmacies, including those associated with or controlled by PBMs, to pharmacies participating in our HorizonCares program, we may experience a significant decline in DUEXIS, VIMOVO and PENNSAID 2% prescriptions as a result of formulary exclusions, co-payment requirements or other incentives to use lower-priced alternatives to our medicines. Our ability to increase utilization of our patient access programs will depend on physician and patient awareness and comfort with the programs, and we have limited ability to influence whether physicians use our patient access programs to prescribe our medicines or whether patients will agree to receive our medicines through our HorizonCares program. In addition, the HorizonCares program is not available to federal health care program (such as Medicare and Medicaid) beneficiaries. We have also contracted with certain PBMs and other payers to secure formulary status and reimbursement for certain of our primary care medicines, which generally require us to pay administrative fees and rebates to the PBMs and other payers for qualifying prescriptions. While we have business relationships with two of the largest PBMs, Express Scripts and CVS Caremark, that have resulted in DUEXIS and VIMOVO being removed from the Express Scripts and CVS Caremark 2017 exclusion lists, as well as a rebate agreement with another PBM, Prime Therapeutics LLC, and we believe these agreements will secure formulary status for certain of our medicines, we cannot guarantee that we will be able to agree to terms with other PBMs and other payers, or that such terms will be commercially reasonable to us. Despite our agreements with PBMs, the extent of formulary status and reimbursement will ultimately depend to a large extent upon individual healthcare plan formulary decisions. If healthcare plans that contract with PBMs with which we have agreements do not adopt formulary changes recommended by the PBMs with respect to our medicines, we may not realize the expected access and reimbursement benefits from these agreements. In addition, we generally pay higher rebates for prescriptions covered under plans that adopt a PBM-chosen formulary than for plans that adopt custom formularies. Consequently, the success of our PBM contracting strategy will depend not only on our ability to expand formulary adoption among healthcare plans, but also upon the relative mix of healthcare plans that have PBM-chosen formularies versus custom formularies. During the nine months ended September 30, 2017, the adoption rates of our primary care medicines onto certain healthcare plan formularies were lower than we had anticipated and as a result, we incurred higher patient assistance costs than we expected, and the mix of healthcare plans adopting our primary care medicines onto their formularies was more heavily weighted towards plans that use PBM-chosen formularies, which resulted in higher rebate costs than we expected. If we are unable to realize the expected benefits of our contractual arrangements with the PBMs we may continue to experience reductions in net sales from our primary care business unit. If we are unable to increase adoption of HorizonCares for filling prescriptions of our medicines or to secure formulary status and reimbursement through arrangements with PBMs and other payers, particularly with healthcare plans that use custom formularies, our ability to achieve net sales growth for our primary care business unit would be impaired.

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

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

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

If the cost of maintaining our patient access programs increases relative to our sales revenues, we could be forced to reduce the amount of patient financial assistance that we offer or otherwise scale back or eliminate such programs, which could in turn have a negative impact on physicians’ willingness to prescribe and patients’ willingness to fill prescriptions of our medicines. While we believe that our arrangements with PBMs will result in broader inclusion of certain of our primary care medicines on healthcare plan formularies, and therefore increase payer reimbursement and lower our cost of providing patient access programs, these arrangements generally require us to pay administrative and rebate payments to the PBMs and/or other payers and their effectiveness will ultimately depend to a large extent upon individual healthcare plan formulary decisions that are beyond the control of the PBMs. If our arrangements with PBMs and other payers do not result in increased prescriptions and reductions in our costs to provide our patient access programs that are sufficient to offset the administrative fees and rebate payments to the PBMs and/or other payers, our financial results may continue to be harmed.

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

We ~~are solely dependent on third parties to commercialize~~may also experience pressure from payers as well as state and federal government authorities concerning certain ofpromotional approaches that we may implement such as our ~~medicines outside the United States. Failure of these third parties~~patient assistance programs or any other ~~third parties~~co-pay programs. Certain state and federal enforcement authorities and members of Congress have initiated inquiries about co-pay assistance programs. Some state legislatures have implemented or have been considering implementing laws to ~~successfully commercialize our medicines~~restrict or ban co-pay coupons for branded drugs. For example, legislation was signed into law in California that limits the use of co-pay coupons in cases where a lower cost generic drug is available and ~~medicine candidates~~if individual ingredients in combination therapies are available over the ~~applicable jurisdictions~~counter at a lower cost. It is possible that similar legislation could be proposed and enacted in additional states. Additionally, numerous organizations, including biopharmaceutical manufacturers, have a material adverse effect on our business.*been subject to ongoing litigation, enforcement actions and settlements related to their patient assistance programs and support.

Mundipharma International Corporation Limited, or Mundipharma, is our exclusive distributor for LODOTRA in Europe, Asia and Latin America. Innomar Strategies Inc., or Innomar, is our exclusive distributor for PROCYSBI and QUINSAIR in Canada. We rely on other third-party distributors for commercialization of BUPHENYL (known as AMMONAPS in certain European countries) in certain territories outside the United States for which we currently have rights. We expect RAVICTI to be available in Europe in the fourth quarter of 2017 through an exclusive distribution agreement with SOBI. We have limited contractual rights to force these third parties to invest significantly in commercialization of these medicines in our markets. In the event that Mundipharma, Innomar, our current ex-U.S. distributors for BUPHENYL, SOBI or any other third-party with any future commercialization rights to any of our medicines or medicine candidates fail to adequately commercialize those medicines or medicine candidates because they lack adequate financial or other resources, decide to focus on other initiatives or otherwise, our ability to successfully commercialize our medicines or medicine candidates in the applicable jurisdictions would be limited, which would adversely affect our business, financial condition, results of operations and prospects. We have had disagreements with Mundipharma under our European agreements and may continue to have disagreements, which could harm commercialization of LODOTRA in Europe or result in the termination of our agreements with Mundipharma. In addition, our agreements with Mundipharma, Innomar, our current ex-U.S. distributors for BUPHENYL and SOBI may be terminated by either party in the event of a bankruptcy of the other party or upon an uncured material breach by the other party. If these third parties terminated their agreements, we may not be able to secure an alternative distributor in the applicable territory on a timely basis or at all, in which case our ability to generate revenues from the sale of LODOTRA, PROCYSBI, BUPHENYL, QUINSAIR or RAVICTI outside the United States would be materially harmed.

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

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

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

Applications for regulatory approval, including a marketing authorization application, or MAA, for marketing new drugs in ~~Europe,~~the European Economic Area (which consists of the 27 Member States of the EU, Iceland, Liechtenstein and Norway), or EEA, must be supported by extensive clinical and ~~preclinical~~pre-clinical data, as well as extensive information regarding chemistry, manufacturing and controls, or CMC, to demonstrate the safety and effectiveness of the applicable medicine candidate. The number and types of ~~preclinical~~pre-clinical studies and clinical trials that will be required for regulatory approval varies depending on the medicine candidate, the disease or the condition that the medicine candidate is designed to target and the regulations applicable to any particular medicine candidate. Despite the time and expense associated with ~~preclinical~~pre-clinical and clinical studies, failure can occur at any stage, and we could encounter problems that cause us to repeat or perform additional ~~preclinical~~pre-clinical studies, CMC studies or clinical trials. Regulatory authorities could delay, limit or deny approval of a medicine candidate for many reasons, including because they:

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

If we are unable to obtain any further approvals for RAVICTI outside the United States, Canada and Europe, or determine that commercializing RAVICTI outside the United States, Canada and Europe is not economically viable, the market potential of RAVICTI may be limited.

On June 19, 2017, we received a notice of compliance, from Health Canada, or HC, for PROCYSBI for the treatment of nephropathic cystinosis in adults and children two years of age and older. PROCYSBI is the only cystine-depleting agent approved in Canada for the treatment of nephropathic cystinosis.

~~If we are unable to obtain any further approvals for~~ ~~PROCYSBI~~ ~~in the United States, Canada, Latin America and Asia-Pacific region, or determine that commercializing~~ ~~PROCYSBI~~ ~~outside the United States, Canada, Latin America and Asia-Pacific region is not economically viable, the market potential of~~ ~~PROCYSBI~~ ~~may be limited.~~

With respect to QUINSAIR, the FDA has indicated in previous written and verbal communications with Raptor Pharmaceutical Corp., or Raptor, and with the drug’s previous sponsor that it believes the data submitted in connection with EMA’s subsequent approval of QUINSAIR for the management of chronic pulmonary infections due to Pseudomonas aeruginosa in adults with cystic fibrosis does not provide substantial evidence of efficacy and safety to support FDA approval of QUINSAIR for treatment of patients with cystic fibrosis. On October 27, 2016, the FDA expressed its recommendation that an additional clinical trial should be conducted, and noted that if Raptor submits a new drug application, or NDA, without conducting an additional clinical trial, the FDA will review the submission to determine whether it is acceptable for filing. ~~Based upon the FDA’s feedback, we have made the decision not to pursue an NDA for U.S. approval of QUINSAIR as a treatment of Pseudomonas aeruginosa in adults with cystic fibrosis at this time.~~

Prior to our acquisition of Raptor, Raptor planned to pursue the development of QUINSAIR for use in the indication of bronchiectasis, or BE, not associated with cystic fibrosis. Raptor submitted a protocol to FDA on August 18, 2016 for a Phase 2, placebo-controlled study of QUINSAIR in adults with BE. Feedback from FDA was received on October 17, 2016 requesting additional information and changes to the proposed study protocol. Raptor was also exploring further clinical development of QUINSAIR for the treatment of pulmonary nontuberculous mycobacteria, or NTM infection, based on third-party data generated pertaining to the susceptibility of certain pathogens to treatment with levofloxacin and other fluoroquinolone molecules. No clinical data has been generated with QUINSAIR in patients with BE or with NTM infections, either by Raptor, subsequently by Horizon or by other parties. This creates uncertainty regarding the potential efficacy of QUINSAIR in these indications.

We will evaluate all development opportunities, including all obligations to use commercial reasonable efforts to further develop QUINSAIR. However, we may determine not to pursue such further development.

The ultimate approval and commercial marketing of any of our medicines in additional indications or geographies is subject to substantial uncertainty. Failure to gain additional regulatory approvals would limit the potential revenues and value of our medicines and could cause our share price to decline.

The ~~amount~~United Kingdom’s withdrawal from the EU may have a negative effect on global economic conditions, financial markets and our business, which could reduce the price of our ordinary shares.*

Following the result of a referendum in 2016, the United Kingdom, or UK, left the EU on January 31, 2020, commonly referred to as Brexit. Pursuant to the formal withdrawal arrangements agreed between the UK and the EU, the UK was subject to a transition period until December 31, 2020 during which EU rules continued to apply. The UK and the EU have signed a EU-UK Trade and Cooperation Agreement, or TCA, which became provisionally applicable on January 1, 2021 and entered into force on May 1, 2021. This agreement provides details on how some aspects of the UK and EU’s relationship will operate going forwards however there are still many uncertainties. The TCA primarily focuses on ensuring free trade between the EU and the UK in relation to goods, including medicinal products. Although the body of the TCA includes general terms which apply to medicinal products, greater detail on sector-specific issues is provided in an Annex to the TCA. The Annex provides a framework for the recognition of Good Manufacturing Practice, or GMP, inspections and for the exchange and acceptance of official GMP documents. The regime does not, however, extended to procedures such as batch release certification. Among the changes that have occurred are that Great Britain (England, Scotland and Wales) is treated as a “third country”, a country that is not a member of the EU and whose citizens do not enjoy the EU right to free movement. Northern Ireland has continued to follow many aspects of the EU regulatory rules, particularly in relation to trade in goods. As part of the TCA, the EU and the UK recognize GMP inspections carried out by the other party and the acceptance of official GMP documents issued by the other party. The TCA also encourages, although it does not oblige, the parties to consult one another on proposals to introduce significant changes to technical regulations or inspection procedures. Among the areas of absence of mutual recognition are batch testing and batch release. The UK has unilaterally agreed to accept EU batch testing and batch release. However, the EU continues to apply EU laws that require batch testing and batch release to take place in the EU territory. This means that medicinal products that are tested and released in the UK must be retested and re-released when entering the EU market for commercial use. As it relates to marketing authorizations, Great Britain has a separate regulatory submission process, approval process and a separate national marketing authorization. Northern Ireland has continued, however, to be covered by the marketing authorizations granted by the European Commission. For example, the scope of a marketing authorization for a medicinal product granted by the European Commission no longer encompasses Great Britain (England, Scotland and Wales). In these circumstances, a separate marketing authorization granted by the UK competent authorities is required to place medicinal products on the market in Great Britain. On February 27, 2023, the European Commission and the UK government reached a political agreement in principle, commonly referred to as the “Windsor Framework”. The purpose of the agreement is to establish a set of joint solutions that would allow goods to be traded between Great Britain and Northern Ireland and between Northern Ireland and Ireland while ensuring the integrity of the EU Single Market. New legislation must be passed by the UK and the EU in order to implement the provisions of the Windsor Framework, including those that relate to medicinal products. The implementation of the proposed framework would take place in stages with measures relating to medicinal products scheduled to take effect in January 2025. The Windsor Framework provides, however, that medicinal products to be placed on the market in Northern Ireland will be authorized solely in accordance with UK laws.

Since a significant proportion of the regulatory framework in the UK applicable to our business and our medicines is derived from EU directives and regulations, Brexit has materially impacted the regulatory regime with respect to the development, manufacture, importation, approval and commercialization of our medicines and medicine candidates in the UK and the EU, now that UK legislation has the potential to diverge from EU legislation. All of these changes could increase our costs and otherwise adversely affect our business. In addition, we may be required to pay taxes or duties or be subjected to other hurdles in connection with the importation of our medicine ~~sales~~candidates into the EU. If any of these outcomes occur, we may be forced to restrict or delay efforts to seek regulatory approval in the ~~EEA is dependent in part upon~~UK or the pricing and reimbursement decisions adopted in each of the EEA countries, which may not be at acceptable levels to us.*

~~One or more EEA countries may not support pricing within our target pricing and reimbursement range~~EU for our ~~medicines due~~medicine candidates, or incur significant additional expenses to ~~budgetary decisions made by regional, national~~operate our business, which could significantly and local health authorities and third-party payers in the EEA, which would negatively affect our revenues. The pricing and reimbursement process in EEA countries can be lengthy, involved and difficult to predict. Failure to timely complete the pricing and reimbursement process in the EEA countries willmaterially harm or delay our ability to ~~market~~generate revenues or achieve profitability of our business. Any further changes in international trade, tariff and import/export regulations as a result of Brexit or otherwise may impose unexpected duty costs or other non-tariff barriers on us. These developments, or the perception that any of them could occur, may significantly reduce global trade and, in particular, trade between the impacted nations and the UK. It is also possible that Brexit may negatively affect our ability to attract and retain employees, particularly those from the EU. The regulatory changes that are a result of Brexit may also materially impact upon the development, manufacture, importation, approval and commercialization of our medicines in the EEA, should any development or manufacture of these medicines take place in the UK.

Since Great Britain is no longer covered by the EU’s procedures for the grant of marketing authorizations and Northern Ireland may not, as a result of the Windsor Framework, be in the future our medicine candidates require a separate marketing authorization for Great Britain (or, once Northern Ireland is no longer covered by the EU procedures, the UK), which involves additional administrative burden. Any delay in obtaining, or an inability to ~~derive revenues~~obtain, any marketing approvals, as a result of Brexit or otherwise, could prevent us from ~~those countries.~~or delay us commercializing our medicine candidates in the UK and/or the EEA and restrict our ability to generate revenue and achieve and sustain profitability. If any of these outcomes occur, we may be forced to restrict or delay efforts to seek regulatory approval in the UK and/or EEA for our medicine candidates, which could significantly and materially harm our business.

We are subject to ongoing obligations and continued regulatory review by the FDA and comparable foreign regulatory authorities, and we may be subject to penalties and litigation and large incremental expenses if we fail to comply with regulatory requirements or experience problems with our medicines.

~~Even after we achieve regulatory approvals, we~~Our current approved medicines (and our medicine candidates, if approved) are subject to extensive ongoing obligations and continued regulatory review with respect to many operational aspects including our manufacturing processes, labeling, packaging, distribution, storage, import, export, safety surveillance, adverse event monitoring and reporting, dispensation, advertising, promotion and recordkeeping. These requirements include submissions of safety and other post-marketing information and reports, ongoing maintenance of medicine registration and continued compliance with current good manufacturing practices, or cGMPs, good clinical practices, or GCPs, International Council for Harmonisation, or ICH, guidelines, good pharmacovigilance practice, good distribution practices and good laboratory practices, or ~~GLPs. If we,~~GLPs, which are regulations and guidelines enforced by the FDA and comparable foreign regulatory authorities for all of our medicines in clinical development and for any clinical trials that we conduct post-approval.

Later discovery of previously unknown problems with a medicine or medicine ~~candidates,~~candidate, including adverse events of unanticipated severity or ~~the~~frequency, or with our third-party manufacturers or manufacturing ~~facilities for our medicines~~processes, or ~~medicine candidates fail~~failure to comply with ~~applicable~~ regulatory requirements, ~~a regulatory agency may:~~may result in, among other things:

Moreover, existing regulatory approvals and any future regulatory approvals that we obtain will be subject to limitations on the approved indicated uses and patient populations for which our medicines may be marketed, the conditions of approval, requirements for potentially costly, post-market testing, including Phase 4 clinical trials, and requirements for surveillance to monitor the safety and efficacy of the medicines. In the EEA, the advertising and promotion of pharmaceuticals is strictly regulated. The direct-to-consumer promotion of prescription pharmaceuticals is not permitted, and some countries in the EEA require the notification and/or prior authorization of promotional or advertising materials directed at healthcare professionals. The FDA, EMA and other authorities in the EEA countries strictly regulate the promotional claims that may be made about prescription ~~medicines, and our~~ ~~medicine~~ ~~labeling, advertising and promotion are subject to continuing regulatory review.~~ Physicians nevertheless may prescribe our medicines to their patients in a manner that is inconsistent with the approved label or that is off-label. Positive clinical trial results in any of our medicine development programs increase the risk that approved ~~pharmaceutical~~biopharmaceutical forms of the same active biopharmaceutical ingredients, or APIs, may be used off-label in those indications. ~~Our investigational medicine candidate RP103 is comprised~~A significant number of biopharmaceutical companies have been the target of inquiries and investigations by various U.S. federal and state regulatory, investigative, prosecutorial and administrative entities or comparable foreign regulatory authorities in connection with the promotion of medicines for off-label uses and other sales practices. These investigations have alleged violations of various U.S. federal and state laws and regulations, including claims asserting antitrust violations, violations of the ~~same API as PROCYSBI.~~Food, Drug and Cosmetic Act, or FDCA, anti-kickback laws, and other alleged violations in connection with the promotion of medicines for unapproved uses, pricing and Medicare and/or Medicaid reimbursement and comparable foreign regulatory requirements. If we are found to have improperly promoted off-label uses of approved medicines, we may be subject to significant sanctions, civil and criminal fines and injunctions prohibiting us from engaging in specified promotional conduct.

In addition, engaging in improper promotion of our medicines for off-label uses in the United States can subject us to false claims litigation under federal and state statutes. These false claims statutes in the United States include the federal False Claims Act, which allows any individual to bring a lawsuit against a ~~pharmaceutical~~biopharmaceutical company on behalf of the federal government alleging submission of false or fraudulent claims or causing to present such false or fraudulent claims for payment by a federal program such as Medicare or Medicaid. Growth in false claims litigation has increased the risk that a ~~pharmaceutical~~biopharmaceutical company will have to defend a false claim action, pay civil money penalties, settlement fines or restitution, agree to comply with burdensome reporting and compliance obligations and be excluded from Medicare, Medicaid and other federal and state healthcare programs.

The regulations, policies or guidance of regulatory ~~agencies~~authorities may change and new or additional statutes or government regulations may be enacted that could prevent or delay regulatory approval of our medicine candidates or further restrict or regulate post-approval activities. For example, ~~the Food and Drug Administration Safety and Innovation Act requires the FDA to issue new guidance describing its policy~~there remains a substantial amount of uncertainty regarding internet and social media promotion of regulated medical products, and the FDA may soon specify new restrictions on this type of promotion. In January 2014, the FDA released draft guidance on how drug companies can fulfill their regulatory requirements for post-marketing submission of interactive promotional media, and though the guidance provided insight into how the FDA views a company’s responsibility for certain types of social media promotion, there remains a substantial amount of uncertainty.products. We cannot predict the likelihood, nature or extent of adverse government regulation that may arise from pending or future legislation or administrative action, either in the United States or abroad. If we are unable to achieve and maintain regulatory compliance, we will not be permitted to market our drugs, which would materially adversely affect our business, results of operations and financial condition.

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

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

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

Following our sale of the rights to RAVICTI outside of North America to Medical Need Europe AB, part of the Immedica Group, or Immedica, Immedica has marketing and distribution rights to RAVICTI in those regions. Following our sale of the rights to PROCYSBI ~~and QUINSAIR~~ in Europe, the ~~Europe,~~ Middle East and Africa, or EMEA, regions to Chiesi Farmaceutici ~~S.p.A,~~S.p.A., or Chiesi, in June 2017, or the Chiesi divestiture, Chiesi has marketing and distribution rights to PROCYSBI ~~and QUINSAIR~~ in ~~EMEA. AstraZeneca AB,~~the EMEA regions. Mitsubishi Tanabe Pharma Corporation, or ~~AstraZeneca,~~MTPC, has ~~retained its existing~~ rights to ~~VIMOVO~~develop and commercialize UPLIZNA for NMOSD as well as other potential future indications in ~~territories outside of the United States, including the right to use the VIMOVO name~~Japan and ~~related trademark. Similarly, Nuvo Research Inc., or Nuvo,~~certain other countries in Asia. Hansoh has ~~retained its~~ rights to ~~PENNSAID 2%~~develop and commercialize UPLIZNA for NMOSD as well as other potential future indications in territories outside of the United States and in March 2017, Nuvo announced that it had entered into an exclusive license agreement with Sayre Therapeutics PVT Ltd. to distribute, market and sell PENNSAID 2% in India, Sri Lanka, Bangladesh and Nepal. Nuvo also announced that it expects to complete PENNSAID 2% out-licensing agreements for other territories throughout 2017 and 2018.China. We have little or no control over Immedica’s activities with respect to RAVICTI outside of North America, over Chiesi’s activities with respect to PROCYSBI ~~and QUINSAIR~~ in the EMEA, or over ~~AstraZeneca’s~~MTPC’s or Hansoh’s activities with respect to ~~VIMOVO outside~~UPLIZNA in the ~~United States or over Nuvo’s or its existing and future commercial partners’ activities with respect to PENNSAID 2% outside of the United States,~~certain countries in Asia, even though those activities could impact our ability to successfully commercialize these medicines. For example, Immedica or its assignees, Chiesi or its assignees, ~~AstraZeneca~~MTPC or ~~its assignees~~Hansoh or ~~Nuvo or its~~their respective assignees can make statements or use promotional materials with respect to RAVICTI, PROCYSBI ~~QUINSAIR, VIMOVO~~ or ~~PENNSAID 2%,~~UPLIZNA, respectively, outside of the United States that are inconsistent with our positioning of the medicines in the United States, and could sell ~~VIMOVO~~RAVICTI, PROCYSBI or ~~PENNSAID 2%,~~UPLIZNA, respectively, in foreign countries ~~including Canada,~~ at prices that are dramatically lower than the prices we charge in the United States. These activities and decisions, while occurring outside of the United States, could harm our commercialization strategy ~~in the United States, in particular because AstraZeneca is continuing to market VIMOVO outside the United States under the same VIMOVO brand name that we are using~~ in the United States. In addition, medicine recalls or safety issues with these medicines outside the United States, even if not related to the commercial medicine we sell in the United States, could result in serious damage to the brand in the United States and impair our ability to successfully market them. We also rely on Immedica, Chiesi, ~~AstraZeneca~~MTPC and ~~Nuvo~~Hansoh, or their assignees to provide us with timely and accurate safety information regarding the use of these medicines outside of the United States, as we have or will have limited access to this information ourselves.

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

The facilities used by our third-party manufacturers to manufacture our medicines and medicine candidates must be approved by the applicable regulatory authorities. We do not control the manufacturing processes of third-party manufacturers and are currently completely dependent on our third-party manufacturing partners.

We rely on AGC Biologics A/S (formerly known as CMC Biologics A/S), or AGC Biologics, as our exclusive manufacturer of TEPEZZA drug substance and Catalent Indiana, LLC, or Catalent, and Patheon Pharmaceuticals Inc., or Patheon (the contract development and manufacturing services organization of Thermo Fisher Scientific), as our manufacturers for TEPEZZA drug product. If AGC Biologics fails to supply TEPEZZA drug substance or if Catalent and Patheon fail to supply TEPEZZA drug product for a period beyond our current expectation or any manufacturer is otherwise unable to meet our volume requirements due to unexpected market demand for TEPEZZA, it may lead to further TEPEZZA supply constraints.

We rely on NOF Corporation, or NOF, as our exclusive supplier of the PEGylation agent that is a critical raw material in the manufacture of KRYSTEXXA. If NOF fails to supply such PEGylation agent, it may lead to KRYSTEXXA supply constraints. We rely on AstraZeneca UK Limited for the manufacture of clinical and commercial supplies of UPLIZNA, and for clinical and nonclinical supplies of the other medicine candidates acquired in the acquisition of Viela Bio, Inc., or Viela. In addition, we are required to obtain AstraZeneca’s consent prior to engaging any third-party manufacturers for esomeprazole, one of the APIs in VIMOVO, other than the third-party manufacturer(s) used by AstraZeneca or its affiliates or licensees. To the extent such manufacturers are unwilling or unable to manufacture esomeprazole for us on commercially acceptable terms, we cannot guarantee that AstraZeneca would consent to our use of alternate sources of supply.

We rely on an exclusive supply agreement with Boehringer Ingelheim Biopharmaceuticals GmbH, or Boehringer Ingelheim Biopharmaceuticals, for manufacturing and supply of ACTIMMUNE. ACTIMMUNE is manufactured by starting with cells from working cell bank samples which are derived from a master cell bank. We and Boehringer Ingelheim Biopharmaceuticals separately store multiple vials of the master cell bank. In the event ofof catastrophic loss at our or Boehringer Ingelheim Biopharmaceuticals’ storage facility, it is possible that we could lose multiple cell banks and have the manufacturing capacity of ACTIMMUNE severely impacted by the need to substitute or replace the cell banks.

