`
`
`
`
`Commission
`File Number
`001-36867
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`
`
`
`001-36887
`
`UNITED STATES
`SECURITIES AND EXCHANGE COMMISSION
`Washington, D.C. 20549
`Form 10-K
`⌧ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
`For the fiscal year ended December 31, 2015
`OR
`(cid:134) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
`For the transition period from to
`Exact name of registrant as specified in its charter,
`State of incorporation
`principal office and address and telephone number
`or organization
`
`Allergan plc
`Ireland
`Clonshaugh Business and Technology Park
`Coolock, Dublin, D17 E400, Ireland
`(862) 261-7000
`Warner Chilcott Limited
`Cannon’s Court 22
`Victoria Street
`Hamilton HM 12
`Bermuda
`(441) 295-2244
`Securities registered pursuant to Section 12(b) of the Act:
`Name of Each Exchange on Which Registered
`New York Stock Exchange
`New York Stock Exchange
`New York Stock Exchange
`
`
`
`
`
`
`
`
`
`
`
`Bermuda
`
`
`
`
`
`
`
`
`
`I.R.S. Employer
`Identification No.
`98-1114402
`
`98-0496358
`
`
`
`
`
`
`
`
`
`Title of Each Class
`Allergan plc Ordinary Shares, $0.0001 par value
`Allergan plc 5.500% Mandatory Convertible Preferred Shares, Series A, par value of $0.0001
`Actavis Funding SCS $500,000,000 Floating Rate Notes due 2016*
`*Notes issued by Actavis Funding SCS and guaranteed by Warner Chilcott Limited
`Securities registered pursuant to Section 12(g) of the Act:
`None
`Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
` Allergan plc
`
`Yes ⌧
`
`Yes ⌧
`Warner Chilcott Limited
`Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.
` Allergan plc
`No ⌧
`
`Yes (cid:133)
`No ⌧
`
`Yes (cid:133)
`Warner Chilcott Limited
`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:
` Allergan plc
`
`Yes ⌧
`No (cid:133)
`
`Yes ⌧
`No (cid:133)
`Warner Chilcott Limited
`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).
` Allergan plc
`
`Yes ⌧
`No (cid:133)
`
`Yes ⌧
`No (cid:133)
`Warner Chilcott Limited
`Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§ 229.405 of this chapter) is not contained herein, and will not be contained, to
`the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.
` Allergan plc
` (cid:133)
`
` ⌧
`
`Warner Chilcott Limited
`Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of
`“large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):
` Allergan plc
`Large accelerated filer
`
`Non-accelerated filer (Do not check if a smaller reporting company)
`Warner Chilcott Limited
`Large accelerated filer
`
`Non-accelerated filer (Do not check if a smaller reporting company)
`Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).
`No ⌧
`Allergan plc
`
`Yes (cid:133)
`No ⌧
`
`Yes (cid:133)
`Warner Chilcott Limited
`The aggregate market value of the voting and non-voting stock held by non-affiliates of Allergan plc as of June 30, 2015, based upon the last sale price reported for such
`date on the New York Stock Exchange, was $119.0 billion. The calculation of the aggregate market value of voting and non-voting stock excludes Class A ordinary shares of
`Allergan plc held by executive officers, directors, and stockholders that the registrant concluded were affiliates of Allergan plc on that date.
`Number of shares of Allergan plc’s Ordinary Shares outstanding on February 15, 2016: 394,687,384
`This Annual Report on Form 10-K is a combined report being filed separately by two different registrants: Allergan plc and Warner Chilcott Limited. Warner Chilcott
`Limited is an indirect wholly owned subsidiary of Allergan plc. The information in this Annual Report on Form 10-K is equally applicable to Allergan plc and Warner Chilcott
`Limited, except where otherwise indicated. Warner Chilcott Limited meets the conditions set forth in General Instruction H(1)(a) and (b) of Form 10-K and, to the extent
`applicable, is therefore filing this form with a reduced disclosure format.