In ~~addition,~~July 2021, we purchased a ~~key excipient used~~drug product biologics manufacturing facility in ~~PENNSAID 2% as~~Waterford, Ireland, which is intended to be an additional source of manufacturing to supplement the capabilities of our third-party drug product manufacturers. We are in the process of completing the build-out and validation of this facility and assuming timely receipt of regulatory approvals, we expect the first medicine manufactured for commercial use at the facility to be approved for release in the fourth quarter of 2023. In August 2022, we submitted a ~~penetration enhancer is dimethyl sulfoxide,~~planning application to build a drug substance biologics manufacturing facility adjacent to our existing drug product biologics manufacturing facility in Waterford, Ireland. Based on our current operating plan, we do not anticipate making significant investments in building a drug substance biologics manufacturing facility during 2023. To the extent that we proceed with building a drug substance biologics manufacturing facility in the future, we have minimal experience in building, developing, validating, obtaining regulatory approval for or ~~DMSO. We~~running manufacturing facilities and ~~Nuvo, our exclusive supplier of PENNSAID 2%, rely on a sole proprietary form of DMSO for which~~ we ~~maintain a substantial safety stock. However, should this supply become inadequate, damaged, destroyed or unusable, we and Nuvo~~therefore may not be ~~able~~successful in these activities. In particular, we may experience delays and unforeseen expenses in connection with building a drug substance biologics manufacturing facility or hiring qualified personnel to ~~qualify~~operate such a ~~second source. We rely~~facility. Even if we are successful in producing medicines at the Waterford facilities for commercial sale once we receive the required regulatory approvals, we expect to remain dependent on ~~NOF Corporation, or NOF, as~~ our ~~exclusive supplier of the PEGylation agent that is a critical raw material~~third-party drug product filling and drug substance manufacturing partners in the ~~manufacture of KRYSTEXXA.~~ near-term and to a lesser extent in the medium/longer term, but we plan to always dual source our strategic medicines.

If ~~NOF failed to supply such PEGylation agent, it may lead to KRYSTEXXA supply constraints.~~

Ifwe or any of our third-party manufacturers cannot successfully manufacture material that conforms to our specifications and the applicable regulatory authorities’ strict regulatory requirements, or pass regulatory inspection, ~~they~~we or our third-party manufacturers will not be able to secure or maintain regulatory approval for the manufacturing facilities. For example, Pharmaceutics International, Inc., or Pii, our manufacturer of BUPHENYL, was found to be non-compliant for cGMPs by the Medicines and Healthcare Products Regulatory Agency, or the MHRA, which could restrict Pii from supplying BUPHENYL in the EU. ~~However, BUPHENYL was considered to be critical to public health and as a result, the MHRA issued a certificate of cGMP compliance for Pii, which is valid until June 30, 2018.~~In addition, we have no direct control over the ability of third-party manufacturers to maintain adequate quality control, quality assurance and qualified personnel. If the FDA or any other applicable regulatory authorities do not approve these facilities for the manufacture of our medicines or if they withdraw any such approval in the future, or if our suppliers or third-party manufacturers decide they no longer want to supply our primary active ingredients or manufacture our medicines, we may need to find alternative manufacturing facilities, which would significantly impact our ability to develop, obtain regulatory approval for or market our medicines. To the extent our manufacturing facility or that of any third-party manufacturers that we engage with respect to our medicines are different from those currently being used for commercial supply in the United States, the FDA will need to approve ~~the~~such facilities ~~of those third-party manufacturers used in the manufacture of our medicines~~ prior to our sale of any medicine using these facilities.

Although we have entered into supply agreements for the manufacture and packaging of our medicines, our manufacturers may not perform as agreed or may terminate their agreements with us. We currently rely on single source suppliers for certain of our medicines. If our manufacturers terminate their agreements with us, we may have to qualify new back-up manufacturers. We rely on safety stock to mitigate the risk of our current suppliers electing to cease producing bulk drug ~~medicine~~product or ceasing to do so at acceptable prices and quality. However, we can provide no assurance that such safety stocks would be sufficient to avoid supply shortfalls in the event we have to identify and qualify new contract manufacturers.

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

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

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

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

As of December 31, 2010 and prior to the commercial launch of DUEXIS, we employed approximately 40 full-time employees as a consolidated entity. As of September 30, 2017, we employed approximately 980 full-time employees, including approximately 420 sales representatives, representing a substantial change to the size of our organization. We have also experienced, and may continue to experience, turnover of the sales representatives that we hired or will hire in connection with the commercialization of our medicines, requiring us to hire and train new sales representatives. Our management, personnel, systems and facilities currently in place may not be adequate to support this recent and anticipated growth, and we may not be able to retain or recruit qualified personnel in the future due to competition for personnel among pharmaceutical businesses.

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

Our recent acquisitions have resulted in many changes, including significant changes in the corporate business and legal entity structure, the integration of other companies and their personnel with us, and changes in systems. We are currently undertaking numerous complex transition activities associated with our recent acquisitions, and we may encounter unexpected difficulties or incur unexpected costs, including:

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

We may not be successful in growing our commercial operations outside the United States, and could encounter other challenges in growing our commercial presence in Europe, including due to risks associated with political and economic instability, operating under different legal requirements and tax complexities. If we are unable to manage our commercial growth outside of the United States, our opportunities to expand sales in other countries will be limited or we may experience greater costs with respect to our ex-U.S. commercial operations.

We are also broadening our acquisition strategy to potentially include development-stage assets or programs, which entails additional risk to us. For example, if we are unable to identify programs that ultimately result in approved medicines, we may spend material amounts of our capital and other resources evaluating, acquiring and developing medicines that ultimately do not provide a return on our investment. We have less experience evaluating development-stage assets and may be at a disadvantage compared to other entities pursuing similar opportunities. Regardless, development-stage programs generally have a high rate of failure and we cannot guarantee that any such programs will ultimately be successful. We will also need to enhance our clinical development and regulatory functions to properly evaluate and develop earlier-stage opportunities, which may include recruiting personnel that are knowledgeable in therapeutic areas we have not yet pursued. If we are unable to acquire promising development-stage assets or eventually obtain marketing approval for them, we may not be able to create a meaningful pipeline of new medicines and eventually realize a return on our investments.

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

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

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

~~DUEXIS~~Although TEPEZZA does not face direct competition, other therapies, such as corticosteroids, have been used on an off-label basis to alleviate some of the symptoms of TED. While these therapies have not proved effective in treating the underlying disease, and ~~VIMOVO face competition from other NSAIDs, including Celebrex~~^®~~, which was marketed by Pfizer~~carry with them potential significant side effects, their off-label use could reduce or delay treatment with TEPEZZA among the addressable patient population. Viridian Therapeutics, Inc., or Viridian, is pursuing development of both an intravenous (VRDN-001) and ~~is also a generic medicine known as celecoxib and marketed by other pharmaceutical companies. DUEXIS and VIMOVO also face significant competition~~subcutaneous (VRDN-001, VRDN-002 or VRDN-003) formulations of anti-IGF-1R monoclonal antibodies for TED. In August 2022, Viridian announced positive initial clinical data from the ~~separate use~~first cohort, 10mg/kg, of ~~NSAIDs~~the ongoing Phase 1/2 clinical trial for ~~pain relief~~an IGF-1R monoclonal antibody VRDN-001 (intravenous), in patients with TED. On November 14, 2022 and ~~GI protective medications to reduce~~January 8, 2023, Viridian announced positive data for their second and third cohorts, 20mg/kg and 3mg/kg, respectively, of the ~~risk~~ongoing Phase 1/2 trial showing improvements in signs and symptoms of NSAID-induced upper GI ulcers. Both NSAIDs and GI protective medications are available in generic form and may be less expensive to use separately than DUEXIS or VIMOVO. PENNSAID 2% faces competition from generic versions of diclofenac sodium topical solutions that are priced significantly less than the price we charge for PENNSAID 2%, and Voltaren Gel, marketed by Endo Pharmaceuticals Solutions Inc., which is the market leaderTED after two infusions. In addition, in the ~~topical NSAID category. Legislation enacted~~fourth quarter of 2022, Viridian enrolled the first patient in ~~most states~~its THRIVE Phase 3 trial of VRDN-001 (intravenous) with active TED. Additionally, on July 10, 2023, Viridian announced positive results from a cohort of 12 chronic TED patients in the ~~United States allows, or in some instances mandates, that~~Phase 1/2 trial. Viridian expects to initiate a ~~pharmacist dispense an available generic equivalent when filling a prescription for a branded medicine,~~Phase 3 trial in the ~~absence~~third quarter of ~~specific instructions~~2023, with top-line results expected by the end of 2024. Viridian has initiated a Phase 2 trial with a subcutaneous version of VRDN-002 in the fourth quarter of 2022. Viridian filed an investigational new drug, or IND, application for VRDN-003 in June of 2023 and upon approval plans to subsequently begin a Phase 1 trial in healthy volunteers with topline results expected by the end of 2023. In March 2023, Viridian announced it is conducting a Phase 1 trial of a subcutaneous formulation of VRDN-001 in healthy volunteers, with topline results expected by the end of 2023. Viridian has stated that it intends to select one of the three subcutaneous formulations to move into pivotal trials by the end of 2023, with a subsequent Phase 2/3 trial to be initiated in early 2024. In addition, Sling Therapeutics, Inc. is conducting a Phase 2b study of an oral IGF-1R for the treatment of moderate-to-severe TED. Immunovant Inc., or Immunovant, initiated two Phase 3 clinical trials of a fully human anti-FcRn monoclonal antibody candidate for the treatment of active TED, also referred to as Graves’ ophthalmopathy, in the fourth quarter of 2022. Immunovant has indicated that it expects data from the prescribing physician. Because pharmacists often have economic and other incentives to prescribe lower-cost generics, if physicians prescribe DUEXIS, PENNSAID 2% or VIMOVO, those prescriptions may not result in sales. If physicians do not complete prescriptions through our HorizonCares program or otherwise provide prescribing instructions prohibiting the substitution of generic ibuprofen and famotidine separately as a substitution for DUEXIS or generic naproxen and branded Nexium^® (esomeprazole) as a substitute for VIMOVO or generic diclofenac sodium topical solutions as a substitute for PENNSAID 2%, sales of DUEXIS, PENNSAID 2% and VIMOVO may suffer despite any success we may have in promoting DUEXIS, PENNSAID 2% or VIMOVO to physicians. In addition, other medicine candidates that contain ibuprofen and famotidine in combination or naproxen and esomeprazole in combination, while not currently known or FDA approved, may be developed and compete with DUEXIS or VIMOVO, respectively,Phase 3 trials in the ~~future.~~ first half of 2025. On January 5, 2023, Acelyrin, Inc., or Acelyrin, announced the acquisition of ValenzaBio Inc., or ValenzaBio. Previously, ValenzaBio received IND clearance and subsequently had begun a Phase 1 trial in the first half of 2022 with VB421 or lonigutamab, an anti-IGF-1R monoclonal antibody designed for subcutaneous use. In January 2023, Acelyrin modified the trial design into a Phase 1/2 adaptive trial in active TED. Lassen Therapeutics, Inc. has included a TED cohort into their ongoing Phase 1 trial of LASN01, an IL-11 monoclonal antibody, also in development for pulmonary fibrosis. Argenx SE announced a registrational trial of efgartigimod for the treatment of TED due to begin in the fourth quarter of 2023.

While KRYSTEXXA faces limited direct competition, a number of competitors have ~~drugs~~medicines in clinical trials, including Selecta Biosciences Inc., or Selecta, which has initiated a Phase 13 clinical program of a candidate for the treatment of chronic refractory gout. In September 2020, Selecta announced topline clinical data that did not meet the primary endpoint or demonstrate statistical superiority for its Phase 2 trial that compared its candidate, which includes an immunomodulator, to KRYSTEXXA alone. In July 2020, Selecta and Swedish Orphan Biovitrum AB, or Sobi, entered into a strategic licensing agreement under which Sobi will assume responsibility for certain development, regulatory, and commercial activities for this candidate. In August 2022, Selecta announced the completion of enrollment for both DISSOLVE trials, the two clinical studies of the Phase 3 DISSOLVE development program of SEL-212 for chronic refractory gout. In March 2023, Selecta and Sobi announced positive topline data from the DISSOLVE trials. ~~On December 22, 2015, AstraZeneca secured~~Sobi intends to file a biologics license application, or BLA, in the first half of 2024. SEL-212 is a combination of Selecta’s ImmTOR immune tolerance platform and a therapeutic uricase enzyme (pegadricase).

RAVICTI could face competition from a few alternative medicine and treatment options that have been recently approved or are in development, including Pheburane®, a taste-masked formulation of sodium phenylbutyrate for which Medunik USA received approval from the FDA in June 2022, a gene-therapy candidate by Ultragenyx Pharmaceutical Inc., OlpruvaTM, a taste-masked formulation of sodium phenylbutyrate for ~~ZURAMPIC (lesinurad) 200mg tablets~~which ACER Therapeutics Inc. received approval from the FDA in ~~combination with~~December 2022, an enzyme replacement for a ~~xanthine oxidase inhibitor, or XOI,~~specific UCD subtype (ARG) by Aeglea Bio Therapeutics Inc. and a mRNA-based therapeutic for the treatment of hyperuricemia associated with gout in patients who have not achieved target serum uric acid (sUA) levels with an XOI alone. In April 2016, the U.S. rights to ZURAMPIC were licensed to Ironwood Pharmaceuticalsa specific UCD subtype (OTC) by Arcturus Therapeutics Holdings Inc. Although ZURAMPIC is not a direct competitor because it has not been approved for refractory gout, this therapy could be used prior to use of KRYSTEXXA and if effective, could reduce the target patient population for KRYSTEXXA. PROCYSBI faces competition from Cystagon® (immediate-release cysteamine bitartrate capsules) for the treatment of ~~cystinosis and Cystaran (cysteamine ophthalmic solution)~~cystinosis. Additionally, we are also aware that AVROBIO, Inc. has a gene therapy candidate in development for the treatment of ~~corneal crystal accumulation in patients with~~ cystinosis. ~~QUINSAIR~~

UPLIZNA faces competition from ~~Tobramycin solution, which~~eculizumab, marketed as Soliris® by AstraZeneca plc, or AstraZeneca, and satralizumab, marketed as EnspryngTM by Genentech/Chugai Pharmaceuticals Co., Ltd., a subsidiary of F. Hoffmann-La Roche Ltd., each for the treatment of patients with NMOSD. AstraZeneca announced in May 2023 that Ultomiris® (ravulizumab) has been approved in the EU for the treatment of adults with anti-aquaporin-4 (AQP4) antibody-positive (Ab+) NMOSD. Ultomiris is ~~available as a generic~~currently under regulatory review in the United States and, if approved for this indication, UPLIZNA could face additional competition. UPLIZNA also faces competition from rituximab, an off-label treatment that has been used for years to treat NMOSD given the lack of an approved medicine for ~~treatment of chronic Pseudomonas aeruginosa lung infections in patients with cystic fibrosis, TOBI Podhaler, Cayston~~this disease prior to 2019. Other novel treatments are under development for NMOSD, including Phase 3 candidates being developed by Beijing Mabworks Biotech Co. Ltd. and ~~colistimethate.~~RemeGen Co. Ltd., and Phase 2 candidates, including a candidate being developed by Chord Therapeutics SA/Merck KGaA.

We have also entered into settlement and license agreements that may allow certain of our competitors to sell generic versions of certain of our medicines in the United States, subject to the terms of such agreements. We granted a non-exclusive license (that is only royalty-bearing in some circumstances), to manufacture and commercialize a generic version of DUEXIS in the United States after January 1, 2023, or earlier under certain circumstances. We granted(i) non-exclusive licenses to manufacture and commercialize generic versions of ~~PENNSAID 2%~~RAVICTI in the United States after ~~January 10, 2029, or earlier under certain circumstances. We granted a~~July 1, 2025 and (ii) non-exclusive license to manufacture and commercialize a generic version of ~~RAYOS tablets~~PROCYSBI in the United States after ~~December 23, 2022, or earlier under~~March 31, 2030. Under certain ~~circumstances.~~

~~Patent litigation is currently pending in the United States District Court for the District of New Jersey against~~ ~~several companies intending to market~~ a generic version of PENNSAID 2% prior to the expiration of certain of our patents listed in the FDA’s Orange Book, or the Orange Book. These cases are collectively known as the PENNSAID 2% cases, and involve the following sets of defendants: (i) Actavis Laboratories UT, Inc., formerly known as Watson Laboratories, Inc., Actavis, Inc. and Actavis plc, or collectively Actavis; and (ii) Lupin Limited and Lupin Pharmaceuticals, Inc., or collectively Lupin. These cases arise from Paragraph IV Patent Certification notice letters fromcircumstances, each of ~~Actavis and Lupin advising each had filed~~these licenses could become effective on an ~~Abbreviated New Drug Application, or ANDA, with the FDA seeking approval to market a generic version of PENNSAID 2% before the expiration of the patents-in-suit.~~earlier date.

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

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

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

ACTIMMUNE is the only medicine currently approved by the FDA specifically for the treatment of CGD and SMO. While there are additional or alternative approaches used to treat patients with CGD and SMO, there are currently no medicines on the market that compete directly with ACTIMMUNE. A widely accepted protocol to treat CGD in the United States is the use of concomitant “triple prophylactic therapy” comprising ACTIMMUNE, an oral antibiotic agent and an oral antifungal agent. However, the FDA-approved labeling for ACTIMMUNE does not discuss this “triple prophylactic therapy,” and physicians may choose to prescribe one or both of the other modalities in the absence of ACTIMMUNE. Because of the immediate and life-threatening nature of SMO, the preferred treatment option for SMO is often to have the patient undergo a bone marrow transplant which, if successful, will likely obviate the need for further use of ACTIMMUNE in that patient. Likewise, the ~~use~~potentially curative treatment of bone marrow transplants ~~in the treatment of~~for patients with CGD is becoming more prevalent, which could have a material adverse effect on sales of ACTIMMUNE and its profitability. We are aware of a number of research programs investigating the potential of gene therapy as a possible cure for CGD. Additionally, other companies may be pursuing the development of medicines and treatments that target the same diseases and conditions which ACTIMMUNE is currently approved to treat. As a result, it is possible that our competitors may develop new medicines that manage CGD or SMO more effectively, cost less or possibly even cure CGD or SMO. In addition, the U.S. healthcare legislation passed in March 2010 authorized the FDA to approve biological products, known as biosimilars, that are similar to or interchangeable with previously approved biological products, likepatents covering ACTIMMUNE based upon potentially abbreviated data packages. Biosimilars are likely to be sold at substantially lower prices than branded medicines because the biosimilar manufacturer would not have to recoup the researchexpired on August 30, 2022, and ~~development and marketing costs associated with the branded medicine. Though~~although we are not currently aware of any biosimilar to ACTIMMUNE under development, the development and commercialization of any competing medicines or the discovery of any new alternative treatment for CGD or SMO could have a material adverse effect on sales of ACTIMMUNE and its profitability.

BUPHENYL’s composition of matter patent protection and orphan drug exclusivity have expired. Because BUPHENYL has no regulatory exclusivity or listed patents, there is nothing to prevent a competitor from submitting an ANDA for a generic version of BUPHENYL and receiving FDA approval. In November 2011, Ampolgen Pharmaceuticals, LLC received FDA approval for a generic version of NaPBA tablets, which may compete with RAVICTI and BUPHENYL in treating UCD. In March 2013, SigmaPharm Laboratories, LLC received FDA approval for a generic version of NaPBA powder, which competes with BUPHENYL and may compete with RAVICTI in treating UCD. In July 2013, Lucane Pharma, or Lucane, received marketing approval from the EMA for taste-masked NaPBA and has announced a distribution partnership in Canada. In January 2015, Lucane announced it had received marketing approval for its taste-masked NaPBA in Canada. We believe Lucane is also seeking approval via an ANDA in the United States. If this ANDA is approved, this formulation may compete with RAVICTI and BUPHENYL in treating UCD in the United States. Generic versions of BUPHENYL to date have been priced at a discount relative to ~~BUPHENYL or~~ RAVICTI, and physicians, patients, or payers may decide that this less expensive alternative is preferable to ~~BUPHENYL and~~ RAVICTI. If this occurs, sales of ~~BUPHENYL and/or~~ RAVICTI could be materially reduced, but we would nevertheless be required to make royalty payments to Bausch Health Companies Inc. (formerly Ucyclyd Pharma, Inc.), or ~~Ucyclyd,~~Bausch, and another external party, at the same royalty rates. While ~~Ucyclyd~~Bausch and its affiliates are generally contractually prohibited from developing or commercializing new medicines, anywhere in the world, for the treatment of UCD or hepatic encephalopathy, or HE, which are chemically similar to RAVICTI, they may still develop and commercialize medicines that compete with RAVICTI. For example, medicines approved for indications other than UCD and HE may still compete with RAVICTI if physicians prescribe such medicines off-label for UCD or HE. We are also aware that Recordati S.p.A (formerly known as Orphan Europe ~~SARL,~~SARL), or ~~Orphan Europe, is conducting a clinical trial of~~Recordati, received FDA approval in January 2021 for carglumic acid ~~to treat some of the UCD enzyme deficiencies for which RAVICTI was approved. Promethera Biosciences SA has successfully completed Phase I/II trials of its cell-based therapy~~ for the treatment of ~~UCD and plans~~acute hyperammonemia due to ~~conduct a Phase IIb/III clinical trial.~~propionic acidemia or methylmalonic acidemia. Carglumic acid is also approved for ~~maintenance therapy for~~ chronic and acute hyperammonemia ~~and~~due to ~~treat hyperammonenic crises in Nacetylglutamate~~N-acetylglutamate synthase deficiency, a rare UCD subtype, and is sold under the name Carbaglu. If the results of this trial are successful and Orphan Europe is able to complete development and obtain approval of Carbaglu to treat additional UCD enzyme deficiencies,subtype. RAVICTI ~~would~~may face additional competition from this compound.

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

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

Our biologic medicines and candidates may face biosimilar competition sooner than anticipated.*

Even if we are successful in achieving regulatory approval to commercialize a biologic medicine candidate ahead of our competitors, our biologic medicines and candidates may face competition from biosimilar products. In the United States, the Biologics Price Competition and Innovation Act of 2009, or BPCIA, created an abbreviated pathway for FDA approval of biosimilar and interchangeable biological products based on a previously licensed reference product. Under the BPCIA, an application for a biosimilar biological product cannot be approved by the FDA until 12 years after the original reference biological product was approved under a BLA. The law is complex and is still being interpreted and implemented by the FDA. As a result, its ultimate impact, implementation, and meaning are subject to uncertainty and any such processes could have a material adverse effect on the future commercial prospects for our biologic medicines and candidates.

We believe that any of our candidates approved as a biological product under a BLA should qualify for the 12-year period of exclusivity available to reference biological products. However, there is a risk that this exclusivity could be shortened due to congressional action or otherwise, or that the FDA will not consider our candidates to be reference biological products pursuant to its interpretation of the exclusivity provisions of the BPCIA for competing products, potentially creating the opportunity for biosimilar competition sooner than anticipated. Moreover, the extent to which a biosimilar product, once approved, will be substituted for any one of our reference medicines in a way that is similar to traditional generic substitution for non-biological products is not yet clear, and will depend on a number of marketplace and regulatory factors that are still developing including whether a future competitor seeks an interchangeability designation for a biosimilar of one of our medicines. Under the BPCIA as well as state pharmacy laws, only interchangeable biosimilar products are considered substitutable for the reference biological product without the intervention of the health care provider who prescribed the original biological product. However, as with all prescribing decisions made in the context of a patient-provider relationship and a patient’s specific medical needs, healthcare providers are not restricted from prescribing biosimilar products in an off-label manner. In addition, a competitor could decide to forego the abbreviated approval pathway available for biosimilar products and to submit a full BLA for product licensure after completing its own preclinical studies and clinical trials. In such a situation, any exclusivity to which we may be eligible under the BPCIA would not prevent the competitor from marketing its biological product as soon as it is approved.

Data and market exclusivity is available in relation to grant of certain types of marketing authorization for medicinal products in the EU. Upon grant of a marketing authorization, innovative medicinal products are generally entitled to benefit from eight years of data exclusivity and 10 years of market exclusivity in the EU. Data exclusivity, if granted, prevents regulatory authorities in the EU from referencing the innovator’s data to assess a generic application or biosimilar application for eight years from the date of authorization of the innovative product. After this period a generic or biosimilar marketing authorization application can be submitted, and the innovator’s data may be referenced. The market exclusivity period prevents a successful generic or biosimilar applicant from commercializing its product in the EU until 10 years have elapsed from grant of the initial marketing authorization of the reference product in the EU. The overall ten year period may, occasionally, be extended for a further year to a maximum of 11 years if, during the first eight years of those ten years, the marketing authorization holder obtains an authorization for one or more new therapeutic indications which, during the scientific evaluation prior to their authorization, are held to bring a significant clinical benefit in comparison with existing therapies. However, there is no guarantee that a product will be considered by the EU’s regulatory authorities to be a new chemical/biological entity, and products may not qualify for data exclusivity. In the EU, the European Commission has granted marketing authorizations for several biosimilar products pursuant to a set of general and product class-specific guidelines for biosimilar approvals issued over the past few years. In addition, companies may be developing biosimilar products in other countries that could compete with our medicines, if approved.

On April 26, 2023, the European Commission adopted a proposal for a new Directive and Regulation to revise the existing pharmaceutical legislation. If adopted in the form proposed, the recent European Commission proposals to revise the existing EU laws governing authorization of medicinal products may result in a decrease in data and market exclusivity for our product candidates in the EU.

If competitors are able to obtain marketing approval for biosimilars referencing our medicine candidates, if approved, our future medicines may become subject to competition from such biosimilars, whether or not they are designated as interchangeable, with the attendant competitive pressure and potential adverse consequences. Such competitive products may be able to immediately compete with us in each indication for which our medicine candidates may have received approval.