`DOCUMENTS INCORPORATED BY REFERENCE
`Certain information required by Part III of this Annual Report on Form 10-K (“Annual Report”) is incorporated by reference from the Allergan plc proxy statement to be
`filed pursuant to Regulation 14A with respect to the Registrant’s Annual Meeting of Shareholders to be held on or about May 5, 2016.
`
`
`
`No (cid:134)
`No (cid:133)
`
`⌧ Accelerated filer
`(cid:134) Smaller reporting company
`(cid:134) Accelerated filer
`⌧ Smaller reporting company
`
`(cid:134)
`(cid:134)
`(cid:134)
`(cid:134)
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`MYLAN - EXHIBIT 1063
`Mylan Pharmaceuticals Inc. et al. v. Allergan, Inc.
`IPR2016-01127, -01128, -01129, -01130, -01131, & -01132
`
`

`

`
`
`ALLERGAN PLC
`WARNER CHILCOTT LIMITED
`TABLE OF CONTENTS
`FORM 10-K FOR THE YEAR ENDED DECEMBER 31, 2015
`
`
`
`
`
`PART I
`ITEM 1. Business ...................................................................................................................................................................
`ITEM 1A. Risk Factors .............................................................................................................................................................
`ITEM 1B. Unresolved Staff Comments ....................................................................................................................................
`ITEM 2.
`Properties .................................................................................................................................................................
`ITEM 3.
`Legal Proceedings ....................................................................................................................................................
`ITEM 4. Mine Safety Disclosures ..........................................................................................................................................
`PART II
`ITEM 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity
`Securities .............................................................................................................................................................
`ITEM 6.
`Selected Financial Data ............................................................................................................................................
`ITEM 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations ...................................
`ITEM 7A. Quantitative and Qualitative Disclosures About Market Risk .................................................................................
`ITEM 8.
`Financial Statements and Supplementary Data ........................................................................................................
`ITEM 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure ..................................
`ITEM 9A. Controls and Procedures ...........................................................................................................................................
`ITEM 9B. Other Information .....................................................................................................................................................
`PART III
`ITEM 10. Directors and Executive Officers of the Registrant .................................................................................................
`ITEM 11. Executive Compensation .........................................................................................................................................
`ITEM 12. Security Ownership of Certain Beneficial Owners and Management ......................................................................
`ITEM 13. Certain Relationships and Related Transactions ......................................................................................................
`ITEM 14. Principal Accounting Fees and Services ..................................................................................................................
`PART IV
`ITEM 15. Exhibits, Financial Statement Schedules .................................................................................................................
`
`SIGNATURES.........................................................................................................................................................
`
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`PAGE
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`3
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`55
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`100
`102
`102
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`104
`104
`104
`104
`104
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`105
`106
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`2
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`
`ITEM 1. BUSINESS
`Explanatory Note
`This Annual Report on Form 10-K is a combined annual report being filed separately by two registrants: Allergan plc and its
`indirect wholly-owned subsidiary, Warner Chilcott Limited. Each registrant hereto is filing on its own behalf all the information
`contained in this annual report that relates to such registrant. Each registrant hereto is not filing any information that does not relate to
`such registrant, and therefore makes no representations as to any such information.
`
`Company History
`Allergan plc (formerly known as Actavis plc) was incorporated in Ireland on May 16, 2013 as a private limited company and re-
`registered effective September 20, 2013 as a public limited company. It was established for the purpose of facilitating the business
`combination between Actavis, Inc. and Warner Chilcott plc (“Warner Chilcott”). On October 1, 2013, pursuant to the transaction
`agreement dated May 19, 2013 among Actavis, Inc., Warner Chilcott, Allergan plc, Actavis Ireland Holding Limited, Actavis W.C.