If we are unable to maintain or realize the benefits of orphan drug exclusivity, we may face increased competition with respect to certain of our medicines.*

Under the Orphan Drug Act of 1983, the FDA may designate a medicine as an orphan drug if it is a drug intended to treat a rare disease or condition affecting fewer than 200,000 people in the United States. A company that first obtains FDA approval for a designated orphan drug for the specified rare disease or condition receives orphan drug marketing exclusivity for that drug for a period of seven years from the date of its approval. ~~RAVICTI~~PROCYSBI received ten years of market exclusivity for the treatment of nephropathic cystinosis, through September 2023, as an orphan drug in the EEA and UK. PROCYSBI ~~have~~received seven years of market exclusivity, until December 22, 2024, for patients one year of age to less than two years of age as an orphan drug in the United States. TEPEZZA has been granted orphan drug exclusivity ~~by the FDA,~~for treatment of active (dynamic) phase Graves’ ophthalmopathy, which we expect will provide orphan drug marketing exclusivity in the United States until ~~February 2020 and December 2020, respectively, with~~January 2027. In addition, UPLIZNA was granted orphan drug exclusivity for ~~PROCYSBI extending to 2022 for patients ages two to six years.~~the treatment of NMOSD, which we expect will provide orphan drug marketing exclusivity in the United States until June 2027. However, despite orphan drug exclusivity, the FDA can still approve another drug containing the same active ingredient and used for the same orphan indication if it determines that a subsequent drug is safer, more effective or makes a major contribution to patient care, and orphan exclusivity can be lost if the orphan drug manufacturer is unable to ensure that a sufficient quantity of the orphan drug is available to meet the needs of patients with the rare disease or condition. Orphan drug exclusivity may also be lost if the FDA later determines that the initial request for designation was materially defective. In addition, orphan drug exclusivity does not prevent the FDA from approving competing drugs for the same or similar indication containing a different active ingredient. Outside the United States, similar limitations regarding orphan drugs also exist. If orphan drug exclusivity is lost and we were unable to successfully enforce any remaining patents covering ~~RAVICTI or PROCYSBI,~~the applicable medicine, we could be subject to generic competition and revenues from ~~RAVICTI or PROCYSBI~~the medicine could decrease materially.

In addition, if a subsequent drug is approved for marketing for the same or a similar indication as ~~RAVICTI or PROCYSBI~~our medicines despite orphan drug exclusivity, we may face increased competition and lose market share with respect to these medicines. RAVICTI will benefit from a period of 10 years of orphan market exclusivity in the EU, concurrently applied to each of the approved six sub-types of the UCDs. This will run concurrently with its marketing exclusivity status.

Our business operations may subject us to numerous commercial disputes, claims and/or lawsuits and such litigation may be costly and time-consuming and could materially and adversely impact our financial position and results of operations.*

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

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

Similarly, from time to time we are involved in disputes with distributors, PBMs and licensing partners regarding our rights and performance of obligations under contractual arrangements. For example, we were previously in litigation with Express Scripts, related to alleged breach of contract claims and in which Express Scripts was seeking payment for rebates relating to DUEXIS, RAYOS and VIMOVO. We counterclaimed against Express Scripts, contesting the amount owed and contending Express Scripts had breached the rebate agreement. In September 2016, we entered into a settlement agreement and mutual release with Express Scripts pursuant to which we and Express Scripts were released from any and all claims relating to the litigation without admitting any fault or wrongdoing and we paid Express Scripts $65.0 million.

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

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

~~In addition to our U.S. operations, we~~We have operations in Ireland, Bermuda, the Grand Duchy of Luxembourg, or Luxembourg, Switzerland, Germany, Canada, the Grand Cayman Islands and in Israel (through Andromeda Biotech Ltd). Moreover, Grünenthal S.A. is continuing with the registration process for the commercialization of DUEXIS in Latin America. BUPHENYL is currently marketed in various territories outside the United States, ~~by third-party distributors. RAVICTI received marketing authorization from HC~~Ireland and in ~~March 2016~~multiple other jurisdictions, and ~~marketing approval in~~are pursuing a global expansion strategy, which includes bringing TEPEZZA to patients with TED and UPLIZNA to adult patients with NMOSD outside of the EU in November 2015. We launched RAVICTI in Canada in November 2016 and expect RAVICTI to be available in Europe in the fourth quarter of 2017 through our partnership with SOBI. QUINSAIR received marketing authorizatio~~n from HC in June 2015 and we launched QUINSAIR in Canada in December 2016. PROCYSBI received marketing authorization from HC in June 2017 and we launched PROCYSBI in Canada in October 2017.~~ United States.

We face risks associated with our international operations, including possible unfavorable ~~regulatory, pricing and reimbursement,~~ political, tax and labor conditions, which could harm our business.

We are subject to numerous risks associated with international business activities, including:

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

We are subject to tax audits around the world, and such jurisdictions may assess additional income tax against us. Although we believe our tax positions are reasonable, the final determination of tax audits could be materially different from our recorded income tax provisions and accruals. The ultimate results of an audit could have a material adverse effect on our operating results or cash flows in the period or periods for which that determination is made and could result in increases to our overall tax expense in subsequent periods.

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

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

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

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

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

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

As of December 31, 2013, we employed approximately 300 full-time employees as a consolidated entity. As of June 30, 2023, we employed approximately 2,190 full-time employees, including approximately 370 sales representatives and sales management, representing a substantial change to the size of our organization. We have also experienced, and may continue to experience, turnover of the sales representatives that we hired or will hire in connection with the commercialization of our medicines, requiring us to hire and train new sales representatives. We have experienced additional turnover and difficulties in hiring new employees as a result of the pending Transaction with Amgen. Our management, personnel, systems and facilities currently in place may not be adequate to support anticipated growth, and we may not be able to retain or recruit qualified personnel in the future due to competition for personnel among biopharmaceutical businesses.

As our commercialization plans and strategies continue to develop, and particularly as we execute on our strategy to expand our commercial team in the United States and establish commercial capabilities outside the United States, we will need to continue to recruit and train sales and marketing personnel. In addition, as we build our R&D and manufacturing capabilities, we will need to continue to recruit and train qualified individuals in these areas. Our ability to manage any future growth effectively may require us to, among other things:

Our acquisitions have resulted in many changes, including significant changes in the corporate business and legal entity structure, the integration of other companies and their personnel with us, and changes in systems. We may encounter unexpected difficulties or incur unexpected costs, including:

We may not be successful in growing our commercial operations outside the United States and could encounter other challenges in growing our commercial presence, including due to risks associated with political and economic instability, operating under different legal requirements and tax complexities. If we are unable to manage our commercial growth outside of the United States, our opportunities to expand sales in other countries will be limited or we may experience greater costs with respect to our ex-U.S. commercial operations.

We have also broadened our acquisition strategy to include development-stage assets or programs, which entails additional risk to us. For example, if we are unable to identify programs that ultimately result in approved medicines, we may spend material amounts of our capital and other resources evaluating, acquiring and developing medicines that ultimately do not provide a return on our investment. We have less experience evaluating development-stage assets and may be at a disadvantage compared to other entities pursuing similar opportunities. Regardless, development-stage programs generally have a high rate of failure and we cannot guarantee that any such programs will ultimately be successful. While we have significantly enhanced our R&D function in recent years, we may need to enhance our clinical development and regulatory functions to properly evaluate and develop earlier-stage opportunities, which may include recruiting personnel that are knowledgeable in therapeutic areas we have not yet pursued. If we are unable to acquire promising development-stage assets or eventually obtain marketing approval for them, we may not be able to create a meaningful pipeline of new medicines and eventually realize a return on our investments. For example, a core strategic rationale for the Viela acquisition was Viela’s pipeline of medicine candidates and R&D capabilities, but if we experience clinical failures with respect to Viela’s medicine candidates and research programs or such candidates and programs do not otherwise result in marketed medicines, we will not realize the expected benefits from our substantial investment in the acquisition and subsequent development of the Viela pipeline. As our R&D plans and strategies continue to develop, including as a result of our acquisition of Viela, we will need to continue to recruit and train R&D personnel.

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

We have ~~recently~~ completed multiple medicine and company acquisitions, and our strategy is to engage in additional strategic transactions with third parties, such as acquisitions of companies or divisions of companies and asset purchases of medicines, medicine candidates or technologies that we believe will complement or augment our existing business. We may also consider a variety of other business arrangements, including spin-offs, strategic partnerships, joint ventures, restructurings, divestitures, business combinations and other investments. Any such transaction may require us to incur non-recurring and other charges, increase our near and long-term expenditures, pose significant integration challenges, create additional tax, legal, accounting and operational complexities in our business, require additional expertise, result in dilution to our existing shareholders and disrupt our management and business, which could harm our operations and financial results. For example, in connection with our acquisition of the U.S. rights to VIMOVO, we assumed primary responsibility for the existing patent infringement litigation with respect to VIMOVO, and have also agreed to reimburse certain legal expenses of Pozen Inc., who subsequently entered into a business combination with Tribute Pharmaceuticals Canada Inc. to become known as Aralez Pharmaceuticals Inc., or Aralez, with respect to its continued involvement in such litigation. We also assumed responsibility for the existing patent infringement litigation with respect to RAVICTI upon the closing of our acquisition of Hyperion Therapeutics Inc., or Hyperion, and have assumed responsibility for completing post-marketing clinical trials of RAVICTI that are required by the FDA and are ongoing. We expect that the RAVICTI litigation will result in substantial on-going expenses and potential distractions to our management team.

In connection with our acquisition of Raptor, we assumed contractual obligations under agreements with Tripex Pharmaceuticals, LLC, or Tripex, and PARI Pharma GmbH, or PARI, related to QUINSAIR. Under the agreement with Tripex, we are required to pursue commercially reasonable efforts to initiate, and subsequently to complete, an additional clinical trial of QUINSAIR in a non-cystic fibrosis patient population within a specified period of time and an obligation to progress toward submitting an NDA for approval of QUINSAIR in the United States for use in all or part of the cystic fibrosis patient population. These obligations are subject to certain exceptions due to, for example, manufacturing delays not under our control, or delays caused by the FDA. If we fail to properly exercise such efforts to initiate and complete an appropriate clinical trial, or fail to submit an NDA for U.S. approval in the cystic fibrosis patient population, during the time periods specified in the agreement, we may be subject to various claims by Tripex and parties affiliated with Tripex. In addition, if we do not spend a minimum amount on QUINSAIR development in each of the three years following our acquisition of Raptor, we may also be obligated to pre-pay a milestone payment related to initiating a clinical trial for QUINSAIR in a non-cystic fibrosis indication. During October 2017, we triggered a milestone payment under this agreement, and we paid Tripex $20.0 million in November 2017. Under the license agreement with PARI, we are required to comply with diligence milestones related to development and commercialization of QUINSAIR in the United States and to spend a specified minimum amount per year on development activities in the United States until submission of the NDA for QUINSAIR in the United States. If we do not comply with these obligations, our licenses to certain intellectual property related to QUINSAIR may become non-exclusive in the United States or could be terminated. We are also subject to contractual obligations under an amended and restated license agreement with the Regents of the University of California, San Diego, or UCSD, with respect to PROCYSBI, including obligations to consider engaging in the development of PROCYSBI for the treatment of non-alcoholic steatohepatitis, or NASH, and related diligence obligations if we undertake such development. Under the amended and restated license agreement with USCD, we also are subject to diligence obligations to identify a third party to undertake development of PROCYSBI for the treatment of Huntington’s disease. To the extent that we fail to perform the diligence obligations under the agreement, UCSD may, with respect to such indication, terminate the license or otherwise cause the license to become non-exclusive. If one or more of these licenses was terminated, we would have no further right to use or exploit the related intellectual property, which would limit our ability to develop PROCYSBI or QUINSAIR in other indications, and could impact our ability to continue commercializing PROCYSBI or QUINSAIR in their approved indications.

We face significant competition in seeking appropriate strategic transaction opportunities and the negotiation process for any strategic transaction can be time-consuming and complex. In addition, we may not be successful in our efforts to engage in certain strategic transactions due to the pending Transaction and the restrictions under the transaction agreement with Amgen, or because our financial resources may be insufficient and/or third parties may not view our commercial and development capabilities as being adequate. Further, increasing regulatory scrutiny of acquisitions may limit our ability to pursue certain acquisitions where we have potentially competing products or clinical programs. We may not be able to expand our business or realize our strategic goals if we do not have sufficient funding or cannot borrow or raise additional capital. There is no assurance that following any of our recent acquisition transactions or any other strategic transaction, we will achieve the anticipated revenues, net income or other benefits that we believe justify such transactions. In addition, any failures or delays in entering into strategic transactions anticipated by analysts or the investment community, including any failures to capitalize on opportunistic strategic transactions due to the restrictions under the transaction agreement with Amgen in the event the Transaction is not ultimately consummated, could seriously harm our consolidated business, financial condition, results of operations or cash flow.

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

Our parent company is incorporated in Ireland and ~~maintains~~has subsidiaries maintained in Ireland and in multiple jurisdictions, including Ireland, the U.K, the United States, Switzerland, Luxembourg, Germany, Canada and Bermuda. Prior to our merger transaction with Vidara Therapeutics International Public Limited Company, or Vidara, and such transaction, the Vidara Merger, Vidara wasother jurisdictions. We are able to achieve a favorable tax rate through the performance of certain functions and ownership of certain assets in tax-efficient jurisdictions, including Ireland and Bermuda, together with ~~intra-group~~the use of intercompany service and transfer pricing agreements, each on an arm’s length basis. ~~We are continuing a substantially similar structure~~Our effective tax rate may be different than experienced in the past due to numerous factors including, changes to the tax laws of jurisdictions that we operate in, the enactment of new tax treaties or changes to existing tax treaties, changes in the mix of our profitability from jurisdiction to jurisdiction, the implementation of the EU Anti-Tax Avoidance Directive (see further discussion below), the implementation of the Bermuda Economic Substance Act 2018 (effective December 31, 2018) and ~~arrangements.~~our inability to secure or sustain acceptable agreements with tax authorities (if applicable). Any of these factors could cause us to experience an effective tax rate significantly different from previous periods or our current expectations. Taxing authorities, such as the U.S. Internal Revenue Service, or IRS, actively audit and otherwise challenge these types of arrangements, and have done so in the ~~pharmaceutical~~biopharmaceutical industry. We expect that these challenges will continue as a result of the recent increase in scrutiny and political attention on corporate tax structures. The IRS and/or the Irish tax authorities may challenge our structure and transfer pricing arrangements through an audit or lawsuit. Responding to or defending such a challenge could be expensive and consume time and other resources, and divert management’s time and focus from operating our business. We cannot predict whether taxing authorities will conduct an audit or file a lawsuit challenging this structure, the cost involved in responding to any such audit or lawsuit, or the outcome. If we are unsuccessful in defending such a challenge, we may be required to pay taxes for prior periods, as well as interest, fines or penalties, and may be obligated to pay increased taxes in the future, any of which could require us to reduce our operating expenses, decrease efforts in support of our medicines or seek to raise additional funds, all of which could have a material adverse effect on our business, financial condition, results of operations and growth prospects.

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

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

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

~~Further, there can be no assurance that the IRS will agree with the position that the ownership test was satisfied. If our parent company were unable to be treated~~classification as a foreign corporation for U.S. federal income tax purposes ~~one of our significant strategic reasons for completing~~is affected by Section 7874, though the ~~Vidara Merger would be nullified~~IRS may disagree.

Recent and ~~we may not be able to recoup the significant investment in completing the transaction.~~

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

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

On April 4, 2016, the U.S. Treasury and the IRS issued temporary regulations and in January 2017 issued final regulations that expand the scope of transactions subject to the rules designed to eliminate the U.S. tax benefits of so-called inversion transactions. Under the temporary regulations, the former stockholders of U.S. corporations acquired by a foreign corporation within 36 months of the signing date of the last such acquisition are aggregated for the purpose of determining whether the foreign corporation will be treated as a domestic corporation for U.S. federal tax purposes because at least 80 percent of the stock of the foreign corporation is held by former stockholders of a U.S. corporation. The requirement to aggregate the stockholders in such acquisitions for the purpose of determining whether the 80 percent threshold is met may limit our ability to use our stock to acquire U.S. corporations or their assets in the future. The Secretary of the United States Treasury recently announced that the U.S. Treasury will review every significant regulation issued over the past year and a half, including certain inversion regulations, but, at present, it is unclear what the outcome of Treasury’s review will be or what impact it may have on us.

The U.S. Treasury and the IRS also issued proposed regulations on April 4, 2016 as well as final and temporary regulations in October 2016 that address whether an interest in a related corporation is debt or equity for United States federal income tax purposes. These regulations could result in recharacterization of inter-company debt to equity for certain of our inter-company debt and such a recharacterization could result in more of our future income being taxed by the United States and thereby increase our effective tax rate. We are continuing to evaluate the impact that these regulations may have and will reflect such impact on our financial statements as required.

In July 2015, the International Tax Bipartisan Tax Working Group of the United States Senate Committee on Finance, or the Finance Committee, issued its report on international tax reform. The Finance Committee’s co-chairs concluded that it will be necessary to limit earnings stripping by foreign multinationals through interest deductions on inter-company debt in order to eliminate a competitive advantage that foreign multinationals would otherwise have over domestic multinational companies. The status of the recommendations from the International Tax Bipartisan Tax Working Group, including regulations aimed at curbing earnings stripping, as well as the status of United States tax reform in general, is subject to significant uncertainty as President Trump and both houses of Congress are considering several material tax reform proposals. These proposals include, among other items, a significant reduction to the U.S. corporate tax rate and a possible “border adjustment tax” that would effectively increase the economic cost of imports. Consideration of various tax reform proposals continues to evolve. In July 2017, the Speaker of the House, Majority Leader of the Senate, Chairmen of the House of Representatives Committee on Ways and Means, Finance Committee, Secretary of the Treasury and Director of the National Economic Council issued a joint statement setting aside the idea of a border adjustment tax and called for tax reform legislation that “reduces tax rates as much as possible, allows unprecedented capital expensing, places a priority on permanence, and creates a system that encourages American companies to bring back jobs and profits trapped overseas. On September 22, 2017, the Administration and Chairman of the House Committee on Ways and Means and Senate Finance Committee released the “Unified Framework” tax reform which among other items discussed “ending incentives to ship jobs, capital and tax revenue overseas.” At this point in time it is not possible to determine all of the possible consequences to us of the various tax reform proposals that are under consideration. However, any tax reform could significantly impact our U.S. and worldwide tax liabilities.

In addition, the Organization for Economic ~~Co-operation~~Cooperation and Development, or the OECD, released its Base Erosion and Profit Shifting project final report on October 5, 2015. This report provides the basis for international standards for corporate taxation that are designed to prevent, among other things, the artificial shifting of income to tax havens and low-tax jurisdictions, the erosion of the tax base through interest deductions on ~~inter-company~~intercompany debt and the artificial avoidance of permanent establishments (i.e., tax nexus with a jurisdiction). Legislation to adopt these standards has been enacted or is currently under consideration in a number of jurisdictions. On June 7, 2017, several countries, including many countries that we operate and have subsidiaries in, participated in the signing ceremony adopting the ~~Organization for Economic Cooperation and Development’s~~OECD’s Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting, commonly referred to as the MLI. The MLI ~~is intended to provide countries~~came into effect on July 1, 2018. In January 2019, Ireland deposited the instrument of ratification of Ireland’s MLI choices with ~~a tool through which they can amend their income~~the OECD. Ireland’s MLI came into force on May 1, 2019, however the provisions in respect of withholding taxes and other taxes levied by Ireland did not come into effect for us until January 1, 2020 (with application also depending on whether the MLI has been ratified in other jurisdictions whose tax ~~treaties. Although not yet effective, the~~treaties with Ireland are affected). The MLI may modify ~~thousands of~~affected tax treaties making it more difficult for us to obtain advantageous tax-treaty benefits. The number of affected tax treaties could eventually be in the thousands. As a result, our income may be taxed in jurisdictions where it is not currently taxed and at higher rates of tax than it is currently taxed, which may ~~substantially~~ increase our effective tax rate.

On July 12, 2016, the Anti-Tax Avoidance Directive, or ATAD, was formally adopted by the Economic and Financial Affairs Council of the EU. The ~~U.S. federal government has called~~stated objective of the ATAD is to provide for ~~substantial changes~~the effective and swift coordinated implementation of anti-base erosion and profit shifting measures at EU level. Like all directives, the ATAD is binding as to ~~U.S. tax policy~~the results it aims to achieve though EU Member States are free to choose the form and ~~laws. Congress~~method of achieving those results. In addition, the ATAD contains a number of optional provisions that present an element of choice as to how it will be implemented into law. On December 25, 2018, the Finance Act 2018 was signed into Irish law, which introduced certain elements of the ATAD, such as the Controlled Foreign Company, or CFC, regime, into Irish law. The CFC regime became effective as of January 1, 2019. The ATAD also set out a high-level framework for the introduction of Anti-hybrid provisions. Finance Act 2019 introduced Anti-hybrid legislation in Ireland with effect from January 1, 2020. Finance Act 2021 introduced further ATAD measures, such as the interest limitation rules and ~~President Trump have released the frameworks of proposed tax plans which would significantly alter the U.S. tax code if enacted.~~anti-hybrid rules to neutralize reverse-hybrid mismatches into Irish law with effect from January 1, 2022. We do not expect a material impact on our effective tax rate as a result of the introduction of these provisions.

On October 8, 2021, 136 of the 140 members of the OECD/G20 Inclusive Framework on Base Erosion and Profit Shifting, or Inclusive Framework, approved a statement providing a framework for reform of the international tax rules, or Inclusive Framework Statement. The Inclusive Framework Statement sets out the key terms for an agreement on a two-pillar solution to address the tax challenges arising from the digitalization of the economy. Pillar One focuses on nexus and profit allocation and Pillar Two provides for a global minimum effective corporate tax rate of 15%. The Inclusive Framework Statement provides that Pillar One would apply to multinational enterprises with annual global revenue above 20 billion euros and profitability above 10%, with the revenue threshold potentially reduced to 10 billion euros in the future. Based on these thresholds, we would currently be outside the scope of the Pillar One proposals. On December 20, 2021, the Inclusive Framework published detailed rules which define the scope of, and set out the mechanism for introducing, the Pillar Two global minimum effective tax rate proposal. The rules provide for the imposition of the global minimum effective tax rate on certain multinational enterprises that have ~~sufficient information~~consolidated revenues of at least 750 million euros in at least two out of the last four years. Based on these thresholds, we currently expect that we could fall within the scope of the Pillar Two proposals. A number of countries are currently proposing to implement core elements of the Pillar Two proposals by the start of 2024 and, on December 15, 2022, the EU adopted a Council Directive requiring aspects of the Pillar Two proposals to be transposed into the national laws of its Member States (including Ireland) by December 31, 2023. Although it is difficult at this stage to determine with precision the impact the Pillar Two proposals would ~~allow us~~have, their implementation could materially increase our effective tax rate.

On August 16, 2022, President Biden signed into law the Inflation Reduction Act of 2022, or IRA, which includes a minimum tax equal to 15 percent of the adjusted financial statement income of certain corporations, as well as a one percent excise tax on share buybacks. Pending further guidance, it is possible that the IRA could increase our tax liability, which could in turn adversely impact our business and future profitability. The IRA or future changes in U.S. tax laws could have a material adverse impact on the value of our deferred tax assets and liabilities, could result in significant one-time charges, and could increase our future U.S. tax expense.

Effective January 1, 2022, the Tax Cuts and Jobs Act eliminated the option to deduct R&D expenses for tax purposes in the year incurred and requires taxpayers to capitalize and subsequently amortize such expenses over five years for research activities conducted in the United States and over fifteen years for research activities conducted outside the United States. Unless U.S. Treasury issues regulations that narrow the application of this provision to a smaller subset of our R&D expenses or the provision is deferred, modified, or repealed by Congress, this provision could materially decrease our cash flows from operations with an offsetting similarly sized increase in our net deferred tax assets over these amortization periods. The actual impact of this provision will depend on multiple factors, including the amount of R&D expenses we will incur and whether we conduct our R&D activities inside or outside the United States.

We are unable to predict what ~~U.S.~~ tax ~~reform, if any,~~laws may be proposed or enacted in the future or what ~~impact any~~effect such changes would have on our business. ~~Changes to U.S.~~To the extent new tax laws are enacted, or new guidance released, this could ~~significantly impact~~have an adverse effect on our ~~business, financial condition, results~~future effective tax rate. It could also lead to an increase in the complexity and cost of ~~operations,~~tax compliance. We urge our shareholders to consult with their legal and tax advisors with respect to the potential tax consequences of investing in or ~~cash flows.~~holding our ordinary shares.

If a United States person is treated as owning at least 10% of our ordinary shares, such holder may be subject to adverse U.S. federal income tax consequences.

If a United States person is treated as owning (directly, indirectly, or constructively) at least 10% of the value or voting power of our ordinary shares, such person may be treated as a “United States shareholder” with respect to each “controlled foreign corporation” in our group (if any). Because our group includes one or more U.S. subsidiaries, certain of our non-U.S. subsidiaries could be treated as controlled foreign corporations (regardless of whether or not we are treated as a controlled foreign corporation). A United States shareholder of a controlled foreign corporation may be required to report annually and include in its U.S. taxable income its pro rata share of “Subpart F income,” “global intangible low-taxed income,” and investments in U.S. property by controlled foreign corporations, regardless of whether we make any distributions. An individual that is a United States shareholder with respect to a controlled foreign corporation generally would not be allowed certain tax deductions or foreign tax credits that would be allowed to a U.S. corporation that is a United States shareholder with respect to a controlled foreign corporation. Failure to comply with these reporting and tax paying obligations may subject a United States shareholder to significant monetary penalties and may prevent the statute of limitations from starting with respect to such shareholder’s U.S. federal income tax return for the year for which reporting was due. We cannot provide any assurances that we will assist investors in determining whether any of our non-U.S. subsidiaries is treated as a controlled foreign corporation or whether any investor is treated as a United States shareholder with respect to any such controlled foreign corporation or furnish to any United States shareholders information that may be necessary to comply with the aforementioned reporting and tax paying obligations. A United States investor should consult its advisors regarding the potential application of these rules to an investment in our ordinary shares.