`Holding LLC (now known as Actavis W.C. Holding Inc.) and Actavis W.C. Holding 2 LLC (now known as Actavis W.C. Holding 2
`Inc.) (“MergerSub”), (i) the Company acquired Warner Chilcott (the “Warner Chilcott Acquisition”) pursuant to a scheme of
`arrangement under Section 201, and a capital reduction under Sections 72 and 74, of the Irish Companies Act of 1963 where each
`Warner Chilcott ordinary share was converted into 0.160 of an Allergan plc ordinary share (the “Company Ordinary Shares”), or
`$5,833.9 million in equity consideration, and (ii) MergerSub merged with and into Actavis, Inc., with Actavis, Inc. as the surviving
`corporation in the merger (the “Merger” and, together with the Warner Chilcott Acquisition, the “Transactions”). Following the
`consummation of the Transactions, Actavis, Inc. and Warner Chilcott became wholly-owned subsidiaries of Allergan plc. Each of
`Actavis, Inc.’s common shares was converted into one Company Ordinary Share. Effective October 1, 2013, through a series of
`related-party transactions, Allergan plc contributed its indirect subsidiaries, including Actavis, Inc., to Warner Chilcott Limited.
`
`On March 17, 2015, the Company acquired Allergan, Inc. (“Legacy Allergan”) for approximately $77.0 billion including
`outstanding indebtedness assumed of $2.2 billion, cash consideration of $40.1 billion and equity consideration of $34.7 billion, which
`includes outstanding equity awards (the “Allergan Acquisition”). Under the terms of the agreement, Legacy Allergan shareholders
`received 111.2 million of the Company’s ordinary shares, 7.0 million of the Company’s non-qualified stock options and 0.5 million of
`the Company’s share units. The addition of Legacy Allergan’s therapeutic franchises in ophthalmology, neurosciences and medical
`aesthetics/dermatology/plastic surgery complements the Company’s existing central nervous system, gastroenterology, women’s
`health and urology franchises. The combined company benefits from Legacy Allergan’s global brand equity and consumer awareness
`of key products, including Botox® and Restasis®. The transaction expanded our presence and market and product reach across many
`international markets, with strengthened commercial positions across Canada, Europe, Southeast Asia and other high-value growth
`markets, including China, India, the Middle East and Latin America.
`
`In connection with the Allergan Acquisition, the Company changed its name from Actavis plc to Allergan plc. Actavis plc’s
`ordinary shares were traded on the NYSE under the symbol “ACT” until the opening of trading on June 15, 2015, at which time
`Actavis plc changed its corporate name to “Allergan plc” and changed its ticker symbol to “AGN.” Pursuant to Rule 12g-3(c) under
`the Securities Exchange Act of 1934, as amended (the “Exchange Act”), Allergan plc is the successor issuer to Actavis plc’s ordinary
`shares and Actavis plc’s mandatory convertible preferred shares, both of which are deemed to be registered under Section 12(b) of the
`Exchange Act, and Allergan plc is subject to the informational requirements of the Exchange Act, and the rules and regulations
`promulgated thereunder.
`
`References throughout to “we,” “our,” “us,” the “Company” or “Allergan” refer to financial information and transactions of
`Watson Pharmaceuticals, Inc. prior to January 23, 2013, Actavis, Inc. from January 23, 2013 until October 1, 2013 and Allergan plc
`and Warner Chilcott Limited subsequent to October 1, 2013.
`
`References throughout to “Ordinary Shares” refer to Actavis, Inc.’s Class A common shares, par value $0.0033 per share, prior
`to the consummation of the Transactions and to Allergan plc’s ordinary shares, par value $0.0001 per share, since the consummation
`of the Transactions.
`
`
`On July 26, 2015, Allergan plc entered into a master purchase agreement (the “Teva Agreement”), under which Teva
`Pharmaceutical Industries Ltd. (“Teva”) agreed to acquire the Company’s global generic pharmaceuticals business and certain other
`assets (the “Teva Transaction”). Under the Teva Agreement, upon the closing of the Teva Transaction, we will receive $33.75 billion
`in cash and 100.3 million Teva ordinary shares (or American Depository Shares with respect thereto), which approximates $6.75
`billion in Teva stock using the then-current stock price at the time the Teva Transaction was announced, in exchange for which Teva
`will acquire our global generics business, including the United States (“U.S.”) and international generic commercial units, our third-
`party supplier Medis, our global generic manufacturing operations, our global generic R&D unit, our international over-the-counter
`(OTC) commercial unit (excluding OTC eye care products) and some established international brands. We continue to work toward
`
`3
`
`

`

`
`satisfying all conditions in order to close by the end of the first quarter of 2016; however, it is possible that closing could slip beyond
`the end of the first quarter. As a result of the transaction, and in accordance with Financial Accounting Standards Board (“FASB”)
`Accounting Standards Update (“ASU”) number 2014-08 “Presentation of Financial Statements (Topic 205) and Property, Plant and
`Equipment (Topic 360): Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity,” the Company
`is accounting for the assets and liabilities to be divested as held for sale. Further, the financial results of the business held for sale
`have been reclassified to discontinued operations for all periods presented in our consolidated financial statements.
`
`On November 23, 2015, the Company announced that it entered into a definitive merger agreement (the “Pfizer Agreement”)
`under which Pfizer Inc. (“Pfizer”), a global innovative biopharmaceutical company, and Allergan plc will merge in a stock and cash
`transaction (the “Pfizer Transaction”), which attributes a $160.0 billion enterprise valuation using the then-current stock price at the
`time the Pfizer Transaction was announced. Company shareholders will receive 11.3 shares of the combined company ordinary shares
`for each of their existing Allergan shares and Pfizer stockholders will receive in respect of each share of Pfizer common stock held by
`them, at their election and subject to certain proration procedures described in the Pfizer Agreement, either one share of the combined
`company or an amount in cash equal to the volume weighted average price per share of Pfizer common stock on the New York Stock
`Exchange (“NYSE”) on the trading day immediately preceding the date of the consummation of the Pfizer Transaction. The Pfizer
`Transaction is anticipated to close in the second half of 2016.
`
`Except where otherwise indicated, and excluding certain insignificant cash and non-cash transactions at the Allergan plc level,
`the consolidated financial statements and disclosures are for two separate registrants, Allergan plc and Warner Chilcott Limited. The
`results of Warner Chilcott Limited are consolidated into the results of Allergan plc. Due to the deminimis activity between Allergan
`plc and Warner Chilcott Limited, references throughout this document relate to both Allergan plc and Warner Chilcott Limited. Refer
`to “Note 3 —Reconciliation of Warner Chilcott Limited results to Allergan plc results” in the accompanying “Notes to the
`Consolidated Financial Statements” in this document for a summary of the details on the differences between Allergan plc and Warner
`Chilcott Limited.
`
`This discussion contains forward-looking statements that are subject to known and unknown risks, uncertainties and other
`factors that may cause our actual results to differ materially from those expressed or implied by such forward-looking statements.
`These risks, uncertainties and other factors include, among others, those identified under “Risk Factors” in this Annual Report and in
`other reports we have filed with the U.S. Securities and Exchange Commission (“SEC”).
`
`Business Overview
`Allergan plc is a global specialty pharmaceutical company engaged in the development, manufacturing, marketing, and
`distribution of brand name pharmaceutical products (“brand”, “branded” or “specialty brand”), medical aesthetics, biosimilar and
`over-the-counter (“OTC”) pharmaceutical products. The Company has operations in more than 100 countries. Warner Chilcott
`Limited is an indirect wholly-owned subsidiary of Allergan plc and has the same principal business activities. As a result of the
`Allergan Acquisition which closed on March 17, 2015, the Company expanded its franchises to include ophthalmology, neurosciences
`and medical aesthetics/dermatology/plastic surgery, which complements the Company’s existing central nervous system,
`gastroenterology, women’s health and urology franchises. The combined company benefits significantly from Legacy Allergan’s
`global brand equity and consumer awareness of key products, including Botox® and Restasis®. The Allergan Acquisition expanded
`our presence and market and product reach across many international markets, with strengthened commercial positions across Canada,
`Europe, Southeast Asia and other high-value growth markets, including China, India, the Middle East and Latin America.