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

Our ability to compete in the highly competitive ~~biotechnology and pharmaceuticals~~biopharmaceuticals industries depends upon our ability to attract and retain highly qualified managerial, manufacturing, scientific and medical personnel. We are highly dependent on our management, sales and marketing and scientific and medical personnel, including our executive officers composed of our Chairman, President and Chief Executive Officer, Timothy P. Walbert; our Executive Vice President, Chief Business Officer, Robert F. Carey; our Executive Vice President, Chief Financial Officer, Paul W. Hoelscher; our Executive Vice President, Chief Administrative Officer, Barry J. Moze; our Executive Vice President, Research and Development and Chief Medical Officer, Jeffrey W. Sherman, M.D., FACP; our Executive Vice President, Chief Human Resources Officer, Irina Konstantinovsky; our Executive Vice President, General Counsel, Brian K. Beeler; our Executive Vice President, ~~Primary Care Business Unit~~, George Hampton; our Executive Vice President, Commercial Development and Strategy, Dave Happel; our Executive Vice President, Technical Operations, Michael A. DesJardin; our Senior Vice President, Orphan Business Unit, Eric Mosbrooker and our Senior Vice President, Rheumatology Business Unit, Vikram Karnani.officers. In order to retain valuable employees at our company, in addition to salary and annual cash incentives, we provide a mix of performance stock units, or PSUs, that vest subject to attainment of specified corporate performance goals and continued services, stock options and restricted stock units, or RSUs, that vest over ~~time.~~time subject to continued services. The value to employees of PSUs, stock options and ~~restricted stock units~~RSUs will be significantly affected by movements in our share price that are beyond our control, and may at any time be insufficient to counteract more lucrative offers from other companies.

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

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

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

Any regulatory approvals that we obtain for our medicine candidates may also be subject to limitations on the approved indicated uses for which the medicine may be marketed or to the conditions of approval, or contain requirements for potentially costly post-marketing testing, including Phase 4 clinical trials and surveillance to monitor the safety and efficacy of the medicine candidate. In addition, with respect to our current FDA-approved medicines (and with respect to our medicine candidates, if approved), the manufacturing processes, labeling, packaging, distribution, adverse event reporting, storage, advertising, promotion and recordkeeping for the medicine are subject to extensive and ongoing regulatory requirements. These requirements include submissions of safety and other post-marketing information and reports, registration, as well as continued compliance with cGMPs, GCPs, international conference on harmonization regulations, or ICH regulations, and GLPs, which are regulations and guidelines enforced by the FDA for all of our medicines in clinical development, for any clinical trials that we conduct post-approval. With respect to RAVICTI, the FDA imposed several post-marketing requirements and a post-marketing commitment, which include remaining obligations to conduct studies in UCD patients during the first two months of life and from two months to two years of age, including a study of the pharmacokinetics in both age groups, and a randomized study to determine the safety and efficacy in UCD patients who are treatment naïve to phenylbutyrate treatment. Although we are committed to carrying out these commitments, there are challenges in conducting studies in pediatric patients including availability of study sites, patients, and obtaining parental informed consent. In May 2017, the FDA approved our supplemental new drug application, or sNDA, for RAVICTI to expand the age range for chronic management of UCDs from two years of age and older to two months of age and older. Subject to positive data from on-going studies, we have targeted an sNDA submission in the first quarter of 2018 in relation to UCD patients during the first two months of life. In connection with our acquisition of Crealta Holdings LLC, or Crealta, in January 2016, we assumed responsibility for an observational study related to KRYSTEXXA, which requirement was fulfilled in May 2017. We are in the process of closing out the study and drafting the final report.

In addition, the FDA closely regulates the marketing and promotion of drugs and biologics. The FDA does not regulate the behavior of physicians in their choice of treatments. The FDA does, however, restrict manufacturers’ promotional communications. A significant number of pharmaceutical companies have been the target of inquiries and investigations by various U.S. federal and state regulatory, investigative, prosecutorial and administrative entities in connection with the promotion of medicines for off-label uses and other sales practices. These investigations have alleged violations of various U.S. federal and state laws and regulations, including claims asserting antitrust violations, violations of the Food, Drug and Cosmetic Act, false claims laws, the Prescription Drug Marketing Act, anti-kickback laws, and other alleged violations in connection with the promotion of medicines for unapproved uses, pricing and Medicare and/or Medicaid reimbursement. While Congress has recently considered legislation that would modify or eliminate restrictions for off-label promotion, we do not have sufficient information to anticipate if the current regulatory environment will change.

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

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

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

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

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

~~Outside of the United States, the success of our medicines, including~~ ~~BUPHENYL, LODOTRA~~, PROCYSBI, QUINSAIR, RAVICTI and IMUKIN, will depend largely on obtaining and maintaining government coverage, because in many countries patients are unlikely to use prescription drugs that are not covered by their government healthcare programs. The majority of LODOTRA sales are in Germany and Italy where reimbursement has been approved. BUPHENYL is marketed in select countries throughout Europe, the Middle East and the Asia-Pacific region. We launched RAVICTI in Canada in November 2016 and we expect RAVICTI to be available in Europe in the fourth quarter of 2017 through our partnership with SOBI. QUINSAIR was launched in Canada in December 2016 and PROCYSBI was launched in Canada in October 2017. We cannot be certain that existing reimbursement in such countries will be maintained or that we will be able to secure reimbursement in additional countries. Negotiating coverage and reimbursement with governmental authorities can delay commercialization by 12 months or more. Coverage and reimbursement policies may adversely affect our ability to sell our medicines on a profitable basis. In many international markets, governments control the prices of prescription pharmaceuticals, including through the implementation of reference pricing, price cuts, rebates, revenue-related taxes and profit control, and we expect prices of prescription pharmaceuticals to decline over the life of the medicine or as volumes increase. Many countries in the EU have increased the amount of discounts required on medicines, and we expect these discounts to continue as countries attempt to manage healthcare expenditures, especially in light of current economic conditions. As a result of these pricing practices, it may become difficult to achieve or sustain profitability or expected rates of growth in revenue or results of operations. Any shortfalls in revenue could adversely affect our business, financial condition and results of operations.

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

We expect to experience pricing pressures in connection with the sale of our medicines due to the trend toward managed healthcare, the increasing influence of health maintenance organizations and additional legislative proposals relating to outcomes and quality. For example, the Patient Protection and Affordable Care Act, as amended by the Health Care and Education Reconciliation Act, or collectively the ACA, increased the mandated Medicaid rebate from 15.1% to 23.1%, expanded the rebate to Medicaid managed care utilization and increased the types of entities eligible for the federal 340B drug discount program. On January 30, 2017, the White House Office of Management and Budget withdrew the draft August 2015 Omnibus Guidance document that was issued by the Department of Health and Human Services, or HHS, Health Resources and Services Administration, or HRSA, that addressed a broad range of topics including, among other items, the definition of a patient’s eligibility for 340B drug pricing. However, as concerns continue to grow over the need for tighter oversight, there remains the possibility that HRSA or other agency under the HHS will propose a similar regulation or that Congress will explore changes to the 340B program through legislation. For example, the Centers for Medicare & Medicaid Services has issued a final rule that would revise the Medicare hospital outpatient prospective payment system for calendar year 2018, including a new reimbursement methodology for drugs purchased under the 340B program for Medicare patients. In addition, HHS has currently set July 1, 2018 for implementation of the final rule setting forth the calculation of the ceiling price and application of civil monetary penalties under the 340B program. A material portion of KRYSEXXA prescriptions are written by healthcare providers that are eligible for 340B drug pricing and therefore any reduction in 340B pricing, whether in the form of the final rule or otherwise, or an expansion of healthcare providers eligible for 340B drug pricing, would likely have a negative impact on our net sales from KRYSTEXXA.

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

We may also experience pressure from payers concerning certain promotional approaches that we may implement such as our HorizonCares program or any other co-pay or free medicine programs whereby we assist qualified patients with certain out-of-pocket expenditures for our medicine. Certain enforcement authorities and members of Congress have initiated inquires about co-pay assistance programs. Some state legislatures have been considering proposals that would restrict or ban co-pay coupons. For example, legislation was recently signed into law in California that would limit the use of co-pay coupons in cases where a lower cost generic drug is available and if individual ingredients in combination therapies are available over the counter at a lower cost. If we are unsuccessful with our HorizonCares program or any other co-pay initiatives or free medicine programs, or we alternatively are unable to secure expanded formulary access through additional arrangements with PBMs or other payers, we would be at a competitive disadvantage in terms of pricing versus preferred branded and generic competitors. We may also experience financial pressure in the future which would make it difficult to support investment levels in areas such as managed care contract rebates, HorizonCares and other access tools.

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

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

~~If we are found~~initiatives, particularly in the United States. For example, the ACA, among other things, established an annual, nondeductible fee on any entity that manufactures or imports specified branded prescription drugs and biologic agents; expanded eligibility criteria for Medicaid programs; increased the statutory minimum rebates a manufacturer must pay under the Medicaid Drug Rebate Program; creates a Medicare Part D coverage gap discount program; established a Patient-Centered Outcomes Research Institute to beoversee, identify priorities in ~~violation of any of these laws or any other federal or state regulations, we may~~and conduct comparative clinical effectiveness research, along with funding for such research; and established a Center for Medicare & Medicaid Innovation at CMS to test innovative payment and service delivery models to lower Medicare and Medicaid spending. On June 17, 2021, the U.S. Supreme Court dismissed a challenge on procedural grounds that argued the ACA is unconstitutional in its entirety because the “individual mandate” was repealed by Congress. However, it is possible that the ACA will be subject to ~~civil and/~~additional judicial or ~~criminal penalties, damages, fines, exclusion, additional reporting~~Congressional challenges in the future.

Prior to the U.S. Supreme Court ruling, on January 28, 2021, President Biden issued an executive order that initiated a special enrollment period for purposes of obtaining health insurance coverage through the ACA marketplace. The executive order also instructed certain governmental agencies to review and reconsider their existing policies and rules that limit access to healthcare, including among others, reexamining Medicaid demonstration projects and waiver programs that include work requirements, ~~and/~~and policies that create unnecessary barriers to obtaining access to health insurance coverage through Medicaid or ~~oversight from federal~~the ACA.

In addition, on August 16, 2022, President Biden signed the IRA into law, which among other things, extends enhanced subsidies for individuals purchasing health ~~care programs~~insurance coverage in ACA marketplaces through plan year 2025. The IRA also eliminates the “donut hole” under the Medicare Part D program beginning in 2025 by significantly lowering the beneficiary maximum out-of-pocket costs. Medicare will cap beneficiary costs at $2,000 per year, indexed in future years to the rate of increase in Medicare costs. Further, the IRA restructures liability under Medicare Part D beginning in 2025, through a newly established Manufacturer Discount Program, which in part requires manufacturers to provide a 10% discount in the initial phase and 20% discount in the ~~restructuring of our operations. Any of these could have a material adverse effect on our business and financial results. Since many of these laws have not been fully interpreted by the courts, there~~catastrophic phase for brand drugs. It is an increased risk that we may be found in violation of one or more of their provisions. Any action against us for violation of these laws, even if we ultimately are successful in our defense, will cause us to incur significant legal expenses and divert our management’s attention away from the operation of our business.

In January 2017, the United States House of Representatives and Senate passed legislation, the concurrent budget resolution for fiscal year 2017, which initiates actions that would repeal certain aspectsunclear how future healthcare reform measures of the ~~ACA. Further, on January 20, 2017, President Trump signed an Executive Order directing federal agencies with authorities and responsibilities under~~Biden administration will impact the ACA, to waive, defer, grant exemptions from, or delay the implementation of any provision of the ACA that would impose a fiscal or regulatory burden on states, individuals, healthcare providers, health insurers, or manufacturers of pharmaceuticals or medical devices. In May 2017, following the passage of the budget resolution for fiscal year 2017, the U.S. House of Representatives passed legislation known as the American Health Care Act, which, if enacted, would have amended and repealed significant portions of the ACA. The U.S. Senate considered but did not adopt other legislation to amend and/or replace elementsmany different provisions of the ACA and ~~authority~~IRA affecting the health system, the biopharmaceutical sector and our business. It is also likely that the IRA will put pressure on commercial insurers to ~~act under~~reduce coverage or reimbursement of branded medicines.

Other legislative changes have also been proposed and adopted since the ACA was enacted. For example, the Budget Control Act of 2011 resulted in aggregate reductions in Medicare payments to providers of up to 2 percent per fiscal year, ~~2017 budget resolution expired on September 30, 2017. However, on October 12, 2017, President Trump signed another Executive Order directing certain federal agencies~~starting in 2013, and due to ~~propose regulations or guidelines~~subsequent legislative amendments to ~~permit small businesses to form association health plans, expand~~ the ~~availability~~statute will remain in effect until 2032, unless additional Congressional action is taken. The American Taxpayer Relief Act of short-term, limited duration insurance, and expand the use of health reimbursement arrangements, which may circumvent some of the requirements for health insurance mandated by the ACA. In addition, citing legal guidance from the U.S. Department of Justice and the HHS, the Trump administration has concluded that cost-sharing reduction, or CSR,2012, among other things, reduced Medicare payments to ~~insurance companies required under~~several types of providers and increased the ~~ACA~~statute of limitations period for the government to recover overpayments to providers from three to five years. Such laws, and others that may affect our business that have ~~not received necessary appropriations from Congress~~been enacted or may in the future be enacted, may result in additional reductions in Medicare and announced that it will discontinue these payments immediately until such appropriations are made. The loss of the CSR payments is expected to increase premiums on certain policies issued by qualified health plans under the ACA. We continue to evaluate the effect that the ACA and its possible repeal and replacement has on our business.other healthcare funding.

In addition, drug pricing by ~~pharmaceutical~~biopharmaceutical companies in the United States has ~~recently~~ come under increased scrutiny. Specifically, there have been several recent state and U.S. ~~Congressional~~congressional inquiries ~~and proposed federal and state legislation designed~~into pricing practices by biopharmaceutical companies.

In July 2021, the Biden administration released an executive order, “Promoting Competition in the American Economy,” with multiple provisions aimed at prescription drugs. In response to ~~among other things, bring more transparency to~~President Biden’s executive order, on September 9, 2021, HHS released a Comprehensive Plan for Addressing High Drug Prices that outlines principles for drug pricing reform. The plan sets out a variety of potential legislative policies that Congress could pursue as well as potential administrative actions HHS can take to advance these principles. In response to the Biden administration’s October 2022 executive order, on February 14, 2023, HHS released a report outlining three new models for testing by ~~requiring drug companies~~the Center for Medicare and Medicaid Innovation which will be evaluated on their ability to notify insurers and government regulators of price increases and provide an explanation of the reasons for the increase, reduce the out-of-pocket cost of prescription drugs, review the relationship between pricing and manufacturer patient programs, reducelower the cost of drugs, promote accessibility, and improve quality of care. These models target Medicare Part D, cell and gene therapies, and drugs approved on the accelerated approval pathway. It is unclear whether the models will be utilized in any health reform measures in the future.

Congress continues to seek new legislative and/or administrative measures to control drug costs. On March 11, 2021, President Biden signed the American Rescue Plan Act of 2021 into law, which eliminates the statutory Medicaid drug rebate cap, currently set at 100% of a drug’s average manufacturer price, for single source and innovator multiple source drugs, beginning January 1, 2024. In addition, the IRA directs the HHS Secretary to establish a Drug Price Negotiation Program, or Program, to lower prices for certain high-expenditure, single-source prescription drugs and biologics covered under Medicare Part B and ~~reform government program reimbursement methodologies. Legislation was recently signed into law~~Part D that have been approved by the FDA for at least 7 years for prescription drugs and at least 11 years for biologics when the drug or biologic, as applicable, is eligible for selection for the Program. Under the Program, the HHS Secretary will publish a list of “selected drugs,” and will then negotiate maximum fair prices with their manufacturers. The Program will be implemented in ~~California~~stages. Beginning in 2026, 10 Medicare Part D “selected drugs” will be subject to price negotiations. By 2029, and in subsequent years thereafter, the number will increase to 20 drugs and biologics covered under Medicare Part B and Part D. Agreements between HHS and manufacturers will remain in place until a drug or biologic is no longer considered a “selected drug” for negotiation purposes. Manufacturers who do not comply with the negotiated prices set under the Program will be subject to an excise tax based on a percentage of total sales of a “selected drug” up to 95%, or they have the option to withdraw from the Medicare and Medicaid markets. Orphan drugs approved for only one rare disease or condition, among others, are exempt from negotiation. Further, the IRA now requires manufacturers that ~~requires drug manufactures~~increase prices of certain Medicare Part B and Part D drugs or biologics at a rate greater than inflation to ~~provide advance notice~~pay rebates to CMS or be subject to civil monetary penalties. Inflation penalties for Part B drugs will be assessed beginning in the fall of 2025, and ~~explanation~~inflation penalties for Part D drugs will be assessed starting at the end of 2025. The IRA permits HHS to ~~state regulators, health plans~~implement many of these provisions through guidance, as opposed to regulation, for the initial years. HHS has and ~~insurers~~will continue to issue and ~~PBMs for price increases~~update guidance as these programs are implemented. These provisions will take effect progressively starting in fiscal year 2023, although the Program is currently subject to legal challenges. The IRA is likely to have a significant negative impact on the pharmaceutical industry.

In EU countries and Japan, legislators, policymakers, and healthcare insurance funds continue to propose and implement cost-containing measures to keep healthcare costs down, due in part to the attention being paid to healthcare cost containment. Certain of ~~more than 16% over two years. Moreover, President Trump has discussed the need for federal legislation, regulation or Executive Order to regulate~~these changes could impose limitations on the prices ~~of medicines. The majority of~~we will be able to charge for our medicines ~~are purchased by private payers,~~ and ~~much of the focus of pending legislation is on government program reimbursement. However, we cannot know what form~~ any ~~such action may take, the likelihood it would be executed, enacted, effectuated or implemented~~approved medicine candidates or the ~~market’s perception~~amounts of ~~how~~reimbursement available for these medicines from governmental agencies or third-party payers, may increase the tax obligations on biopharmaceutical companies such ~~legislation would affect us. Any reduction in reimbursement from government programs~~as ours, or may ~~result in a similar reduction in payments from private payers.~~ facilitate the introduction of generic competition with respect to our medicines.

The implementation of cost containment measures or other healthcare reforms may prevent us from being able to generate revenue, attain profitability, or commercialize our current medicines and/or those for which we may receive regulatory approval in the future.

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

In the United States, we are subject directly, or indirectly through our customers and other third parties, to various state and federal fraud and abuse and transparency laws, including, without limitation, the federal Anti-Kickback Statute, the federal False Claims Act, ~~civil monetary penalty statutes~~the Civil Monetary Penalties Law prohibiting, among other things, beneficiary inducements, and similar state and local laws, federal and state privacy and security laws, such as the Health Insurance Portability and Accountability Act of 1996, as amended by the Health Information Technology for Economic and Clinical Health Act, sunshine laws, government price reporting laws, and other fraud laws. ~~These~~Some states, such as Massachusetts, make certain reported information public. In addition, there are state and local laws that require biopharmaceutical representatives to be licensed and comply with codes of conduct, transparency reporting, and other obligations. Collectively, these laws may ~~impact,~~affect, among other things, our current and proposed research, sales, marketing and educational programs, as well as other possible relationships with customers, pharmacies, physicians, payers, and patients. We are subject to similar laws in the EEA.

Compliance with these laws, including the development of a comprehensive compliance program, is difficult, costly and time consuming. Because of the breadth of these laws and the narrowness of available statutory and regulatory exemptions, it is possible that some of our business activities could be subject to challenge under one or more of such laws. Moreover, state governmental agencies may propose or enact laws and regulations that extend or contradict federal requirements. These risks may be increased where there are evolving interpretations of applicable regulatory requirements, such as those applicable to manufacturer co-pay ~~initiatives. Pharmaceutical~~programs. Biopharmaceutical manufacturer co-pay ~~initiatives and free medicine~~ programs, including biopharmaceutical manufacturer donations to patient assistance programs offered by charitable foundations, are the subject of ongoing litigation, enforcement actions and settlements (involving other manufacturers and to which we are not a party) and evolving interpretations of applicable regulatory requirements and certain state laws, and any change in the regulatory or enforcement environment regarding such programs could impact our ability to offer such programs. Other recent legislation and regulatory policies contain provisions that disincentivize the use of co-pay coupons by requiring their value to be included in average sales price or best price calculations, potentially lowering reimbursement for drugs with a high use of copay coupons in Medicare Part B and Medicaid. If we are unsuccessful with our ~~HorizonCares programs, any other~~ co-pay ~~initiatives or free medicine~~ programs, we would be at a competitive disadvantage in terms of pricing versus preferred branded and generic competitors, or be subject to significant penalties. We are engaged in various business arrangements with current and potential customers, and we can give no assurance that such arrangements would not be subject to scrutiny under such laws, despite our efforts to properly structure such arrangements. Even if we structure our programs with the intent of compliance with such laws, there can be no certainty that we would not need to defend our business activities against enforcement or litigation. Further, we cannot give any assurances that prior business activities or arrangements of other companies that we acquire will not be scrutinized or subject to enforcement or litigation. If any such actions are instituted against us, and we are not successful in defending ourselves or asserting our rights, those actions could have an impact on our business, including the imposition of significant civil, criminal and administrative sanctions, damages, disgorgement, monetary fines, possible exclusion from participation in Medicare, Medicaid and other federal healthcare programs, or comparable foreign programs, imprisonment, integrity oversight and reporting obligations, contractual damages, reputational harm, diminished profits and future earnings, and curtailment or restructuring of our operations, any of which could adversely affect our ability to operate our business and our results of operations.

There has also been a trend of increased federal and state regulation of payments made to physicians and other healthcare providers. The ACA, among other things, imposed reporting requirements on drug manufacturers for payments made by them to physicians (defined to include doctors, dentists, podiatrists, optometrists and licensed chiropractors), certain other healthcare providers (including, for example, physician assistants and nurse practitioners), and teaching hospitals, as well as ownership and investment interests held by physicians, and their immediate family members. Failure to submit required information may result in significant civil monetary penalties.

On August 3, 2022, we received a civil investigative demand from the United States Department of Justice, or DOJ, pursuant to the Federal False Claims Act regarding an investigation concerning potentially false information in prior authorization forms. A prior authorization form is a managed care practice whereby the payer (either a commercial insurer or a government health program) requires that the prescribing physician provide additional justification or information supporting the physician’s decision to prescribe a particular medicine. The civil investigative demand requests certain documents and information related to DUEXIS, PENNSAID 2%, VIMOVO and RAYOS. We are cooperating with the investigation and the DOJ has not indicated to us whether it believes we engaged in any wrongdoing or if we are the subject of the investigation. While we are not aware of any fraudulent scheme to provide false information in prior authorization forms for our medicines that resulted in improper payments from government healthcare programs, no assurance can be given as to the timing or outcome of the DOJ’s investigation, or that it will not result in a material adverse effect on our business.

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

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

Undesirable side effects caused by any medicine candidate that we develop could result in the denial of regulatory approval by the FDA or other comparable foreign regulatory authorities for any or all targeted indications, or cause us to evaluate the future of our development programs. In our ~~two Phase 3~~ clinical trials ~~with DUEXIS,~~that supported the initial U.S. approval of TEPEZZA for the treatment of TED, the most commonly reported treatment-emergent adverse events were muscle spasms, nausea, ~~dyspepsia,~~alopecia, diarrhea, ~~constipation~~fatigue, hyperglycemia, hearing impairment, dysgeusia, headache, dry skin, weight decreased, nail disorder, and ~~upper respiratory tract infection. In Phase 3 endoscopic registration~~menstrual disorders. While our post-marketing studies and pharmacovigilance reporting data have shown similar rates of hearing impairment as compared to the initial TEPEZZA pivotal clinical trials, which was reflected in the initial FDA-approved label, there have been third party reports that have purported to show higher rates of hearing impairment. In addition, an analysis of safety data as part of our ongoing pharmacovigilance program indicated a signal of hearing impairment events of greater severity, in limited cases, than those observed in the TEPEZZA pivotal clinical trials and described in the approved product label. Based on this analysis, we initiated discussions with ~~VIMOVO,~~the FDA regarding potential updates to the warnings and precautions, adverse reactions and patient counseling information sections of the TEPEZZA label as part of a supplemental biologic license application, or sBLA. On July 17, 2023, the FDA approved the sBLA to include additional information on hearing impairment, including the possibility of severe hearing impairment, which in some cases may be permanent. To the extent healthcare providers or patients become concerned with adverse events associated with TEPEZZA, including the potential for hearing impairment, it could negatively impact our ability to increase adoption of the medicine. With respect to KRYSTEXXA, the most commonly reported ~~treatment-emergent~~ adverse ~~events~~reactions in the pivotal trial were ~~erosive gastritis, dyspepsia, gastritis, diarrhea, gastric ulcer, upper abdominal~~gout flares, infusion reactions, nausea, contusion or ecchymosis, nasopharyngitis, constipation, chest pain, ~~nausea~~anaphylaxis and upper respiratory tract infection. The most common side effects observed in pivotal trials for ACTIMMUNE were “flu-like” or constitutional symptoms such as fever, headache, chills, myalgia and fatigue. Thevomiting. When administering KRYSTEXXA with methotrexate, the most commonly reported ~~treatment-emergent~~ adverse events in the ~~Phase 3 clinical trials with RAYOS/LODOTRA included flare in rheumatoid arthritis related symptoms, abdominal pain, nasopharyngitis, headache, flushing, upper respiratory tract infection, back pain~~MIRROR randomized control trial were gout flares, arthralgia, COVID-19, nausea and weight gain. The most common adverse events reported in a Phase 2 clinical trial of PENNSAID 2% were application site reactions, such as dryness, exfoliation, erythema, pruritus, pain, induration, rash and scabbing. With respect to BUPHENYL, the most common side effects are change in the frequency of breathing, lack of or irregular menstruation, lower back, side, or stomach pain, mood or mental changes, muscle pain or twitching, nausea or vomiting, nervousness or restlessness, swelling of the feet or lower legs, unpleasant taste and unusual tiredness or weakness.fatigue. With respect to RAVICTI, the most common side effects are diarrhea, nausea, decreased appetite, gas, vomiting, high blood levels of ammonia, headache, tiredness and dizziness. With respect to ~~KRYSTEXXA,~~UPLIZNA, the most ~~commonly reported serious~~common adverse reactions across both the randomized and open-label treatment in our N-MOmentum trial for UPLIZNA were urinary tract infection, nasopharyngitis, arthralgia, upper respiratory tract infection, headache, back pain, and infusion related reaction. The most common infections reported by treated patients in the ~~pivotal~~randomized and open-label periods included urinary tract infection, nasopharyngitis, upper respiratory tract infection and influenza. In addition, three deaths were reported in the ongoing open-label period. One death occurred in a patient experiencing a myelitis attack and was considered unrelated to UPLIZNA by the investigator. The second death was due to complications from mechanical ventilator-associated pneumonia in a patient who developed new neurological symptoms and seizures, the cause of which could not be definitively established. The possibility that the death was treatment-related could not be ruled out, and as a result, under the terms of the protocol for the trial, ~~were gout flares, infusion reactions, nausea, contusion~~the death was assessed as treatment-related. The third death was due to COVID-19 pneumonia and was considered unrelated to UPLIZNA by the investigator. There can be no assurance a foreign regulatory authority will agree with the classifications of the deaths made by the investigators or ~~ecchymosis, nasopharyngitis, constipation, chest pain, anaphylaxis, exacerbation~~that we will not be required to conduct additional clinical trials of ~~pre-existing congestive heart failure and vomiting. With respect~~UPLIZNA in order to MIGERGOT, the most commonly reported adverse reactions are ischemia, cyanosis, absence of pulse, cold extremities, gangrene, precordial distress and pain, electrocardiogram change, muscle pain, nausea and vomiting, rectal or anal ulcer, parathesias, numbness weakness, vertigo, localized edemas and itching.establish an adequate safety database. With respect to PROCYSBI, the most common side effects include vomiting, nausea, abdominal pain, breath odor, diarrhea, skin odor, fatigue, rash and headache. ~~With respect to QUINSAIR, the~~The most common side effects ~~include itching, wheezing, hives, rash, swelling, pale skin color, fast heartbeat~~observed in pivotal trials for ACTIMMUNE were “flu-like” or constitutional symptoms such as fever, headache, chills, myalgia and ~~faintness.~~fatigue.