`
`The results of our discontinued operations includes the results of our generic product development, manufacturing and
`distribution of off-patent pharmaceutical products, established international brands marketed similar to generic products and out-
`licensed generic pharmaceutical products primarily in Europe through our Medis third-party business.
`
`Allergan plc’s principal executive offices are located at Clonshaugh Business and Technology Park, Coolock, Dublin, Ireland
`and our administrative headquarters are located at Morris Corporate Center III, 400 Interpace Parkway, Parsippany, NJ 07054. Our
`Internet website address is www.allergan.com. We do not intend this website address to be an active link or to otherwise incorporate
`by reference the contents of the website into this report. Our annual reports on Form 10-K, quarterly reports on Form 10-Q and current
`reports on Form 8-K, and all amendments thereto, are available free of charge on our Internet website. These reports are posted on our
`website as soon as reasonably practicable after such reports are electronically filed with the SEC. The public may read and copy any
`materials that we file with the SEC at the SEC’s Public Reference Room at 100 F Street, NE, Washington DC 20549 or electronically
`through the SEC website (www.sec.gov). The information contained on the SEC’s website is not incorporated by reference into this
`Form 10-K and should not be considered to be part of this Form 10-K. Information may be obtained regarding the operation of the
`Public Reference Room by calling the SEC at 1-800-SEC-0330. Within the Investors section of our website, we provide information
`concerning corporate governance, including our Corporate Governance Guidelines, Board Committee Charters and Composition,
`Code of Conduct and other information. Refer to “ITEM 1A. RISK FACTORS-CAUTIONARY NOTE REGARDING FORWARD-
`LOOKING STATEMENTS” in this document.
`
`4
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`

`

`
`Business Development
`2015 Significant Business Developments
`The following are the material transactions that were completed in the year ended December 31, 2015.
`
`Acquisitions
`AqueSys
`On October 16, 2015, the Company acquired AqueSys, Inc. (“AqueSys”), a private, clinical-stage medical device company
`focused on developing ocular implants that reduce intraocular pressure (“IOP”) associated with glaucoma, in an all-cash transaction.
`Under the terms of the agreement, the Company acquired AqueSys for an acquisition accounting purchase price of $298.9 million,
`including $193.5 million for the estimated fair value of contingent consideration relating to the regulatory approval and
`commercialization milestone payments. The Company acquired AqueSys for the lead development program, including XEN45, a soft
`shunt that is implanted in the sub conjunctival space in the eye through a minimally invasive procedure with a single use, pre-loaded
`proprietary injector (the “AqueSys Acquisition”).
`
`Northwood Medical Innovation
`On October 1, 2015, the Company acquired Northwood Medical Innovation Ltd., developer of innovative implant technology,
`earFold™, which is being accounted for as a business acquisition. earFold™ is a medical device for the correction of prominent ears,
`with or without asymmetry, in patients aged 7 years and older. earFold™ received a Conformité Européene (“CE”) mark in April
`2015, and has been made available by Northwood Medical Innovation Ltd to trained and accredited plastic surgeons, otolaryngologists
`(Ear, Nose and Throat) and maxillo-facial surgeons, primarily in the United Kingdom (“UK”). The Company acquired Northwood
`Medical Innovation Ltd. for acquisition accounting purchase price consideration of $25.5 million (the “Northwood Acquisition”),
`including $15.0 million of contingent consideration.
`
`Kythera
`On October 1, 2015, the Company acquired Kythera Biopharmaceuticals (“Kythera”), for $75 per share, or an acquisition
`accounting purchase price of $2,089.5 million (the “Kythera Acquisition”). Kythera was focused on the discovery, development and
`commercialization of novel prescription aesthetic products. Kythera’s lead product, Kybella® injection, is the first and only United
`States Food and Drug Administration (“FDA”) approved, non-surgical treatment for moderate to severe submental fullness,
`commonly referred to as double chin.
`
`Oculeve
`On August 10, 2015, the Company acquired Oculeve, Inc. (“Oculeve”), a development-stage medical device company focused
`on developing novel treatments for dry eye disease. Under the terms of the agreement, Allergan acquired Oculeve for an acquisition
`accounting purchase price of $134.5 million (the “Oculeve Acquisition”), including $90.0 million for the estimated fair value of
`contingent consideration of which the Company may owe up to $300.0 million in future payments. The Company acquired Oculeve
`and its lead product candidate OD-01, an intranasal neurostimulation device, as well as other dry eye products in development.
`
`Auden Mckenzie
`On May 29, 2015 the Company acquired Auden Mckenzie Holdings Limited (“Auden”), a company specializing in the
`development, licensing and marketing of niche generic medicines and proprietary brands in the United Kingdom (“UK”) and across
`Europe for approximately 323.7 million British Pounds, or $495.9 million (the “Auden Acquisition”). The assets and liabilities
`acquired, as well as the results of operations for the acquired Auden business are part of the assets being divested in the Teva
`Transaction and are included as a component of income from discontinued operations. In addition the acquired financial position is
`included in assets and liabilities held for sale.
`
`Allergan
`On March 17, 2015, the Company completed the Allergan Acquisition. The addition of Legacy Allergan’s therapeutic
`franchises in ophthalmology, neurosciences and medical aesthetics/dermatology/plastic surgery complements the Company’s existing
`central nervous system, gastroenterology, women’s health and urology franchises. The combined company benefited from Legacy
`Allergan’s global brand equity and consumer awareness of key products, including Botox® and Restasis®. The transaction also
`expanded our presence and market and product reach across many international markets, with strengthened commercial positions
`across Canada, Europe, Southeast Asia and other high-value growth markets, including China, India, the Middle East and Latin
`America.
`
`5
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`

`

`
`Licenses and Asset Acquisitions
`Mimetogen
`On November 4, 2015, the Company entered into an exclusive licensing agreement with Mimetogen Pharmaceuticals
`(“Mimetogen”), a clinical stage biotechnology company, to develop and commercialize tavilermide (MIM-D3), a topical formulation
`of a novel small molecule TrkA agonist for the treatment of dry eye disease, in exchange for an upfront payment of $50.0 million to
`Mimetogen, which is included as a component of research and development (“R&D”) expenses in the year ended December 31, 2015.
`Mimetogen will be entitled to receive potential milestones based on achieving regulatory approval and predefined labeling of the
`product. In addition, Mimetogen is entitled to receive one-time annual sales based milestone payments based on multiple pre-defined
`annual net sales thresholds which may or may not be achieved, and tiered royalties based on net sales to third parties of the licensed
`products (the “Mimetogen Transaction”). The Company concluded based on the stage of development of the assets, the lack of
`acquired employees and manufacturing as well as certain other inputs and processes that the transaction did not qualify as a business.
`
`Almirall
`On October 27, 2015, the Company and Ironwood Pharmaceuticals, Inc. announced that Allergan has acquired rights to
`Constella® (linaclotide) in the European Union, Switzerland, Turkey and the Commonwealth of Independent States from Almirall,
`S.A. and has also reacquired rights to Linzess® (linaclotide) in Mexico from Almirall for €60.0 million. The consideration was
`accounted for as an asset acquisition and included as a component of intangible assets. The Company concluded based on the lack of
`acquired employees and the lack of certain other inputs and processes that the transaction did not qualify as a business.