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

In addition, if we or others may identify undesirable side effects caused by our medicines or any other medicine candidate that we may develop that receives marketing approval, or if there ~~is a perception~~could be perceptions that the medicine is associated with undesirable side ~~effects:~~effects. For example, product liability suits have been filed against us alleging that TEPEZZA is defectively designed and/or that we failed to include proper warnings regarding potential adverse events associated with hearing impairment. As a result of any such events it is possible that:

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

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

We have agreements with third-party contract research organizations, or CROs, to conduct our clinical programs, including those required for post-marketing commitments, and we expect to continue to rely on CROs for the completion of on-going and planned clinical trials. We may also have the need to enter into other such agreements in the future if we were to develop other medicine candidates or conduct clinical trials in additional indications for our existing medicines. In connection with the investigator-initiated study to evaluate ACTIMMUNE in combination with PD-1/PD-L1 inhibitors in various forms of cancer including advanced urothelial carcinoma (bladder cancer) and renal cell carcinoma, we are collaborating with Fox Chase Cancer Center. In connection with our ongoing study to evaluate RAYOS/LODOTRA on the fatigue experienced by SLE patients, we are collaborating with the ALR. We also rely heavily on these parties for the execution of our clinical studies and control only certain aspects of their activities. Nevertheless, we are responsible for ensuring that each of our studies is conducted in accordance with the applicable protocol. We, our CROs and our academic research organizations are required to comply with current GCP or ICH regulations. The FDA, ~~enforces~~and comparable foreign regulatory authorities in other jurisdictions, enforce these GCP or ICH regulations through periodic inspections of trial sponsors, principal investigators and trial sites. If we or our CROs or collaborators fail to comply with applicable GCP or ICH regulations, the data generated in our clinical trials may be deemed unreliable and our submission of marketing applications may be delayed or the FDA, or such other comparable foreign regulatory authorities, may require us to perform additional clinical trials before approving our marketing applications. We cannot assure ~~you~~ that, upon inspection, the FDA, or such other comparable foreign regulatory authorities, will determine that any of our clinical trials comply or complied with GCP or ICH regulations. In addition, our clinical trials must be conducted with medicine produced under cGMP regulations, and may require a large number of test subjects. Our failure to comply with these regulations may require us to repeat clinical trials, which would delay the regulatory approval process. Moreover, our business may be implicated if any of our CROs or collaborators violates federal or state fraud and abuse or false claims laws and regulations or ~~healthcare~~ privacy and security laws. We must also obtain certain third-party institutional review board, or IRB, approvals and ~~ethics committee approvals~~positive Ethics Committee opinions as part of the decision on the authorization of the clinical trial issued by EU Member States including input from the national competent authorities and Ethics Committee, in order to conduct our clinical trials. Delays by IRBs and ~~ethics committees~~Ethics Committees in providing such approvals or opinions may delay our clinical trials.

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

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

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

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

In some instances, there can be significant variability in safety and efficacy results between different clinical trials of the same medicine candidate due to numerous factors, including changes in trial protocols, differences in size and type of the patient populations, differences in and adherence to the dosing regimen and other trial protocols and the rate of dropout among clinical trial participants. For example, ~~Raptor~~we recently announced ~~in September 2015, based on information then available,~~ that ~~it would not advance its program for~~daxdilimab failed to meet the ~~treatment of pediatric NASH with PROCYSBI after~~primary endpoint in a Phase 2b2 clinical trial ~~failed achieve its primary endpoints. Also, on December 8, 2016,~~in systemic lupus erythematosus, and cannot guarantee that our trials of daxdilimab in other indications will have different outcomes. In addition, while we have announced that dazodalibep met the primary endpoint in a Phase 2 clinical trial in Sjögren’s syndrome in both populations and that we plan on initiating a Phase 3 development program in this indication, there is no assurance that dazodalibep will demonstrate similar results in the planned Phase 3 trials, or demonstrate successful results in our planned trial in focal segmental glomerulosclerosis. As another example, while TEPEZZA is approved in the United States in TED and we have also recently announced that TEPEZZA met the primary endpoint in a Phase 4 clinical trial in chronic/low CAS TED, there is no assurance that TEPEZZA will demonstrate similar results in our ongoing Phase 3 trial ~~Safety, Tolerability and Efficacy of ACTIMMUNE Dose Escalation~~ in ~~Friedreich’s Ataxia study evaluating ACTIMMUNEfor the treatment of Friedreich’s ataxia, or FA, did not meet its primary endpoint of a statistically significant change from baseline~~chronic/low CAS TED in the modified Friedreich’s Ataxia Rating Scale at twenty-six weeks versus treatment with placebo. In addition, the secondary endpoints did not meet statistical significance. We, in conjunction with the independent Data Safety Monitoring Board, the principal investigator and the Friedreich’s Ataxia Research Alliance Collaborative Clinical Research Network in FA, determined that, based on the trial results, the STEADFAST program would be discontinued, including the twenty-six week extension study and the long-term safety study.Japanese patients.

~~With respect to the investigator-initiated study to evaluate ACTIMMUNE in combination with OPDIVO~~^® ~~(nivolumab) in advanced solid tumors and the Phase 3 pivotal clinical trial of teprotumumab in~~ ~~thyroid eye disease that we commenced in the fourth quarter of 2017,~~ and to the extent that we are required to conduct additional clinical development of any of our existing or later acquired medicines or we conduct clinical development of earlier stage medicine candidates or for other additional indications for RAYOS/LODOTRA, weWe may experience delays in ~~these~~ clinical trials or investigator-initiated studies. We do not know whether any additional clinical trials will be initiated in the future, begin on time, need to be redesigned, enroll patients on time or be completed on schedule, if at all. Clinical trials can be delayed for a variety of reasons, including delays related to:

Our clinical trials have been and may also in the future be affected by public health epidemics or outbreaks. For example, while the clinical trial has since completed, we experienced enrollment delays in our TEPEZZA clinical trial in chronic/low CAS TED due to the impacts of the omicron variant of COVID-19. We also experienced enrollment delays in our UPLIZNA clinical trial in myasthenia gravis due to government ordered COVID-19 lockdowns in China, combined with other negative impacts related to the conflict in Ukraine. As a result, we expect topline data for our clinical trial of UPLIZNA in myasthenia gravis in 2024. The availability of supplies needed for the conduct of preclinical studies and clinical trials may be impacted by supply disruptions. For example, we depend on the availability of non-human primates to conduct certain preclinical studies that we are required to complete prior to submitting an IND and initiating clinical development. There is currently a global shortage of non-human primates available for drug development. If the shortage continues, this could substantially increase the cost of conducting our preclinical development and could also result in delays to our development timelines. These events could delay our clinical trials, increase the cost of completing our clinical trials and negatively impact the integrity, reliability or robustness of the data from our clinical trials.

Patient enrollment, a significant factor in the timing of clinical trials, is affected by many factors including the size and nature of the patient population, the proximity of patients to clinical sites, the eligibility criteria for the trial, the design of the clinical trial, competing clinical trials and clinicians’ and patients’ perceptions as to the potential advantages of the medicine candidate being studied in relation to other available therapies, including any new drugs or biologics that may be approved for the indications we are investigating. ~~Furthermore, we rely and expect to rely on CROs and clinical trial sites to ensure the proper and timely conduct~~In addition, if patients drop out of our ~~future clinical~~ trials, ~~and while we have and intend~~miss scheduled doses or follow-up visits or otherwise fail to ~~have agreements governing their committed activities, we will have limited influence over their actual performance.~~follow trial protocols, or impacted by local disruptions, the integrity of data from our trials may be compromised or not accepted by the FDA or other comparable foreign regulatory authorities, which would represent a significant setback for the applicable program.

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

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

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

The sizes of the patient populations suffering from some of the diseases we are targeting are small and based on estimates that may not be accurate.

Because certain of our clinical trials are focused on indications with small patient populations, our ability to enroll eligible patients may be limited or may result in slower enrollment than we anticipate. In addition, our projections of both the number of people who have some of the diseases we are targeting, as well as the subset of people with these diseases who have the potential to benefit from treatment with our medicines and any of our future medicine candidates, are estimates. These estimates have been derived from a variety of sources, including scientific literature, surveys of clinics, physician interviews, patient foundations and market research, and may prove to be incorrect. Further, new studies may change the estimated incidence or prevalence of these diseases. The number of patients may turn out to be lower than expected. Additionally, the potentially addressable patient population for our medicines and any future medicine candidates may be limited or may not be amenable to treatment with our medicines and any of our medicine candidates, if and when approved. Even if we obtain significant market share for our medicines and any of our medicine candidates (if and when they are approved), small potential target populations for certain indications means we may never achieve profitability without obtaining market approval for additional indications.

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

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

WeActual or threatened public health pandemics or outbreaks may adversely impact our industry, including the commercialization of our medicines, our supply chain, our clinical trials, our liquidity and access to capital markets and our business development activities.*

While many health organizations have declared that the COVID-19 pandemic has ended, the pandemic and previous actions to slow its spread had an adverse impact on our operations, including the commercialization of our medicines, and we cannot predict if or when other similar disease outbreaks will emerge that cause similar disruptions. The extent to which future pandemics may impact the commercialization of our medicines, our supply chain, our clinical trials, our access to capital and our business development activities, will depend on future developments, which are ~~dependent~~highly uncertain and cannot be predicted with confidence, such as the timing and duration of future pandemics, the transmissibility and severity of illness caused by future pandemics, the efforts by governments and businesses to contain the spread of future pandemics, business closures or business disruptions and the impact on the economy and capital markets.

If our information technology systems or data, or those of third parties upon which we rely, are or were compromised or threatened to be compromised, we could experience adverse consequences resulting from such compromise, including but not limited to regulatory investigations or actions; litigation; fines and penalties; disruptions of our business operations; reputational harm; loss of revenue or profits; loss of sales; and other adverse consequences.*

In the ordinary course of our business, we may collect, receive, store, generate, use, protect, secure, dispose of, transmit, disclose, or otherwise make accessible (collectively “process”) proprietary, confidential, and sensitive data, including personal data (such as health-related data), intellectual property, and trade secrets. We may rely upon third parties (such as service providers) for our data processing-related activities. We may share or receive sensitive data with or from third parties.

Cyberattacks, malicious internet-based activity, and online and offline fraud are prevalent and continue to increase. These threats are becoming increasingly difficult to detect. These threats come from a variety of sources. In addition to traditional computer “hackers,” threat actors, personnel misconduct, or error (such as theft or misuse), sophisticated nation-state and nation-state supported actors now engage in attacks. Some actors now engage and are expected to continue to engage in cyber-attacks, including without limitation nation-state actors for geopolitical reasons and in conjunction with military conflicts and defense activities. During times of war and other major conflicts, we, and the third parties upon which we rely, may be vulnerable to a heightened risk of these attacks, including retaliatory cyber-attacks, that could materially disrupt our systems and operations, and ability to produce, sell and distribute our medicines. We may be subject to a variety of evolving threats, including but not limited to social engineering attacks, malware, denial-of-service attacks, ransomware, supply-chain attacks, software bugs, server malfunction, software or hardware failures, loss of data or other information technology assets, adware, telecommunications failures, earthquakes, fire, flood, and other similar threats. Ransomware attacks, including those perpetrated by organized criminal threat actors, nation-states, and nation-state supported actors, are becoming increasingly prevalent and severe and can lead to significant interruptions in our operations, loss or misuse of data and income, reputational harm, and diversion of funds. Extortion payments may alleviate the negative impact of a ransomware attack, but we may be unwilling or unable to make such payments due to, for example, applicable laws or regulations prohibiting payments. Similarly, supply-chain attacks have increased in frequency and severity, and we cannot guarantee that third parties and infrastructure ~~and data, which exposes us~~in our supply chain have not been compromised or that they do not contain exploitable defects or bugs that could result in a breach of or disruption to data security risks.*

~~We are dependent upon~~ our ~~own~~information technology systems or the third-party information technology systems ~~infrastructure~~that support us and ~~data, including mobile technologies, to operate~~ our business. The multitude and complexity of our computer systems may make them vulnerable to service interruption or destruction, malicious intrusion, or random attack. Likewise, data privacy or security breaches by employees or others may pose a risk that sensitive data, including our intellectual property, trade secrets or personal informationservices. Further, as the majority of our employees ~~patients, customers~~work remotely for some portion of their jobs, this has increased risk to our information technology systems and data with the utilization of network connections outside our premises. Future business transactions (such as acquisitions or ~~other business partners may be exposed~~integrations) could expose us to unauthorized persons or to the public. Cyber-attacks are increasing in their frequency, sophistication and intensity. Cyber-attacks could include the deployment of harmful malware, denial-of-service, social engineering and other means to affect service reliability and threaten data confidentiality, integrity and availability. Our business partners face similaradditional cybersecurity risks and ~~any security breach of their~~vulnerabilities, as our systems could ~~adversely affect our~~be negatively affected by vulnerabilities present in acquired or integrated entities’ systems and technologies.

Any of the previously identified or similar threats could cause a security ~~posture.~~incident. A security ~~breach~~incident could result in unauthorized, unlawful or ~~privacy violation that leads to~~accidental acquisition, modification, destruction, loss, alteration, encryption, disclosure ~~or modification~~ of or ~~prevents~~ access to ~~patient information, including personally identifiable information~~data. A security incident could disrupt our (and third parties upon whom we rely) ability to provide our products and services. We may expend significant resources or ~~protected health information, could harm~~modify our ~~reputation, compel us~~business activities (including our clinical trial activities) in an effort to ~~comply with federal and/or state breach notification laws~~protect against security incidents. Certain data privacy and ~~foreign law equivalents, subject us to mandatory corrective action,~~security obligations may require us to ~~verify the correctness of database contents~~implement and ~~otherwise subject us~~maintain specific security measures, industry-standard or reasonable security measures to ~~litigation or other liability under laws~~protect our information technology systems and regulations that protect personal data, any of which could disrupt our business and/or result in increased costs or loss of revenue. Moreover, the prevalent use of mobile devices that access confidential information increases the risk of data security breaches, which could lead to the loss of confidential information, trade secrets or other intellectual property. data.

While we have ~~invested, and continue~~implemented security measures designed to ~~invest, in the protection of our data and information technology infrastructure,~~protect against a security incident, there can be no assurance that these measures will be effective. We have not always been able in the past and may be unable in the future to detect vulnerabilities in our information technology systems because such threats and techniques change frequently, are often sophisticated in nature, and may not be detected until after a security incident has occurred. Despite our efforts ~~will prevent service interruptions, or~~to identify ~~breaches~~and remediate vulnerabilities, if any, in our information technology systems, ~~that~~our efforts may not be successful. Further, we may experience, delays in developing and deploying remedial measures designed to address any such identified vulnerabilities.

Applicable data privacy and security obligations may require us to notify relevant stakeholders of security incidents. Such disclosures are costly, and the disclosures or the failure to comply with such requirements, could ~~adversely affect our business and operations~~lead to adverse impacts. If we (or a third party upon whom we rely) experience a security incident or are perceived to have experienced a security incident, we may experience adverse consequences. These consequences may include: government enforcement actions; additional reporting requirements and/or ~~result~~oversight; restrictions on processing data; litigation; indemnification obligations; negative publicity; reputational harm; monetary fund diversions; interruptions in ~~the loss~~our operations; financial loss; and other similar harms. Security incidents and attendant consequences may cause customers to stop using our products and services, deter new customers for using our products and services, and negatively impact our ability to grow and operate our business.

Our contracts may not contain limitations of ~~critical~~liability, and even where they do, there can be no assurance that limitations of liability in our contracts are sufficient to protect us from liabilities, damages, or ~~sensitive information, which could result in financial, legal, business or reputational harm~~claims related to ~~us. In addition,~~our data privacy and security obligations. We cannot be certain that (a) our liability insurance ~~may not~~will be sufficient in type or amount to cover us against claims related to security ~~breaches, cyber-attacks~~incidents; (b) such coverage will cover any indemnification claims against us relating to any security incident, will continue to be available to us on economically reasonable terms, or at all; or (c) any insurer will not deny coverage as to any future claim. The successful assertion of one or more claims against us that exceed available insurance coverage, or the occurrence of changes in our insurance policies, including premium increases or the imposition of large deductible or co-insurance requirements, could adversely affect our reputation, business, financial condition and results of operations.

We are subject to stringent and evolving U.S. and foreign laws, regulations, rules, contractual obligations, policies, standards and other obligations related ~~breaches.~~ to data privacy and security. Our actual or perceived failure to comply with such obligations could lead to regulatory investigations or actions; litigation; fines and penalties; disruptions of our business operations; reputational harm; loss of revenue or profits; loss of customers or sales; and other adverse business consequences.*

In the ordinary course of business, we may process personal data and other sensitive information, including proprietary and confidential business data, trade secrets, intellectual property, data we collect about trial participants in connection with clinical trials, and sensitive third-party data. Our data processing activities may subject us to numerous data privacy and security obligations, such as various laws, regulations, guidance, industry standards, external and internal privacy and security policies, contractual requirements, and other obligations relating to data privacy and security.

In the United States, federal, state, and local governments have enacted numerous data privacy and security laws, including data breach notification laws, personal data privacy laws, and consumer protection laws (e.g., Section 5 of the Federal Trade Commission Act). For example, the California Consumer Privacy Act of 2018, or CCPA, requires businesses to provide specific disclosures in privacy notices and honor requests of California residents to exercise certain privacy rights. The CCPA provides for civil penalties of up to $7,500 per violation and allows private litigants affected by certain data breaches to recover significant statutory damages. Although the CCPA exempts some data processed in the context of clinical trials, the CCPA may increase compliance costs and potential liability with respect to other personal data we may maintain about California residents. In addition, the California Privacy Rights Act of 2020, which became effective January 1, 2023, expanded the CCPA’s requirements and establishes a new regulatory agency to implement and enforce the law. Other states, such as Virginia, Colorado, Utah and Connecticut, have also passed comprehensive privacy laws, and similar laws are being considered in several other states. In addition, data privacy and security laws have been proposed at the federal and local levels in recent years, which could further complicate compliance efforts and may increase legal risk and compliance costs for us and the third parties upon whom we rely.

Outside the United States, an increasing number of laws, regulations, and industry standards apply to data privacy and security. For example, the EU’s General Data Protection Regulation, or the EU GDPR, and the UK’s GDPR, impose strict requirements for processing personal data, and violators of these laws face significant penalties. Under the EU GDPR, companies may face temporary or definitive bans on data processing and other corrective actions; fines of up to 20 million Euros or 4% of annual global revenue, whichever is greater; or private litigation related to processing of personal data brought by classes of data subjects or consumer protection organizations authorized at law to represent their interests.

Certain jurisdictions have enacted data localization laws and cross-border personal data transfer laws, which could make it more difficult to transfer information across jurisdictions (such as transferring or receiving personal data that originates in the EU or in other foreign jurisdictions). In particular, the EEA and the UK have historically restricted the transfer of personal data to the United States and other countries whose privacy laws it believes are inadequate. Other jurisdictions may adopt similarly stringent interpretations of their data localization and cross-border data transfer laws.

A recent decision by the European Commission has implemented new laws approving transfers of personal data between the EU and the United States, known as the EU-US Data Privacy Framework, or Framework. The Framework establishes a legal basis for us to transfer personal data between the EU and the United States that is compliant with the EU GDPR, without the need to implement any additional safeguards. The Framework therefore represents an alternative opportunity for us to manage the export of data between the EEA and the U.S. and we are currently assessing our transfer strategy in light of these developments. All international data transfer mechanisms are subject to legal challenges, and there is no certainty that we can continue to rely on these measures to lawfully transfer personal data to the United States if the current legal position changes.

In addition to data privacy and security laws, we may be contractually subject to industry standards adopted by industry groups and may become subject to such obligations in the future. We may also be bound by contractual obligations related to data privacy and security, and our efforts to comply with such obligations may not be successful. For example, certain privacy laws, such as the GDPR and the CCPA, require companies to impose specific contractual restrictions on their service providers. We publish privacy policies, marketing materials and other statements regarding data privacy and security. If ~~product~~these policies, materials, or statements are found to be deficient, lacking in transparency, deceptive, unfair, or misrepresentative of our practices, we may be subject to investigation, enforcement actions by regulators or other adverse consequences.

Obligations related to data privacy and security are quickly changing, becoming increasingly stringent, and creating regulatory uncertainty. Additionally, these obligations may be subject to differing applications and interpretations, which may be inconsistent or conflict among jurisdictions. Preparing for and complying with these obligations requires us to devote significant resources. These obligations may necessitate changes to our services, information technologies, systems, and practices and to those of any third parties that process personal data on our behalf. We may at times fail (or be perceived to have failed) in our efforts to comply with our data privacy and security obligations. Moreover, despite our efforts, our personnel or third parties on whom we rely may fail to comply with such obligations, which could negatively impact our business operations. If we or the third parties on which we rely fail, or are perceived to have failed, to address or comply with applicable data privacy and security obligations, we could face significant consequences, including but not limited to: government enforcement actions; litigation; additional reporting requirements and/or oversight; bans on processing personal data; orders to destroy or not use personal data; and imprisonment of company officials.

Any of these events could have a material adverse effect on our reputation, business, or financial condition, including but not limited to: loss of customers; interruptions or stoppages in our business operations, including clinical trials; inability to process personal data or to operate in certain jurisdictions; limited ability to develop or commercialize our medicines; expenditure of time and resources to defend any claim or inquiry; adverse publicity; or substantial changes to our business model or operations.

We are subject to various laws and regulations pertaining to export controls and trade and economic sanctions, which can impact our business activities and subject us to liability for noncompliance.

Our activities are subject to various U.S. and foreign export control and sanctions laws and regulations, including the U.S. Department of Commerce’s Export Administration Regulations and the U.S. Department of the Treasury’s Office of Foreign Assets Control economic and trade sanctions programs. Export control laws may restrict our ability to export, reexport, or transfer our medicines outside of the United States without authorization. Sanctions laws may prohibit or restrict our ability to provide medicines and services to certain countries, territories, entities, or individuals.

These laws and regulations are subject to frequent change which may impact the global economy and supply chains in ways that impact our business. Notably, in response to Russia’s invasion of Ukraine in February 2022, the United States and its allies significantly expanded export control and sanctions prohibitions and restrictions aimed at Russia, Belarus, and certain regions in Ukraine. We have a limited number of ongoing clinical research studies in Russia, Belarus, and non-restricted regions in Ukraine, and are monitoring the potential impact of the conflict on our clinical trial activities. We are no longer initiating new clinical trials or opening new investigator sites in these countries. With respect to our clinical trial of UPLIZNA in myasthenia gravis, disruptions in payment systems and other logistical challenges related to the conflict in Ukraine have negatively impacted enrollment and operations of clinical sites in the region which, combined with other negative impacts related to COVID-19, has delayed our expected timeline for topline data to 2024. Although we continue to work diligently with patients and sites across the impacted regions and are putting the appropriate measures in place to meet enrollment targets, further escalation of the conflict and any additional export controls and sanctions or adverse regulatory developments could restrict, prohibit, or otherwise impair our studies.

Compliance with these laws and regulations can be time- and resource-intensive. Although we are committed to complying with all applicable export control and sanctions laws and regulations, we cannot guarantee full compliance. Violations of these regimes can result in significant financial penalties, loss of licensing privileges, other administrative penalties, reputational harm, and adverse business impact.

Product liability lawsuits ~~are brought against~~may cause us ~~we may~~to incur substantial liabilities ~~and may be required~~or could require us to limit commercialization of our medicines.*

We face an inherent risk of product liability claims as a result of the commercial sales of our medicines and the clinical testing of our medicine candidates. ~~For example,~~In particular, we have been and may continue to be sued if any of our medicines or medicine candidates allegedly causes injury or is found to be otherwise unsuitable during clinical testing, manufacturing, marketing or sale. Any such product liability claims may include allegations of defects in manufacturing, defects in design, a failure to warn of dangers inherent in the medicine, negligence, strict liability or a breach of warranties. Claims could also be asserted under state consumer protection acts. For example, several product liability suits have been filed against us alleging that TEPEZZA is defectively designed and/or that we failed to include proper warnings regarding potential adverse events associated with hearing impairment. While we intend to vigorously defend ourselves in the lawsuits, no assurance can be given as to the outcome of the litigation, whether additional similar lawsuits will be initiated or whether our insurance coverage will be adequate to cover the costs of the litigation or any resulting settlements or judgments. If we cannot successfully defend ourselves against product liability claims, we may incur substantial liabilities or be required to limit commercialization of our medicines and medicine candidates. Even a successful defense ~~would~~will require significant financial and management resources. Regardless of the merits or eventual outcome, liability claims may result in:

Our inability to obtain and retain sufficient product liability insurance at an acceptable cost to protect against potential product liability claims could prevent or inhibit the commercialization of medicines we develop. We currently carry product liability insurance covering our clinical studies and commercial medicine sales in the amount of ~~$125~~$125.0 million in the aggregate. Although we maintain such insurance, any claim that may be brought against us could result in a court judgment or settlement in an amount that is not covered, in whole or in part, by our insurance or that is in excess of the limits of our insurance coverage. If we determine that it is prudent to increase our product liability coverage due to the on-going commercialization of our current medicines in the United States, and/or the potential commercial launches of any of our medicines in additional markets or for additional indications, we may be unable to obtain such increased coverage on acceptable terms or at all. Our insurance policies also have various exclusions, and we may be subject to a product liability claim for which we have no coverage. We will have to pay any amounts awarded by a court or negotiated in a settlement that exceed our coverage limitations or that are not covered by our insurance, and we may not have, or be able to obtain, sufficient capital to pay such amounts.