`
`Naurex
`On August 28, 2015, the Company acquired certain products in early stage development of Naurex, Inc. (“Naurex”) in an all-
`cash transaction of $571.7 million (the “Naurex Transaction”), plus future contingent payments up to $1,150.0 million, which was
`accounted for as an asset acquisition. The Company recognized the upfront consideration of $571.7 million as a component of R&D
`expenses in the year ended December 31, 2015. The Company concluded based on the stage of development of the assets, the lack of
`acquired employees and manufacturing as well as certain other inputs and processes that the transaction did not qualify as a business.
`The Naurex Transaction expands our pipeline with Naurex’s two leading product candidates GLYX-13 and NRX-1074, two
`compounds that utilize NMDA modulation as a potential new approach to the treatment of Major Depressive Disorder (“MDD”), a
`disease that can lead to suicidality among the most severe patients.
`
`Migraine License
`On August 17, 2015, the Company entered into an agreement with Merck & Co. (“Merck”) under which the Company acquired
`the exclusive worldwide rights to Merck’s early development stage investigational small molecule oral calcitonin gene-related peptide
`receptor antagonists, which are being developed for the treatment and prevention of migraines (the “Merck Transaction”). The
`transaction is being accounted for as an asset acquisition. The Company acquired these rights for an upfront charge of $250.0 million
`which was recognized as a component of R&D expenses in the year ended December 31, 2015. The Company concluded based on the
`stage of development of the assets, the lack of acquired employees and manufacturing as well as certain other inputs and processes
`that the transaction did not qualify as a business. The Company paid $125.0 million in the year ended December 31, 2015 and the
`remaining $125.0 million is payable on April 30, 2016. Additionally, Merck is owed contingent payments based on commercial and
`development milestones of up to $965.0 million as well as royalties.
`
`Divestitures
`Respiratory Business
`As part of the Forest Acquisition (defined below), we acquired certain assets that comprised Legacy Forest’s branded respiratory
`business in the U.S. and Canada (the “Respiratory Business”). During the year ended December 31, 2014, we held for sale respiratory
`assets of $734.0 million, including allocated goodwill to this unit of $309.1 million. On March 2, 2015, the Company sold the
`Respiratory Business to AstraZeneca plc (“AstraZeneca”) for consideration of $600.0 million upon closing, additional funds to be
`received for the sale of certain of our inventory to AstraZeneca and low single-digit royalties above a certain revenue threshold.
`AstraZeneca also paid Allergan an additional $100.0 million and Allergan has agreed to a number of contractual consents and
`approvals, including certain amendments to the ongoing collaboration agreements between AstraZeneca and Allergan (the
`“Respiratory Sale”). As a result of the final terms of the agreement, in the year ended December 31, 2015, the Company recognized
`an incremental charge in cost of sales (including the acquisition accounting fair value mark-up of inventory) relating to inventory that
`will not be sold to AstraZeneca of $35.3 million. The Company recognized a loss in other (expense) income, net for the sale of the
`business of $5.3 million in the year ended December 31, 2015.
`
`6
`
`

`

`
`
`Pharmatech
`As part of the Forest Acquisition, the Company acquired certain manufacturing plants and contract manufacturing agreements
`within the business known as Aptalis Pharmaceutical Technologies (“Pharmatech”). In accordance with acquisition accounting, the
`assets were fair valued on July 1, 2014 as assets held in use, including market participant synergies anticipated under the concept of
`“highest and best use.” During the fourth quarter of 2014, the decision was made to hold these assets for sale as one complete unit,
`without integrating the unit and realizing anticipated synergies. During the year ended December 31, 2014, the Company recognized
`an impairment on assets held for sale of $189.9 million (the “Pharmatech Transaction”) which included a portion of goodwill allocated
`to this business unit. In the year ended 2015, the Company completed the divestiture of the Pharmatech business and there was no
`material impact to the Com