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

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

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

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

Although we recorded operating income and net income for the ~~past~~last several years, we have incurred significant operating losses.*

We have a limited operating history and even less history operating as a combined organization following the acquisitions of Vidara, Hyperion, Crealta and Raptor. We have financed our operations primarily through equity and debt financings and have incurred significantmay incur operating losses in the ~~past. We had an operating loss of $316.8 million for the nine months ended September 30, 2017, an operating loss of $147.2 million for the~~ ~~year ended December 31, 2016,~~ ~~operating income of $55.4 million for~~ ~~the~~ year ended December 31, 2015 and an operating loss of $8.5 million for the year ended December 31, 2014. We had a net loss of $364.1 million for the nine months ended September 30, 2017, a net loss of $166.8 million for the year ended December 31, 2016, net income of $39.5 million for the ~~year ended~~ ~~December 31, 2015 and a net loss of $263.6 million for the year ended December 31, 2014. As of September 30, 2017, we had an accumulated deficit of $1,205.9 million. Our~~future. Losses in prior ~~losses have~~periods resulted principally from costs incurred in our development activities for our medicines and medicine candidates, commercialization activities related to our medicines and costs associated with our acquisition ~~transactions and costs associated with derivative liability accounting.~~transactions. Our prior losses, combined with possible future losses, have had and ~~will~~may continue to have an adverse effect on our shareholders’ ~~deficit~~equity and working capital. ~~While we anticipate that we will generate operating profits in the future, whether we can sustain this~~Our ability to maintain profitability will depend on the revenues we generate from the sale of our medicines being sufficient to cover our operating expenses. We also expect our operating expenses to increase substantially as a result of continuing to develop our pipeline of medicine candidates, which will negatively impact our future profitability until such time, if ever, that these potential medicine candidates are approved and successfully commercialized, as well as developing our manufacturing and international sales and marketing capabilities.

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

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

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

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

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

We cannot be certain that additional funding will be available on acceptable terms, or at all. As a result of the COVID-19 pandemic and actions taken to slow its spread, current and potential future bank failures, the military conflict between Ukraine and Russia, actual or anticipated changes in interest rates and economic inflation, the global credit and financial markets have at times experienced extreme volatility and disruptions, including diminished liquidity and credit availability, declines in consumer confidence, declines in economic growth, increases in unemployment rates and uncertainty about economic stability. If the equity and credit markets deteriorate, it may make any additional debt or equity financing more difficult, more costly and more dilutive. In particular, rising interest rates have made debt financing more expensive which may limit our ability to finance future acquisitions through additional borrowing. In addition, the transaction agreement with Amgen contains restrictions on our ability to incur additional indebtedness or issue new equity in connection with financing activities or otherwise. If we are unable to raise additional capital in sufficient amounts or on terms acceptable to us, we may have to significantly delay, scale back or discontinue the development or commercialization of one or more of our medicines or medicine candidates or one or more of our other ~~research and development~~R&D initiatives, or delay, cut back or abandon our plans to grow the business through ~~acquisition.~~acquisitions. We also could be required to:

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

Any of the above events could significantly harm our business, financial condition and prospects.

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

As of ~~September~~June 30, ~~2017,~~2023, we had ~~$1,897.6 million~~$2.6 billion book value, or ~~$2,022.9 million~~$2.6 billion aggregate principal amount of indebtedness, including ~~$847.9~~ ~~million~~$2.0 billion in secured indebtedness. In March 2017, we borrowed $850.0 million in aggregate principal amount of secured loans pursuant to our credit agreement. In connection with the acquisition of Hyperion, we issued $475.0 million aggregate principal amou ~~nt of 6.625% Senior Notes due 2023, or the 2023 Senior Notes,~~ ~~in April 2015. In connection with the acquisition of Raptor, we issued $300.0 million aggregate principal amount of 8.75% Senior Notes due 2024, or the 2024 Senior Notes, in October 2016. In Mar~~ch 2015, we issued $400.0 million aggregate principal amount of 2.50% Exchangeable Senior Notes due 2022, or the Exchangeable Senior Notes. On October 23, 2017, we borrowed approximately $845.8 million aggregate principal amount of loans under our credit agreement pursuant to an amendment to our credit agreement to refinance the then outstanding senior secured term loans incurred in March 2017 under our credit agreement, which totaled approximately $845.8 million. Accordingly, we have a significant amount of debt outstanding on a consolidated basis.

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

~~The~~Our credit agreement and the ~~indentures~~indenture governing ~~the 2024~~our 5.5% Senior Notes ~~and the 2023~~due 2027, or 2027 Senior Notes, impose, and the terms of any future indebtedness may impose, various covenants that limit our ability and/or the ability of our restricted subsidiaries’ (as designated under such agreements) to, among other things, pay dividends or distributions, repurchase equity, prepay junior debt and make certain investments, incur additional debt and issue certain preferred stock, incur liens on assets, engage in certain asset sales, consolidate with or merge or sell all or substantially all of our assets, enter into transactions with affiliates, designate subsidiaries as unrestricted subsidiaries, and allow to exist certain restrictions on the ability of restricted subsidiaries to pay dividends or make other payments to us.

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

As a result of the COVID-19 pandemic and actions taken to slow its spread, bank failures, actual or anticipated changes in interest rates and economic inflation, the global credit and financial markets have experienced extreme volatility and disruptions, including diminished liquidity and credit availability, declines in consumer confidence, declines in economic growth, increases in unemployment rates and uncertainty about economic stability. In addition, government efforts to stimulate economic activity in the face of the COVID-19 pandemic have caused interest rates to fluctuate and created uncertainty as to future fluctuations. If the equity and credit markets deteriorate, it may make any additional debt or equity financing more difficult, more costly or more dilutive.

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

Our ability to make scheduled payments under or to refinance our debt obligations depends on our financial condition and operating performance, which is subject to prevailing economic, industry and competitive conditions and to certain financial, business and other factors beyond our control. Our ability to generate cash flow to meet our payment obligations under our debt may also depend on the successful ~~implementation~~implementation of our operating and growth strategies. Any refinancing of our debt could be at higher interest rates and may require us to comply with more onerous covenants, which could further restrict our business operations. We cannot assure ~~you~~ that we will maintain a level of cash flows from operating activities sufficient to pay the principal, premium, if any, and interest on our indebtedness.

If our cash flows and capital resources are insufficient to fund our debt service obligations, we may be forced to reduce or delay capital expenditures, sell assets or business operations, seek additional capital or restructure or refinance our indebtedness. We cannot ensure that we would be able to take any of these actions, that these actions would be successful and permit us to meet our scheduled debt service obligations or that these actions would be permitted under the terms of existing or future debt agreements, including the ~~indentures~~indenture that ~~govern~~governs the ~~2024~~2027 Senior Notes and ~~the 2023 Senior Notes and the~~our credit agreement. In addition, any failure to make payments of interest and principal on our outstanding indebtedness on a timely basis would likely result in a reduction of our credit rating, which could harm our ability to incur additional indebtedness.

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

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

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

Our ability to use net operating loss carryforwards and certain other tax attributes to offset U.S. income taxes may be limited.*

Under Sections 382 and 383 of the Code, if a corporation undergoes an “ownership change” (generally defined as a greater than ~~50 percent~~50% change (by value) in its equity ownership over a three-year period), the corporation’s ability to use pre-change net operating loss carryforwards and other pre-change tax attributes to offset post-change income may be limited. ~~We continue to carry forward our annual limitation resulting from an ownership change date of August 2, 2012. The limitation on pre-change~~Certain net operating losses ~~incurred prior to the August~~generated before an August 2, 2012 ownership change ~~date is approximately $14.7 million for 2017~~ and ~~$7.7 million for 2018 through 2028. During the third quarter of 2016, we also recognized additional~~federal net operating losses and federal ~~and state~~ tax credits ~~as a result of our~~acquired through the Viela acquisition of Raptor on October 25, 2016 in the amount of approximately $97.3 million of federal net operating losses, state operating losses of approximately $177.5 million and approximately $22.4 million of federal and state tax credits. We continue to carry forward the annual limitation related to Hyperion of $50 million resulting from the last ownership change date in 2014. In addition, in the second quarter of 2017, we recognized $37.4 million of federal net operating losses, $43.2 million of state net operating losses and $5.8 million of federal tax credits following our acquisition of River Vision Development Corp. These acquired federal net operating losses and credits are subject to an annual ~~limitation of $8.1 million for the 2017 year and $12.5 million from 2018 through 2021.~~limitation. The net operating loss carryforward ~~limitation is~~and tax credit carryforward limitations are cumulative such that any use of the carryforwards below the limitations in one year will result in a corresponding increase in the limitations for the subsequent tax year.

Following certain acquisitions of a U.S. corporation by a foreign corporation, Section 7874 of the Code limits the ability of the acquired U.S. corporation and its U.S. affiliates to utilize U.S. tax attributes such as net operating losses to offset U.S. taxable income resulting from certain transactions. Based on the limited guidance available, we expect this limitation is applicable for approximately ten years following ~~the~~our merger transaction with Vidara ~~Merger.~~with respect to certain intercompany transactions. As a result, ~~it is not currently expected that~~ we or our other U.S. affiliates ~~will~~may not be able to utilize ~~their~~ U.S. tax attributes to offset ~~their~~ U.S. taxable income or U.S. tax liability respectively, if any, resulting from certain intercompany taxable transactions ~~following the Vidara Merger.~~during such period. Notwithstanding this limitation, we expect that we will be able to fully use our U.S. net operating losses and tax credits prior to their expiration. As a result of this limitation, however, it may take ~~HPI~~Horizon Therapeutics USA, Inc. (formerly known as Horizon Pharma USA, Inc. and as the successor to HPI) longer to use its net operating ~~losses.~~losses and tax credits. Moreover, contrary to these expectations, it is possible that the limitation under Section 7874 of the Code on the utilization of U.S. tax attributes could prevent us from fully utilizing our U.S. tax attributes prior to their expiration if we do not generate sufficient taxable ~~income.~~income or tax obligations.

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

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

From time to time, including recently as a result of the COVID-19 pandemic and actions taken to slow its spread, bank failures, actual or anticipated changes in interest rates and economic inflation, global credit and financial markets have experienced extreme volatility and disruptions, including severely diminished liquidity and credit availability, declines in consumer confidence, declines in economic growth, increases in unemployment rates, and uncertainty about economic stability. Our general business strategy may be adversely affected by any such economic downturn, volatile business environment and continued unpredictable and unstable market conditions. If the equity and credit markets deteriorate, it may make any necessary debt or equity financing more difficult to complete, more costly, and more dilutive. Failure to secure any necessary financing in a timely manner and on favorable terms could have a material adverse effect on our growth strategy, financial performance and share price and could require us to delay or abandon commercialization or development plans. There is a risk that one or more of our current service providers, manufacturers and other partners may not survive an economic down-turn, which could directly affect our ability to attain our operating goals on schedule and on budget.

The U.K.’s referendum to leave the EU or “Brexit,” has and may continue to cause disruptions to capital and currency markets worldwide. The full impact of the Brexit decision, however, remains uncertain. A process of negotiation will determine the future terms of the U.K.’s relationship with the EU. During this period of negotiation, our results of operations and access to capital may be negatively affected by interest rate, exchange rate and other market and economic volatility, as well as regulatory and political uncertainty. The tax consequences of the U.K.’s withdrawal from the EU are uncertain as well. Brexit may also have a detrimental effect on our customers, distributors and suppliers, which would, in turn, adversely affect our revenues and financial condition.

At ~~September~~June 30, ~~2017,~~2023, we had ~~$625.0 million~~$2.5 billion of cash and cash equivalents consisting of cash, ~~and~~ money market ~~funds.~~funds, time deposits and U.S. federal government securities. While we are not aware of any downgrades, material losses, or other significant deterioration in the fair value of our cash equivalents since ~~September~~June 30, ~~2017,~~2023, no assurance can be given that deterioration in conditions of the global credit and financial markets or bank failures would not negatively impact our current portfolio of cash equivalents or our ability to meet our financing objectives. Dislocations in the credit market may adversely impact the value and/or liquidity of marketable securities owned by us.

The UK’s referendum to leave the EU and the UK’s exit from the EU on January 31, 2020, or “Brexit,” has caused and may continue to cause disruptions to capital and currency markets worldwide. The full impact of Brexit, however, remains uncertain. A Trade and Cooperation Agreement, or the TCA, which outlines the trading relationship between the UK and the EU was agreed in December 2020, entered into force provisionally on January 1, 2021, and has been permanently applicable since May 1, 2021.

There remains uncertainty as to the practical impacts of Brexit and, especially in the early stages of the UK and the EU operating under different legislation, our results of operations and access to capital may be negatively affected by interest rate, exchange rate and other market and economic volatility, as well as political uncertainty. Brexit may also have a detrimental effect on our customers, distributors and suppliers, which would, in turn, adversely affect our revenues and financial condition.

While the TCA provides for the tariff-free trade of medicinal products between the UK and the EU there may be additional non-tariff costs to such trade which did not exist prior to the TCA coming into force. Further, should the UK diverge from the EU from a regulatory perspective in relation to medicinal products, tariffs could be put into place in the future. Any further changes in international trade, tariff and import/export regulations as a result of Brexit or otherwise may impose unexpected duty costs or other non-tariff barriers on us.

We could therefore, both now and in the future, face additional expenses (when compared to the position prior to the TCA coming into force) to operate our business, which could harm or delay our business. These developments, or the perception that any of them could occur, may significantly reduce global trade and, in particular, trade between the impacted nations and the UK.

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

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

Covenants under the ~~indentures~~indenture governing our ~~2024 Senior Notes and 2023~~2027 Senior Notes and our c~~redit~~credit agreement may restrict our business and operations in many ways, and if we do not effectively manage our covenants, our financial conditions and results of operations could be adversely affected.

The ~~indentures~~indenture governing the ~~2024 Senior Notes and the 2023~~2027 Senior Notes and the credit agreement impose various covenants that limit our ability and/or our restricted subsidiaries’ ability to, among other things:

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

Our failure to comply with any of the covenants could result in a default under the credit agreement or the ~~indentures~~indenture governing the ~~2024 Senior Notes or the 2023~~2027 Senior Notes, which could permit the administrative agent or the trustee, as applicable, or permit the lenders or the holders of the ~~2024 Senior Notes or the 2023~~2027 Senior Notes to cause the administrative agent or the trustee, as applicable, to declare all or part of any outstanding senior secured term loans ~~the 2023 Senior Notes~~or revolving loans, or the ~~2024~~2027 Senior Notes to be immediately due and payable or to exercise any remedies provided to the administrative agent or the trustee, including, in the case of the credit agreement proceeding against the collateral granted to secure our obligations under the credit agreement. An event of default under the credit agreement or the ~~indentures~~indenture governing the ~~2024 Senior Notes or the 2023~~2027 Senior Notes could also lead to an event of default under the terms of the other ~~agreements and the indenture governing our Exchangeable Senior Notes.~~agreement. Any such event of default or any exercise of rights and remedies by our creditors could seriously harm our business.

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

In connection with the accounting for our various acquisition transactions, we have recorded significant amounts of intangible assets. Under GAAP, we must assess, at least annually and potentially more frequently, whether the value of goodwill ~~and other indefinite-lived intangible assets~~ has been impaired. Amortizing intangible assets will be assessed for impairment in the event of an impairment indicator. ~~Any~~For example, during the year ended December 31, 2018, we recorded an impairment of $33.6 million to fully write off the book value of developed technology related to PROCYSBI in Canada and Latin America. More recently, our interim goodwill impairment test in the second quarter of 2022 indicated an impairment which represented the difference between the estimated fair value of the former inflammation reporting unit and its carrying value. As a result, we recognized an impairment charge of $56.2 million in June 2022 representing the full amount of goodwill for the former inflammation reporting unit. Such impairment and any reduction or other impairment of the value of goodwill or other intangible assets will result in a charge against earnings, which could materially adversely affect our results of operations and shareholders’ equity in future periods.

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

We rely upon a combination of patents, trade secret protection and confidentiality agreements to protect the intellectual property related to our medicines and medicine candidates. The strength of patents in the ~~biotechnology and pharmaceutical~~biopharmaceutical field involves complex legal and scientific questions and can be uncertain. The patent applications that we own may fail to result in issued patents with claims that cover our medicines in the United States or in other foreign countries. If this were to occur, early generic competition could be expected against our current medicines and other medicine candidates in development. There is no assurance that all potentially relevant prior art relating to our patents and patent applications has been found, which prior art can invalidate a patent or prevent a patent from issuing based on a pending patent application. In particular, because the APIs in DUEXIS, VIMOVO and RAYOS/LODOTRA have been on the market as separate medicines for many years, it is possible that these medicines have previously been used off-label in such a manner that such prior usage would affect the validity of our patents or our ability to obtain patents based on our patent applications. In addition, claims directed to dosing and dose adjustment may be substantially less likely to issue in light of the Supreme Court decision in Mayo Collaborative Services v. Prometheus Laboratories, Inc., where the court held that claims directed to methods of determining whether to adjust drug dosing levels based on drug metabolite levels in the red blood cells were not patent eligible because they were directed to a law of nature. This decision may have wide-ranging implications on the validity and scope of pharmaceutical method claims.

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

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

On January 12, 2017, a six-day bench trial for the cases asserting U.S. Patent Nos. 8,557,285 and 6,926,907, or Case I, commenced against defendants Dr. Reddy’s and Mylan before Honorable Judge Mary Cooper in the District of New Jersey. Defendant Lupin formerly entered into a stay pending the entry of judgment in Case I. On June 26, 2017, the court issued its opinion upholding the validity of the ‘285 and ‘907 patents and finding that Dr. Reddy’s, Mylan’s and Lupin’s proposed generic naproxen/esomeprazole magnesium products would all infringe at least one of the two patents. The court entered the final judgment on July 21, 2017. Dr. Reddy’s, Mylan and Lupin have appealed the District Court’s judgment to the Court of Appeals for the Federal Circuit.

On January 19, 2017, the court entered a scheduling order for the cases asserting U.S. Patent Nos. 8,858,996, 8,865,190, 8,852,636, 9,161,920, and 9,198,888, or Case II, and the cases asserting U.S. Patent Nos. 8,945,621, 9,220,698 and 9,345,695, the case asserting U.S. Patent No. 9,393,208 against Lupin and Mylan, and the case asserting U.S. Patent Nos. 8,945,621, 9,220,698 and 9,345,695 against Dr. Reddy’s, or collectively Case III, which was subsequently updated. The court’s scheduling order requires, ~~inter alia~~, filing and serving of the opening claim construction submissions by May 26, 2017. The court has not issued a claim construction order in Case II. A trial date for Cases II and III has not yet been set. On December 20, 2016, Mylan filed a motion to dismiss our first amended complaint for patent infringement in Case III. On April 28, 2017, Dr. Reddy’s filed a motion to dismiss for lack of jurisdiction in Case II. On August 18, 2017, the District Court granted Dr. Reddy’s and Mylan’s motions to dismiss our claims relating to the ‘621 patent.

On August 19, 2015, Lupin filed Petitions for inter partes review, or IPR, of U.S. Patent No. 8,858,996, or the ’996 patent, and U.S. Patent Nos. 8,852,636 and 8,865,190, or the ’190 patent, all patents in litigation in the above referenced VIMOVO cases. On March 1, 2016, the Patent Trial and Appeal Board, or the PTAB, issued decisions to institute the IPRs for the ‘996 patent and the ’190 patent. On March 1, 2017, the PTAB denied the Petition for IPR for U.S. Patent No. 8,852,636. The PTAB hearings for the ’996 and ’190 patents were both held on November 29, 2016. On February 28, 2017, the PTAB issued final written decisions on the IPRs of the ‘996 and ‘190 patents, upholding the validity of both patents.

~~Patent litigation is currently pending in the United States District Court for the District of New Jersey against two companies intending to~~ ~~market~~ a generic version of PENNSAID 2% prior to the expiration of certain of our patents listed in the Orange Book. These cases are collectively known as the PENNSAID 2% cases, and involve the following sets of defendants: (i) Actavis and (ii) Lupin. These cases arise from Paragraph IV Patent Certification notice letters from each of Actavis and Lupin advising each had filed an ANDA with the FDA seeking approval to market a generic version of PENNSAID 2% before the expiration of Orange Book listed U.S. Patents 8,217,078, 8,252,838, 8,546,450, 8,563,613, 8,618,164, 8,741,956, 8,871,809, 9,066,913, 9,101,591, 9,132,110, 9,168,304, 9,168,305, 9,220,784, 9,339,551 and 9,339,552.

~~On August 17, 2016, the district court issued a~~ ~~Markman~~ ~~opinion holding certain of the asserted claims of U.S. Patents 8,252,838, 8,563,613, 9,066,913 and 9,101,591 invalid as indefinite. On August 30, 2016,~~ ~~we filed a motion for reconsideration of the court’s August 17, 2016, opinion. On January 6, 2017, the court denied~~ our motion for reconsideration. On March 16, 2017, the court granted Actavis’ motion for summary judgment of non-infringement of the asserted claims of U.S. Patents 8,546,450, 8,217,078 and 9,132,110. In view of the ~~Markman~~ and summary judgment decisions, a bench trial was held on March 21-30, 2017, regarding claim 12 of U.S. Patent 9,066,913. On May 14, 2017, the court issued its opinion upholding the validity of claim ~~12 of the ‘913 patent, which Actavis had previously admitted its proposed generic diclofenac sodium topical solution product would infringe. Actavis filed its Notice of Appeal on June 16, 2017.~~ We ~~filed~~ our Notice of Appeal of the district court’s rulings on certain claims of the ‘450, ‘078, ‘838, ‘613, ‘591 ‘304, ‘305, ‘784, ‘913, and ‘110 patents on June 9, 2017. Our opening brief was filed on August 14, 2017. Actavis’s opening brief, challenging the district court’s judgment on the ‘913 patent, was filed on October 10, 2017. Our brief defending the judgment on the ‘913 patent is due on November 20, 2017.

On October 27, 2015, we filed suit in the United States District Court for the District of New Jersey against Actavis for patent infringement of U.S. Patents 9,168,304 and 9,168,305. On February 5, 2016, we filed suit in the United States District Court for the District of New Jersey against Actavis for patent infringement of U.S. Patent No. 9,220,784. All three patents, U.S. Patent Nos. 9,168,304, 9,168,305, and 9,220,784, are listed in the Orange Book and have claims that cover PENNSAID 2%. All claims from U.S. Patents 9,168,304, 9,168,305 and 9,220,784 asserted against Actavis were held invalid as indefinite by way of the court’s August 17, 2016, ~~Markman~~ ~~opinion and the court’s January 6, 2017, order denying our motion for reconsideration. The court’s rulings are currently on appeal to the Federal Circuit.~~

We received from Actavis a Paragraph IV Patent Certification Notice Letter dated September 27, 2016, against Orange Book listed U.S. Patent 9,415,029, advising that Actavis had filed an ANDA with the FDA for a generic version of PENNSAID 2%.

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

On June 30, 2015, we filed suit in the United States District Court for the District of New Jersey against Lupin for patent infringement of U.S. Patent 9,066,913. On August 11, 2015, we filed an amended complaint in the United States District Court for the District of New Jersey against Lupin that added U.S. Patent 9,101,591 to the litigation pending on U.S. Patent 9,066,913. On September 17, 2015, we filed suit in the United States District Court for the District of New Jersey against Lupin for patent infringement of U.S. Patent 9,132,110. All three patents, U.S. Patents 9,066,913, 9,101,591, and 9,132,110, are listed in the Orange Book and have claims that cover PENNSAID 2%.

On October 27, 2015, we filed suit in the United States District Court for the District of New Jersey against Lupin for patent infringement of U.S. Patents 9,168,304 and 9,168,305. On February 5, 2016, we filed suit in the United States District Court for the District of New Jersey against Lupin for patent infringement of U.S. Patent 9,220,784. On August 18, 2016, we filed suit in the United States District Court for the District of New Jersey against Lupin for patent infringement of U.S. Patents 9,339,551, 9,339,552, 9,370,501 and 9,375,412. All seven patents, U.S. Patents 9,168,304, 9,168,305, 9,220,784, 9,339,551, 9,339,552, 9,370,501 and 9,375,412, are listed in the Orange Book and have claims that cover PENNSAID 2%. All of the infringement actions brought against Lupin remain pending, with certain claims of the ’809, ’913, ’450, ’110, ’551, ’552, ’412 and ’501 patents being asserted. The decisions reached by the court in the related Actavis actions regarding the ’809, ’450, ’110, ’551, ’552, ’412 and ’501 patents as described above, are expected to apply to the same claims asserted against Lupin in these actions. The court has not yet set a trial date for the Lupin actions.

We have received from Apotex Paragraph IV Patent Certification Notice Letters dated April 1, 2016, June 30, 2016, September 21, 2016, April 20, 2017 and April 27, 2017 against Orange Book listed U.S. Patents 8,217,078, 8,252,838, 8,546,450, 8,563,613, 8,618,164, 8,741,956, 8,871,809, 9,066,913, 9,101,591, 9,132,110, 9,168,304, 9,168,305, 9,220,784, 9,339,551, 9,339,552 9,415,029, 9,539,335 and 9,370,501 advising that Apotex had filed an ANDA with the FDA for a generic version of PENNSAID 2%.

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

On April 29, 2015, Par Pharmaceutical filed Petitions for IPR of U.S. Patents 8,404,215 and 8,642,012, two of the patents involved in the above mentioned RAVICTI cases. On November 4, 2015, the PTAB issued decisions instituting such IPRs. On September 29, ~~2016, the PTAB~~ ~~found~~ ~~all of the claims~~ in U.S. Patent 8,404,215 to be unpatentable. We did not appeal the PTAB’s final written decision with respect to U.S. Patent 8,404,215. On November 3, 2016, the PTAB issued a final written decision holding all of the ~~claims of U.S.~~ P~~atent~~ ~~8,642,012 patentable.~~ ~~On December 29, 2016, Par~~ ~~Pharmaceutical~~ ~~filed a notice of appeal with the Federal Circuit to appeal the final written decision of the PTAB concerning the patentability of~~ ~~U.S. Patent 8,642,012.~~

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

~~On April 1, 2016, Lupin filed a Petition for IPR of U.S. Patent 9,095,559, a patent currently at issue in the Lupin~~ RAVICTI case. On September 30, 2016, the PTAB issued a decision instituting the IPR. On September 26, 2017, the PTAB issued its final written decision, ruling that the challenged claims of the ‘559 patent are unpatentable. Our Notice of Appeal is due by November 28, 2017. On March 27, 2017, Lupin filed a Petition to request an IPR of the ‘278 patent and a Petition to request an IPR of the ‘966 patent. We filed our response on the ‘966 patent on July 6, 2017. Our preliminary patent owner response for the ‘278 patent was filed on July 24, 2017. On September 28, 2017, the PTAB issued its orders granting Lupin’s petitions to institute an IPR of the ‘278 and the ‘966 patents. The PTAB must issue a final written decision on the IPRs no later than September 28, 2018.

~~On July 13, 2017, Par~~ ~~Pharmaceutical~~ ~~filed Petitions for IPR of the ‘559, ‘278, and ‘966 patents. Our opposition to Par~~ ~~Pharmaceutical’s requested IPRs is due by November 6, 2017.~~

~~On August 8, 2017, we filed suit against Par Pharmaceutical and Lupin in the United States District Court for New Jersey. Par~~ ~~Pharmaceutical~~ ~~and Lupin have answered and counterclaimed. The district court has not yet issued a scheduling order for either action.~~

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

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

With respect to RAVICTI, the composition of matter patent we hold would have expired in the United States in February 2015 without term extension. However, Hyperion applied for a term extension for this patent under the Drug Price Competition and Patent Term Restoration Act and received notice that the United States Patent and Trademark Office, or the U.S. PTO, extended the expiration date of the patent to July 28, 2018. We cannot guarantee that pending patent applications related to RAVICTI will result in additional patents or that other existing and future patents related to RAVICTI will be held valid and enforceable or will be sufficient to deter generic competition in the United States. Therefore, it is possible that upon expiration of the RAVICTI composition of matter patent, we would need to rely on forms of regulatory exclusivity, to the extent available, to protect against generic competition.

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

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

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

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

We are party to a number of technology licenses that are important to our business and expect to enter into additional licenses in the future. For example, we hold an exclusive, worldwide license from Roche to patents and know-how for TEPEZZA. We also have exclusive sub-licenses for rights licensed to Roche for TEPEZZA by certain third-party licensors. Roche may have the right to terminate the license upon our breach, if not cured within a specified period of time. Roche may also terminate the license in the event of our bankruptcy or insolvency, or if we challenge the validity of Roche’s patents. If the license is terminated for our breach or based on our challenging the validity of Roche’s patents, then all rights and licenses granted to us by Roche would also terminate, and we may be required to assign and transfer to Roche certain filings and approvals, trademarks, and data in our possession necessary for the development and commercialization of TEPEZZA, and assign clinical trial agreements to the extent permitted. We may also be required to grant Roche an exclusive license under our patents and know-how for TEPEZZA, and to manufacture and supply TEPEZZA to Roche for a transitional period. If one or more of these licenses is terminated, it may be impossible for us to continue to commercialize TEPEZZA, which would have a material adverse effect on our business, financial condition and results of operations.

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

In addition, we rely on a license from Bausch with respect to technology developed by Bausch in connection with the manufacturing of RAVICTI. The purchase agreement under which Hyperion Therapeutics, Inc., or Hyperion, purchased the rights to RAVICTI contains obligations to pay Bausch regulatory and sales milestone payments relating to RAVICTI, as well as royalties on the net sales of RAVICTI. On May 31, 2013, when Hyperion acquired BUPHENYL under a restated collaboration agreement with Bausch, Hyperion received a license to use some of the manufacturing technology developed by Bausch in connection with the manufacturing of BUPHENYL. The restated collaboration agreement also contains obligations to pay Bausch regulatory and sales milestone payments, as well as royalties on net sales of BUPHENYL. If we fail to make a required payment to Bausch and do not cure the failure within the required time period, Bausch may be able to terminate the license to use its manufacturing technology for RAVICTI and BUPHENYL. If we lose access to the Bausch manufacturing technology, we cannot guarantee that an acceptable alternative method of manufacture could be developed or acquired. Even if alternative technology could be developed or acquired, the loss of the Bausch technology could still result in substantial costs and potential periods where we would not be able to market and sell RAVICTI and/or BUPHENYL. We also license intellectual property necessary for commercialization of RAVICTI from an external party. This party may be entitled to terminate the license if we breach the agreement, including failure to pay required royalties on net sales of RAVICTI, or we do not meet specified diligence obligations in our development and commercialization of RAVICTI, and we do not cure the failure within the required time period. If the license is terminated, it may be difficult or impossible for us to continue to commercialize RAVICTI, which would have a material adverse effect on our business, financial condition and results of operations.

Following our acquisition of Viela on March 15, 2021, we are a party to a number of intellectual property license agreements including (i) our licenses with Duke University, Dana-Farber Cancer Institute and BioWa, Inc., or BioWa, related to UPLIZNA, (ii) our license with SBI Biotech Co. Ltd related to daxdilimab, (iii) our license with MedImmune, LLC, or MedImmune, related to dazodalibep, (iv) our sublicense with MedImmune for its license with Lonza Sales AG, or Lonza, related to UPLIZNA and daxdilimab, and (v) our sublicense with MedImmune for its license with BioWa and Lonza related to daxdilimab. If we fail to comply with our obligations under these agreements, or we are subject to a bankruptcy, we may be required to make certain payments to the licensor, we may lose the exclusivity of our license, or the licensor may have the right to terminate the license, in which event we would not be able to develop or market medicines covered by the license.

We are subject to contractual obligations under our amended and restated license agreement with The Regents of the University of California, San Diego, as amended, with respect to PROCYSBI. If one or more of these licenses was terminated, we would have no further right to use or exploit the related intellectual property, which would limit our ability to develop PROCYSBI in other indications, and could impact our ability to continue commercializing PROCYSBI in its approved indications.

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

Some intellectual property has been discovered through government-funded programs and thus may be subject to federal regulations such as “march-in” rights, certain reporting requirements and a preference for U.S.-based companies. Compliance with such regulations may limit our exclusive rights, and limit our ability to contract with non-U.S. manufacturers.

Some of our intellectual property rights, specifically, intellectual property rights related to UPLIZNA that are in-licensed from Duke University, were generated through the use of U.S. government funding and are therefore subject to certain federal regulations. As a result, the U.S. government may have certain rights to intellectual property embodied in certain of our current or future medicine candidates pursuant to the Bayh-Dole Act of 1980, or the Bayh-Dole Act. These U.S. government rights in certain inventions developed under a government-funded program include a non-exclusive, non-transferable, irrevocable worldwide license to use inventions for any governmental purpose. In addition, the U.S. government has the right, under certain limited circumstances, to require us to grant exclusive, partially exclusive, or non-exclusive licenses to any of these inventions to a third party if it determines that: (i) adequate steps have not been taken to commercialize the invention; (ii) government action is necessary to meet public health or safety needs; or (iii) government action is necessary to meet requirements for public use under federal regulations (also referred to as “march-in rights”). To our knowledge, however, the U.S. government has, to date, not exercised any march-in rights on any patented technology that was generated using U.S. government funds. The U.S. government also has the right to take title to these inventions if we or the applicable grantee fail to disclose the invention to the government and fail to file an application to register the intellectual property within specified time limits. Intellectual property generated under a government funded program is also subject to certain reporting requirements, compliance with which may require us to expend substantial resources. In addition, the U.S. government requires that any products embodying the subject invention or produced through the use of the subject invention be manufactured substantially in the United States. The manufacturing preference requirement can be waived if the owner of the intellectual property can show that reasonable but unsuccessful efforts have been made to grant licenses on similar terms to potential licensees that would be likely to manufacture substantially in the United States or that under the circumstances domestic manufacture is not commercially feasible. This preference for U.S. manufacturers may limit our ability to contract with non-U.S. product manufacturers for medicines covered by such intellectual property. To the extent any of our current or future intellectual property is generated through the use of U.S. government funding, the provisions of the Bayh-Dole Act may similarly apply.

The patent protection and patent prosecution for some of our medicine candidates is dependent on third parties.*

While we normally seek and gain the right to fully prosecute the patents relating to our medicine candidates, there may be times when one or more patents relating to our medicine candidates are controlled by our licensors. For example, this is the case with current patents and patent applications licensed from MedImmune related to dazodalibep, and those licensed from Duke University related to inebilizumab. If we, or any of our future licensing partners fail to appropriately file, prosecute and maintain patent protection for patents covering any of our medicine candidates, our ability to develop and commercialize those medicine candidates may be adversely affected and we may not be able to prevent competitors from making, using, and selling competing products. In addition, even where we now have the right to control patent prosecution of patents and patent applications we have licensed from third parties, we may still be adversely affected or prejudiced by actions or inactions of our licensors.

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

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

In addition, the stock market in general, and The Nasdaq Global Select Market and the stock of biotechnology companies in particular, have experienced extreme price and volume fluctuations that have often been unrelated or disproportionate to the operating performance of these companies. Broad market and industry factors may adversely affect the market price of our ordinary shares, regardless of our actual operating performance.

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

We have never declared or paid any cash dividends on our ordinary shares. We currently anticipate that we will retain future earnings for the development, operation and expansion of our business and do not anticipate declaring or paying any cash dividends for the foreseeable future, including due to limitations that are currently imposed by our credit agreement, the indenture governing the 2027 Senior Notes and the transaction agreement with Amgen. Any return to shareholders will therefore be limited to the increase, if any, of our ordinary share price.

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

Additional capital may be needed in the future to continue our planned operations. To the extent we raise additional capital by issuing equity securities or securities convertible into or exchangeable for ordinary shares, our shareholders may experience substantial dilution. We may sell ordinary shares, and we may sell convertible or exchangeable securities or other equity securities in one or more transactions at prices and in a manner we determine from time to time. If we sell such ordinary shares, convertible or exchangeable securities or other equity securities in subsequent transactions, existing shareholders may be materially diluted. New investors in such subsequent transactions could gain rights, preferences and privileges senior to those of holders of ordinary shares. We also maintain equity incentive plans, including our Amended and Restated 2020 Equity Incentive Plan, as amended, Amended and Restated 2018 Equity Incentive Plan, as amended, 2014 Non-Employee Equity Plan, as amended, and 2020 Employee Share Purchase Plan, and intend to grant additional ordinary share awards under these and future plans, which will result in additional dilution to our existing shareholders.

Irish law differs from the laws in effect in the United States and may afford less protection to holders of our securities.

It may not be possible to enforce court judgments obtained in the United States against us in Ireland based on the civil liability provisions of the U.S. federal or state securities laws. In addition, there is some uncertainty as to whether the courts of Ireland would recognize or enforce judgments of U.S. courts obtained against us or our directors or officers based on the civil liabilities provisions of the U.S. federal or state securities laws or hear actions against us or those persons based on those laws. We have been advised that the United States currently does not have a treaty with Ireland providing for the reciprocal recognition and enforcement of judgments in civil and commercial matters. Therefore, a final judgment for the payment of money rendered by any U.S. federal or state court based on civil liability, whether or not based solely on U.S. federal or state securities laws, would not automatically or necessarily be enforceable in Ireland.

As an Irish company, we are governed by the Irish Companies Act 2014 (as amended), which differs in some material respects from laws generally applicable to U.S. corporations and shareholders, including, among others, differences relating to interested director and officer transactions and shareholder lawsuits. Likewise, the duties of directors and officers of an Irish company generally are owed to the company only. Shareholders of Irish companies generally do not have a personal right of action against directors or officers of the company and may exercise such rights of action on behalf of the company only in limited circumstances. Accordingly, holders of our securities may have more difficulty protecting their interests than would holders of securities of a corporation incorporated in a jurisdiction of the United States.

Provisions of our articles of association and Irish law could delay or prevent a takeover of us by a third party.

Our articles of association contain provisions which could delay, defer or prevent a third-party from acquiring us, despite the possible benefit to our shareholders, or otherwise adversely affect the price of our ordinary shares. For example, our articles of association:

In addition, several mandatory provisions of Irish law could prevent or delay an acquisition of us. For example, Irish law does not permit shareholders of an Irish public limited company to take action by written consent with less than unanimous consent. We are also subject to various provisions of Irish law relating to mandatory bids, voluntary bids, requirements to make a cash offer and minimum price requirements, as well as substantial acquisition rules and rules requiring the disclosure of interests in our ordinary shares in certain circumstances.

These provisions may discourage potential takeover attempts, discourage bids for our ordinary shares at a premium over the market price or adversely affect the market price of, and the voting and other rights of the holders of, our ordinary shares. These provisions could also discourage proxy contests and make it more difficult for you and our other shareholders to elect directors other than the candidates nominated by our board of directors, and could depress the market price of our ordinary shares.

Any attempts to take us over will be subject to Irish Takeover Rules and subject to review by the Irish Takeover Panel.

We are subject to the Irish Takeover Rules, under which our board of directors will not be permitted to take any action which might frustrate Amgen’s offer for our ordinary shares or another third party offer for our ordinary shares.

In certain circumstances, the transfer of shares in an Irish incorporated company will be subject to Irish stamp duty, which is a legal obligation of the buyer. This duty is currently charged at the rate of 1.0% of the price paid or the market value of the shares acquired, if higher. Because our ordinary shares are traded on a recognized stock exchange in the United States, an exemption from this stamp duty is available to transfers by shareholders who hold ordinary shares beneficially through brokers, which in turn hold those shares through the Depositary Trust Company, or DTC, to holders who also hold through DTC. However, a transfer by or to a record holder who holds ordinary shares directly in his, her or its own name could be subject to this stamp duty. We, in our absolute discretion and insofar as the Irish Companies Act 2014 (as amended) or any other applicable law permit, may, or may provide that one of our subsidiaries will pay Irish stamp duty arising on a transfer of our ordinary shares on behalf of the transferee of such ordinary shares. If stamp duty resulting from the transfer of ordinary shares which would otherwise be payable by the transferee is paid by us or any of our subsidiaries on behalf of the transferee, then in those circumstances, we will, on our behalf or on behalf of such subsidiary (as the case may be), be entitled to (i) seek reimbursement of the stamp duty from the transferee, (ii) set-off the stamp duty against any dividends payable to the transferee of those ordinary shares and (iii) claim a first and permanent lien on the ordinary shares on which stamp duty has been paid by us or such subsidiary for the amount of stamp duty paid. Our lien shall extend to all dividends paid on those ordinary shares.

In certain circumstances, as an Irish tax resident company, we will be required to deduct Irish dividend withholding tax (currently at the rate of 25%) from dividends paid to our shareholders. Shareholders that are resident in the United States, EU countries (other than Ireland) or other countries with which Ireland has signed a tax treaty (whether the treaty has been ratified or not) generally should not be subject to Irish withholding tax so long as the shareholder has provided its broker, for onward transmission to our qualifying intermediary or other designated agent (in the case of shares held beneficially), or our or its transfer agent (in the case of shares held directly), with all the necessary documentation by the appropriate due date prior to payment of the dividend. However, some shareholders may be subject to withholding tax, which could adversely affect the price of our ordinary shares.

Securities class action litigation could divert our management’s attention and harm our business and could subject us to significant liabilities.

The stock markets have from time to time experienced significant price and volume fluctuations that have affected the market prices for the equity securities of biopharmaceutical companies. These broad market fluctuations may cause the market price of our ordinary shares to decline. In the past, securities class action litigation has often been brought against a company following a decline in the market price of its securities. This risk is especially relevant for us because biotechnology and biopharma companies have experienced significant stock price volatility in recent years. For example, following declines in our stock price, two federal securities class action lawsuits were filed in March 2016 against us and certain of our current and former officers alleging violations of the Securities Exchange Act of 1934, as amended, which lawsuits were dismissed by the plaintiffs in June 2018. Even if we are successful in defending any similar claims that may be brought in the future, such litigation could result in substantial costs and may be a distraction to our management and may lead to an unfavorable outcome that could adversely impact our financial condition and prospects.

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

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

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

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

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

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

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

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

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

We rely on a license from Ucyclyd with respect to technology developed by Ucyclyd in connection with the manufacturing of RAVICTI. The purchase agreement under which Hyperion purchased the worldwide rights to RAVICTI contains obligations to pay Ucyclyd regulatory and sales milestone payments relating to RAVICTI, as well as royalties on the net sales of RAVICTI. On May 31, 2013, when Hyperion acquired BUPHENYL under a restated collaboration agreement with Ucyclyd, Hyperion received a license to use some of the manufacturing technology developed by Ucyclyd in connection with the manufacturing of BUPHENYL. The restated collaboration agreement also contains obligations to pay Ucyclyd regulatory and sales milestone payments, as well as royalties on net sales of BUPHENYL. If we fail to make a required payment to Ucyclyd and do not cure the failure within the required time period, Ucyclyd may be able to terminate the license to use its manufacturing technology for RAVICTI and BUPHENYL. If we lose access to the Ucyclyd manufacturing technology, we cannot guarantee that an acceptable alternative method of manufacture could be developed or acquired. Even if alternative technology could be developed or acquired, the loss of the Ucyclyd technology could still result in substantial costs and potential periods where we would not be able to market and sell RAVICTI and/or BUPHENYL. We also license intellectual property necessary for commercialization of RAVICTI from an external party. This party may be entitled to terminate the license if we breach the agreement, including failure to pay required royalties on net sales of RAVICTI, or we do not meet specified diligence obligations in our development and commercialization of RAVICTI, and we do not cure the failure within the required time period. If the license is terminated, it may be difficult or impossible for us to continue to commercialize RAVICTI, which would have a material adverse effect on our business, financial condition and results of operations.

In addition, we are subject to contractual obligations under our agreements with Tripex and PARI related to QUINSAIR. Under the agreement with Tripex, we are required to pursue commercially reasonable efforts to initiate, and subsequently to complete, an additional clinical trial of QUINSAIR in a non-cystic fibrosis patient population within a specified period of time and an obligation to progress toward submitting an NDA for approval of QUINSAIR in the United States for use in all or part of the cystic fibrosis patient population. These obligations are subject to certain exceptions due to, for example, manufacturing delays not under our control, or delays caused by the FDA. If we fail to properly exercise such efforts to initiate and complete an appropriate clinical trial, or fail to submit an NDA for U.S. approval in the cystic fibrosis patient population, during the time periods specified in the agreement, we may be subject to various claims by Tripex and parties affiliated with Tripex. In addition, if we do not spend a minimum amount on QUINSAIR development in each of the three years following our acquisition of Raptor, we may also be obligated to pre-pay a milestone payment related to initiating a clinical trial for QUINSAIR in a non-cystic fibrosis indication. During October 2017, we triggered a milestone payment under this agreement, and we paid Tripex $20.0 million in November 2017. Under the license agreement with PARI, we are required to comply with diligence milestones related to development and commercialization of QUINSAIR in the United States and to spend a specified minimum amount per year on development activities in the United States until submission of the NDA for QUINSAIR in the United States. If we do not comply with these obligations, our licenses to certain intellectual property related to QUINSAIR may become non-exclusive in the United States or could be terminated. We are also subject to contractual obligations under our amended and restated license agreement with U ~~CSD, with respect to PROCYSBI, including obligations to consider engaging in the~~ ~~development of~~ PROCYSBI for the treatment of NASH and related diligence obligations if we undertake such development. Under the amended and restated license agreement with USCD, we also are subject to diligence obligations to identify a third party to undertake development of PROCYSBI for the treatment of Huntington’s disease. To the extent that we fail to perform the diligence obligations under the agreement, UCSD may, with respect to such indication, terminate the license or otherwise cause the license to become non-exclusive. If one or more of these licenses was terminated, we would have no further right to use or exploit the related intellectual property, which would limit our ability to develop PROCYSBI or QUINSAIR in other indications, and could impact our ability to continue commercializing PROCYSBI or QUINSAIR in their approved indications.

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

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

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

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

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

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

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

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

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

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

In addition, the stock market in general, and The NASDAQ Global Select Market and the stock of biotechnology companies in particular, have experienced extreme price and volume fluctuations that have often been unrelated or disproportionate to the operating performance of these companies. Broad market and industry factors may adversely affect the market price of our ordinary shares, regardless of our actual operating performance.

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

We have never declared or paid any cash dividends on our ordinary shares. We currently anticipate that we will retain future earnings for the development, operation and expansion of our business and do not anticipate declaring or paying any cash dividends for the foreseeable future, including due to limitations that are currently imposed by our credit agreement and the indentures governing the 2024 Senior Notes and the 2023 Senior Notes. Any return to shareholders will therefore be limited to the increase, if any, of our ordinary share price.

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

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

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

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

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

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

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

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

~~Irish law differs from the laws in effect in the United States and may afford less protection to holders of our securities.~~

It may not be possible to enforce court judgments obtained in the United States against us in Ireland based on the civil liability provisions of the U.S. federal or state securities laws. In addition, there is some uncertainty as to whether the courts of Ireland would recognize or enforce judgments of U.S. courts obtained against us or our directors or officers based on the civil liabilities provisions of the U.S. federal or state securities laws or hear actions against us or those persons based on those laws. We have been advised that the U.S. currently does not have a treaty with Ireland providing for the reciprocal recognition and enforcement of judgments in civil and commercial matters. Therefore, a final judgment for the payment of money rendered by any U.S. federal or state court based on civil liability, whether or not based solely on U.S. federal or state securities laws, would not automatically be enforceable in Ireland.

As an Irish company, we are governed by the Irish Companies Acts, which differ in some material respects from laws generally applicable to U.S. corporations and shareholders, including, among others, differences relating to interested director and officer transactions and shareholder lawsuits. Likewise, the duties of directors and officers of an Irish company generally are owed to the company only. Shareholders of Irish companies generally do not have a personal right of action against directors or officers of the company and may exercise such rights of action on behalf of the company only in limited circumstances. Accordingly, holders of our securities may have more difficulty protecting their interests than would holders of securities of a corporation incorporated in a jurisdiction of the United States.

~~Provisions of our articles of association could delay or prevent a takeover of us by a third-party.~~

Our articles of association could delay, defer or prevent a third-party from acquiring us, despite the possible benefit to our shareholders, or otherwise adversely affect the price of our ordinary shares. For example, our articles of association:

In certain circumstances, the transfer of shares in an Irish incorporated company will be subject to Irish stamp duty, which is a legal obligation of the buyer. This duty is currently charged at the rate of 1.0 percent of the price paid or the market value of the shares acquired, if higher. Because our ordinary shares are traded on a recognized stock exchange in the United States, an exemption from this stamp duty is available to transfers by shareholders who hold ordinary shares beneficially through brokers which in turn hold those shares through the Depositary Trust Company, or DTC, to holders who also hold through DTC. However, a transfer by or to a record holder who holds ordinary shares directly in his, her or its own name could be subject to this stamp duty. We, in our absolute discretion and insofar as the Companies Acts or any other applicable law permit, may, or may provide that one of our subsidiaries will pay Irish stamp duty arising on a transfer of our ordinary shares on behalf of the transferee of such ordinary shares. If stamp duty resulting from the transfer of ordinary shares which would otherwise be payable by the transferee is paid by us or any of our subsidiaries on behalf of the transferee, then in those circumstances, we will, on our behalf or on behalf of such subsidiary (as the case may be), be entitled to (i) seek reimbursement of the stamp duty from the transferee, (ii) set-off the stamp duty against any dividends payable to the transferee of those ordinary shares and (iii) claim a first and permanent lien on the ordinary shares on which stamp duty has been paid by us or such subsidiary for the amount of stamp duty paid. Our lien shall extend to all dividends paid on those ordinary shares.

In certain circumstances, as an Irish tax resident company, we will be required to deduct Irish dividend withholding tax (currently at the rate of 20%) from dividends paid to our shareholders. Shareholders that are resident in the United States, EU countries (other than Ireland) or other countries with which Ireland has signed a tax treaty (whether the treaty has been ratified or not) generally should not be subject to Irish withholding tax so long as the shareholder has provided its broker, for onward transmission to our qualifying intermediary or other designated agent (in the case of shares held beneficially), or our or its transfer agent (in the case of shares held directly), with all the necessary documentation by the appropriate due date prior to payment of the dividend. However, some shareholders may be subject to withholding tax, which could adversely affect the price of our ordinary shares.

If securities or industry analysts do not publish research or publish inaccurate or unfavorable research about our business, our share price and trading volume could decline.

The trading market for our ordinary shares will depend in part on the research and reports that securities or industry analysts publish about us or our business. If one or more of the analysts who cover us downgrade our rating or publish inaccurate or unfavorable research about our business, our share price could decline. If one or more of these analysts cease coverage of our company or fail to publish reports on our company regularly, demand for our ordinary shares could decrease, which might cause our share price and trading volume to decline.

~~Securities class action litigation could divert our management’s attention and harm our business and could subject us to significant liabilities.~~

The stock markets have from time to time experienced significant price and volume fluctuations that have affected the market prices for the equity securities of pharmaceutical companies. These broad market fluctuations may cause the market price of our ordinary shares to decline. In the past, securities class action litigation has often been brought against a company following a decline in the market price of its securities. This risk is especially relevant for us because biotechnology and biopharmaceutical companies have experienced significant stock price volatility in recent years. For example, following declines in our stock pri ce, two federal securities class action lawsuits were filed in March 2016 against us and certain of our current and former officers alleging violations of the Securities Exchange Act of 1934, as amended. Subsequently, the two actions were consolidated, and ~~plaintiff added claims under the Securities Act and named~~ additional defendants. This consolidated class action (captioned Schaffer v. Horizon Pharma plc, et al., Case No. 1:16-cv-01763) is currently pending in the United States District Court for the Southern District of New York. In November 2016, defendants filed motions to dismiss plaintiffs’ consolidated amended complaint, which are fully briefed but have not yet been decided by the court. Even if we are successful in defending against this action or any similar claims that may be brought in the future, such litigation could result in substantial costs and may be a distraction to our management, and may lead to an unfavorable outcome that could adversely impact our financial condition and prospects.

~~We completed the following issuances of unregistered securities during the three months ended September 30, 2017:~~

# Schedules have been omitted pursuant to Item 601(a)(5) of Regulation S-K. The registrant hereby undertakes to furnish supplemental copies of any of the omitted schedules upon request by the U.S. Securities and Exchange Commission.

* Certain information in this exhibit has been omitted pursuant to Item 601 of Regulation S-K.

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.


Ireland		~~Not Applicable~~98-1195602
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

~~Connaught House, 1st Floor~~70 St. Stephen’s Green ~~1 Burlington Road,~~ Dublin ~~4, D04 C5Y6,~~ 2, D02 E2X4, Ireland		Not Applicable
(Address of principal executive offices)		(Zip Code)


Title of each class	Trading Symbol	Name of each exchange on which registered
Ordinary shares, nominal value $0.0001 per share	HZNP	The Nasdaq Global Select Market


Large accelerated filer	☒	Accelerated filer	☐

Non-accelerated filer	☐ ~~(Do not check if a smaller reporting company)~~	Smaller reporting company	☐

Emerging growth company	☐


		Page
		No.
PART I. FINANCIAL INFORMATION
Item 1.	Financial Statements	31
	Condensed Consolidated Balance Sheets as of ~~September~~June 30, ~~2017~~2023 and as of December 31, ~~2016~~2022 (Unaudited)	31
	Condensed Consolidated Statements of Comprehensive ~~Loss~~Income for the Three and ~~Nine~~Six Months Ended ~~September~~June 30, ~~2017~~2023 and ~~2016~~2022 (Unaudited)	42
	Condensed Consolidated Statements of Shareholders’ Equity for the Three and Six Months Ended June 30, 2023 and 2022 (Unaudited)	3
	Condensed Consolidated Statements of Cash Flows for the ~~Nine~~Three and Six Months Ended ~~September~~June 30, ~~2017~~2023 and ~~2016~~2022 (Unaudited)	54
	Notes to Unaudited Condensed Consolidated Financial Statements	75
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	4526
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	6342
Item 4.	Controls and Procedures	6443
PART II. OTHER INFORMATION
Item 1.	Legal Proceedings	6544
Item 1A.	Risk Factors	6544
Item 2.6.	~~Unregistered Sales of Equity Securities and Use of Proceeds~~Exhibits	~~108~~97
~~Item 6.~~	~~Exhibits~~Signatures	~~109~~
	~~Signatures~~	~~111~~
		99

	For the Nine Months Ended September 30,
	2017		2016
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid for interest	$	74,378	$	39,542
Net cash payments for income taxes		2,054		18,538
Cash paid for debt extinguishment		145		—
SUPPLEMENTAL NON-CASH FLOW INFORMATION:
Purchases of property and equipment included in accounts payable and accrued expenses		45		1,101


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


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


										Additional			Accumulated Other					Total
	Ordinary Shares				Treasury Stock					Paid-in			Comprehensive			Retained		Shareholders’
	Shares		Amount		Shares		Amount			Capital			Income			Earnings		Equity
Balances at December 31, 2022		227,625,913	$	23		384,366	$	(4,585	)	$	4,474,199		$	12,528		$	590,009	$	5,072,174
Issuance of ordinary shares in conjunction with the exercise of stock options and the vesting of restricted stock units and performance stock units		1,334,792		—		—		—			3,421			—			—		3,421
Ordinary shares withheld for payment of employees’ withholding tax liability		—		—		—		—			(87,549	)		—			—		(87,549	)
Share-based compensation		—		—		—		—			58,673			—			—		58,673
Interest rate swap contracts designated as cash flow hedges		—		—		—		—			—			(7,052	)		—		(7,052	)
Pension and other post-employment benefit plan remeasurements		—		—		—		—			—			1,824			—		1,824
Foreign currency translation adjustments		—		—		—		—			—			(615	)		—		(615	)
Net income		—		—		—		—			—			—			54,684		54,684
Balances at March 31, 2023		228,960,705	$	23		384,366	$	(4,585	)	$	4,448,744		$	6,685		$	644,693	$	5,095,560
Issuance of ordinary shares in conjunction with the exercise of stock options and the vesting of restricted stock units and performance stock units		168,967		—		—		—			2,628			—			—		2,628
Issuance of ordinary shares in conjunction with the Employee Share Purchase Plan		193,721		—		—		—			14,912			—			—		14,912
Ordinary shares withheld for payment of employees’ withholding tax liability		—		—		—		—			(4,506	)		—			—		(4,506	)
Share-based compensation		—		—		—		—			60,367			—			—		60,367
Interest rate swap contracts designated as cash flow hedges		—		—		—		—			—			13,339			—		13,339
Pension and other post-employment benefit plan remeasurements		—		—		—		—			—			179			—		179
Foreign currency translation adjustments		—		—		—		—			—			1,409			—		1,409
Net income		—		—		—		—			—			—			127,071		127,071
Balances at June 30, 2023		229,323,393	$	23		384,366	$	(4,585	)	$	4,522,145		$	21,612		$	771,764	$	5,310,959


SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid for interest, net of interest swap payments	$	74,619	$	41,778
Cash paid for income taxes, net of refunds received		19,731		13,216
Cash paid for amounts included in the measurement of operating lease liabilities		6,545		4,312
SUPPLEMENTAL NON-CASH FLOW INFORMATION:
Purchases of property, plant and equipment included in accounts payable and accrued expenses and other current liabilities	$	8,955	$	6,579
Lease liabilities arising from obtaining right-of-use assets		47,844		22,521

	For the Three Months Ended		For the Nine Months Ended
	September 30, 2017		September 30, 2017
Cash proceeds	$	—	$	72,163
Add reimbursement of royalties		—		27,101
Less net assets sold:
Developed technology		—		(47,261	)
Goodwill	—			(16,285	)
Other		—		(24,482	)
Transaction and other costs		112		(5,268	)
Gain on divestiture	$	112	$	5,968

Cash	$	841,494
Net settlements on the exercise of stock options and restricted stock units		19,268
Total consideration	$	860,762

(Liabilities assumed) and assets acquired:	Before			Adjustment			After
Accounts payable	$	(4,572	)	$	—		$	(4,572	)
Accrued expenses		(23,773	)		(240	)		(24,013	)
Accrued trade discounts and rebates		(6,377	)		1,350			(5,027	)
Deferred tax liabilities		(237,166	)		1,743			(235,423	)
Contingent royalty liability		(102,000	)		—			(102,000	)
Accrued royalties		(2,705	)		—			(2,705	)
Other non-current liability		(25,500	)		—			(25,500	)
Cash and cash equivalents		24,897			—			24,897
Restricted cash		1,350			—			1,350
Accounts receivable, net		17,767			—			17,767
Inventories		74,463			—			74,463
Prepaid expenses and other current assets		4,194			—			4,194
Property and equipment		3,373			—			3,373
Developed technology		946,000			—			946,000
Other non-current assets		1,765			—			1,765
Goodwill		189,046			(2,853	)		186,193
Fair value of consideration paid	$	860,762		$	—		$	860,762

Cash	$	536,206
Net settlements on the exercise of stock options and restricted stock units		3,526
Total consideration	$	539,732

(Liabilities assumed) and assets acquired:	Allocation
Accounts payable and accrued expenses	$	(4,543	)
Accrued trade discounts and rebates		(1,424	)
Deferred tax liabilities		(20,141	)
Other non-current liabilities		(6,900	)
Contingent royalty liabilities		(51,300	)
Cash and cash equivalents		24,893
Accounts receivable		10,014
Inventories		149,363
Prepaid expenses and other current assets		1,382
Developed technology		428,200
Other non-current assets		275
Goodwill		9,913
Fair value of consideration paid	$	539,732

	For the Nine Months Ended September 30, 2016
	As reported			Pro forma			Pro forma
				adjustments
Net sales	$	670,770		$	99,571		$	770,341
Net loss		(36,292	)		(112,274	)		(148,566	)

	September 30, 2017		December 31, 2016
Medicine samples inventory	$	13,374	$	10,192
Prepaid income taxes		10,559		9,155
Rabbi trust assets		5,717		3,073
Other prepaid expenses and other current assets		23,275		27,199
Prepaid expenses and other current assets	$	52,925	$	49,619

Balance at December 31, 2016	$	445,579
Divestiture during the period		(16,285	)
Measurement period adjustments		(2,853	)
Balance at September 30, 2017	$	426,441

	September 30, 2017							December 31, 2016
	Cost Basis		Accumulated Amortization			Net Book Value		Cost Basis		Accumulated Amortization			Net Book Value
Developed technology	$	3,115,695	$	(603,283	)	$	2,512,412	$	3,166,695	$	(399,511	)	$	2,767,184
Customer relationships		8,100		(2,457	)		5,643		8,100		(1,849	)		6,251
Total intangible assets	$	3,123,795	$	(605,740	)	$	2,518,055	$	3,174,795	$	(401,360	)	$	2,773,435

2017 (October to December)	$	68,666
2018		274,084
2019		261,092
2020		261,068
2021		253,373
Thereafter		1,399,772
Total	$	2,518,055

	September 30, 2017		December 31, 2016
Accrued wholesaler fees and commercial rebates	$	183,133	$	47,460
Accrued co-pay and other patient assistance		175,991		188,504
Accrued government rebates and chargebacks		76,590		61,592
Accrued trade discounts and rebates		435,714		297,556
Invoiced wholesaler fees and commercial rebates, co-pay and other patient assistance, and government rebates and chargebacks in accounts payable		13,283		16,830
Total customer-related accruals and allowances	$	448,997	$	314,386

	Wholesaler Fees			Co-Pay and			Government
	and Commercial			Other Patient			Rebates and
	Rebates			Assistance			Chargebacks			Total
Balance at December 31, 2016	$	47,651		$	205,143		$	61,592		$	314,386
Measurement period adjustment		—			—			(1,350	)		(1,350	)
Current provisions relating to sales during the nine months ended September 30, 2017		472,118			1,406,614			245,547			2,124,279
Adjustments relating to prior-year sales		5,580			(59	)		(4,904	)		617
Payments relating to sales during the nine months ended September 30, 2017		(288,749	)		(1,230,603	)		(156,118	)		(1,675,470	)
Payments relating to prior-year sales		(53,043	)		(205,084	)		(55,338	)		(313,465	)
Balance at September 30, 2017	$	183,557		$	176,011		$	89,429		$	448,997

Balance as of December 31, 2016	$	334,274
Reclassification to other long-term liabilities		(5,233	)
Remeasurement of royalty liabilities		(2,944	)
Royalty payments		(33,796	)
Accretion expense		38,347
Other royalty expense		297
Balance as of September 30, 2017		330,945
Accrued royalties - current portion as of September 30, 2017		62,273
Accrued royalties, net of current as of September 30, 2017	$	268,672

	Number of Units		Weighted Average Fair Value Per Unit		Average Illiquidity Discount			Recorded Weighted Average Fair Value Per Unit
Executive committee members		8,889,656	$	15.15		18.9	%	$	12.29
Non-executive committee members		2,892,664	13.78			7.3	%		12.77
		11,782,320	$	14.82		16.3	%	$	12.41


	For the Three Months Ended June 30,						Change			Change
	2023			2022			$			%
	(in thousands, except percentages)
Net sales	$	944,959		$	876,411		$	68,548			8	%
Cost of goods sold		219,958			230,216			(10,258	)		(4	)%
Gross profit		725,001			646,195			78,806			12	%
Operating expenses:
Research and development		150,035			103,246			46,789			45	%
Selling, general and administrative		434,125			398,221			35,904			9	%
Impairment of goodwill		—			56,171			(56,171	)		(100	)%
Gain on sale of asset		(2,000	)		—			(2,000	)		(100	)%
Total operating expenses		582,160			557,638			24,522			4	%
Operating income		142,841			88,557			54,284			61	%
Other expense, net:
Interest expense, net		(12,098	)		(21,409	)		9,311			43	%
Foreign exchange gain		326			28			298		NM
Other income (expense), net		4,183			(2,389	)		6,572			275	%
Total other expense, net		(7,589	)		(23,770	)		16,181			68	%
Income before expense for income taxes		135,252			64,787			70,465			109	%
Expense for income taxes		8,181			3,813			4,368			(115	)%
Net income	$	127,071		$	60,974		$	66,097			108	%

	For the Three Months Ended September 30,
	2017			2016			Change
	(in thousands)
Net sales	$	271,646		$	208,702		$	62,944
Cost of goods sold		125,517			85,161			40,356
Gross profit		146,129			123,541			22,588
Operating expenses:
Research and development		17,928			12,814			5,114
Selling, general and administrative		153,952			132,049			21,903
Total operating expenses		171,880			144,863			27,017
Operating loss		(25,751	)		(21,322	)		(4,429	)
Other expense, net:
Interest expense, net		(31,706	)		(19,066	)		(12,640	)
Foreign exchange gain (loss)		275			(108	)		383
Gain on divestiture		112			—			112
Other income, net		280			6,879			(6,599	)
Total other expense, net		(31,039	)		(12,295	)		(18,744	)
Loss before expense (benefit) for income taxes		(56,790	)		(33,617	)		(23,173	)
Expense (benefit) for income taxes		7,181			(27,747	)		34,928
Net loss	$	(63,971	)	$	(5,870	)	$	(58,101	)

	Three Months Ended September 30, 2017					Three Months Ended September 30, 2016
	Amount		% of Total Net Sales			Amount		% of Total Net Sales
United States	$	267,906		99	%	$	204,302		98	%
Rest of world		3,740		1	%		4,400		2	%
Net sales	$	271,646				$	208,702

	Three Months Ended September 30,					Change			Change
	2017		2016			$			%
	(in thousands)
RAVICTI	$	50,972	$	42,176		$	8,796			21	%
PENNSAID 2%		48,262		80,199			(31,937	)		(40	%)
KRYSTEXXA		42,752		25,542			17,210			67	%
PROCYSBI		33,574		—			33,574		*
DUEXIS		31,619		47,615			(15,996	)		(34	%)
ACTIMMUNE		29,175		24,915			4,260			17	%
VIMOVO		15,056		32,839			(17,783	)		(54	%)
RAYOS		14,591		13,419			1,172			9	%
BUPHENYL		3,650		4,341			(691	)		(16	%)
MIGERGOT		1,142		1,154			(12	)		(1	%)
LODOTRA		744		1,502			(758	)		(50	%)
QUINSAIR		109		—			109		*
Litigation settlement		—		(65,000	)		65,000		*
Net sales	$	271,646	$	208,702		$	62,944			30	%


	Three Months Ended June 30, 2023						Three Months Ended June 30, 2022
	Amount			% of Gross Sales			Amount			% of Gross Sales
Gross sales	$	1,240.7			100.0	%	$	1,241.3			100.0	%
Adjustments to gross sales:
Prompt pay discounts		(6.4	)		(0.5	)%		(10.0	)		(0.8	)%
Medicine returns		(9.0	)		(0.7	)%		(7.8	)		(0.6	)%
Co-pay and other patient assistance		(11.6	)		(0.9	)%		(98.8	)		(8.0	)%
Commercial rebates and wholesaler fees		(41.0	)		(3.3	)%		(51.2	)		(4.1	)%
Government rebates and chargebacks		(227.7	)		(18.4	)%		(197.1	)		(15.9	)%
Total adjustments		(295.7	)		(23.8	)%		(364.9	)		(29.4	)%
Net sales	$	945.0			76.2	%	$	876.4			70.6	%

	Three Months Ended September 30, 2017						Three Months Ended September 30, 2016
	Amount			% of Gross Sales			Amount			% of Gross Sales
Gross sales	$	1,002.1			100.0	%	$	865.9			100.0	%
Adjustments to gross sales:
Prompt pay discounts		(19.9	)		(2.0	)%		(16.7	)		(1.9	)%
Medicine returns		(10.0	)		(1.0	)%		(9.1	)		(1.1	)%
Co-pay and other patient assistance		(449.2	)		(44.8	)%		(458.4	)		(52.9	)%
Wholesaler fees and commercial rebates		(168.4	)		(16.8	)%		(30.2	)		(3.5	)%
Government rebates and chargebacks		(83.0	)		(8.3	)%		(77.8	)		(9.0	)%
Litigation settlement		—			—			(65.0	)		(7.5	)%
Total adjustments		(730.5	)		(72.9	)%		(657.2	)		(75.9	)%
Net sales	$	271.6			27.1	%	$	208.7			24.1	%

	For the Nine Months Ended September 30,
	2017			2016			Change
	(in thousands)
Net sales	$	782,012		$	670,770		$	111,242
Cost of goods sold		394,783			243,520			151,263
Gross profit		387,229			427,250			(40,021	)
Operating expenses:
Research and development		194,090			36,746			157,344
Selling, general and administrative		509,940			407,563			102,377
Total operating expenses		704,030			444,309			259,721
Operating loss		(316,801	)		(17,059	)		(299,742	)
Other expense, net:
Interest expense, net		(95,297	)		(57,752	)		(37,545	)
Foreign exchange gain (loss)		167			(266	)		433
Gain on divestiture		5,968			—			5,968
Loss on debt extinguishment		(533	)		—			(533	)
Other income, net		280			6,839			(6,559	)
Total other expense, net		(89,415	)		(51,179	)		(38,236	)
Loss before benefit for income taxes		(406,216	)		(68,238	)		(337,978	)
Benefit for income taxes		(42,138	)		(31,946	)		(10,192	)
Net loss	$	(364,078	)	$	(36,292	)	$	(327,786	)

	Nine Months Ended September 30, 2017					Nine Months Ended September 30, 2016
	Amount		% of Total Net Sales			Amount		% of Total Net Sales
United States	$	757,805		97	%	$	660,608		98	%
Rest of world		24,207		3	%		10,162		2	%
Total Net Sales	$	782,012				$	670,770

	Nine Months Ended September 30,					Change			Change
	2017		2016			$			%
	(in thousands)
RAVICTI	$	142,086	$	118,599		$	23,487			20	%
PENNSAID 2%		141,094		207,857			(66,763	)		(32	%)
KRYSTEXXA		112,667		61,570			51,097			83	%
PROCYSBI		104,533		—			104,533		*
DUEXIS		92,951		122,780			(29,829	)		(24	%)
ACTIMMUNE		84,196		80,465			3,731			5	%
VIMOVO		41,069		89,710			(48,641	)		(54	%)
RAYOS		36,492		36,062			430			1	%
BUPHENYL		16,205		12,134			4,071			34	%
MIGERGOT		3,995		3,196			799			25	%
LODOTRA		3,417		3,397			20			1	%
QUINSAIR		3,307		—			3,307		*
Litigation settlement		—		(65,000	)		65,000		*
Total Net Sales	$	782,012	$	670,770		$	111,242			17	%


	Six Months Ended June 30, 2023						Six Months Ended June 30, 2022
	Amount			% of Gross Sales			Amount			% of Gross Sales
Gross sales	$	2,347.7			100.0	%	$	2,472.8			100.0	%
Adjustments to gross sales:
Prompt pay discounts		(13.1	)		(0.6	)%		(20.2	)		(0.8	)%
Medicine returns		(15.9	)		(0.7	)%		(12.2	)		(0.5	)%
Co-pay and other patient assistance		(44.2	)		(1.9	)%		(183.6	)		(7.4	)%
Commercial rebates and wholesaler fees		(79.1	)		(3.4	)%		(102.4	)		(4.2	)%
Government rebates and chargebacks		(418.4	)		(17.8	)%		(392.7	)		(15.9	)%
Total adjustments		(570.7	)		(24.4	)%		(711.1	)		(28.8	)%
Net sales	$	1,777.0			75.6	%	$	1,761.7			71.2	%


Exhibit Number		Description of Document

~~2.1~~⁽¹⁾ 2.1#		Transaction Agreement, ~~and Plan of Merger,~~ dated ~~March 18, 2014,~~December 11, 2022, by and among ~~Horizon Pharma,~~Amgen Inc., ~~Vidara~~Pillartree Limited and Horizon Therapeutics ~~Holdings LLC, Vidara Therapeutics International Ltd. (now known as Horizon Pharma~~ Public Limited ~~Company), Hamilton Holdings (USA), Inc. and Hamilton Merger Sub, Inc~~.^†

~~2.2~~⁽²⁾		~~First Amendment~~Company (incorporated by reference to ~~Transaction Agreement and Plan of Merger, dated June~~Exhibit 2.1 to Horizon Therapeutics Public Limited Company’s Current Report on Form 8-K, filed on December 12, ~~2014, by and between Horizon Pharma, Inc. and Vidara Therapeutics Holdings LLC~~2022).

~~2.3~~⁽³⁾ 2.2		~~Agreement and Plan~~Appendix 3 to the Rule 2.7 Announcement, dated as of ~~Merger, dated March 29, 2015,~~December 12, 2022 (Conditions Appendix) (incorporated by ~~and among~~reference to Exhibit 2.2 to Horizon ~~Pharma, Inc., Ghrian Acquisition Inc. and Hyperion~~ Therapeutics ~~Inc~~Public Limited Company’s Current Report on Form 8-K, filed on December 12, 2022).^†

~~2.4~~⁽⁴⁾^* 3.1		~~Agreement and Plan of Merger, dated December 10, 2015, by and among Horizon Pharma USA, Inc., HZNP Limited, Criostail LLC, Crealta Holdings LLC and the other parties thereto~~.^††

~~2.5~~⁽⁵⁾		~~Agreement and Plan of Merger, dated September 12, 2016, by and among Horizon Pharma Public Limited Company, Misneach Corporation and Raptor Pharmaceutical Corp~~.^†

~~3.1~~⁽⁶⁾		Memorandum and Articles of Association of Horizon ~~Pharma~~Therapeutics Public Limited Company, as amended (incorporated by reference to Exhibit 3.1 to Horizon Therapeutics Public Limited Company’s Quarterly Report on Form 10-Q, filed on May 8, 2019).

4.1⁽⁷⁾		Indenture dated ~~March 13, 2015, by and among Horizon Pharma Public Limited Company, Horizon Pharma Investment Limited and U.S. Bank National Association~~.

~~4.2~~⁽⁷⁾		~~Form~~as of ~~2.50% Exchangeable Senior Note due 2022 (included in Exhibit 4.1).~~

~~4.3~~⁽⁸⁾		~~Indenture, dated April 29, 2015,~~July 16, 2019 by and between Horizon ~~Pharma Financing Inc. and U.S. Bank National Association~~.

~~4.4~~⁽⁸⁾		~~Form of 6.625% Senior Note due 2023 (included in Exhibit 4.3).~~

~~4.5~~⁽⁹⁾		~~First Supplemental Indenture, dated May 7, 2015, by and among Horizon Pharma Public Limited Company, certain subsidiaries of Horizon Pharma Public Limited Company and U.S. Bank National Association.~~

~~4.6~~⁽¹⁰⁾		~~Indenture, dated October 25, 2016, by and among Horizon Pharma,~~Therapeutics USA, Inc., ~~Horizon Pharma USA, Inc.~~the guarantors party thereto and U.S. Bank National Association, as trustee (incorporated by reference to Exhibit 4.1 to Horizon Therapeutics Public Limited Company’s Current Report on Form 8-K, filed on July 16, 2019).

~~4.7~~⁽¹⁰⁾ 4.2		Form of ~~8.75%~~5.500% Senior Note due ~~2024 (included in~~2027 (incorporated by reference to Exhibit ~~4.6)~~4.1 to Horizon Therapeutics Public Limited Company’s Current Report on Form 8-K, filed on July 16, 2019).

~~10.1~~⁽¹¹⁾ 4.3		First Supplemental Indenture, dated November 19, 2019, by and between HZNP Finance Limited and U.S. Bank National Association (incorporated by reference to Exhibit 4.5 to Horizon ~~Pharma~~Therapeutics Public Limited ~~Company 2014 Equity Incentive Plan, as amended, and~~Company’s Quarterly Report on Form ~~of Option Agreement, Form of Stock Option Grant Notice, Form of Restricted Stock Unit Agreement and Form of Restricted Stock Unit Grant Notice thereunder.~~10-Q, filed on May 6, 2020).
4.4
~~10.2+~~		~~Executive Employment Agreement, effective as of September 11, 2017,~~Second Supplemental Indenture, dated April 23, 2020, by and among Horizon ~~Pharma, Inc., Horizon Pharma USA,~~Properties Holding LLC, Curzion Pharmaceuticals, Inc. and ~~Irina Konstantinovsky.~~U.S. Bank National Association (incorporated by reference to Exhibit 4.6 to Horizon Therapeutics Public Limited Company’s Quarterly Report on Form 10-Q, filed on May 6, 2020).

~~10.3+~~ 4.5		~~Executive Employment Agreement, effective as of August 21, 2017,~~Third Supplemental Indenture, dated March 15, 2021, by and ~~among Horizon Pharma, Inc., Horizon Pharma USA,~~between Viela Bio, Inc. and ~~Eric Mosbrooker.~~U.S. Bank National Association (incorporated by reference to Exhibit 4.5 to Horizon Therapeutics Public Limited Company’s Quarterly Report on Form 10-Q, filed on May 5, 2021).

~~10.4~~⁽¹²⁾ 10.1*		Amendment No. 3,10 to the License Agreement, dated ~~October 23, 2017,~~May 22, 2023, by and among F. Hoffmann-La Roche Ltd, Hoffman-La Roche Inc. and Horizon Therapeutics Ireland DAC (as successor in interest to River Vision Development Corp).

10.2		Amendment No. 10, dated June 16, 2023, to the Credit Agreement, dated May 7, 2015, ~~(as~~as amended, ~~by Amendment No. 1, dated October 25, 2016, and Amendment No. 2, dated March 29, 2017),~~ by and among Horizon ~~Pharma,~~Therapeutics USA, Inc., as Borrower, Horizon ~~Pharma USA, Inc., as an Additional Borrower, Horizon Pharma~~Therapeutics Public Limited Company, as Irish Holdco and a guarantor, the subsidiary guarantors party thereto, as subsidiary guarantors, the lenders party thereto and Citibank, N.A., as administrative agent and collateral agent.

31.1		Certification of Principal Executive Officer pursuant to Rule 13a-14(a) or 15d-14(a) of the Exchange Act.

31.2		Certification of Principal Financial Officer pursuant to Rule 13a-14(a) or 15d-14(a) of the Exchange Act.
32.1
~~32.1~~		Certification of Principal Executive Officer pursuant to Rule 13a-14(b) or 15d-14(b) of the Exchange Act and 18 U.S.C. Section 1350.

32.2		Certification of Principal Financial Officer pursuant to Rule 13a-14(b) or 15d-14(b) of the Exchange Act and 18 U.S.C. Section 1350.


101. INS		Inline XBRL Instance Document – the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document

~~101.INS~~101.SCH		~~XBRL Instance Document~~

~~101.SCH~~		Inline XBRL Taxonomy Extension Schema Document

101.CAL		Inline XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF		Inline XBRL Taxonomy Extension Definition Linkbase Document

101.LAB		Inline XBRL Taxonomy Extension Label Linkbase Document

101.PRE		Inline XBRL Taxonomy Extension Presentation Linkbase Document

104		Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)